Canada and the World
Current Events with a Canadian Perspective
Last update
31 December 2010
British Petroleum’s
Corporate Nightmare
The oil well catastrophe in the Gulf of Mexico
is only the latest in the long series
of controversies involving the company
For a dozen years, British Petroleum was run by John Browne until he abruptly resigned in May 2007. He was celebrated by the British media as an outstanding executive and rewarded by his country with a peerage.
But, Lord Browne of Madingley was a relentless cost cutter in his drive to create record profits for the company. Under his watch, the value of the company rose fivefold and its share price increased by 250%.
British Petroleum’s Appalling Safety Record
Writing for The Daily Beast (June 10, 2010), Clive Irving pointed out that Browne “was ruthlessly slashing any costs that seemed inessential, which included rules of operational safety and levels of redundancy that other oil companies thought essential.”
But, The New York Times (May 1, 2007) noted that “some analysts said the transformation came at a cost, pointing to recent problems at BP, including an explosion at its Texas refinery that killed 15 people and an oil spill in Alaska.”
That Texas City refinery accident also injured 170 people, some with terrible burns. BP paid $50 million in criminal fines and more than $87 million to the Occupational Safety and Health Administration for what was termed wilful negligence.
In October 2009, the company was “fined a further $87 million for failing to correct safety hazards at the Texas refinery” (BBC News, June 9, 2010).
The BBC also reports that “In 2006, a U.S. congressional hearing accused BP of ‘unacceptable’ neglect of pipelines in Alaska after it was forced to shut down oil operations in Prudhoe Bay because of leaking pipes.
“In 2007, the company was fined a total of $373 million by the U.S. Department of Justice for environmental crimes and committing fraud.”
Image Makeover
In July 2000, Lord Browne unveiled a carefully constructed re-
A new green, white, and yellow logo replaced the BP shield and was “designed,” wrote
the BBC, “to show the company’s commitment to the environment and solar power.”
Along with the new logo, the organization announced a new slogan “Beyond Petroleum.”
Critics accused BP of “Greenwashing,” a term that first appeared in Mother Jones Magazine in 1991 to describe the use of marketing techniques to cover environmentally bad practices.
Gulf of Mexico Oil Spill
On April 20, 2010 an explosion occurred at the
Deepwater Horizon oil drilling platform
that was 64 km off the coast of Louisiana in the Gulf of Mexico. The rig burned and
sank, and the underwater wellhead began spewing crude into the ocean.
The amount of oil escaping has been estimated at up to 16 million litres a day. A vast slick (seen in this NASA satellite image) spread across the Gulf of Mexico. Within days, oil began coming ashore along the coastlines of Louisiana, Mississippi, Alabama, and Florida.
Fragile ecosystems have been destroyed, the fisheries of the region are closed, and untold millions of seabirds, fish, and other wildlife have been killed. It is the worst environmental disaster in the history of the United States.
BP Ignored Numerous Warnings of Danger
When he became Chief Executive Officer of BP in May 2007, Tony Hayward announced that he would make safety and reliability his top priorities, claiming to focus on safety “like a laser.”
However, since the disaster in the Gulf of Mexico stories of safety and best practice violations have surfaced. According to World Energy Media (June 19, 2010)
“British Petroleum…disregarded indications hours before the April 20 blast that the rig might suffer a catastrophic blowout…”
Also, the U.S. House Energy and Commerce Committee has published a report that “outlines multiple safety failures on systems involved in making sure that the well remained under control.”
Disaster Costly to BP
By late June 2010, BP had run up bills of about $2 billion in attempting to contain the oil gusher, but the final tally will be many times higher.
The value of its shares have dropped by 50% since the well blowout and the company has suspended paying dividends to its shareholders, although not until after it was publicly embarrassed into doing so by many politicians including U.S. President Obama.
On June 19, 2010 the Oil and Natural Gas Journal reported that, “The failure by BP to establish safety standards to prevent the oil spill in the Gulf of Mexico may result in the company being banned from conducting business in the United States. BP is currently the biggest oil producer in the United States.”
Sources
“BP Safety Record Questioned, May Lead to Suspension of Operation in U.S.” Oil and Natural Gas Journal, June 19, 2010
“BP Boss Tony Hayward’s Gaffes.” BBC News, June 20, 2010.
“BP Engulfed in Controversy Again.” Richard Anderson, BBC News, June 9, 2010.
“John Browne Steps down Abruptly from BP.” Alan Cowell, New York Times, May 1, 2007.
© Canada and the World, June 2010
All rights reserved
International Bird Rescue Research Centre
BP’s profit in 2009:
$14 billion
BP’s CEO Tony Hayward’s 2009 compensation package: $4,775,459
LOGO REDESIGN
Greenpeace International has launched a competition to redesign BP’s logo. “A few
years ago,” writes the environmental group, “BP rebranded themselves as 'beyond petroleum'.
And yet BP is pursuing 'unconventional oil' -
A slide show of the entries can be seen here
GAFFES
BP has committed a series of horrible public relations mistakes over the oil catastrophe.
May 18, 2010 – CEO Tony Hayward told Sky News: “I think the environmental impact of this disaster is likely to be very, very modest.”
May 30, 2010 -
June 3, 2010 – BP spend $50 million on a television ad saying it’s sorry for the calamity. BBC News reported that U.S. President Barack Obama “questioned whether BP should be spending…on TV advertising to improve its image while the crisis was still going on.”
June 16, 2010 -
June 19, 2010 – Hayward takes time out to join a yacht race in a boat he owns.