A new site gives perspective on the British Petroleum (BP) Oil Spill Disaster 1 in the Gulf of Mexico. This site overlays the BP Oil Spill over your home state. If it were in Utah, the BP Oil Spill would look like this:
I want to be really clear here, I’m not against British Petroleum (BP) or any oil company. I care about our environment, but I’m not a huge environmentalist either. I have nothing against BP – I don’t know enough to make a judgment.
There are good people that work at BP and I feel bad that they have to deal with the mistakes of the company, though they were not involved in the oil spill. All I know is that this is a terrible disaster for America and the World.
And, from the perspective of Lean Thinking, we know that it is usually processes and systems that are broken, not usually people. So, if anything is to be blamed, it is processes and human systems that didn’t prevent this disaster from happening.
The map above with the BP Oil Spill overlaid on my home state gives perspective on how big this is, how much bigger it is going to get, and how much this is harming our environment.
BP Oil Spill
For review, this is what we know of the BP Oil Spill:
On April 20, 2010, a semi-submersible exploratory offshore drilling rig in the Gulf of Mexico exploded after a blowout and sank two days later, killing eleven people and causing a massive oil spill threatening the coast of Louisiana, Mississippi, Alabama, Texas, and Florida. The rig is owned and operated by Transocean Ltd on behalf of BP, which is the majority owner of the oil field. The company originally estimated the size of the leak at about 1,000 barrels a day but later accepted government estimates of a leak of at least 5,000 barrels per day (790 m3/d).
On April 30, BP stated that it would harness all of its resources to battle the oil spill, spending $7 million a day with its partners to try to contain the disaster. BP was running the well without a remote control shut-off switch used in two other major oil-producing nations, Brazil and Norway, as a last resort protection against underwater spills. The use of such devices is not mandated by U.S. regulators. The U.S. Government gave the responsibility of the incident to BP and will hold it accountable for costs incurred in containing the situation.
On May 11, 2010, Congress called the executives of BP, Transocean, and Halliburton to a hearing regarding the oil spill. When probed for answers regarding the events leading up to the explosion, each company blamed the other. BP blamed Transocean who owned the rig, who then blamed the operators of the rig, BP. They also blamed Halliburton, who built the well casing. Scientists have been requesting the right to monitor the amount of oil that is actually being released per day, but “‘The answer is no to that,’ a BP spokesman, Tom Mueller, said on Saturday, May 15. ‘We’re not going to take any extra efforts now to calculate flow there at this point. It’s not relevant to the response effort, and it might even detract from the response effort.’” Steven Wereley, an associate professor of mechanical engineering at Purdue University, analyzed videotape of the leak using particle image velocimetry and estimated oil flow rates at between 56,000 to 84,000 barrels per day (8,900 to 13,400 m3/d), or equivalent to one Exxon Valdez spill every 3.5 to 2.4 days. A second, smaller leak has been estimated to be releasing 25,000 barrels per day (4,000 m3/d) by itself, suggesting that the total size of the leak may well be in excess of 100,000 barrels per day and became the largest oil spill in US history.
This is not the first Oil Spill Incident 2 that BP has been involved in.
This teaches us several obvious lessons 3, from the perspective of Lean Thinking:
- Stop at First Defect – pull the andon when we notice problems.
- Create an open culture – not a culture of fear: when people are safe to express their feelings, then defects and disasters like this might have been avoided.
- While this falls squarely on the shoulders of BP, this becomes all of our problem.
From a historical perspective – say, twenty years from now – I’m hoping it’ll show that America4, the World, and – yes – even BP were contributors to good and, that together, this mess was cleaned up and future disasters like this don’t happen anymore.
- In May 1901, William Knox D’Arcy was granted a concession by the Shah of Iran to search for oil which he discovered in May 1908. This was the first commercially significant find in the Middle East. On 14 April 1909, the Anglo-Persian Oil Company (APOC) was incorporated to exploit this. In 1923, the company secretly gave £5,000 to future Prime Minister Winston Churchill to lobby the British government to allow them to monopolise Persian oil resources. In 1935, it became the Anglo-Iranian Oil Company (AIOC).
After World War II, AIOC and the Iranian government initially resisted nationalist pressure to revise AIOC’s concession terms still further in Iran’s favour. But in March 1951, the pro-western Prime Minister Ali Razmara was assassinated.10 The Majlis of Iran (parliament) elected a nationalist, Mohammed Mossadeq, as prime minister. In April, the Majlis nationalised the oil industry by unanimous vote.11 The National Iranian Oil Company was formed as a result, displacing the AIOC.12 The AIOC withdrew its management from Iran, and organised an effective boycott of Iranian oil. The British government – which owned the AIOC – contested the nationalisation at the International Court of Justice at The Hague, but its complaint was dismissed.13
By spring of 1953, incoming U.S. President Dwight D. Eisenhower authorised the Central Intelligence Agency (CIA) to organise a coup against the Mossadeq government with support from the British government. On 19 August 1953, Mossadeq was forced from office by the CIA conspiracy, involving the Shah and the Iranian military, and known by its codename, Operation Ajax.
Classic shield logo, designed by Raymond Loewy, used from 1979 to 2000 and still in use in a small number of petrol stations.
Mossadeq, prince (Shahzadeh) of Qajar Dynasty, was replaced by pro-Western general Fazlollah Zahedi, and the Shah, who returned to Iran after having left the country briefly to await the outcome of the coup. The Shah abolished the democratic Constitution and assumed autocratic powers.
After the coup, Mossadeq’s National Iranian Oil Company became an international consortium, and AIOC resumed operations in Iran as a member of it.12 The consortium agreed to share profits on a 50–50 basis with Iran, “but not to open its books to Iranian auditors or to allow Iranians onto its board of directors.”16 AIOC, as a part of the Anglo-American coup d’état deal, was not allowed to monopolise Iranian oil as before. It was limited to a 40% share in a new international consortium. For the rest, 40% went to the five major American companies and 20% went to Royal Dutch Shell and Compagnie Française des Pétroles, now Total S.A.
The AIOC became the British Petroleum Company in 1954. In 1959 the company expanded beyond the Middle East to Alaska18 and in 1965 it was the first company to strike oil in the North Sea.19 In 1978 BP acquired a controlling interest in Standard Oil of Ohio or Sohio, a breakoff of the former Standard Oil that had been broken up after anti-trust litigation.
BP continued to operate in Iran until the Islamic Revolution in 1979. After 1979, during the Iran-Iraq war, the oil refineries were destroyed and Iran became a raw supplier of oil. The new regime of Ayatollah Khomeini broke all prior oil contracts and signed new contracts with British Petroleum with 90% to BP and 10% to Ayatollah Khomeini and his followers.
Sir Peter Walters was BP’s chairman from 1981 to 1990.21 This was the era of the Thatcher government’s privatisation strategy. The British government sold its entire holding in BP in several tranches between 1979 and 1987.22 The sale process was marked by an attempt by the Kuwait Investment Office, the investment arm of the Kuwait government, to acquire control of BP.23 This was ultimately blocked by the strong opposition of the British government. In 1987, British Petroleum negotiated the acquisition of Britoil24 and the remaining publicly traded shares of Standard Oil of Ohio.
A British BP Shop Petrol Station.
Walters was replaced by Robert Horton in 1989. Horton carried out a major corporate down-sizing exercise removing various tiers of management within the BP Head Office.25
Standard Oil of California and Gulf Oil merged in 1984, the largest merger in history at that time. Under the antitrust regulation, SoCal divested many of Gulf’s operating subsidiaries, and sold some Gulf stations and a refinery in the eastern United States.26 BP bought many of the stations in the Southeastern United States.citation needed
Lord Browne of Madingley, who had been on the board as managing director since 1991, was appointed group chief executive in 1995. Browne was responsible for three major acquisitions; Amoco, ARCO and Burmah-Castrol
British Petroleum merged with Amoco (formerly Standard Oil of Indiana) in December 1998, becoming BP Amoco plc. In 2000, BP Amoco acquired Arco (Atlantic Richfield Co.)30 and Burmah Castrol plc.31 In 2001 the company formally renamed itself as BP plc29 and adopted the tagline “Beyond Petroleum,” which remains in use today. It states that BP was never meant to be an abbreviation of its tagline. Most Amoco stations in the United States were converted to BP’s brand and corporate identity. In many states, however, BP continued to sell Amoco branded gasoline even in service stations with the BP identity as Amoco was rated the best petroleum brand by consumers for 16 consecutive years and also enjoyed one of the three highest brand loyalty reputations for gasoline in the US, comparable only to Chevron and Shell. In May 2008, when the Amoco name was mostly phased out in favour of “BP Gasoline with Invigorate”, promoting BP’s new additive, the highest grade of BP gasoline available in the United States was still called Amoco Ultimate.
Chief scientist, Steven Koonin (top right, with laptop), speaks about the energy scene in the boardroom in 2005.
In April 2004, BP decided to move most of its petrochemical businesses into a separate entity called Innovene within the BP Group. BP sought to sell the new company possibly via an initial public offering (IPO) in the US, and filed IPO plans for Innovene with the New York Stock Exchange on 12 September 2005. On 7 October 2005, however, BP announced that it had agreed to sell Innovene to INEOS, a privately held UK chemical company for $9 billion, thereby scrapping its plans for the IPO.32 In 2005, BP announced that it would be leaving the Colorado market. Many locations were re-branded as Conoco.
Westlake Park in the Energy Corridor area of Houston has BP Americas’s headquarters
BP has recently looked to grow its oil exploration activities in frontier areas such as the former Soviet Union for its future reserves.35 In Russia, BP owns 50% of TNK-BP with the other half owned by three Russian billionaires. TNK-BP accounts for a fifth of BP’s global reserves, a quarter of BP’s production, and nearly a tenth of its global profits.36
In 2007, according to some private BP-branded gasoline center operators in the Metro Atlanta area, BP planned to leave the Southern market in the next few years. All corporate-owned BP stations, typically known as “BP Connect”, were to be sold to local jobbers.
On 12 January 2007, it was announced that Lord Browne would retire at the end of July 2007. The new Chief Executive will be the current head of exploration and production, Tony Hayward. It had been expected that Lord Browne would retire in February 2008 when he reached the age of 60, the standard retirement age at BP. Browne resigned abruptly from BP on 1 May 2007, following the lifting of a legal injunction preventing Associated Newspapers from publishing details about his private life. Hayward succeeded Browne with immediate effect. ↩
- 1993–1995: Hazardous substance dumping – In September 1999, one of BP’s US subsidiaries, BP Exploration Alaska (BPXA), agreed to resolve charges related to the illegal dumping of hazardous wastes on the Alaska North Slope, for $22 million. The settlement included the maximum $500,000 criminal fine, $6.5 million in civil penalties, and BP’s establishment of a $15 million environmental management system at all of BP facilities in the US and Gulf of Mexico that are engaged in oil exploration, drilling or production. The charges stemmed from the 1993 to 1995 dumping of hazardous wastes on Endicott Island, Alaska by BP’s contractor Doyon Drilling. The firm illegally discharged waste oil, paint thinner and other toxic and hazardous substances by injecting them down the outer rim, or annuli, of the oil wells. BPXA failed to report the illegal injections when it learned of the conduct, in violation of the Comprehensive Environmental Response, Compensation and Liability Act. In March 2005, BP’s Texas City, Texas refinery, one of its largest refineries, exploded causing 15 deaths, injuring 180 people and forcing thousands of nearby residents to remain sheltered in their homes. A large column filled with hydrocarbon overflowed to form a vapour cloud, which ignited. The explosion caused all the casualties and substantial damage to the rest of the plant. The incident came as the culmination of a series of less serious accidents at the refinery, and the engineering problems were not addressed by the management. Maintenance and safety at the plant had been cut as a cost-saving measure, the responsibility ultimately resting with executives in London.
The fall-out from the accident continues to cloud BP’s corporate image because of the mismanagement at the plant. There have been several investigations of the disaster, the most recent being that from the U.S. Chemical Safety and Hazard Investigation Board44 which “offered a scathing assessment of the company.” OSHA found “organizational and safety deficiencies at all levels of the BP Corporation” and said management failures could be traced from Texas to London.
The company pleaded guilty to a felony violation of the Clean Air Act, was fined $50 million, and sentenced to three years probation.
On October 30, 2009, the US Occupational Safety and Health Administration (OSHA) fined BP an additional $87 million — the largest fine in OSHA history — for failing to correct safety hazards revealed in the 2005 explosion. Inspectors found 270 safety violations that had been previously cited but not fixed and 439 new violations. BP is appealing that fine.
In August 2006, BP shut down oil operations in Prudhoe Bay, Alaska, due to corrosion in pipelines leading up to the Alaska Pipeline. The wells were leaking insulating agent called Arctic pack, consisting of crude oil and diesel fuel, between the wells and ice.46 BP had spilled over one million litres of oil in Alaska’s North Slope.47 This corrosion is caused by sediment collecting in the bottom of the pipe, protecting corrosive bacteria from chemicals sent through the pipeline to fight this bacteria. There are estimates that about 5,000 barrels (790 m3) of oil were released from the pipeline. To date 1,513 barrels (240.5 m3) of liquids, about 5,200 cubic yards (4,000 m3) of soiled snow and 328 cubic yards (251 m3) of soiled gravel have been recovered. After approval from the DOT, only the eastern portion of the field was shut down, resulting in a reduction of 200,000 barrels per day (32,000 m3/d) until work began to bring the eastern field to full production on 2 October 2006.
In May 2007, the company announced another partial field shutdown owing to leaks of water at a separation plant. Their action was interpreted as another example of fallout from a decision to cut maintenance of the pipeline and associated facilities.
On 16 October 2007 Alaska Department of Environmental Conservation officials reported a toxic spill of methanol (methyl alcohol) at the Prudhoe Bay oil field managed by BP PLC. Nearly 2,000 gallons of mostly methanol, mixed with some crude oil and water, spilled onto a frozen tundra pond as well as a gravel pad from a pipeline. Methanol, which is poisonous to plants and animals, is used to clear ice from the insides of the Arctic-based pipelines.
From January 2006 to January 2008, three workers were killed at the company’s Texas City, Texas refinery in three separate accidents. In July 2006 a worker was crushed between a pipe stack and mechanical lift, in June 2007, a worker was electrocuted, and in January 2008, a worker was killed by a 500-pound piece of metal that came loose under high pressure and hit him.
Four BP energy traders in Houston were charged with manipulating prices of propane in October 2007. As part of the settlement of the case, BP paid the US government a $303 million fine, the largest commodity market settlement ever in the US. The settlement included a $125 million civil fine to the Commodity Futures Trading Commission, $100 million to the Justice Department, $53.3 million to a restitution fund for purchasers of the propane BP sold, and $25 million to a US Postal Service consumer fraud education fund.
In May 2010, the Supreme Court of Arbitration of the Russian Federation agreed in support of the country’s antimonopoly service’s decision to a 1.1 billion Ruble fine ($35.2 million) against TNK/BP, a 50/50 joint venture, for abusing antitrust legislation and setting artificially high oil products prices in 2008, TNK and BP declined comment.
On April 1 2009, a Bond Offshore Helicopters Eurocopter AS332 Super Puma ferrying workers from BP’s platform in the Miller oilfield in the North Sea off Scotland crashed in good weather killing all 16 on board. ↩
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- Ironically, as I published this today, there was news of an Oil Spill into the Great Salt Lake in Utah: SALT LAKE CITY (AP) — A leaked pipeline sent oil spilling into a Salt Lake City creek, coating geese and ducks and closing a park, officials said Saturday as they started a cleanup effort expected to last weeks.
At least 400 to 500 barrels of oil spewed into Red Butte Creek before crews capped the leak site. Nearly 50 gallons of crude oil per minute initially had spilled into the creek, according to Scott Freitag, a Salt Lake City Fire Department spokesman.
”Our real concern is keeping people safe, and keeping the oil from reaching the Great Salt Lake,” he told the Deseret News.
Chevron determined the pipeline broke at 10 p.m. Friday, and police and fire crews were notified of it shortly before 7 am. Saturday.
Officials were unsure of the cause of the leak, near the University of Utah campus, or the extent of the spill’s environmental impact. Mayor Ralph Becker said drinking water for residents was not affected.
”Our fire teams have capped the site and will work to determine the damage and the best course of action,” the mayor said in a statement.
The state Division of Water Quality was onsite assessing damage and will issue a violation notice against Chevron, Gov. Gary Herbert said in a release. The governor said he was monitoring the spill, which he called ”devastating.”
Chevron spokesman Mark Sullivan said some residual oil was still leaking and the cleanup likely will take ”weeks.”
”We’re taking full responsibility for any financial damage, environmental damage, safety concerns, impacts on health and cleanup,” Sullivan told the Salt Lake Tribune.
Crews were using absorbent booms and creating dams to contain the spill, but officials said some oil had flowed as far as four miles to the Jordan River, and into a pond in the city’s Liberty Park, near where residents reported dead fish in their ponds.
A crew was trying to collect and take birds to Hogle Zoo cleaning stations and other facilities, said Brad Park, zoo spokesman.
About 150 birds have been identified for rehabilitation, said Jane Larson, Hogle’s animal care supervisor. About 75 percent are Canada geese.
”A lot of them are just coated from about the water line, but there are a number of birds that started preening and have oil completely covering their bodies,” said Tom Aldridge, migratory bird coordinator for the Utah Division of Wildlife Services.
Several ducks also were affected.
The underground pipeline flows to Salt Lake City from Colorado and feeds the city’s oil and gas refineries.
Employees at the Veteran Affairs Hospital first noticed oil in the stream just before 7 a.m. Officials then traced the spill to the pipe near Red Butte Garden. Freitag said the pipeline was shut off about 7:45 a.m. ↩
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This post was written by Pete Abilla | ||||
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