32 Responses to Is BP the Goldman Sachs of Big Oil? CEO Hayward says to fellow executives: “What the hell did we do to deserve this?”
Let’s see: How about a spotty safety record, insistence on voluntary ‘trust me’ self-regulation, a drilling plan that ignored key risks, and failure to use best shut-off technology to save a few bucks?
Limit government, we’re told. Big companies will police themselves because the potential loss in revenue and reputation is motivation enough, we’re told. The predictable result is Goldman Sachs, Massey Energy, and BP.
If you Google ‘British Petroleum cited violations‘ you get 192,000 hits. One of the most revealing is “MMS Records Show BP Has Previous Deepwater Violations” (excerpted below).
CBS and the AP report “BP Didn’t Plan for Major Oil Spill: Company Suggests in Documents that Likelihood of Accident Happening was Virtually Impossible.”
Planning drives response, and no doubt BP’s delusional worst-case scenario drove them to keep assuring the government and the nation they could handle this.
Though as 20-year Coast Guard veteran Robert Brulle wrote here: “With a spill of this magnitude and complexity, there is no such thing as an effective response.”
At the same time, BP’s “it can’t happen here” mentality is no doubt why it decided to save $500,000 and didn’t bother with “a remote-control shutoff switch that two other major oil producers, Norway and Brazil, require,” the WSJ reported (subs. req’d).
BP knows it can’t blame the feds since it fought efforts to change the voluntary self-regulation laws, the industry opposed mandates for the remote-control shutoff switch, BP sold the Minerals Management Service on a laughable planning scenario — it was “unlikely that an accidental surface or subsurface oil spill would occur from the proposed activities” — and the industry, not the feds, have the relevant equipment to stop the gusher.
BP has been blaming the rig owner, Transocean. CEO Hayward said last week, “The responsibility for safety on the drilling rig is Transocean. It is their rig, their equipment, their people, their systems, their safety processes.” And I expect they will ultimately point the finger at Halliburton, as I’ll discuss tomorrow.
But let’s get to the Goldman-Sachs level of hubris. In a Friday NYT piece, “Oil Spill’s Blow to BP’s Image May Eclipse Costs” — a dubious headline given the latest spill rate estimates of up to 1 million gallons a day — the reporter buried the shocking quote from CEO Hayward that should have been the lede:
For Tony Hayward, who has led BP for the last three years, the accident threatens to overshadow all of the efforts he has made to burnish the tattered reputation of the company after a refinery explosion in Texas in 2005 and a pipeline leak in Alaska in 2006.
As Mr. Hayward said to fellow executives in his London office recently, “What the hell did we do to deserve this?”
Indeed, Rebecca Lefton, a researcher for Progressive Media, noted in a TP post, “BP’s Greenwashing Masked Dangerous ‘Drill, Baby, Drill’ Reality“:
41% Raise For BP’s CEO. “Chief Executive Tony Hayward’s total remuneration and share awards rose 41% in 2009 on performance bonuses from improved operations which made the company one of the best performing oil majors in the fourth quarter, despite lower full-year profits due to the fall in the oil price.” [Wall Street Journal, 3/5/2010]
But, ultimately, this isn’t about karma or the all-too-high wages of hubris. It is about negligence, “trust me” self-regulation, whitewashed planning, and a safety record that Jake Tapper on ABC’s This Week called “spotty.” Here’s one ‘spot‘:
On October 25, 2007, BP pled guilty to a criminal violation of the Clean Water Act and paid a $20 million fine related to two separate oil spills that occurred in the North Slope in March and August of 2006, the result of a severely corroded pipeline and a safety valve failure. BP formally entered a guilty plea in federal court on November 29, 2007. US District Court Judge Ralph Beistline sentenced BP to three years probation and said oil spills were a “serious crime” that could have been prevented if BP had spent more time and funds investing in pipeline upgrades and a “little less emphasis on profit.”
BP Exploration & Production, which owns the deep water rig that exploded last week in the Gulf of Mexico, was cited in 2007 for inadequately training employees in well control, according to the US Minerals Management Service.
The conditions of the training are the same as those suspected in the possible blowout aboard the TransOcean Deepwater Horizon, which left 11 workers missing and presumed dead.
MMS slapped BP with $41,000 in fines in October 2007 after a series of violations related to a near-blowout five years earlier.
The NYT story notes that in 2006:
A leaky BP oil pipeline in Alaska forced the shutdown of one of the nation’s biggest oil fields. BP was fined $20 million in criminal penalties after prosecutors said the company had neglected corroding pipelines….
Mr. Hayward, a geologist who had been in charge of exploration and production, took over and promised to refocus the company and change the culture, emphasizing safety. He also expanded the company’s already aggressive exploratory efforts in the deep waters of the gulf.
So Hayward emphasized safety starting when he took over in May 2007, while pursuing deep water drilling in the Gulf uber-aggresively. How did that work out? The first page of the Google search reveals this March 2010 story, “OSHA cited BP-Husky refinery for 42 willful, 20 serious violations.”
And this October 2009 NYT story should perhaps give CEO Hayward one small answer to his inane lament:
The Occupational Safety and Health Administration announced the largest fine in its history on Friday, $87 million in penalties against the oil giant BP for failing to correct safety problems identified after a 2005 explosion that killed 15 workers at its Texas City, Tex. refinery.
The fine is more than four times the size of any previous OSHA sanction.
Federal officials said the penalty was the result of BP’s failure to comply in hundreds of instances with a 2005 agreement to fix safety hazards at the refinery, the nation’s third-largest.
According to documents obtained by The New York Times, OSHA issued 271 notifications to BP for failing to correct hazards at the Texas City refinery over the four-year period since the explosion. As a result, OSHA, which is part of the Labor Department, is issuing fines of $56.7 million. In addition, OSHA also identified 439 “willful and egregious” violations of industry-accepted safety controls at the refinery. Those violations will lead to $30.7 million in additional fines.
Contacted Thursday night after federal officials disclosed the OSHA citations to The New York Times, BP said it was disappointed.
Yes, disappointed. As are we all.
And let’s remember that Hayward became “Chief Executive of exploration and production in January 2003.” He created whatever safety culture the explorers and producers have today.
Buried in the April NYT story is this sleeper:
Last year, when the federal Minerals Management Service proposed a rule that would have required companies to have their safety and environmental management programs audited once every three years, BP and other companies objected. The agency is also investigating charges by a whistle-blower that the company discarded important records from its Atlantis Gulf platform.
Truthout provides more details:
A former contractor who worked for British Petroleum (BP) claims the oil conglomerate broke federal laws and violated its own internal procedures by failing to maintain crucial safety and engineering documents related to one of the firms other deepwater production projects in the Gulf of Mexico, according to internal emails and other documents obtained by Truthout….
… the whistleblower, who was hired to oversee the company’s databases that housed documents related to its Atlantis project, discovered that the drilling platform had been operating without a majority of the engineer-approved documents it needed to run safely, leaving the platform vulnerable to a catastrophic disaster that would far surpass the massive oil spill that began last week following a deadly explosion on a BP-operated drilling rig….
Even worse, 95 percent of Atlantis’ subsea welding records did not receive final approval, calling into question the integrity of thousands of crucial welds on subsea components that, if they were to rupture, could result in an oil spill 30 times worse than the one that occurred after the explosion on Deepwater Horizon last week.
“What the hell did we do to deserve this?” The question answers itself.