bp oil crisis case study

Lessons from an oil spill: how BP gained - then lost - our trust

Senior Research Associate, RMIT University

Disclosure statement

Tony Jaques does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

RMIT University provides funding as a strategic partner of The Conversation AU.

View all partners

The Deepwater Horizon oil spill disaster in the Gulf of Mexico in 2010 is one of the most exhaustively analysed environmental and management crises in recent history. And BP‘s response will probably be remembered for a generation as the perfect example of how not to manage a crisis.

But it wasn’t always that way. This year marks the 25th anniversary of another BP oil spill which is now virtually forgotten, but was regarded at the time as a gold standard in how to respond effectively and protect reputation.

Although it is eclipsed by a litany of subsequent high profile oil spill disasters – such as the Erika breaking up off Brittany in 1999 and the Montara oil rig fire off northwest Australia in 2009 – there is much to be learned from what happened 25 years ago on the coast of Southern California.

In February 1990, less than a year after the debacle of the Exxon Valdez running aground in Alaska, the BP-chartered tanker American Trader accidentally ran over its own anchor off Huntington Beach in Orange County, spilling 400,000 gallons of crude oil, which came ashore on the prestigious surfing strip.

BP’s response was prompt and unequivocal. In just over two hours, oil skimming vessels were on the scene and the company’s crisis team was in the air. And within 24 hours there were 36 BP specialists on-site.

Even more impressive was the leadership of BP America Chairman James Ross, who flew straight to the scene. In a memorable press conference on the polluted breach Ross told reporters: “Our lawyers tell us it’s not our fault. But we feel like it’s our fault and we are going to act like it’s our own fault.”

Contrast this statesmanlike approach with the denial and blame-shifting which blighted BP’s response in 2010 when fire destroyed the oil rig Deepwater Horizon in the Gulf of Mexico, killing 11 workers and starting a torrent of oil onto a massive swathe of coastline. Then-BP CEO Tony Hayward commented that the amount of oil was “relatively tiny in a very big ocean.” His now infamous comment to the media that he would “like his life back”, was dubbed by the New York Times as “the sound bite from hell”.

The clean-up at Huntington Beach was swift and efficient. More than 100 people from other big oil companies took part on the spill response, and BP trained and equipped volunteer bird rescuers, who became some of the company’s strongest supporters in the community. And they worked very closely with government agencies, and the parade of political figures who wanted to be photographed on the beach. Ross later commented: “We are convinced that by working with them, we avoided jurisdictional disputes and a ton of controversy.”

The outcome is strikingly evident. The Los Angeles Times ran a story praising the company’s efforts under the headline “After spill, BP soaks up oil and good press.” It later ran a front-page photograph of the company’s crisis manager fulfilling his pledge to be the first to swim at the cleaned-up beach.

When BP America President James Ross was summoned to Washington he found himself praised by lawmakers. Compare that with the concerted attack by American politicians on BP after the Deepwater Horizon spill. President Barack Obama himself called for Hayward to be sacked.

Of course the volume of the Deepwater Horizon spill was much greater. But the lesson for today is not about the challenges of clean-up. It’s about the response at a management level, and what it teaches us about crisis leadership. Just like the Huntington Beach spill, James Ross too was quickly forgotten by the media and he went on to a successful career as CEO of Cable and Wireless and company Director.

By contrast British-born Hayward was famously pilloried by a headline in the New York Times - “BP’s CEO Tony Hayward: The most hated – and most clueless – man in America.” And when he was appointed to a role in a small oil company two years later the New York Times observed that for bewildered Americans who saw oil plumes rising, livelihoods crumbling and seabirds dying in the viscous crude, Hayward came to personify the catastrophe.

The starkly different outcomes of the two incidents could be put down to failure of corporate memory. To a rigidly hierarchical executive style which was acknowledged to exist at BP Headquarters. Or to over-dependence on a single spokesperson who was ill-suited to the task of conveying compassion and conviction. Whatever the cause, BP’s Gulf of Mexico oil spill has well and truly earned its place in the pantheon of bona fide PR disasters. And it’s a brutal warning that the impact of bad management can persist for decades.

But perhaps most importantly, it’s a reminder that individual managers set the tone in a crisis. Even after 25 years, there is much more to be learned from the little-known success of James Ross of BP in 1990 than can ever be gained from raking over the much studied disaster of BP and Tony Hayward in 2010.

This is part of an ongoing series on ‘bad’ management. Read more in the series here .

• Deepwater Horizon
• BP oil spill
• Bad management

Deputy Editor - Technology

Sydney Horizon Educators (Identified)

Assistant Grants Officer

Deputy Vice-Chancellor (Academic and Student Life)

Visiting Professor - 2024-25 Australia-Korea Chair in Australian Studies at Seoul National University

• English | en
• Spanish | ES
• French | FR
• German | DE
• Portuguese | PT
• Chinese | ZH
• Japanese | JA

CASE STUDY: BP in the Gulf

On April 20, 2010, BP’s Deepwater Horizon oil rig exploded, killing 11 rig workers and setting off a massive oil leak.

By now, the story is well known. On April 20, 2010, BP’s Deepwater Horizon oil rig exploded, killing 11 rig workers and setting off a massive oil leak at the mouth of the damaged deep-ocean well. Months later, the ruptured well, situated 50 miles off the Louisiana coast, continued to spew millions of barrels of oil into the Gulf of Mexico, causing an ever-widening spread of destruction and despair among fishermen, residents and businesses that depend on the pristine waters and beaches of the Gulf for a livelihood. From an economic, political and brand perspective, few corporate disasters in industrial history can match the situation in which BP finds itself.

At this writing, after three months of gushing oil, an underwater camera displayed that the oil had finally ceased to flow. BP issued a statement urging caution, but also indicating that the leak had most likely been plugged. At the same time, more than 30,000 vessels, large and small, were scouring the Gulf to clean up the oil. The company had come under fire from all sides — environmentalists, Gulf Coast residents, business executives, the media and the president of the United States — and seemed at a loss as to how to put an end to the crisis. In fact, media reports stressed the chaotic nature of the situation, and both BP and the federal government were under intense scrutiny and criticism for the handling of the crisis.

From a public relations point of view, it was every CEO’s nightmare come true. BP’s share price plunged and eight weeks into the crisis, the company’s stock had lost nearly half its value. President Obama expressed outrage that BP had initiated a $50 million advertising campaign to try to salvage its image and had announced it would pay a dividend to shareholders over the summer. BP, he insisted, should be spending its money on repaying the victims of the spill. In a speech broadcast live from the Oval Office, President Obama said, “We will make BP pay for the damage their company has caused.” The next day, BP’s then-CEO, Tony Hayward, and chairman, Carl-Henric Svanberg, were summoned to the White House, where they agreed to put $20 billion into an escrow account to pay for damages and to cancel stockholder dividends for the year. Svanberg then held a press conference during which he apologized for the accident. Shortly after, Hayward removed himself from day-to-day oversight of the disaster and put an American, Robert Dudley, in charge. Dudley then replaced Hayward as BP’s CEO.

BP, it turned out, was not unfamiliar with oil-related disasters. In 2005, at its Johnson City, Tex., oil refinery, an explosion killed 15 workers, an event later attributed at least partially to cost-cutting. In 2006, a BP oil pipeline ruptured and spilled more than 200,000 gallons of oil into Prudhoe Bay in Alaska. With such a track record, BP is receiving very little compassion from its critics.

Though BP is a highly profitable and cash-rich giant ($17 billion in profits in 2009), the first whispers on Wall Street were heard in June that the company might indeed have trouble surviving this crisis intact.Rumors of a potential takeover or even bankruptcy were rampant as BP’s shares tumbled and litigants began lining up. Hayward responded by putting out a statement: “There is no objective justification for this share price movement.” This followed an earlier press statement in which he told reporters: “There’s no one who wants this over more than I do. I’d like my life back.” That statement met with widespread criticism.

As the weeks passed, BP’s troubles mounted. Oil continued to flow from the damaged wellhead, and estimates of the actual amount of oil being lost grew exponentially from 1,000 barrels a day, when the crisis began, to as many as 60,000 barrels a day, at this writing. Unable to cap the damaged well, BP’s efforts to focus on both the cleanup and its damaged corporate reputation were under increasing pressure. Britain’s new prime minister, David Cameron, weighed in and suggested that BP was being unfairly criticized in the United States. For its part, BP continued its advertising to try to reassure the public that it was not only sorry for the situation but was also committed to making it right, no matter the cost.

For BP’s board, executives and shareholders, the company’s future was enshrouded in a dark cloud. How would BP recapture its business momentum in the light of a catastrophe of this scope? As this case study unfolded, Briefings asked four crisis and risk management experts to weigh in.

Rear Adm. Marty Evans, retired, United States Navy, president and CEO of the American Red Cross during and after Hurricane Katrina.

I had the Tony Hayward role at the Red Cross during Hurricane Katrina, then Rita and Wilma too, which came back to back. So I am very sensitive to the BP role in this situation. We had a long-term problem, which required coordinated, joint solutions with many player agents in the mix. People say, “Something should be done.” But sometimes, nothing can be done — at least not as fast as everyone would want.

When I speak on crisis leadership, one of the points I make is that it is what you do between the crises that really counts. You have to look at lessons learned, imagine the risk you are dealing with, strategize, plan, exercise and train. You have to do all these things and even if you don’t identify a risk beforehand, you will be better prepared to address it if it happens. BP, for example, was not new to catastrophic events. The company’s prior oil disasters should have been fresh in executives’ minds.

In addition, executives need to identify the players who are going to be in place when a crisis happens. There is a whole range of advisers you will be depending on, and they have to be identified in advance.

I’m convinced that a fair number of corporate lawyers are advising BP’s CEO and telling him what he cannot do and not enough advisers are telling him what he can do. Every company in the universe ought to be learning from this crisis. You won’t be able to identify every risk. But the more you’ve worked and exercised on what you can identify, the better it sets up behavior patterns and organizational patterns on how you might deal with something you didn’t imagine.

Once a crisis is under control, corporate leadership must focus with laser intensity on what was learned and what will be done differently in the future. Let me tell you how hard that is. You’ve got people working as hard as they can on a crisis, and then you bring in a team to do a post-mortem. It is as hard to be really self-critical as it was to deal with the crisis in the first place. But as a leader, you have to have the fortitude to do it. There is no book to read for the next time.

Another key lesson: Values matter. There’s an important difference between doing the right thing and doing things right. All the lawyers will tell you to do things right, but you want to do the right thing. The right thing is to be open and share. A CEO sets the course and tone about what are the important values. You are taking care of people, being transparent, open, honest, sharing facts, acting when you can, communicating. Those are critical things you have to do. But from the lawyers’ perspective, being open may not be doing it right.

Also, you must communicate. In a disaster, there’s no such thing as communicating too much. BP has been reactive and defensive. Both the administration and BP are to blame for not communicating clearly what is going on. Early estimates of the damage, the scope of the spill, the existence of underwater oil plumes and a list of possible solutions were all ambiguous and misleading. Things had to be dragged out of BP. There was a sense that it was hiding something.

The board of directors has a key role as well. They must find the right CEO. Some people are great leaders but become paralyzed during crises. They just don’t have a natural gift to connect and communicate with the constituencies that they need to connect with. More than ever, it is up to the board of directors to evaluate and hire the right CEO, especially for companies in high-risk industries like oil and finance. Though it isn’t easy to illuminate in advance how any individual will react in a crisis, corporate boards must do everything possible to identify individuals with not just day-to-day operational skills but with the skill set required to be effective leaders during a crisis.

Jonathan Bernstein, president of Bernstein Crisis Management Inc. in Los Angeles and author of the book, “Keeping the Wolves at Bay.”

This is a seminal moment for BP and for the oil industry. What they do in handling this could determine whether this country finally turns in the direction of finding a safer way of getting energy. It is the oil industry’s equivalent of a nuclear reactor meltdown. For BP’s leaders, there are very few options. Whatever their technical legal liability is, they’ve been so severely damaged because of their lack of advanced preparedness that my recommendation would be to be bold and proactive. For any chance to salvage the company’s reputation, they should make a public pledge to liquidate any assets they need to in order to make things financially right for everybody damaged, regardless of whether BP is required to or not. They’ve got the assets with which to compensate the fishing industry, the tourist industry and everybody who has been damaged there.

The only thing a CEO should do in this kind of situation is express tremendous remorse for what has happened and tell people what the company is going to do to make it right and prevent it from happening again. It’s very important to come across as being on top and in control, even if in many respects you are not. For example, Rudy Giuliani, New York’s mayor when Sept. 11 happened, was an excellent role model. His manner of communication was so reassuring and compassionate, regardless of what was actually happening operationally, that people felt better. He said later he was able to do this as a result of relentless preparation, a lot of training about what you should say and how you should say it from a crisis communications standpoint. He was so well prepared that it wasn’t until a year after Sept. 11 that people realized that the operational preparedness was horrible.

When the Exxon Valdez disaster happened in 1989, Exxon’s executives made several big mistakes. They were very slow to respond, and the CEO failed to be on the scene quickly. Today, when I make presentations, I say the word “Exxon” and everybody in the audience says “Valdez.” That’s the long-term association. That crisis didn’t hurt their bottom line, but part of the reason was that we didn’t have the Internet then. Today, we have millions of people, all of whom are essentially reporters. Everyone has video, audio, print and an instant way to share all of it. The potential for reputational damage today is several orders of magnitude higher than it was for Exxon. This incident will live on longer for BP.

Robert Meyer, co-director of the Risk Management and Decision Processes Center at the Wharton School of Business of the University of Pennsylvania.

Individuals involved in complex tasks tend to focus myopically, seeing their own risk as minimal. For example, an individual who was responsible for making sure that the methane was released from the pipes might have cut his test time from a recommended 10 hours to just over half an hour to save time. That one decision may not seem especially risky from a narrow perspective but when viewed in concert with all the other issues involved might greatly elevate the overall risk. There is a tendency for individuals to not be aware of the holistic level of risk that a system faces when there are a lot of different compound parts. This is why a strong and competent CEO is so important.

A natural human instinct is to believe that rare events happen to other people, and thus people are naturally optimistic that they are immune from catastrophes. At the same time, business leaders rely heavily on “norms” and “best practices” within a given industry. By seeking metrics that define what competitors and peers are doing, we tend to infer that if everyone else is doing it, it must be safe. That often can be quite wrong if everybody else is making the same risky sorts of decisions. It creates a very false sense of safety. Short-term quick fixes are usually the more attractive option for corporate leaders, especially those under time and cost pressures.

Risk management must be a long-term focus, not a short-term solution. Enterprise risk management must rise from No. 7 or 8 on corporate to-do lists to No. 1. This goes far beyond a perfunctory “What are possible bad things that could happen?” to an extensive and systematic audit of business risks and the processes in place to take on worst-case scenarios.

By audit, I mean looking at the ways in which the different types of activities in which BP is involved are interconnected and thinking them through: “What happens if a supplier two stages down the chain screws up? How does that affect the overall system? And what does that imply about the overall risk we are facing?”

BP should have looked at the incentive structures in contracts and asked, “Do we have contracts in place that basically encourage someone down the chain to engage in risky behavior, which is ultimately going to bubble up and bite us?”

There is also a tendency within organizations and in politics to embrace an attitude known as “Not in my term of office,” which results in a focus on the short term at the expense of the long term. Getting a company like BP to shift from a myopic short-term view, especially with incentive systems built upon rewarding short-term thinking, is a major challenge. But companies that think this way face greater risk for trouble.

Finally, we’ve found that people have real difficulty in learning from disasters. We’ve often observed that an individual, a community or an organization will have something bad happen to them and they recover from it, and the same thing happens again down the road. What tends to erode over time is the emotional memory of these things, and that is what is difficult to overcome. The pain that is caused and the emotional trauma tend to fade and that sense of emotion, that emotional trauma, is what really kicks people into action. BP has obviously had a hard time remembering, given its track record. In the oil industry, if a company is not personally going through what BP is going through, rather than saying, “Why don’t we try to simulate this and believe this is us,” there is instead a natural tendency to say, “Thank God it’s not us.” And once you have that mind-set — that it could never happen to you — you are in trouble.

Jonathon Chandler, partner, Reputation Inc., London.

With crises in the food and airline and toy industries, once a crisis starts, it ends. If something goes wrong with food on the shelf, as it did with Coca-Cola in Belgium in 1999, the food can be taken off the shelf and at least the problem part of the crisis is over. The same is true with toys. When Mattel imported tainted toys from China, it took them off the shelf and the problem part of the issue was over. The same is true with airlines. If something happens to a plane, it’s a tragedy, but when it’s over, it’s over. You address the tragedy, you take your hits to your revenue, your reputation, your trust, but then you begin building it all back.

In the case of the BP spill, it’s not over. In fact, the leak hasn’t stopped, and it continues day by day. So, it’s different from a traditional crisis because it’s ongoing, which means most things in the traditional crisis manual won’t work in this type of situation.

And then, just think about the impacts. Here’s a British company that’s now affecting the lives of poor fishermen and hoteliers in the Gulf, but also affecting the career and reputation of the president of the United States. So, the first — and perhaps most important — thing to do is to find out exactly how far this can go. How bad can it get? What’s the extent? And then disclose it.

But there’s a missing ingredient here, and that is that the people at the top of BP should have moved quickly to close the gap with government organizations in the United States at the federal, state and local levels. They should have done this early on. In fact, putting aside the rules of protocol, the people at the top of BP — Hayward and his team — should have been in touch with the president, or at least as close to him as they could get. They should have said, “We have a problem.” Then, they should have done whatever they could to close the gap between BP and everyone affected by the spill, from the fishermen to the president.

The idea of trying to close the gap would be to try to create the impression that everyone is working on the same team. So it’s not just BP’s problem. It’s a shared problem and everyone’s working to fix it. Now, all you need to do is look at the president’s comments to see that’s not the situation. Right now, BP’s the enemy. I’m not saying there should be love between all the parties, only that the gap needs to be narrowed. The aim has to be to collaborate.

Download the PDF

Insights to your inbox

Stay on top of the latest leadership news with This Week in Leadership—delivered weekly and straight into your inbox.

Recent Articles

This Week in Leadership (Mar 11 - Mar 17)

Why mergers are making a comeback despite high interest rates. Plus, why "peak" performance is a myth.

Briefings Podcast #18: The Myth of 'Peak' Performance

How do you drive ever more top performance out of people without burning them out? The author of a new book on the topic and an Olympic medalist highlight how it can be done.

Work? Not a Priority Anymore

Despite widespread efforts to engage them, only about 20% of workers think work is core to their identity. Is this the new normal—or can leaders make more adjustments?

References: 5 Ways to Make Them Impactful

Instead of a ‘check the box’ exercise, experts say candidates should pay close attention to the references they provide.

Merger Mania: The Only Way to Grow?

Dealmaking activity has shot up 130% to start the year. Experts ask: What happened to growing organically?

• Capabilities
• Business Transformation
• Organization Strategy
• Total Rewards
• Assessment & Succession
• Talent Acquisition
• Leadership & Professional Development
• Intelligence Cloud
• Consumer Markets
• Financial Services
• Healthcare & Life Sciences
• Specialties
• Board & CEO Services
• Corporate Affairs
• Cybersecurity
• FInancial Services
• Human Resources
• Information Technology
• Risk Management
• Supply Chain
• Sustainability
• Partnerships
• Microsoft Alliance
• Duke University
• Cleveland Clinic
• Jobs with our clients
• Advance your career
• Join Korn Ferry
• Find a consultant
• Find an office
• Business impact
• Investor relations
• Press releases

© Korn Ferry. All rights reserved.

Terms of Use

Cookie Settings

Do Not Sell My Info

Advertisement

• Previous Paper

Communicating in a Crisis: A Case Study of the BP Oil Spill

• Split-Screen
• Open the PDF for in another window
• View This Citation
• Add to Citation Manager
• Get Permissions
• Search Site

Walaski, Pamela (Ferrante) "Communicating in a Crisis: A Case Study of the BP Oil Spill." Paper presented at the ASSE Professional Development Conference and Exposition, Chicago, Illinois USA, June 2011.

Download citation file:

• Ris (Zotero)
• Reference Manager

This paper discusses the application of key crisis communications principles by reviewing messages delivered during the BP Deepwater Horizon Oil Spill that began in April 2010. This particular case study was chosen for a variety of reasons, not the least of which is the substantial amount of media coverage of numerous communication events from which to analyze the messages and activities of the various organizational and governmental representatives.

Case studies are valuable tools for the study of risk and crisis communications as they allow organizations not impacted by a particular event to clearly view the tremendous problems associated with delivering messages in the current media culture that provides constant access to a variety of images and reports. Crisis management in the current environment places many organizations in a seemingly impossible position as it attempts to both accept responsibly and limit liability, as key management listens in one ear to in-house or external media relations specialists and in the other to legal counsel, as members of the organization work to both deal with the immediate needs of the crisis and simultaneously try to find answers to what happened. And all of these events occur under the relentless and hypercritical eye of the current media culture which requires constant access to key organizational spokespersons for extended periods of time and is quick to pounce on even the smallest error by an exhausted spokesperson who may be dealing with the crisis sixteen to eighteen hour days for weeks or months on end.

While it would seem that an organization faces an uphill battle just to stay afloat, the lessons learned by applying basic principles of risk and crisis communications provide much for other organizations to use in the future if they end up in the unfortunate position recently experienced by BP and several of its prime subcontractors including Halliburton, Transocean and Cameron.

Email Alerts

Suggested reading, affiliations.

• Conferences
• Content Alerts
• SPE Member Pricing
• Terms of Use

Sign In or Register to Continue

Sign In or Register

• school Campus Bookshelves
• menu_book Bookshelves
• perm_media Learning Objects
• login Login
• how_to_reg Request Instructor Account
• hub Instructor Commons
• Download Page (PDF)
• Download Full Book (PDF)
• Periodic Table
• Physics Constants
• Scientific Calculator
• Reference & Cite
• Tools expand_more
• Readability

selected template will load here

This action is not available.

10.7: Case Study- Energy and the BP Oil Disaster

• Last updated
• Save as PDF
• Page ID 12077

On the night of April 20, 2010, the Deepwater Horizon oil rig, one of hundreds operating in the Gulf of Mexico, exploded, killing eleven men, and placing one of the most rich and diverse coastal regions on earth in imminent danger of petroleum poisoning. BP had been drilling in waters a mile deep, and in the next two days, as the rig slowly sank, it tore a gash in the pipe leading to the oil well on the ocean floor. Over the next three months, two hundred million gallons of crude oil poured into the Gulf, before the technological means could be found to seal the undersea well. It was the worst environmental disaster in American history, and the largest peacetime oil spill ever.

The BP oil disaster caused untold short- and long-term damage to the region. The initial impact on the Gulf—the oil washing up on beaches from Texas to Florida, and economic hardship caused by the closing down of Gulf fishing—was covered closely by the news media. The longer term impacts of the oil spill on wetlands erosion, and fish and wildlife populations, however, will not likely receive as much attention.

Much public debate over the spill has focused on the specific causes of the spill itself, and in apportioning responsibility. As with the example of bee colony collapse, however, the search for simple, definitive causes can be frustrating, because the breakdown is essentially systemic. Advanced industries such as crop pollination and oil extraction involve highly complex interactions among technological, governmental, economic, and natural resource systems. With that complexity comes vulnerability. The more complex a system, the more points at which its resiliency may be suddenly exposed. In the case of the Deepwater Horizon rig, multiple technological “safeguards” simply did not work, while poor and sometimes corrupt government oversight of the rig’s operation also amplified the vulnerability of the overall system—a case of governmental system failure making technological failure in industry more likely, with an environmental disaster as the result.

In hindsight, looking at all the weaknesses in the Gulf oil drilling system, the BP spill appears inevitable. But predicting the specific vulnerabilities within large, complex systems ahead of time can be next to impossible because of the quantity of variables at work. Oil extraction takes place within a culture of profit maximization and the normalization of risk, but in the end, the lesson of BP oil disaster is more than a cautionary tale of corporate recklessness and lax government oversight. The very fact that BP was drilling under such risky conditions—a mile underwater, in quest of oil another three miles under the ocean floor—is an expression of the global demand for oil, the world’s most valuable energy resource. To understand that demand, and the lengths to which the global energy industry will go to meet it, regardless of environmental risk, requires the longer view of our modern history as a fossil-fueled species.

Review Questions

• In what ways is the BP Oil Disaster of 2010 an example of complex human systems failure, and what are its longer chains of causation in the history of human industrialization?

• Skip to right header navigation
• Skip to main content
• Skip to secondary navigation
• Skip to footer

Business Continuity and Crisis Management Consultants

Crisis Management Case Study: Deepwater Horizon

April 5, 2022 By //  by  Bryan Strawser

The Deepwater Horizon oil spill was truly a crisis. Unfortunately, it was also handled in one of the worse ways possible. When a crisis occurs, management and communication become some of the largest and most significant issues. In this particular case, BP failed in both of those areas. It’s important to look at how this occurred and why in order to have a better understanding of the event and its aftermath. Additionally, determining ways to avoid the issue in the future and better manage the next crisis is a valuable part of learning lessons from the Deepwater Horizon spill, so the risk of another spill and its resulting damage can be reduced. Here is everything you need to know about this event and the lack of proper crisis management from BP at the time it occurred.

A Summary of the Situation

On April 20, 2010, the Deepwater Horizon oil platform exploded in the Gulf of Mexico. The resulting spill was deemed to be among history’s worst environmental disasters. In addition to the damage inflicted on the planet, eleven workers died in the explosion. Nearly five million barrels of crude oil entered the Gulf before the leak created by the explosion was stopped, and there have been suggestions that the local environment was irreparably harmed by the oil. While some of the oil was cleaned up or contained, much of it made its way into areas where cleaning wasn’t easy or where containment was not really an option. Due to the way oil spreads and the amount of it being released in the spill, collecting all of it and restoring the environment was not really possible.

Additionally, the oil-coated fish, birds, and other animals, and made it more difficult for businesses in communities along the Gulf Coast to survive due to the dip in tourism the spill created. But the problem wasn’t just in what actually happened. It was also in how BP handled the explosion, the leak in the Gulf that went on for far too long, and what the public was being told about the event and the efforts to clean it up. Through a series of missteps and poor choices, BP not only made the situation more complicated but also added to the damage that was being done. Before it was over, BP would be chastised by environmental groups and many others for the decisions made immediately after the explosion took place and in the days and weeks following it, while the leak continued.

BP Failed at Crisis Management

While the explosion, loss of life, and immediate impact of the spill were all devastating, it was what BP did after that which became the subject of discussion and frustration for a lot of people. There was a distinct lack of leadership right from the beginning, and gas stations around the country that carried the BP branding changed their names. They did not want the association with the company and were seeing their sales drop based on the way people felt about BP and the choices the company had made. The lacking leadership was not the only problem the company had, though. It also showed a strong lack of compassion during a time when compassion could have been its greatest asset. The company missed an amazing opportunity to make things right.

Instead of making it right, BP allowed oil to pour into the Gulf of Mexico without really doing anything about it for weeks. There were some failed “attempts” to cap the spill, but it seemed that these were half-hearted, at best. They really failed to get to the heart of what would have helped improve the situation, and what would have addressed the concerns of the public, as well. Among the most obvious gaffes was the realization that BP had not planned for crisis management in any way. It was as though the company assumed a serious problem like the Deepwater Horizon explosion and resulting oil spill could not, or would not, happen to them, so there was no point in “wasting” any time or money being ready for it. When it happened, they clearly were not ready.

There were two facets to BP’s lack of readiness. The first had to do with the health and safety of their workers and the environment, while the second was related to their public image. The company had slashed PR budgets and also cut costs where government relations were concerned, in order to reduce overhead. But that only worked as long as nothing went wrong. When a catastrophe like Deepwater Horizon occurred, there was no plan in place to save the company’s reputation. At the same time, the company had not put any money into crisis management, either, so the ways to handle environmental and worker impacts were not funded or even considered. Both areas were in serious need of correction, which would have been far easier before the oil spill occurred.

It is generally not good practice for a company to have a major disaster and then choose to hire a crisis management firm to address the fallout. Most large companies have these firms already available to them and plans in place for potential problems. Since BP did not have any of that at the time, they had to start from scratch on what they were going to do and say. That delay cost the company significantly, because of the heavy environmental damage and perceived lack of compassion the company displayed in the days and weeks after the Deepwater Horizon explosion. As millions of gallons of oil poured into the Gulf of Mexico, the company seemed to take its time doing anything at all about the issue. That did not sit well with the majority of people in the country.

Want to learn more about Crisis Management?

Our Ultimate Guide to Crisis Management contains everything you need to know about crisis management.

You’ll learn what it is, why it’s important for your organization, how to prepare for a crisis, how to respond when a crisis happens, and how to recover and learn from a crisis after it is over. We’ll also provide some perspective on where to learn more about crisis management.

Ultimate Guide to Crisis Management

Communications — Where BP Really Went Wrong

It was not just in the way the company handled the Deepwater Horizon event that was a real problem, though. It was also in the way the company talked about the event. The CEO of BP, Tony Hayward, was quoted as saying, “There’s no one who wants this thing over more than I do. You know, I’d like my life back.” His insensitivity to the people who had lost their lives and the others who had their lives damaged or disrupted due to the oil spill was talked about for some time. Even if the CEO felt that way, which would be understandable due to the stress of everything taking place, he should have focused his public statements on the tragedy of the people who died, and all the serious environmental impacts of the Deepwater Horizon incident caused, instead of himself.

Hayward received significant backlash for his comments and the ways he seemed to ignore or misunderstand the gravity of the issue around him. He was also quoted as saying there would be minimal impact on the Gulf, and talked about his sympathy for the “small people” who lived along the coast. Naturally, people who lived and worked in the area did not take kindly to Hayward, who appeared to think of himself as being far above most “normal” people. The lack of planning for crisis communications really affected BP the longer the situation went on without public information being provided to those who were worried about their health, their jobs, and their local environment. Even when crisis planning help was offered, BP was slow to take the offerers up on that option.

While BP did eventually launch an ad campaign in an effort to communicate with the public about how they would clean up the spill and restore the environment, that was met with a lot of skepticism given the company’s tone-deaf response to concerns up to that point. Additionally, the ad campaign cost the company $50 million, which could have been used for clean-up efforts. A far less expensive campaign would have been enough, and the biggest focus should have been on getting the work done, instead of telling people that the work would get done. It was six weeks after the Deepwater Horizon exploded before these ads even began to air, showing that BP did not seem to see that time was of the essence, or take the future of the Gulf Coast seriously.

US Government Actions Led to Big Company Changes

The fines BP received for their damage to the environment and careless response to it were unprecedented. There was a fine of $5.5 billion for violations of the Clean Water Act and another $8.8 billion penalty for the damages to natural resources. Those were only the fines and penalties levied by the EPA and did not take into account all the other lawsuits that came about from environmental damage, business harm, and loss of life. Between 2012 and 2015, there were a lot of different settlements between the US government and BP or BP’s partners, based on lawsuits and assessed penalties. Most of those settlements were in the millions of dollars. But the biggest impact was not to BP’s bottom line. Instead, it was really to their reputation and branding.

In 2018, BP re-emerged from all the trauma it had been dealing with as a stronger and leaner company. Robert Dudley had taken over from Hayward and was committed to re-inventing the company so it could remain viable. Now, BP is not the big-name it once was. But it is a strong company that is smaller and more compact than before. It was forced to sell off millions in assets to pay the fines and lawsuits resulting from the explosion of the Deepwater Horizon and the resulting 87 days that un-capped well pumped oil into the Gulf of Mexico. There were times when it was questionable as to whether the company would survive at all. But it did, and it seems as though lessons have been learned from the way it failed to handle one of the biggest environmental disasters of all time.

Lessons Learned From the Oil Spill

There are several takeaways to be considered from the Deepwater Horizon incident. While these are likely lessons that BP has learned the hard way, they are also lessons that any company can use to have a better understanding of crisis management and how it should be handled. The most important thing to remember about crisis management is that it needs to be fully and completely in place before a crisis occurs. Waiting until it happens and then hoping to get quick, quality help with it is just not realistic for the majority of companies. Instead, every company should have a fully planned and functional crisis management plan in place that is periodically reviewed and updated. That plan should include PR, which is one of the areas where BP had the most trouble.

About Bryan Strawser

Bryan Strawser is Founder, Principal, and Chief Executive at Bryghtpath LLC, a strategic advisory firm he founded in 2014. He has more than twenty-five years of experience in the areas of, business continuity, disaster recovery, crisis management, enterprise risk, intelligence, and crisis communications.

At Bryghtpath, Bryan leads a team of experts that offer strategic counsel and support to the world’s leading brands, public sector agencies, and nonprofit organizations to strategically navigate uncertainty and disruption.

Learn more about Bryan at this link .

PO Box 131416 Saint Paul, MN 55113 USA

[email protected]

Our Capabilities

• Active Shooter Programs
• Business Continuity as a Service (BCaaS)
• IT Disaster Recovery Consulting
• Resiliency Diagnosis®️
• Crisis Communications
• Global Security Operations Center (GSOC)
• Emergency Planning & Exercises
• Intelligence & Global Security Consulting
• Workplace Violence & Threat Management

Our Free Courses

Active Shooter 101

Business Continuity 101

Crisis Communications 101

Crisis Management 101

Workplace Violence 101

Our Premium Courses

5-Day Business Continuity Accelerator

Communicating in the Critical Moment

Crisis Management Academy®️

Managing Threats Workshop

Preparing for Careers in Resilience

Our Products

After-Action Templates

Business Continuity Plan Templates

Communications & Awareness Collateral Packages

Crisis Plan Templates

Crisis Playbook®

Disaster Recovery Templates

Exercise in a Box®

Exercise in a Day®

Maturity Models

Ready-Made Crisis Plans

Resilience Job Descriptions

Pre-made Processes & Templates

• Case studies
• Premium content
• Call for contributions

A deep dive into BP’s Deepwater Horizon Spill: a case study

Under pressure – the disaster

Considered as the biggest marine disaster in history, on April 20 th , 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, killing 11 crew members working onsite. The rig eventually sank and damaged the pipe underneath and started to spew millions of barrels of crude oil into the gulf over the next four months. It contaminated about 400 square miles of the sea floor and 1,300 miles of shoreline of the Gulf of Mexico (DOI: 10.1002/jcaf.22306).

Search-and-rescue operations were executed on April 22 nd and within the same day, BP’s CEO Tony Hayward released a statement that they were determined to do everything to contain the oil spill and resolve the situation . When the rig capsized, BP’s initial response comprised of: 1) releasing of a small fleet of response vessels, 2) relief well planning, 3) skimming of oily surface water, 4) implementing protective boom to prevent oil from reaching the shoreline, and 5) placing chemical dispersants in the spill site to break up the oil and keep them from damaging marshes, mangroves, and beaches .

Efforts were made to seal the leaking well but were initially unsuccessful, and as a back-up, they have started drilling relief well in May. To reduce the leak, a tube tool was inserted into the ruptured riser pipe and containment cap was used to collect the oil and pump it to the gulf surface. On July 15 th , BP was able to stop the flow of oil for the first time in 87 days but was still under monitoring to ensure that the cap would stay in place. More than 2 weeks later, the US government announced that almost three-quarters of the spilled oil had been cleaned up, and on September 19 th , BP reported that the leak had been successfully and permanently plugged .

Several service providers (DOI: 10.1002/jcaf.22306) were involved in the offshore drilling operations of the Macondo well, the area of exploration where BP is operating. BP leased the rig from TransOcean, while the processes such as cementing the well and other critical functions were done by Sperry-Sun, Halliburton’s subsidiary. Other companies involved were Dril-Wuip, Oceaneering, M-I-SWACO, Cameron, and Weatherford.

Numerous investigations were held to find the root cause of the disaster, as well as the parties responsible for the damages. The BP report 2010, the Commission Report 2011 and the Joint Report 2011 concluded that the tragedy occurred due to a series of failures from the multiple parties involved in the operation. BP had been identified as the primary responsible for ensuring the safety and protection of personnel, equipment, natural resources, and the environment under the Oil Pollution Act (OPA). The other companies also shared the same accountability for violating several offshore safety regulations based on the Joint Report 2011.

It was revealed that the crisis has cost BP more than US$65 billion covering the total charges, net of reimbursements and recoveries, as well as insurance claims. However, a study (DOI: 10.1002/jcaf.22306) showed that the ultimate cost of the oil spill was twice what was reported in BP’s income statement, amounting to US$144.89 billion. The detailed computation included not just those mentioned above but also the hidden costs such as the revenue lost, unearned profit, and reputational damage. Needless to say, the spill also damaged fisheries, beaches, and coastal wetlands, including several species of birds, sea turtles, marine mammals, fishes, oysters, and other sea animals. A recent study showed that Gulf inhabitants such as brown pelican and menhaden fish have showed robust recovery while many species such as deep-sea coral, common loons, and spotted sea trout are still struggling to multiply.

The Deepwater Horizon spill also brought significant impacts to the economic activity in the surrounding communities. A research (DOI: 10.1007/978-3-030-11605-7_33) revealed that the total economic costs during the period of 2010-2020 of the foregone commercial fishing revenues and recreational fishing expenditures are loss of 25,000 jobs, US$2.3 billion worth of industry output, US$1.2 billion gross regional product, US$700 million labor income, US$160 million state and local tax revenues, and US$160 million federal tax revenues.

A deep well of learnings

Oil spills are not uncommon in the Gulf of Mexico but the magnitude of impact of BP’s Deepwater Horizon had been massive that it attracted so much attention from various stakeholders, not to mention the several missteps BP took as they navigated through the whole crisis. Here is the list of some lessons learned from the accident that, in some way or another, brought lasting impact on the safety of succeeding oil operations in the industry.

• Never learning enough from previous mistakes. In a high-risk business like oil-drilling, it is expected that large companies such as BP would have anticipated negative events in many of its operations. Even more so when there had been several accidents that happened prior the major oil spill. In 2005, BP’s refinery in Texas City exploded and their Thunder Horse rig in the same gulf got into an accident. In the following year, BP’s pipeline leaked in Prudhoe Bay. It was reported that BP was still paying for the violations in these previous disasters when the Deepwater Horizon spill happened .
• Culture of safety must be embraced by the whole industry. The disaster showed how neither the industry, nor the governments were prepared for risks involved in oil exploration. The investigations revealed how failures in following procedures to mitigate risks, and loose coordination among operators and regulatory bodies led to this disaster. It is important for organizations to understand that regulations are for their benefit, and it can provide level playing field for all stakeholders, especially during a crisis. In addition, regulations must be well-enforced, and penalties must be tantamount to the damages incurred in a disaster. Lax safety enforcement for the part of Minerals Management Service (MMS), the regulating body for offshore oil drilling, was found in the investigations. In fact, in the report released by the General Accountability Office (GAO), MMS showed a series of inconsistencies and omissions in their National Environmental Policy Act analyses and was described to lack organization, guidance, technical expertise, and qualified personnel .
• Plans must be prepared and reviewed to the highest standard possible. BP had MMS-approved Gulf Oil Spill Response Plan that detailed cleanup equipment and techniques, surface containment methods, and the use of chemical dispersants while missing out the more important parts of preventing or stopping a blowout. It was later found that BP’s response plan was written by the same contractor that prepared the plans for other oil companies such as ExxonMobil, Chevron, ConocoPhillips, and Shell Oil. Congressional inquiry described the plans as “cookie-cutter” that similar errors were found in some of the companies’ response plan . Furthermore, BP received a categorical exclusion for exploration plan for Macondo Prospect, allowing them to drill without preparing detailed site-specific environmental assessment based on the outdated assumption that “the impacts from the common operations are expected to be negligible to non-existent…”.
• Ensure that Business Continuity Plan includes third-party agreement. Several subcontractors involved in the Deepwater Horizon operations had made the already complex nature of the business even more complicated. Complex risks may arise from third party contractors and their capability to continue their operations. This is why it is important that critical suppliers must have Business Continuity Management arrangement in place. Furthermore, a robust action plans as part of collective response among suppliers in case of a disruption must be included in their contractual obligations. Had the employees well-informed of their responsibilities and safety actions, the death of 11 crew members would have been prevented. Had BP and its contractors have pre-arrangement contracts that included BCM, they would have not blamed each other and engaged in multi-billion dollar litigation after the accident.
• Communication is an integral aspect of crisis management. BP has become a textbook example of how not to handle public relations. Several studies evaluating BP’s actions in terms of crisis communication have been published following the major incident. Below is a quick rundown of both weaknesses and strengths of BP’s campaign (DOI: 10.1080/13527266.2018.1559218).

Digging deeper

Initially, BP’s several mishaps in managing the disaster making it easy for environmentalists, politicians, media, and other concerned individuals to paint the company as uncaring and greedy organization that cares for profits more than anything else . When the rig exploded and oil spill happened, BP was quick to shift the blame to TransOcean through their official statements, and the former CEO Hayward’s media interview. He said: “ This wasn’t our accident. This was a drilling rig operated by another company. It was their people, their systems, their processes. We are responsible not for the accident, but we are responsible for the oil and for dealing with it and cleaning the situation up.”

Lack of concern for the victims was also seen by many when there were reports that BP asked the cleanup workers and those who were affected by the spill to sign a waiver that would limit BP’s liability. This was during the ironic time that BP reported their 135% first quarter profit of $5.6 billion. The company also failed to be transparent, hindering people to build confidence and trust that they were on top of the situation early on. For example, the initial estimate of the leak was only 1,000 barrels per day, increased it to 5,000 barrel per day after more than a week, then later submitted a figure of 100,000 barrels per day to the Congress for investigation.

Lastly, former CEO Tony Hayward’s statements and actions attracted a lot of negative attention. In an interview with The Times of London, he mentioned that some victims would try to scam them for profit (Ibid) “I could give you lots of examples. This is America – come on. We’re going to have lots of illegitimate claims. We all know that.” Furthermore, he tried to downplay the damage caused by the accident by saying “ the Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.” He was also recorded saying in front of many reporters, “The first thing to say is I’m sorry. We’re sorry for the massive disruption it’s caused their lives. There’s no one who wants this over more than I do. I would like my life back.” He was later seen on a yacht off the Isle of Wight, 2 days after testifying before Congress.

The reputation repair

As BP struggled to find solution to stop the oil spill and its dwindling reputation, its share price and credit rating also grappled. The shareholder value of BP plummeted by 55% after the incident, from US$59.48 per share on April 19 th , 2010 to US$27 per share on June 25 th , 2010 . Furthermore, Fitch cut its credit rating from AA to BBB after US politicians demanded US$20 billion deposits in an escrow account to fund the damage claims for the oil spill as the agency was concerned about the ratio between long-term and near-term cost payments would become skewed towards the near-term cost . However, the meeting of BP’s executives with Obama in June was considered a turning point. BP’s Chairman Carl-Henric Svanberg told Obama: “ Our boat is keeling over right now. We’re not taking on water but we’re not far away. If you and the administration can be supportive going forward, that would help us do the right thing.” Obama responded that it is the country’s interest for the company to remain strong and viable to be able to fulfill its commitments . It was on this meeting that BP agreed to fund the US$20 billion escrow account, which investors received positively .

In the same month, BP hired Purple Strategies, a public affairs firm run by a Democratic and a Republican strategist, for its US campaign, alongside Anne Womack Kolton, a former US Energy Department official, to manage its US media relations. The new strategy team was able to showcase what BP had been doing for those affected by the crisis. Television, radio, and print campaign featured BP workers and Gulf Coast locals, volunteers, and BP officials. They were able to put faces on the real and human stories related to the incident. After the leak was plugged, they expanded the communication strategies to image-building by highlighting how BP was helping the Gulf Coast residents to get back to business as usual. They created two major campaigns – “Voices from the Gulf” and “My Gulf”.

Voices from the Gulf: Mississippi Fishermen

Voices from the Gulf: Louisiana’s Restaurant Owners

Voices from the Gulf: Florida Business Owners

My Gulf: Dawn Moliterno – Walton Tourism Development

My Gulf: New Orleans, Louisiana – Cooking the Perfect Gumbo

My Gulf: Josephine, Alabama: Shrimpin’ with Papa Roy

Another unprecedented albeit necessary decision happened in the following month, Tony Hayward, whose gaffes had enraged a lot of Americans, announced that he was stepping down as CEO and would be replaced in October by Bob Dudley, a Mississippi native who was in charge of BP’s clean-up response .

A year of change – the post crisis phase

Changing leadership amidst the crisis was a pivotal step for BP to redirect its direction through the crisis. Bob Dudley’s first tasks as the CEO were: 1) securing the company’s finances, 2) ensuring the safety of BP’s operations worldwide, and 3) restoring the environment of the Gulf Coast . He needed to sell BP’s oil and gas assets quickly, including their prized assets such as the Texas City refinery, Gulf of Mexico oilfields and Russian joint venture , and also do forward sale oil to safeguard BP’s future while meeting its commitment to the Gulf.

Guided by his principle of “value over volume”, Dudley cut the number of BP-operated upstream installation by 50%, the number of wells by more than 30%, and oil and gas reserves by 10%. In addition, he formed a new global Safety and Operational Risk team to instill the culture of safety in the company . Apart from the operation and culture, he mentioned in an interview that capital allocation and decision-making were also reformed . BP became “ inclusive, and modern place to work where leaders were encouraged to listen to the quietest voices in the room ”.

BP’s support to its business partners and people during the crisis did not wane but even strengthened. Dudley found that while several of BP’s partners such as banks were pulling away, there were some partners that were supportive and willing to help. Moreover, he also felt the need to rebuild the confidence of their employees in their company as he was worried that competitors might try to hire their talent away .

The oil company remained committed to environmental restoration. They provided up to US$1 billion for restoring natural resources that were impacted by the accident. In addition, BP has allocated US$500 million for a decade of support to independent research designed to provide better understanding of the Gulf ecosystem and industry. With the help of experts in high-hazard sectors such as nuclear energy, chemicals and the military, BP strengthened their operational risk function. Furthermore, they were able to design and prepare a capping stack that can be used in case another leak in deep water happens .

BP: A year of change

Rising above pressure

The post-crisis organizational reform was able to regain the investors’ trust as shown by the share price increase from June 29 th , 2010. Although the share has not gone back to its pre-oil spill crisis price at around US$60, it did not go below US$27 until the COVID-19 pandemic hit.

BP strengthened its finances after the crisis by cutting costs to reduce breakeven point while improving oil production . In 2017, Moody’s increased BP’s credit rating for the first time in 19 years citing the company’s resilience to oil price volatility and increased clarity in terms of the remaining cash payments related to the US$20 billion Deepwater Horizon settlement .

BP continued to acquire various projects including those that focus on natural gas such as shale gas production from about 200 wells in Oman , the natural gas production at Atoll gas field in Egypt , and several American oil and shale projects bought from mining firm BHP, its first major US investment since the oil spill ,  among others. Although only a small fraction of their total spending, BP started investing in renewable energy at around US$400 million a year. They invested in startup firms like Freewire, which possesses a technology that allow charging electric vehicles faster. It also acquired Chargemaster, UK’s biggest network of EV charging stations, as well as 43% share of Lightsource, Europe’s largest solar development firm . Like other oil companies, BP received several criticisms for doing inadequate efforts to reduce carbon emissions and increase renewable energy, especially that between 2016 and 2019, BP expanded its oil and gas production by 20% .

In 2020, BP announced that it aims to become a net-zero emissions company by 2050 or sooner. It revealed their commitment to a 10-fold increase in low-carbon investment or an estimate of US$5 billion per year, and a 20-fold increase in renewable generating capacity to 50 gigawatts . Headed by the current CEO Bernard Looney, who succeeded Dudley in February 2020, the oil giant plans US$25 billion in fossil-fuel asset sales by 2025, with US$15 billions of which has already been liquidated by unloading the Oman deal, oil and gas field in Alaska and the North Sea, and BP’s entire petrochemical operation . Although the company does not expect profits from its clean-energy business such as solar, EV-charging, and wind ventures until 2025, Looney continues to spend on renewable energy.

The Final Cap

To keep its commitment to meet its obligations in the Gulf of Mexico in spite of almost losing its whole business to the accident is praiseworthy; to move forward, learn its lessons, and transform into a better organization is even more admirable; but nothing can beat a well-prepared company that can prevent a crisis to happen, or at least mitigate the risks. The BP’s Deepwater Horizon Oil Spill is a great example of how return on investment of robust emergency response and business continuity programs can worth priceless.

In addition, the accident showed us that the most critical aspect of crisis leadership is clear and trustworthy communication. The goal of communicating during a crisis is not to lessen the uncertainty but to acknowledge it and the fear that comes with it. Transparency, honesty, and empathy are always the best policy.

If you liked this case study, you might also want to read this one .

Author: Lucil Aguada

RELATED ARTICLES MORE FROM AUTHOR

What I honestly think about ‘you’

Can we boycott Chiara Ferragni? The commentary on the crisis case

High cost of racism in high fashion: a case study on Dolce and Gabbana’s cultural appropriation

Humor and humility saved the chicken: the KFC logistics blunder

Volkswagen USA – Libertyville Case

Leave a reply cancel reply.

Log in to leave a comment

Domino’s Pizza, the toss and turn

High cost of racism in high fashion: a case study on dolce and gabbana’s..., netflix’s way: innovating resilience, business continuity and sustainability: why top management is key.

When you visit a website, it may store or retrieve information on your browser, mainly in the form of cookies. Check your personal cookie services here.

• wordpress_test_cookie
• wordpress_logged_in_
• wordpress_sec
• wordpress_gdpr_cookies_allowed
• wordpress_gdpr_cookies_declined
• wordpress_gdpr_allowed_services
• __wpdm_client

Welcome to About Resilience.

Click here to sign up for our premium content, which will grant you free access to our exclusive body of knowledge on organizational resilience, including proprietary research and industry resources.

Case Study: BP Oil Spill

This lesson has addressed the key components of ethical principles in crisis communication, including the ethical principles of responsibility, accountability, and humanistic care. The case of BP oil spill in 2010 provides an important example for understanding how these principles are valued by public opinion in a crisis situation, and how the communication actions by a corporation in this type of circumstances might have long-term effect on the brand image of the organization.

On April 20, 2010, a BP’s Deepwater Horizon oil rig exploded, causing what has been called the worst environmental disaster in U.S. history and taking the lives of 11 rig workers. For 87 straight days, oil and methane gas spewed from an uncapped wellhead, 1 mile below the surface of the ocean. The federal government estimated 4.2 million barrels of oil spilled into the Gulf of Mexico.

Mistakes in Initial Response

According to NPR, BP’s action has become a textbook example of how not to do crisis management. BP executives declared it was not their accident, blamed their contractors and made the company look arrogant and callous. CEO Tony Hayward repeated insensitive comments in public, like this one: “There’s no one who wants this thing over more than I do. You know, I'd like my life back.” He also suggested that the environmental impact of the spill would be “very, very modest.” Images of Hayward attending a yacht race just 48 hours after a hostile interrogation by a US congressional committee on the oil spill, provoked sharp criticism on both sides of the Atlantic. Although the company, formerly British Petroleum, officially changed its name to BP in 2001, Americans consider it a foreign company even though it has just as many American shareholders as British ones, and its biggest operations are in the United States.

To sooth angry Americans, BP aired a multimillion-dollar national TV spot in June in which Hayward pledges: "We will make this right." Hayward also promised BP would clean up every drop of oil and “restore the shoreline to its original state.” President Barack Obama said the money spent on the ads should have gone to cleanup and compensating devastated fisherman and small business owners. The ad indicated that the company didn't even follow its own internal guidelines for damage control after a spill. Its own spill plan, filed the year before with the federal government, says of public relations: “No statement shall be made containing any of the following: promises that property, ecology or anything else will be restored to normal.”

BP also bought online ads that pop up when people search for information about the oil spill on Google and Yahoo. The ads, which link to BP's own oil-response sites, typically appear above or to the right of other search results. BP said the idea was to help people on the Gulf find the right forms to fill out quickly and effectively. However, many people suggest it's a move to steer searchers away from bad press for BP.

Crisis management experts stated the only reliable way to repair BP's badly tarnished image should be the obvious one — to plug the hole where oil was still leaking out. It would take nearly 3 months before the leak was stopped, and nearly 5 months before the well was declared effectively dead. Public relations experts pointed out that BP ran its crisis communications in the same “ham-fisted” manner they’ve run the clean-up operation in the Gulf.

"BP's handling of the spill from a crisis management perspective will go down in history as one of the great examples of how to make a situation worse by bad communications," said Michael Gordon, of New York-based crisis PR firm Group Gordon Strategic Communications. “It was a combination of a lack of transparency, a lack of straight talking and a lack of sensitivity to the victims. When you're managing an environmental disaster of this magnitude you not only have to manage the problem but also manage all the stakeholders.”

Consequences

BP attempts to convince people that it appears the Gulf of Mexico is healing itself after a while. In 2015, BP released PR materials that highlight the Gulf’s resilience, as well as a scientific report showing the area is making a rapid recovery. But evidence is mounting that five years after millions of gallons of oil spilled into the Gulf, wildlife there is still struggling to rebound.

In June 2016, BP issued its final estimate of the cost of the spill, the largest in U.S. history. The total amount for the cost of the 2010 oil spill in the Gulf of Mexico was $61.6 billion. Under the settlement with BP, five states in the Gulf area and local governments will receive payments over the next dozen years. The funds will enable them to ramp up vital restoration work along the coast. BP continues to settle claims from business owners and residents who say they were harmed.

Moral of the Story

In conclusion, this is a classic case example of why organizational decision making in crisis situations should be based on ethical principles such as accountability and responsibility. Public criticism and outrage following the incident not only focused on the oil spill, but on the lack of remorse and sincerity from the top management in crisis response, particularly the lack of sympathy to the victims of the disaster. The failure by BP’s leadership to respond to the disaster with sufficient speed and attention demonstrates that crisis preparedness and ethical guidelines should become part of the organization culture.

Works Cited & Resources

Browser Error

Oh snap! This course has many interactive elements that don't work well on Internet Explorer or older versions of Firefox. Please use Google Chrome, Firefox version 61+, or Safari to complete this training. This training is also optimized for mobile devices.

You must log in to view this course.

Crisis communication failures: The BP Case Study

Related documents

Add this document to collection(s)

You can add this document to your study collection(s)

Add this document to saved

You can add this document to your saved list

Suggest us how to improve StudyLib

(For complaints, use another form )

Input it if you want to receive answer

Crisis Management: British Petroleum Company Case Study

Executive summary.

This paper reveals the case study that focuses on the explosion which happened on the Deepwater Horizon seven years ago. It was claimed to be one of the greatest disasters that led to human deaths and oil spills that affected the ecosystem adversely. Professionals argued whether the fact that British Petroleum failed to ensure safety and appropriate crisis management was the main reason for the accident. This view is analyzed in the addressed in the paper. It is also discussed how the company could have responded to the explosion and why.

Problem Statement

One of the most critical oil spill disasters related to the petroleum industry took place in April seven years ago. It occurred on a drilling rig owned by the largest company that operates within oilfield services and deals with offshore drilling, Transocean Ltd. The explosion on the Deepwater Horizon led to eleven deaths and oil leaks, resulting in enormous damages not only to human lives but also to the environment, economy, and tourism. As a consequence, British Petroleum (BP) had to deal with the biggest oil spill and financial losses at the same time. What is more, its reputation was negatively affected. Even though the company couldn’t predict the explosion and prevent it, proper behavior in the framework of crisis management could have had positive influences on the observed outcomes (Ingersoll et al. 2).

BP spends much effort trying to overcome issues related to reputation damage. Still, it is only one of the consequences of the main problem. To improve the situation, the company started up a communication machine, but experts questioned its effectiveness. Thus, professionals wondered whether BP maintained crisis management properly or failed to do it. In this way, the problem was what BP should have done to enhance its crisis management and communication. Even though the company had other issues as well, this one turned out to be the most critical because it affected almost all the company’s operations directly or indirectly. It influences the company’s income, the source of competitive advantage, customer satisfaction and loyalty, the morale of employees, and strategic directions. In addition to that, it is connected with the way BP could have improved its performance and repair reputation to overcome financial losses and become competitive again.

Data Analysis

BP had experienced crises before the explosion that happened in 2010. For example, Wolf and Mejri emphasize the fact that it neglected safety several times (51). For example, in the middle of the 20th century, one of the oil rigs that belonged to BP collapsed, and more than ten people died. In 2005, a similar situation repeated and fifteen employees died in the fire while more than 150 of them were injured. Back then, the organization was charged, but recent events showed that it did not start paying expected attention to safety.

The oil spill was caused by the gas explosion. The very disaster started can be traced back to April 19 when the well reached more than 12,000 ft below the seafloor. The company used 51 barrels of cement, but this number was not enough to ensure a required seal. During drilling, mud was lost to the reservoir as expected but then it was pumped into tanks. However, seawater was lighter than mud and that there was not enough cement to balance the flow of gas, so it went in the drilling fluid. There are almost no doubts that the supervisors were aware of this situation, as the photo reveals that a diverter line was affected (see Exh. 1). The volume of mud continued to increase, and the recorder failed to reveal the data appropriately. However, professionals did not stop pumping at that time. When they did, the pit volume decreased at first, but it remained the same the next time and even continued to increase. The extreme pressure led to the blowout, the gas shot the water out and exploded.

This situation reveals that BP did not make the required emphasis on the value of safety when training its personnel. It was more critical for the supervisors to fulfill the task they had instead of implementing measures needed to avoid possible danger. BP’s response to the crisis is not efficient.

In this way, it is also possible to claim that the population that was greatly affected by this accident included those workers who performed their duties on the Deepwater Horizon. In addition to that, the management team was affected because it had to deal with the consequences of the explosion. It was critical to resolving problems connected with organizational performance. The families of those who died that day were also influenced by the disaster because they lost a person who supported them. The company’s partners could have become less willing to cooperate with it because of the possibility to be negatively affected by BP’s reputation. Even the representatives of the general public had to reconsider their attitudes and loyalty.

To improve the situation, BP followed the decision of the federal government. It got engaged in the clean-up and paid attention to those people who were affected by the disaster itself or its indirect influences. The organization focused on health, safety, and welfare. It was involved in the economic recovery of those industries that were affected by the oil spill, including tourism and seafood (Ernst and Young).

In the framework of crisis management and communication, the organization faced a range of difficulties because its personnel did not know how to cope with issues that occur while operating. The company and its management team did not provide any guidance that can be used when facing an ethical issue and trying to decide whether to continue performing to fulfill the most critical goals or to focus on how potential disaster can be avoided. What is more, BP had an opportunity to resort to its previous experiences and to develop a plan that can be used to prevent the next possible crisis. In this way, BP also had a chance to avoid additional expenses. However, being responsible for numerous issues, the company had to pay more than $5 billion in 2010 and provide more than $50 million to health organizations (Wolf and Mejri 80).

There were different ways in which the problem could have been addressed. The company could have reacted to the disaster, and its consequences ignored it, or claim it to be not a BP’s mistake. Still, it would have been advantageous if the organization developed a crisis management plan for its employees to follow in any situation that might affect safety anyway.

Key Decision Criteria

Trying to identify which alternative to following, BP should have thought of the way each of them dealt with the issues observed by the organization. Thus, attention should have been paid to the possibility to restore the reputation and enhance financial performance. All in all, it can be presupposed that it would have been better for the company to respond to the disaster immediately because in this way it could have improved the situation better than other options.

Alternatives Analysis

BP could have reacted to the oil blowout, claiming that it was an accident. The organization could have tried to make its stakeholders believe that there had been no sights of an issue that might have led to the explosion. In this way, BP could have made others believe in its innocence and ensured that it had done its best while operating. As a result, the company would have lost a relatively small part of its clients. However, some partners and customers might start thinking that BP is not experienced enough and that its performance is poor so that it is better not to cooperate with it. Still, proving gross negligence, the organization had an opportunity to avoid expenditures connected with the necessity to support the ecosystem.

BP might have tried to claim that the disaster happened because of other parties. If it had conducted some research to collect information that can prove at least some errors made by other organizations, BP would have been able to make them compensate the affected people. In this way, the company would not only save its money but also improve its reputation, attracting clients back. Still, this option would have entailed a range of ethical issues.

Finally, BP could have resorted to the third alternative. It could have reacted to the explosion immediately, accepting its fault for the inability to ensure safety. The company should have interacted with other professionals to develop a range of initiatives that were likely to reduce negative influences provided on the ecosystem. They should have maintained research and developed a long-term plan to enhance the environment and provide full payment for those people who were affected. In addition to that, BP should have focused on the possibility to advertise seafood and tourism industries that were negatively affected by the explosion. All in all, this initiative could have been the most appropriate one because it addressed all critical issues and avoided ethical dilemmas.

Recommendations

To respond to disasters appropriately, BP needs to develop a working crisis management plan that can be resorted to by the staff members who face critical situations. Considering the discussed case, the organization should create an infrastructure that can be utilized to deal with possible leaks. It should be based on deep-sea oil wells that are used by BP. With the help of the absorbent wall, the company is likely to prevent further issues of this kind.

It will be a great advantage for BP to gather an emergency response team. This group of professionals should patrol that wall and ensure its efficiency. Needless to say, that such a team is to contain well-experienced professionals who have all required theoretical knowledge and skills that can be used in practice.

In the framework of crisis communication, the company should pay much attention to its stakeholders. Transparency should be discussed as a tool to attract clients and restore their loyalty. BP should take responsibility for all those issues that occurred due to the mistakes it made and the inability to ensure safety. Even sincere apologies may be enough to improve the situation greatly. In this way, the company should hire a spokesperson who can easily get in touch with numerous clients.

The company should also reconsider the use of social media because it has already proved to be a great type of communication that can be approached without any significant issues. Unlike a personal website, social media allows the company to avoid constant reconsideration of the discussed disaster, and negative feedback regarding it is also likely to be reduced in this way.

Finally, the organization may consider the possibility to develop some kind of disaster website so that if some crisis occurs, professionals have an opportunity to reach it and inform the population regarding the possibility of crises (McMasters).

Action and Implementation Plan

• To implement changes, following the results of data analysis, it can be claimed that BP should have done the following:
• Collect the oil that was spilled during the disaster;
• Address experts in the sphere to develop the most advantageous solution initiatives;
• Point out the way BP would respond to the consequences;
• Establish trust-based relations with stakeholders, sharing information about the accident;
• Cooperate with the government to minimalize negative influences on other industries;
• Provide compensations to families of those employees who died;
• Gather a group of professionals to focus on such issues;
• Improve safety standards;
• Provide training;
• Enhance security system;
• Promote tourism;
• Develop initiatives to improve the ecosystem.

Exh. 1: A Gas Flare Coming from a Diverter Line (Aeberman)

Works Cited

Aeberman. “What Caused the Deepwater Horizon Disaster?” The Oil Drum , 2010, Web.

Ernst and Young. “Deepwater Horizon Accident and Response.” BP , 2014, Web.

Ingersoll, Christina, et al. BP and the Deepwater Horizon Disaster of 2010 , 2012, Web.

McMasters, Michael. “Analysis of Situation/Background.” LinkedIn , 2015, Web.

Mejri, Mohamed, and Mohamed Mejri. “Crisis Management: Lessons Learnt from the BP Deepwater Horizon Spill Oil.” Business Management and Strategy , vol. 4, no. 2, pp. 67-90.

Wolf, Daniel, and Mohamed Mejri. “Crisis Communication Failures: The BP Case Study.” Management Journal , vol. 2, no. 2, pp. 48-56.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2022, December 2). Crisis Management: British Petroleum Company. https://ivypanda.com/essays/british-petroleum-companys-crisis-management-case/

"Crisis Management: British Petroleum Company." IvyPanda , 2 Dec. 2022, ivypanda.com/essays/british-petroleum-companys-crisis-management-case/.

IvyPanda . (2022) 'Crisis Management: British Petroleum Company'. 2 December.

IvyPanda . 2022. "Crisis Management: British Petroleum Company." December 2, 2022. https://ivypanda.com/essays/british-petroleum-companys-crisis-management-case/.

1. IvyPanda . "Crisis Management: British Petroleum Company." December 2, 2022. https://ivypanda.com/essays/british-petroleum-companys-crisis-management-case/.

Bibliography

IvyPanda . "Crisis Management: British Petroleum Company." December 2, 2022. https://ivypanda.com/essays/british-petroleum-companys-crisis-management-case/.

• British Petroleum Company Case: Deepwater Horizon Oil Spill
• Effects of BP Oil Spill
• BP’s Macondo Oil Explosion Effects on the American Society
• BP’s Reaction to the Gulf of Mexico Crisis
• British Petroleum Company: Deepwater Horizon Oil Spill
• British Petroleum 2010 Crisis Analysis
• BP Company’s Deepwater Horizon Oil Spill
• BP Company's Resolusion of Gulf Coast Oil Spill
• Organisational Change in BP After the Oil Spill in Gulf of Mexico
• BP Deepwater Horizon Oil Spill
• Hong Kong and Shanghai Banking Corporation's Entry Into Japan
• Religious and Spiritual Expressions in the Workplace
• Executives’ Pay and Rewards in the US Auto Industry
• IKEA Globalization Strategy Benefits and Limits Case Study
• The 1994 Major League Baseball Strike and Conflict

• International edition
• Australia edition
• Europe edition

Scientists divided over whether record heat is acceleration of climate crisis

Some believe global anomalies are in line with predictions but others are more concerned by speed of change

Record temperatures in 2024 on land and at sea have prompted scientists to question whether these anomalies are in line with predicted global heating patterns or if they represent a concerning acceleration of climate breakdown.

Heat above the oceans remains persistently, freakishly high, despite a weakening of El Niño , which has been one of the major drivers of record global temperatures over the past year.

Scientists are divided about the extraordinary temperatures of marine air. Some stress that current trends are within climate model projections of how the world will warm as a result of human burning of fossil fuels and forests. Others are perplexed and worried by the speed of change because the seas are the Earth’s great heat moderator and absorb more than 90% of anthropogenic warming.

Earlier this month, the World Meteorological Organization announced that El Niño, a naturally occurring climate pattern associated with the warming of the Pacific Ocean, had peaked and there was an 80% chance of it fading completely between April and June, although its knock-on effects would continue.

The WMO secretary general, Celeste Saulo, said El Niño contributed to making 2023 easily the warmest year on record, although the main culprit was emissions from fossil fuels.

When it came to oceans, she said, the picture was murkier and more disturbing: “The January 2024 sea surface temperature was by far the highest on record for January. This is worrying and can not be explained by El Niño alone.”

Sea surface temperatures in February were also hotter than any month in history, breaking the record set last August, according to Europe’s Copernicus satellite monitoring programme.

Worldwide, the heat above the land and sea was remarkable . Between 8 and 11 February, global temperatures were more than 2C above the 1850-1900 average. Over the month as a whole, Europe experienced heat that was 3.3C above that benchmark.

Carlo Buontempo, the director of the Copernicus Climate Change Service, said it was a taste of what was to come because of the increase of greenhouse gases in the atmosphere: “Unless we manage to stabilise those, we will inevitably face new global temperature records and their consequences.”

Heat records are becoming the norm, but the extent of the anomaly above the seas has prompted concern .

Carlos Nobre, one of Brazil’s most influential climatologists, said no climate model accurately predicted how high sea surface temperatures would reach during the past 12 months. Given the continued heat over the sea, he said 2024 was likely to be another unusually hot year for the world as a whole.

The anomaly is strongest in the North Atlantic, where Brian McNoldy, a climatologist at the University of Miami, calculated the deviation from statistical averages as a one-in-284,000-year event. “It has been record-breaking warm for an entire year, often by seemingly impossible margins,” he tweeted . He has described the trends as “deeply troubling”.

Zeke Hausfather , a scientist at Berkeley Earth in the US, said global sea and surface temperatures were “quite high” but he said they were still well within the projections of climate models: “We don’t have any strong evidence yet from observations that suggests the world is warming faster than anticipated given human emissions.”

The impacts on corals and other forms of marine life are incalculable. Australia’s Great Barrier Reef is suffering its fifth mass bleaching event in eight years . Meteorologists warn that high surface temperatures may also presage a longer and more active hurricane season.

Raúl Cordero, a climate professor at the University of Groningen and the University of Santiago, said the growing possibility of a cooling La Niña between June and August could bring respite from the global heat, but this would only be temporary: “All recent temperature records will likely be broken sooner rather than later. The situation will continue to deteriorate until we halt the burning of fossil fuels.”

• Climate science
• Climate crisis
• El Niño southern oscillation
• Extreme weather

More on this story

February was warmest on record globally, say scientists

Satellite to ‘name and shame’ worst oil and gas methane polluters

John Kerry: US committed to tackling climate crisis despite fossil fuel growth

El Niño forecast to drive record heat from the Amazon to Alaska in 2024

‘Energy turmoil’ looms unless demand is checked, says Cop28 president

February on course to break unprecedented number of heat records

Hurricanes becoming so strong that new category needed, study says

How do you stop a glacier from melting? Simple – put up an underwater curtain

BP’s green agenda all at sea as sinking profits forecast renews fossil fuel call

Most viewed.