BP and the Gulf of
Mexico Oil Spill
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
The Explosion
On April 20, 2010, the oil
rig, Deepwater Horizon,
explodes in the Gulf of
Mexico.
11 people are missing and
17 people are injured.
The majority of individuals
aboard the rig are
Transocean, BP, and
Halliburton employees at
the time of the explosion.
This incident is regarded as one of the most serious ecological disasters in history
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
Key Players
British Petroleum
- “BP operates at the frontiers of the energy industry. We use world-class assets,
technology, capability and know-how to meet energy needs and deliver longterm value.”
- Market Capitalization: $181 billion
Halliburton
- Founded in 1919, one of the largest players in the oil and gas industry.
- Composed of over 55,000 employees.
- Contracted to cement the oil pipe to the ocean floor.
Transocean
- World’s largest offshore drilling contractor.
- 139 mobile offshore drilling units, plus an additional eight new rigs.
- Owners of the rig, the Deepwater Horizon.
Federal Government
Mineral Management Service (MMS)
− Federal agency responsible for overseeing the well’s drilling and
operations.
− Created in 1982 to generate revenues from oil well royalties for the
federal government.
− Also created to oversee the oil industry to ensure safe practices.
− Lack of oil expertise because of the increasingly complicated drilling
industry.
− Conflict of interests and lack of oversight.
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
The History of British Petroleum
William Knox D’Arcy, 1901.
Anglo-Persian Oil Company.
Renamed Anglo-Iranian (AIOC) in 1935.
World’s largest refinery at Abadan.
200,000 workers in scorching conditions
Continued to supply Allied fleet during World War II.
“When the rains subsided, clouds of nipping, small-winged flies
rose from the stagnant waters to fill the nostrils, collecting in
black mounds along the rims of cooking pots and jamming the
fans at the refinery with an unctuous glue.”
- Manucher Farmanfarmaian, describing winter working conditions, 1949
The History of British Petroleum
Dr. Mohammed Mossadegh, 1951.
Nationalizes AIOC’s holdings.
World crisis ensues, US and UK boycott, block
any other European technicians from replacing
the British ones that were fired.
Rebrands itself as British Petroleum in 1954.
BP’s controversial image plays large part in political rhetoric,
gives way to 1979 revolution and the Islamic Republic.
The History of British Petroleum
Nationalization schemes of Arab states forces BP to look outside
region for alternate sources of oil.
Begins pumping oil out of Prudhoe Bay, Alaska in 1977.
− One of the largest infrastructure projects in North America.
BP is now the second largest oil company, operates in 100
countries and can produce 3.5 billion barrels a year.
Record in North America is tainted with a recent series of severe
safety violations that contradicts their “green” image.
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
Green Campaign
“I believe the American people expect a company like BP . . . to offer answers and not excuses.''
- Lord John Browne, BP CEO, March 2002
Green Campaign
Spends $200M in 2000 to rebrand itself as “Beyond Petroleum.”
Redesigns the 70 year-old BP shield into the BP “Helios.”
New York is specifically targeted, advertisements appear in Times
Square.
Lord John Browne acknowledges climate change:
− Pushes BP to confront climate issues
− Candidly acknowledges company’s mistakes
− Enters dialogue with environmental groups.
Campaign is designed to address skepticism consumers have toward
Big Oil.
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
Safety Record
Texas City, Texas 2005:
− 15 people killed, injured 180
− “improperly released vapor and liquid”
Alaska, 2007:
− 200,000 gallons of crude oil spill into the wilderness due to corrosion
along the pipeline
− Pays $16M in criminal fines
Occupational Safety and Health Administration reports that BP ran up
760 “egregious, willful” safety violations in a three-year span:
− Accounts for 97% of total number of industry safety violations
− Pays $373M to avoid federal prosecution
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
How Does Drilling Work?
•
The Deepwater Horizon is the
oil rig that prepares the well for
drilling.
•
It is essential to pump mud and
seawater down the casing
string in order to ensure
pressure equilibrium.
•
If too much pressure is exerted,
the rockbed can be damaged
and result in collapse.
Long String Casing and Centralizers
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
Timeline: April
APRIL
MAY
20 April
• Explosion and fire on the BP-licensed
Transocean drilling rig Deepwater Horizon
in the Gulf of Mexico.
• Eleven people are reported missing and
approximately 17 injured.
25 April
• US coast guard remote underwater
cameras report the well is leaking 1,000
barrels of crude oil per day (bpd).
26 April
• BP's shares fall 2% amid fears that the
cost of cleanup and legal claims will hit the
London-based company hard.
JUNE
JULY
AUGUST
SEPTEMBER
Timeline: April
APRIL
MAY
28 April
•
•
The coast guard says the flow of oil is
5,000 bpd, five times greater than first
estimated, after a third leak is discovered.
BP's attempts to repair a hydraulic leak on
the blowout preventer valve are
unsuccessful.
29 April
•
President Obama pledges "every single
available resource," including the US
military, to contain the spreading spill, and
also says BP is responsible for the
cleanup..
30 April
•
•
An Obama aide says no drilling will be
allowed in new areas until the cause of the
Deepwater Horizon accident is established
US bans new drilling in Gulf of Mexico.
JUNE
JULY
AUGUST
SEPTEMBER
Timeline: June
APRIL
MAY
JUNE
3 June
•
BP faces political flack over its decision to
pay out more than $10bn (£6.8bn) in
dividends to shareholders, despite the
deepening crisis.
15 June
•
Fitch ratings agency cuts BP's credit rating
as the cost of the spill continues to
escalate.
16 June
•
BP agrees to a $20bn (£13.5bn) down
payment toward compensation for victims
of the oil spill.
JULY
AUGUST
SEPTEMBER
Timeline: July
APRIL
MAY
JUNE
JULY
AUGUST
26 July
•
The BP chief executive, Tony Hayward, is to leave
the company, to be replaced by Bob Dudley, a BP
veteran overseeing the clean-up.
27 July
•
•
Greenpeace activists close 46 BP garages in
central London in a move to force the company to
become greener.
Safety switches at the pumps were stolen.
Timeline: August / September
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
25 August
•
BP's poor reputation, following the Gulf
of Mexico oil spill, forces it to pull out of
a bid to drill in the Arctic.
8 September
•
BP releases its own report that blame
must be shared between all entities
involved.
16 September
•
•
BP falls out of a major marketing
consultancy's list of the top 100 brands.
BP falls off Interbrand's index for the first
time in 11 years.
19 September
•
•
BP Statistical Review of World Energy 2008
The leak is finally closed.
Costs estimated to $40 billion.
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
What Caused the Disaster?
The National Commission on the BP
Deepwater Horizon Oil Spill and
Offshore Drilling concludes:
•
There is not one single cause of the
disaster.
•
BP, Transocean, and Halliburton all
are responsible for the disaster.
•
The primary cause is blamed on the
cementing process of the oil pipe to
the well and the inherent risks of
drilling to extreme depths.
•
Blame placed on the MMS for lack of
expertise and conflict of interest.
What Caused the Disaster?
The National Commission on the BP Deepwater Horizon Oil Spill and Offshore
Drilling concludes in the report to the President of the United States:
“…the Macondo blowout was the product of several individual missteps and oversights by
BP, Halliburton, and Transocean, which government regulators
lacked the authority, the necessary resources, and the technical expertise to prevent.”
“The immediate cause of the Macondo blowout was a failure to contain hydrocarbon
pressures in the well. Three things could have contained those pressures: the cement at
the bottom of the well, the mud in the well and in the riser, and the blowout preventer.”
•
•
•
•
Long string casing
Additional need for centralizers
Unstable cement
Poor immediate action training
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
Initial Communication
•
“Our concern and thoughts are with the rig personnel and their
families. We are also very focused on providing every possible
assistance in the effort to deal with the consequences of the
incident.” – Tony Hayward, BP CEO (April 21, 2010)
•
“BP assumes full responsibility for the oil spill”
–Tony Hayward, BP CEO (April 23, 2010)
•
“It’s not our spill.”
– Tony Hayward, BP CEO (May 3, 2010)
Inconsistency
Confusion
Contradictory
Key Communications Figures
Carl-Henric Svanberg
-Chairman, Board of Directors
-Former CEO of Ericsson, assumed Chairman position in September 2009
Tony Hayward
-Chief Executive Officer
-28 years with BP, “Home grown” knowledge of the company
Doug Suttles
-Chief Operating Officer, BP Exploration
-Led BP reaction to deepwater spill
Executive Involvement
•
President Obama delivers a special address to the nation
• Mentions BP six times by name
• Does not mention Halliburton or Transocean one time
•
President appoints Coast Guard Admiral
Thad Allen as National Incident Commander
• Authority on disaster recovery
(Hurricane Katrina)
• Became face and voice of
recovery effort
Social Media Focus
April 27: BP Begins daily “tweets” outlining containment and support
efforts
May 2: BP connects with Facebook fans who “like” the BP recovery
effort with daily posts
May 6: Daily use of BP website for photo, video, map and written
updates
June 3: “We will make this right” video airs on YouTube for the first
time
Paid Media Effort

“We Will Make This Right” campaign airs in
June 2010

$50,000,000 price tag draws
widespread criticism

Designed to appeal to a national
audience
Spillcam
24 hour live-feed of oil flow
Began as a response to pressure from
Congress
Created to present a more open,
transparent stance
Viewed daily on more than 3,000 websites worldwide
Table of Contents
Oil Spill Incident
Key Players
History of BP
Green Campaign
Safety Record
Drilling Operations
Timeline
Causes of the Spill
Communications Effort
Communications Problems
Addressing Severity
Apr 27
Apr 28-30
May 17
May 23
May 30
• Spill mentioned in three sentences after discussion of robust 1Q earnings
• “Oil is spilling at 1,000 barrels per day”
• “Oil is flowing at 1,000-5,000 barrels per day”
• In comparison to the ocean, this is a “relatively tiny” oil spill
• Overall, this is a “very, very modest” spill
• “We’ve turned the corner”
• “I’d eat fish from these waters”
Self-Inflicted Wounds
1

“No one wants this to be over more than me. I want my life back.” –Tony Hayward

“We care about the little people.”
2
– Carl Henric Svanberg
3
4
“I’m sure we can all understand that [Tony Hayward]
wants to spend some time with his family.”
3
1
2