Latest effort to capture oil stalls
UPDATE: Hayward apologizes for “hurtful and thoughtless comment.”
Rep. Charlie Melancon (D-LA) called on the tone-deaf chief of the untrustworthy and reckless oil giant to resign yesterday. He specifically cited Hayward’s absurd statement “I’d like my life back,” which even UK newspapers are now mocking.
While Hayward, who became CEO in 2007, has tried to pass the buck on the safety issue to his predecessor, in fact, he became “Chief Executive of exploration and production in January 2003.” Hayward created whatever safety culture the explorers and producers have today (see 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?)
Hayward’s “ruthless” cost-cutting, as the UK media labeled it, was obviously a key driver of the reckless corner-cutting (see “The three causes of BP’s Titanic oil disaster: Recklessness, Arrogance, and Hubris“). The UK’s Times Online ran a November 2009 story, with this amazing headline:
Tony Hayward makes his mark on BP
Ruthless cuts by the new boss have produced results in higher than expected profits
“¦ More than 6,500 jobs have been eliminated and overheads have fallen by a third”¦.
Having already cut $3 billion from costs, he predicted that another $1 billion will be eliminated by the year end.
Yes, BP has apparently slashed $4 billion in costs, ruthlessly. But that could never impact safety, could it? The story ends with yet another uber-ironic quote from Hayward:
“My whole focus has been to recognise that at its heart we’re an operating enterprise. The question is how do we create a BP that 10 years from now doesn’t end up back in the ditch.”
While the latest effort to capture some of the oil from the spill fails — see WashPost‘s Effort to contain Gulf oil stalls with stuck saw — Hayward is destroying shareholder value almost as fast as he is destroying the Gulf of Mexico.
As I wrote on May 9, “My suggestion: Fire Hayward.”
I’ll end with an excerpt from TP’s The Progress Report on BP’s Credibility Gap:
Six weeks ago, BP’s Deepwater Horizon oil rig located nearly 40 miles off the Louisiana coast exploded and sank, killing 11 workers. Since then, 20 to 100 million gallons of oil have spewed into the Gulf of Mexico, soaking Gulf Coast shoreline with crude, killing thousands of wildlife, endangering public health, and unleashing untold environmental and economic damage in the region. At the same time, BP is doing everything in its power to mislead the public about the realities of the spill — from wildly underestimating the amount of oil that has leaked into the Gulf, to denying media outlets access to report on the scene. Last week, President Obama acknowledged BP’s credibility gap. “I think it is a legitimate concern to question whether BP’s interests in being fully forthcoming about the extent of the damage is aligned with the public interest,” he said, adding, “Their interest may be to minimize the damage and, to the extent that they have better information than anybody else, to not be fully forthcoming.” Now, the White House is stepping up its public criticism. Attorney General Eric Holder announced yesterday that the Justice Department has launched criminal and civil investigations into the spill. But BP’s lack of public trust requires the Obama administration to do more, including taking over management of what has become the worst oil spill in U.S. history.
BP’S DECEPTION GAME: While numerous attempts to stop the leak have failed, in the meantime, BP is trying to bolster its public image, even hiring Vice President Cheney’s former press secretary to help out the effort. But the facts don’t favor the British oil giant. Scientists from several universities have independently identified “plumes of what appears to be oil far from the site of BP’s leaking wellhead” based on “video images and initial observations of water samples taken in the Gulf over the last several weeks.” Yet on Sunday, BP CEO Tony Hayward — who had initially said the oil spill’s impact would be “very, very modest” — denied those reports. “The oil is on the surface,” he said. “There aren’t any plumes.” Experts criticized Hayward’s remarks. “There’s been enough evidence from enough different sources,” said marine scientist James Cowan of Louisiana State University. Other top BP executives have tried to minimize the scale of the disaster or just feign ignorance. “It’s almost impossible to get a precise number” of barrels leaking in the Gulf, said BP COO Doug Suttles. Even before the rig explosion, BP lobbied federal officials to expand drilling without conducting environmental impact analyses. But in addition to its damage control and deception operations since the oil leak began, reports have surfaced that BP has not provided adequate protective equipment for clean up workers and that the company is trying to cover-up evidence. As such, BP has lost the public’s trust. Seventy-six percent of Americans disapprove of how the company is handling the spill. Even Fox News hosts have lost confidence. “We can’t trust BP,” one anchor said. And at the same time, the enormous impact of the oil spill seems to be an inconvenience for Hayward. “I would like my life back,” he said on Sunday.
WHITE HOUSE ACTION: The Obama administration has begun to publicly acknowledge that its confidence in BP to handle the spill has eroded. In addition to the President’s remarks last week, his top energy adviser Carol Browner noted on Sunday what BP is trying to do. “It is important for people to understand BP has a vested financial interest in downplaying the size of this,” she said. Moreover, after frustrations with BP’s lack of transparency, the administration recently decided that Admiral Thad Allen, national incident commander for the spill, will be giving solo daily press briefings — without BP executives — in order to “give the government’s response a reassuring, authoritative face.” And in launching criminal and civil investigations, the White House has indicated that it is serious about holding BP, and other companies involved, accountable for the disaster. “We will prosecute, to the fullest extent of the law, anyone who has violated the law,” Holder said yesterday. Obama vowed “full and rigorous accounting” of the causes of the oil spill. BP — which lost 15 percent of its market value during yesterday’s trading — has previously been implicated in accidents that involved the company ignoring safety violations in order to cut costs. In 2005 at a refinery in Texas City, TX, 15 BP employees died and 170 were injured after a unit that manufactured jet fuel exploded. A panel led by former Secretary of State James Baker III concluded that BP had a “false sense of confidence” about safety. And in 2006, BP pleaded guilty to criminal negligence and paid a $20 million fine after one of its pipelines in Alaska burst, spilling hundreds of thousands of heavy crude. The DOJ investigation comes on top of the Minerals Management Service-Coast Guard investigation, the work of the independent Presidential commission, and several oversight investigations by Congress.
To paraphrase what I often say about climate action, the best time for BP to fire Tony Hayward was weeks ago, but now is much better than later. The same goes for Obama even more clearly taking the reins away from BP, particularly in the cleanup.
Previous in TP Climate Progress
Language Intelligence: Lessons on persuasion from Jesus, Shakespeare, Lincoln, and Lady Gaga
http://www.ctv.ca/generic/generated/static/business/article1589387.html
Another scathing article on Tony ‘paint it black’ Haywart who claimed, in 2007, “to set a new benchmark in industrial safety”. Well Tony you sure did it, you may have set the lowest mark yet! your biggest competition right now is Chernobyl.
What oil plumes? seriously people I went over this its the ‘specific gravity’, there cant be any oil under the surface because of ‘specific gravity’ theres a ‘specific gravity’ there and the ‘specific gravity’ means there can’t be oil under the surface… ‘specific gravity’!
Specific Gravity? If BP were not adding hundreds of thousand of gallons of un-acknowledge chemicals to this stuff a mile under water you might have a case. This “dispersant” is an in-house concoction perhaps even designed to change the specific gravity to a degree that the oil slurry stay below the surface. Very beneficial to the oil company image one would think.
Hayward’s denial of the existence of the plumes is not so bad. He can be disproved by evidence. What is of even greater concern is BP’s Robert Dudley (persona non grata in Russia) when he refuses to clean up subsurface oil. That is a policy decision that must be illegal.
Doing The Easy
I’m not that familiar with what Tony Hayward has or hasn’t done in the last ten years or last ten days. So I won’t comment directly on that. Yes, it’s probably time for at least some folks at BP to lose their jobs over this.
But here is what we ought to realize, I think:
It is easy, easy, easy, and (yes) easy to call out for someone to lose his job, after the fact. It may sound tough, but we all know it’s easy.
The much harder — and much more important — thing to do is to actually change policy ahead of time, before we continue status quo practices that bring disasters, ill health, and injustice upon ourselves.
The much harder — and much more important — thing to do is to actually use economic muscle to send signals to some companies ahead of time, in order that they “get the message” that the public wants them to change what they are doing.
You will probably hear lots of tough-sounding voices, that think of themselves as heroic and outspoken voices, calling for “heads to roll” so to speak, not that the Gulf is fast becoming a mess. Yet, how many of those politicians voted against expanded drilling ten years ago, or fifteen? How many of those politicians are calling for the strongest possible climate and energy legislation? (Not enough of them, to be sure.) And, of the members of the public who are now “calling for heads”, how many of those have actually been out boycotting ExxonMobil in the last two years, or BP, or etc.?
People (including me), to various degrees, find many mental ways to convince themselves that they are doing as much as possible, doing such things as “calling for heads to roll” (speaking here of jobs, of course), and so forth, even as they often don’t do the things that would really matter. I think more and more people will need to get out of their “comfort zones” and do things more proactively. Let’s vote for the right policies, and insist on them, and boycott the companies that are the most problematic, BEFORE we continue policies that ultimately lead to these sorts of disasters or even to much larger ones. Calling for Tony Hayward to lose his job, while it might be very helpful and make complete sense, and it will send signals to the other folks as well, nevertheless, it won’t restore the Gulf of Mexico.
Calling for Bill Keller to lose his job, at The New York Times, may make perfect sense ten years from now, when it is all crystal clear how The Times has incompetently fumbled its role of serving the public good via genuinely excellent coverage of the climate change problem, energy matters, ExxonMobil, and related stuff. It’s happening now, but people will only become angry, apparently, when the damage is growing and when they look back in hindsight for the folks who should be blamed. But that’s too little, too late, of course. We need improved media NOW. We need ExxonMobil to feel the pressure NOW. We need the public to become better informed, and more genuinely informed, NOW.
I worry that the public, or most of it, has lost its “positive imagination”. Have we lost our positive imagination that would otherwise (if we hadn’t lost it) help us to imagine, weigh, understand, and actually DO the sorts of things that will be necessary to put us on a more healthy track?
We call for people to lose their jobs, after the fact. That’s fine, but not nearly enough to actually solve the problems we face. Companies like BP seem to be wholly unimaginative in finding ways to clean up their messes. And, I must say, the government seems to be wholly unimaginative, or insufficiently motivated, on this matter. Did imagination itself die when John Lennon was assassinated on that terrible day?
So many times, it seems, people these days (including well meaning ones and very smart ones) seem to love to say “that will never work”, “that will never work”, “and that will never work”, and … “we’re all doomed”, and … “well, hopefully the people left after the crash will be able to rebuild a new world on a much wiser basis”. Yikes! Far too few people are figuring out solutions, and fewer still are actually DOING things.
The mess in the Gulf is obvious, the scientific community is clear in telling us we have a big problem with climate change, the many arguments for ridding ourselves of our oil and coal addictions are very strong, way too many people are unemployed, the DJIA gyrates wildly, levels of trust are going down, and blah blah blah, and the best that we seem capable of doing is to insist that “heads roll” AFTER disasters happen.
Sorry to sound so “frustrated” — and sorry for any typos.
Be Well (and Be Active),
Jeff
There are many who would say it’s PAST time to fire Tony Hayward.
As for work, maybe he could get a role in some future James Bond movie. He’s got the accent down. But he’ll have to learn to stick to the script.
Correction, I meant: “now that the Gulf is fast becoming a mess”
One of the questions that has emerged from this whole debacle is:
How can the CEO of the fourth biggest company in the world be this dumb?
Then, you have to think about the Board, and the investors. They must be dumb, too! After all, they are supposed to be in the oil business, which means that due diligence about things like offshore well safety factors should have been both routine and thorough. Not to mention the little detail about how it may have been in their interest to sort of tell the truth after the spill occurred.
Maybe, subconsciously, they did know, and thought about how Exxon got away with paying peanuts for the Valdez spill. Part of the cost was paid by the insurance company, and much of the rest was a tax writeoff. Their biggest expense was attorneys. Bush Sr., the oilman, was in charge at the time, but the oil companies have apparently figured that it doesn’t matter who is president. Clinton didn’t do much about offshore safety regulation either.
Let’s see how much separation Obama is able to achieve here. The bottom line will be how much money he is able to pick off the carcass that is becoming BP.
NYT is reporting that the saw they are using to cut the rise is stuck. http://www.nytimes.com/2010/06/03/us/03spill.html
mike roddy says: June 2, 2010 at 12:09 pm
One of the questions that has emerged from this whole debacle is:
How can the CEO of the fourth biggest company in the world be this dumb?
Hayward et al are responding to cues sent by investors, in fact unreasonable demands that year-on-year profits increase at minimally a fixed percentage but more desirably a steadily increasing percentage. This is called geometric growth and while an illusion of such growth is temporarily possible by firing enough workers, cutting enough corners, “wringing out cost”, that hallucination is bound to collapse eventually. We’re seeing one form of this collapse at the Macondo play.
Once again, we can look in the mirror with our complaints, those of us with 401K investments, mutual funds and the like. We place our money in the hands of institutional investors who convey our demands for ever-increasing amounts of money returned to us with no work performed.
We’re a key component of the psychopathy on display here.
BP Oil Leak May Last Until Christmas in Worst Case Scenario
http://www.businessweek.com/news/2010-06-02/bp-oil-leak-may-last-until-christmas-in-worst-case-scenario.html
I’m nauseous now when Tony speaks. The cutting off the riser will only add “a little more” oil spilling.
Can’t somebody — the Prez of the U.S, the Queen of England or the BP shareholders — seal his mouth shut with tape, leaving a “little” hole so he can suck in food through a straw?
The ultimate worst-case scenario is that the well is never successfully plugged, said Fred Aminzadeh, a research professor at the University of Southern California’s Center for Integrated Smart Oil Fields who previously worked for Unocal Corp. That would leave the well to flow for probably more than a decade, he said in a telephone interview.
Pemex Spill
It took Mexico’s state-owned oil company, Petróleos Mexicanos, or Pemex, nine months to plug its Ixtoc I well after an explosion and fire in 1979.
The company’s first attempt with a relief well failed, so it had to drill a second. Eventually, more than 140 million gallons of crude spilled into the Gulf of Mexico — the biggest offshore oil spill on record.
Last year, an explosion at a well off the Australian coast owned by Thailand’s national oil company, PTT Exploration & Production Pcl, required five attempts before it could be plugged by a relief well 10 weeks after the spill began.
Plugging the well is another challenge even after BP successfully intersects it, Robert Bea, a University of California Berkeley engineering professor, said. BP has said it believes the well bore to be damaged, which could hamper efforts to fill it with mud and set a concrete plug, Bea said.
Evacuating Ships
While these efforts are underway, BP could face delays if a hurricane enters the Gulf, forcing an evacuation. BP says it is developing a mechanism to quickly disconnect the ship collecting oil from the well so that it can evacuate ahead of a storm. That would leave the well gushing oil, Bea said.
I agree, Doug Bostrom, but part of this pathology is concentration of wealth- 1% of the people own 50% of the assets in this country. Much of this wealth is unearned, and I include investment bankers in that category. This has enabled the weakening of environmental regulations, companies moving offshore, and corruption of public officials.
In my opinion, the magnitude of this division, and consumption patterns by the rich, exceed what occurred in late Rome and Versailles. Back then, there were only so many things they could buy. Today, fleets of cars, jets, mansions, and art collections are part of the package. They aren’t especially happy, but their puffed egos drive them to do all kinds of damage, including (as you described) pressuring their money managers for greater returns.
Further to the issue of Hayward being our partner in a dance of mutually-assured destruction and self-hypnosis with regard to what’s reasonable to demand of a truly sustainable enterprise, this morning we hear that pension funds in the UK are already being sorely affected by the collapse of BP’s share prices and concomitant imminent decline of dividends.
Pension fund managers demand the impossible, BP tries to deliver by following delusional governance practices, truth is discovered.
Am I being cynical? I don’t think so.
Mike, I agree that the parasitic load on the system, the obviously poor value-for-money we get from executive leadership is a serious problem.
Forman will appear on MSNBC Wednesday morning to discuss the oil spill in the Gulf of Mexico. The Tampa dermatologist says the chemicals used in the clean up could have lasting effects. Today’s interview will air at 11:30 a.m. during the cable network’s MSNBC Live show.
“BP has already pumped more than 800,000 gallons of this toxin into the Gulf of Mexico,” says the Tampa dermatologist. “While it is good the EPA is forcing BP to reduce the amount of COREXIT used, the damage is already done. We will see the effects of this for years to come, similar to ‘agent orange’ in the 1960’s.”
http://www.prnewschannel.com/absolutenm/templates/?z=0&a=2605
More oil workers fall sick on the job
Guidry, a Vietnam veteran, compared the dispersants being used to combat the spill to the deadly chemical weapon, Agent Orange, and said the actions of BP, the oil company responsible for the massive spill, should land officials in jail.
“The U.S. Coast Guard should be monitoring this,” he said. “Somebody needs to take control of the situation.”
http://edition.cnn.com/2010/US/05/29/oil.spill.workers.ill/
Doug, you’re not being cynical in #16, you’re being precise.
Prokaryote-
Is this being covered anyplace besides MSNBC? There were reports earlier that EPA told BP to stop using COREXIT, and BP simply ignored them.
The oil and coal companies are just too cocky. Time to let them know that they do not run this country. We hope not, anyway.
US government approves new Gulf oil well 50 miles off Louisiana coast: http://bit.ly/Drilbabe
Two points that seem to need action.
1/. The relief wells have around a 1 in 3 chance of missing the bore, according to knowledgeable people posting on ‘TOD’. Thus at the end of August we currently have a 1 in 6 chance of having to start from scratch.
Starting 3 additional relief wells this week would change the odds to 1 in 48 of utter failure in early October (3;6;12;24;48). Why the Whitehouse hasn’t already taken action on this, as a matter of basic prudence, is an open question. Plainly, they need pushing, hard.
2/. BP saying its going to run away and leave the oil to flow in the event of bad weather is just shameful. There are a variety of options to avoid this, from mega-bladders, to sea-bed barges to managed-buoyancy submerged barges that BP can perfectly well afford. Again, the Whitehouse has a duty: to require BP to prepare a viable bad-weather storage option, immediately. Again, it needs pushing, hard.
These issues are about active government during a disaster, having failed to provide effective regulation to prevent corporate greed from causing a disaster. Government would do well to get active, as it remains accountable for how well it fulfills its duties.
Regards,
Billhook
Years ago when I first heard that someone could place a bet in the
stock market that a stock would loose value and the more that stock
reached it’s real value the more money that could be made on the bet.
I think that it was a way to make a corection for a stock that was
way over valued. Now what was that bet called?
And is BP still way over valued?
Hayward’s been a useful bellwether to show us the real face of corporate ethics. Ethical behavior by Big Oil is a little like an Easter egg hunt–you’re so overjoyed when you find one stupid egg that you want to jump and shout yippee. Hayward has given us a glimpse of what senior oil executives really think, and it’s ugly. Since no one at Tony’s level has asked him to shut up already, it may be assumed that they all think the same way.
So why bother firing Tony Hayward when it’s BIG Oil we should be firing? Solutions like the list in the proposal by Podesta and Weiss are a good start, but we really have to fire Big Oil if we’re going to get out of this purgatory.
“Fire Big Oil” Thanks, Karen S.
When Tobacco capitulated they were forced to mark on every pack that “Smoking is Hazardous to Your Health.” In addition taxes were levied to help defray the cost to society that all those Cancer Patients Represented. One would be hard pressed to find even very many GOP today that would say that that was not a good move for society. How is oil addiction any different?
Another spill for BP last week–100,000 gallons from the Alaska pipeline:
http://www.gregpalast.com/smart-pig-bps-other-spill-this-week/
Oh, that stock broker is loosing the bet about what that oil company
is worth to us.
I especially like this quote from a Newsweek story:
“On April 29, The New York Times reported that Hayward, apparently exasperated, turned to fellow executives in his London office and asked, “What the hell did we do to deserve this?” (A possible answer might be the company’s 760 safety violations over the last three years. ExxonMobil, in contrast, has had just one.)”
http://www.newsweek.com/2010/06/02/what-not-to-say-when-your-company-is-ruining-the-world-.html
[JR: Looks like Newsweek reads CP or TP.]
Director James Cameron Says BP Turned Down Help Offer
“Over the last few weeks I’ve watched, as we all have, with growing horror and heartache, watching what’s happening in the Gulf and thinking those morons don’t know what they’re doing,” Cameron said at the All Things Digital technology conference.
Cameron, the director of “Avatar” and “Titanic,” has worked extensively with robot submarines and is considered an expert in undersea filming. He did not say explicitly who he meant when he referred to “those morons.”
http://abcnews.go.com/Entertainment/wireStory?id=10812633
BP Could Face Ban as U.S. Launches Criminal Investigation
Oil company’s future in doubt as attorney general opens investigation into worst oil spill in American history
http://solveclimate.com/blog/20100601/gulf-oil-spill-bp-could-face-ban-u-s-launches-criminal-investigation
BP lacked the right tools to deal with crisis, chief executive admits
His comments came as US politicians demanded that BP should suspend dividend payments to shareholders while it battles the oil spill in the Gulf of Mexico.
In an open letter to Hayward – who recently told the Guardian his job was on the line – Democratic senators Charles Schumer and Ron Wyden said it would be wrong for BP to pay investors a dividend until it knows the full cost of the disaster.
“We find it unfathomable that BP would pay out a dividend to shareholders before the total cost of BP’s oil spill clean-up is estimated,” they wrote.
The letter was written hours after it emerged that Hayward was telling BP’s major shareholders that it planned to maintain dividend payments despite the ongoing environmental catastrophe off the coast of Louisiana.
http://www.guardian.co.uk/business/2010/jun/03/gulf-oil-spill-senators-ask-bp-to-suspend-dividends
Well,
BP sold it as a safe investment as per their claims that the
rigs were safely installed.
The stock brokers sold it likewise.
Seems to be a possible breach of contract.
Lief @ #25 – Maybe we should start a campaign to require labeling relative to oil – THE USE OF THIS PRODUCT IS A MAJOR CONTRIBUTOR TO GLOBAL WARMING. You could also place a similar warning on utility bills which would cover coal.
Good thought there David, 33: In fact I pay a premium of $0.0125 /kw for all green power, (a whopping ~$3.00/ month for my usage) with no fan fair what-so-ever in my bill. Perhaps power companies should also promote green usage, mail in green envelope?, as well as warning labels for dirty coal.
I am going to contact my power provider.
Doug Bostrom wrote: “Hayward et al are responding to cues sent by investors, in fact unreasonable demands that year-on-year profits increase at minimally a fixed percentage but more desirably a steadily increasing percentage. This is called geometric growth and while an illusion of such growth is temporarily possible by firing enough workers, cutting enough corners, “wringing out cost”, that hallucination is bound to collapse eventually.”
Two numbers I picked up on 31 May: In 2009, Fortune 500 corporations tripled their profits to $391 billion and slashed payrolls by 800,000.
Killed Transocean oil worker was fiercely concerned about BP safety standards
http://rawstory.com/rs/2010/0603/killed-rig-worker-suspected-bp-cutting-corners/
All of you people are forgetting the wonderful service this company has provided. BP, being the nations only oil producer supplied our country with the materials to fuel our cars and economy.
IF IT WASNT FOR BP, WE WOULD STILL BE USING WHALE OIL TO FUEL OUR FORD EXPLORERS!!!1
All of you need to shut up. They created 5,600 JOBS TO HELP CLEAN UP THE SPILL!!!
THAN DESTROY 4,000
1,600 JOBS CREATE
BP IS THE BEST.