The Spill | Notes & Commentary

Posted on October 29, 2015

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PBS Frontline. The Spill. October 26, 2010.

Read: Furious Growth and Cost Cuts Led To BP Accidents Past and Present by ProPublica.

FILE - This April 21, 2010 aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice on Louisiana's tip shows the Deepwater Horizon oil rig burning. Retired Coast Guard Adm. Thad Allen, the federal government's point man on the disaster, said Sunday, Sept. 19, 2010, BP's well "is effectively dead." A permanent cement plug sealed BP's well nearly 2.5 miles below the sea floor in the Gulf of Mexico, five agonizing months after an explosion sank a drilling rig and led to the worst offshore oil spill in U.S. history. (AP Photo/Gerald Herbert, File)

FILE – This April 21, 2010 aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice on Louisiana’s tip shows the Deepwater Horizon oil rig burning. Retired Coast Guard Adm. Thad Allen, the federal government’s point man on the disaster, said Sunday, Sept. 19, 2010, BP’s well “is effectively dead.” A permanent cement plug sealed BP’s well nearly 2.5 miles below the sea floor in the Gulf of Mexico, five agonizing months after an explosion sank a drilling rig and led to the worst offshore oil spill in U.S. history. (AP Photo/Gerald Herbert, File)

Key quotes from the film:

This is a story about ambition and its consequences.

…there were charges that BP’s management valued profits more than safety.

A fire every week is a warning sign that something is critically wrong at the facility. It was the worst refinery around this area, for sure.

And at that point, BP culture was “Show me the money.” And refining was not showing them the money.

You can only spend a penny once. “Should we do it fixing up this refinery?” You’re choosing among priorities. And they did not give this deferred maintenance priority at Texas City refinery the attention, the priority it should have gotten.

The pressure to cut costs came from the very top of BP. After the buy-out of Amoco, Tony Hayward’s predecessor, Lord John Browne, ordered a 25 percent cost cut across the company. The message was relayed down through the ranks.

I don’t know if they realized just how devastating the cost-cutting ethos was when it actually played out in the field. When there’s a whisper at the top of the company, it becomes like a shout at the bottom.

There was a fatality once- approximately every 18 months or so. The feeling of the workforce was that there was an eminent catastrophic accident that could happen in the near future.

The basic response Don Parus got from that was, “Well, that’s your job to make sure this stuff doesn’t happen.” And he was pleading for, “Well, let me have the materials to do my job that way.” London saw it a different way. And that’s part of that culture that BP didn’t get.

Growth creates challenges to management. There’s no question about that. I’ve worked with small companies, I’ve worked with big companies. Big companies are harder to manage. BP in this case just grows beyond its management ability to watch everything they need to watch when they need to watch it.

But while they were successful in expanding commercially, they were less successful in instituting a sense of operational excellence within the organization.

This was not an accident. This was profits over people. I mean, there were, like, small repairs that would have cost their company, like, $100,000 for, like, a flare system that would have prevented the explosion also, and they didn’t do that.

BP has not adequately established process safety as a core value.

When I was doing reporting on Alaska, that’s when I really began to hear about this incredible focus on cost cuts and that there was just tremendous pressure. And it was just shocking to me that a company would be flying so close to the edge on something, you know, where the down side is so huge.

You know, “What’s the risk?” “How far can we go with this before we’re going to lose a life” or “How many lives can we afford to lose before we need to deal with this?”

It’s essentially a gag order. There are many people who would say that BP devotes more effort and attention to making that a priority than they do to keeping their facilities safe in the first place.

You had Texas City. You had Alaska. You had the problems at Thunder Horse. I think the first one or two incidents, people were able to say, “Well, you know, everybody’s had these accidents.” But after a while, so many things mount up that you’ve got to wonder, is there a deeper systemic problem?

TONY HAYWARD: This is about a fundamental lack of leadership and management in the area of safety, period.

TONY HAYWARD: We diagnosed the following–a company that was too top-down, too directive, and not good at listening. We had too many people that were working to save the world. We’d sort of lost track of the fact that our primary purpose in life is to create value for our shareholders. And we failed to recognize we were an operating company. We had too many people that did not understand what it took to run operations. We had too many shallow generalists.

But London’s bankers weren’t happy. BP’s stock price was slumping. Hayward came under renewed pressure to keep cutting costs.

It just doesn’t make sense. It’s not clear how the company can continue to shave its expenses while supposedly reinvesting in the procedures and the equipment and the operations that have placed it at such great risk over so many years.

Several oil executives that I spoke with described this process of reforming a company culture as a monumental task. And it’s something that will occupy a chief executive’s focus and attention every single day, every day of the week, every week of the year in perpetuity.

—VIA—

Once again, regardless of industry, the culture of leadership is the most important determinant factor in outcomes. The tragedy is two-fold. One, that lives have been lost, the environment has been damaged, and we’ve all suffered from the repercussions of a thousand delinquencies. Two, that all of this could have been easily avoided by attending to simple leadership principles, and creating a different kind of organization.