Bp’s record shows trail of bold risks and blunders
Hurricane Dennis had already come and gone on July 11, 2005, when a passing ship spotted a shocking sight in the Gulf of Mexico: Thunder Horse, BP’s hulking $1 billion oil platform, was listing precariously to one side, looking for all the world as if it were about to sink.
Towering 15 stories above the water’s surface, Thunder Horse was meant to be the company’s crowning glory, the embodiment of its bold gamble to outpace its competitors in finding and exploiting the vast reserves of oil beneath the waters of the Gulf.
Instead, the rig, which was supposed to produce about 20 percent of the Gulf’s oil output, became a symbol of BP’s hubris. A valve installed backward had caused the vessel to flood during the
Continued from A hurricane, jeopardizing the project before any oil had even been pumped. Other problems, discovered later, included a welding job so shoddy that it left underwater pipelines brittle and full of cracks.
The problems at Thunder Horse were not an anomaly but a warning that BP was taking too many risks and cutting corners in pursuit of growth and profits, according to analysts, competitors and former employees. Despite a catalog of crises and near misses in recent years, BP has been chronically unable or unwilling to learn from its mistakes, an examination of its record shows.
“They were very arrogant and proud and in denial,” said Steve Arendt, a safety specialist who assisted the panel that BP appointed to investigate the company’s refineries after a deadly 2005 explosion at its Texas City facility. “It is possible they were fooled by their success.”
Indeed, there was a great deal of success to admire. In little more than a decade, BP grew from a middleweight into the industry’s second-largest company, behind only Exxon Mobil, with soaring profits, fat dividends and a share price to match.
From its base in London, the company struck bold deals in politically volatile areas such as Angola and Azerbaijan and pushed technology to the limit in the remotest reaches of Alaska and the deepest waters of the Gulf — “the tough stuff that others cannot or choose not to do,” as its chief executive, Tony Hayward, once put it.
The company also led an industry wave of cost-cutting and consolidation. It took over U.S. competitors such as Amoco and Atlantic Richfield and eliminated tens of thousands of jobs in several rounds, streamlining management but forcing the company to rely more heavily on outside contractors.
For a long time, BP’s strategy seemed to pay off. But on April 20, the nightmare situation occurred: The Deepwater Horizon drilling rig exploded, killing 11 workers and sending millions of gallons of oil gushing from BP’s Macondo well.
Although the incident is still under investigation, preliminary findings by congressional investigators indicate that BP made a series of decisions that compounded the chances of disaster.
BP declined to make Hayward or other executives available for this article. But in an interview last month, Robert Dudley, the BP board member now in charge of the Gulf spill response, denied that the incident reflected a corporate disregard for safety.
BP is not the only oil company that has taken on difficult projects with a shaky safety net. But the company’s attitude toward risk stands in contrast to that of its competitors, most notably Exxon Mobil, whose searing experience with the Exxon Valdez spill in 1989 spurred a wholesale change in its approach to safety.
“You can have the best intentions in the world, you can have the best equipment in the world, but it’s a combination of intentions, equipment and judgment that keeps accidents out of the workplace,” said Joseph Bryant, who ran BP’s op- erations in Angola from 2000 to 2004 and who is now chief executive of Cobalt International Energy.
Time and again, BP has insisted that it has learned how to balance risk and safety, efficiency and profit. Yet the evidence suggests that fundamental change has been elusive.
Revisiting Texas City in 2009, inspectors from the Occupational Safety and Health Administration found more than 700 safety violations and proposed a record fine of $87.4 million — topping the earlier record BP set in the 2005 accident. Most of the penalties, the agency said, were because BP had failed to fully live up to the previous settlement.
In March, OSHA found 62 violations at BP’s Ohio refinery and proposed another $3 million in penalties.
“Senior management told us they are very serious about safety, but we observed that they haven’t translated their words into safe working procedures and practices, and they have difficulty applying the lessons learned from refinery to refinery or even from within refineries,” said David Michaels, assistant secretary of labor for OSHA.
BP is contesting OSHA’s allegations, saying it has made substantial improvements at both facilities.
Accidents have also continued to plague BP’s pipelines in Alaska. Most recently, on May 25, a power failure led to a leak that overwhelmed a storage tank and spilled about 200,000 gallons of oil — the third-largest spill on the Trans-Alaska Pipeline System.
Dudley, the BP executive overseeing the Gulf response, said it was unfair to blame cultural failings at BP for the string of incidents.
“I don’t accept, and have not witnessed, this cutting of corners and the sacrifice of safety to drive results,” he said.
Henry Waxman, chairman of the House committee investigating the Deepwater Horizon incident, has a different view during hearings a month ago.
“BP cut corner after corner to save a million dollars here and a few hours there,” he said. “And now the whole Gulf Coast is paying the price.”