- Gulf Oil Slick Skimming - U.S. Coastguard
John Browne ran British Petroleum for a dozen years until he abruptly resigned in May 2007. He was hailed by the British media as one of the country’s greatest business leaders and rewarded by his country with a peerage.
Lord Browne of Madingley was a persistent cost cutter in his drive to create record profits for the company. Under his watch, the value of BP 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 said 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.”
At The New York Times (May 1, 2007) Alan Cowell noted a downside: “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 mishap also injured 170 people, some with horrible burns. BP paid $50 million in criminal fines and more than $87 million to the Occupational Safety and Health Administration for what was termed willful 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 a U.S. congressional hearing in 2006 “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.”
Gulf of Mexico Oil Spill
On April 20, 2010 there was an explosion at the Deepwater Horizon oil drilling platform that was operation 64 km off the coast of Louisiana in the Gulf of Mexico. Following the blast the rig burned and sank, and the wellhead, 1,500 metres below the surface, began spewing crude into the ocean. Eleven workers were killed in the accident.
There have been many estimates, one as high as 16 million litres a day, of the amount of crude escaping. The result has been a gigantic slick spreading across the Gulf of Mexico and coming ashore along the coasts of Louisiana, Mississippi, Alabama, and Florida. The region’s fisheries have been closed, entire ecosystems have been destroyed, and millions fish, seabirds, 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
Tony Hayward became Chief Executive Officer of BP in May 2007. At the time he said 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. World Energy Media (June 19, 2010) has written that, “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, the disaster had cost BP about $2 billion in several failed attempts to contain the oil gusher. The final tally, when all the lawsuits have been settled, will be many times higher.
The value of the company’s shares has dropped by 50% since the accident and BP has suspended paying dividends to its shareholders. 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.
Rupert Taylor - Rupert Taylor is the editor of a magazine that provides background to current events.
