BP Oil-spill: Official report spreads blame

January 6, 2011

The offical report into the Deepwater Horizon disaster spreads the blame around BP, Transocean, bad management, and government regulatory laxness

Broad culpability was always likely. The offical report summarized today [January 6th 2011] leaves plenty of scope for years of legal wrangling.

The oil spill in the Gulf of Mexico was an avoidable disaster caused in part by a series of cost-cutting decisions made by BP and its partners, the White House oil commission said last night. In a preview of its final report, due next week, the national oil spill commission said systemic management failure at BP, Transocean, and Halliburton caused the blow-out in the Gulf of Mexico, and warned that such a disaster would likely recur because of industry complacency. “Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),”

See also the Leaders we deserve reports in the months following the oil-spill.


BP Oil Spill: August-Sept Updates

August 4, 2010
Least Terns - one of many birds affected by Gu...

Image by flythebirdpath~} teddy (heart still in YOSEMITE) via Flickr

September 8th “It’s not all our fault”

BP provides oil-spill report. Accepts errors but begins cautious spreading of the errors (blamestorming?)

September 5th

Unified Command has released a video of Saturday’s [September 5th] retrieval of the Deepwater Horizon Blow Out Preventer

Just when I thought the story was going to sleep another oil-rig explosion in the Gulf (Marine Energy operated) …. Great quote: “Just when we thought we’d had a wake-up call we hit the snooze button”.

August 30th

Evidence that BP’s prospects into the future will be severely limited.

August 20th

[1] An interesting stat. Oil Spill at 6 million barrels huge. Note combined spills from three tanker spills exceed that figure.

[2] Lawyers for Transocean, the company that owned the oil rig is alleging that BP is denying them access to information they needs.

According to the BBC:

The claim is made in a letter from one of Transocean’s lawyers sent to members of President Barack Obama’s cabinet. BP rejected the allegation, saying the letter contained “misguided and misleading assertions”. Nevertheless, the claim risks piling further pressure on BP.

August 16th President and daughter swim in Gulf.  Brits recall a politician (John Gummer) who fed hamburger to daughter in Mad Cow drama some years ago.

August 13th Bloomberg’s Joe Mysak writes of Oil-Spill Hysteria.

Never before has a disaster like this been accompanied by such an unrelenting torrent of hysteria, speculation and inexpert testimony… The pronouncements grew madder and madder. This was nothing less, they said, than the oil apocalypse.

What looks like what happened is that BP Plc shut off the well, after some trial and error. As they were doing so, they were also siphoning off oil, burning some and dousing a good portion of the remainder with chemicals meant to break it up so that the ocean could do the rest. Some oil was skimmed at the surface, some was collected in various barriers and some inevitably made it to shore. What’s next? The oil company still has to seal the well. Then there’s more cleanup, which will last months or years.

There’s still a lot we don’t know about how the oil-spill drama will conclude. People talk a lot about the fishing industry, almost as though we were living in 1890. The fishing industry is a relatively unimportant part of the modern Gulf, which is why everyone there is eager for the real business, drilling for oil, to resume. Then of course there is tourism. Can it be restored to pre- spill quality and levels?

Americans are an impatient lot. Something tells me that you don’t clean up the biggest oil spill in the nation’s history overnight. It seems, though, the Deepwater Horizon disaster could have been much worse. Not too long from now, within our lifetimes, people may ask, “Remember the Gulf oil spill?”

August 8th Lawsuits loom. A class action suit has been filed against BP and Nalco related to use of dispersant Corexit.


August 7th
BP stands down Doug Suttles. Replacement is a less senior executive who seems likely to be there for the longer-term, and more full-time. Mike Utsler becomes lead representative in the Unified Area Command and the chief operating officer for the oil giant’s Gulf Coast restoration organization. Suttles, who has led the company’s overall response to the Gulf of Mexico oil spill will now return to his role as chief operating officer

August 6th “seal or sell”. Now the story shifts towards economic issues. The leak seems sufficiently under control to raise the question of the economic future of decisions being made. We have a strategic dilemma here around the decisions of selling off the well, or keeping options open of recovering revenues.

August 5th A government report says only a quarter of the oil from the BP well remains and that it is “degrading quickly”. According to the BBC, the report was compiled by 25 of “the best government and independent scientists”.

August 4th: The “Static Kill” to seal the well has begun. First indications are promising says BP senior vice-president Kent Wells (Nice name for a Wells manager?). He now will presumably front up the BP communications. US Government representative Admiral Thad Allen is now “designated incident commander”. Project management, governance, and leadership roles are coming into focus.

See Also July Entries Updated July stories


Now its the Michigan oil spill. Will the President’s sleep be disturbed?

July 28, 2010


A leak of 800,000 gallons of oil into the Kalamazoo river causes a public health scare. Will President Obama react in a re-run of his BP Oil-spill anger?

According to press reports

Crews were working Tuesday [27th July 2010] to contain and clean up more than 800,000 gallons of oil that poured into a creek and flowed into the Kalamazoo River in southern Michigan, coating wildlife. Battle Creek and Emmett Township authorities warned residents about the strong odor from the oil, which leaked Monday from a pipeline that carries about eight million gallons of oil a day from Griffith, Ind., to Sarnia, Ontario. The pipeline company, Enbridge Energy Partners, said the oil spilled into Talmadge Creek. As of Tuesday afternoon, oil was reported in about 16 miles of the Kalamazoo River downstream of the spill. Representative Mark Schauer, Democrat of Michigan, called the spill a “public health crisis,” and said he planned to hold hearings to examine the response. The spill’s cause is under investigation.

Public sensitivity to the words oil and spill in the same sentence runs high. The story almost writes itself. President Obama will have to show his awareness and empathy to those affected. The story broke within 24 hours of Tony Hayward being removed as CEO of BP after the Gulf Oil-Spill disaster. It will be interesting to see how the CEO of Enbridge Energy Partners reacts to the Kalamazoo spillage. And will his fate be influenced by the events thousands of miles down-stream?


BP’s Hayward goes: How we get the leaders we deserve

July 26, 2010

Tony Hayward, BP’s CEO has been dubbed the most hated Businessman in America in the wake of the Oil Spill disaster in the Gulf of Mexico. His removal was inevitable. But does it make much sense, beyond being a symbolic gesture of a leader falling on his sword?

There is little surprise in the news that Tony Hayward is to be removed as CEO of BP. The BBC’s Robert Peston among others felt that Hayward’s days were numbered from the earliest days of the Deepwater Horizon fatalities. Peston reveals that the BP board had decided that its future would require a new CEO:

Directors also felt that the sacrifice of Hayward should not happen until serious progress had been made on staunching the oil leak and until it was possible to quantify the financial cost of fixing the hole, providing compensation and paying fines. In the last couple of weeks, there has been such progress. And if the moment has more-or-less arrived for BP to start building a post-Macondo future, then it also needs a new public face, a new leader.

The most significant charge appears to be his ‘PR gaffes’.

The demonization of Hayward

Since the Oil-Spill a storm of adverse publicity has been sustained against him. President Obama joined in with remarks in a television interview that Mr Hayward “wouldn’t be working for me after any of those statements”.

Mr Hayward has been demonised as being responsible for the world’s worst environmental disaster – and, let’s not forget, for the deaths of 11 men in the rig explosion that preceded it. Critics argue that, as the man in charge, it is Mr Hayward’s job to take the heat. Nor has he helped his cause with some misguided remarks about wanting his life back and optimistic comments about the clean-up operation. Other public relations own-goals included his refusal to answer questions put to him by a Congressional subcommittee and his decision to participate in a JP Morgan yacht race around the Isle of Wight. END

Leaders we deserve has followed this story closely. The background to Dr Hayward’s appointment in 2007 suggested that he had demonstrated top leadership potential, and had been selected for one of the most challenging of CEO positions with any global organization.

Growing stale in the saddle

CEO tenure remains a complex area for study. Danny Miller’s work is much quoted. He suggests although CEOs may ‘grow stale in the saddle’ that for many organizations, a change of CEO is most likely to take place only as a consequence of catastrophic performance. By generally accepted organizational criteria, Tony Hayward had appeared to making a good start in his job at BP. He declared intentions were to address issues to deal with unsatisfactory operational practices. But should he have been able to put enough changes in place to have prevented the specific errors that contributed to the catastrophe which led to the deaths of eleven people, and environmental disaster

What makes a good leader? How heroes become zeroes

Research into leadership has moved away from universalistic theories. We have stopped looking for presence or absence of a set of properties which differentiate a good leader from a bad one. Even success or failure of itself is insufficient to reveal a simple answer, because all leaders deal with uncertainties and make judgment calls.

In times of crisis, orchestrated anger against a leader builds up. His statements are analysed as evidence of his or her callousness, stupidity, duplicity. The symbolic significance of speech-acts are just as important as physical actions. Sound-bites become replicated in headlines and become elements within a dramatic narrative.

Psycho-analytical models of human behaviour suggest that social groups seek ways of dealing with fear and uncertainty which address inner phobias rather than practical means of overcoming unpleasant circumstances. Under stress and distress group members react as if a leader has betrayed them. According to one text-book such reactions draw on a basic assumption of dependency: a world in which

“The leader is the all-providing and all-knowing saviour who may also become another hate figure”

Lessons to be learned

Under such circumstances it becomes a social imperative to change the leader we have to the leader we deserve. There are lessons to be learned here, about leaders, dilemmas of leadership, and the social processes which result in complex issues being reduced to a leader’s incompetence.


BP Oil-Spill Battle Update July 2010

July 19, 2010

As the BP Oil-Spill story unfolds, Leaders we Deserve analyses and updates the leadership stories emerging in the last weeks of July. The notes are provided for students of business and leadership.

Friday July July 30 Up-date discontinued as month and the well-capping story draw to an end. First accounts emerging of blatant exaggeration of the environmental consequences of spill.

Tuesday July 27th. Tony Hayward goes. Weather conditions improving. BP says it has been given permission to prepare for a “static kill” – pumping mud into the top of the well through the new cap – a step viewed as an intermediate measure. The firm would then need final approval from the US to carry it out.

Earlier Posts:

Monday 19th July

Overnight came news from Reuters. The U.S. government released a letter to BP Chief Managing Director Bob Dudley from retired Coast Guard Admiral Thad Allen that referred to an unspecified type of seepage near the mile-deep (1.6 km-deep) well along with “undetermined anomalies at the well head…I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed,” Allen wrote. His concern was backed up with chilling evidence from the sea-bed.

Latest developments

Publically-available information reveals more enthusiasm for opening the restraining choke-valve by the Admiral than by the BP leadership. We have here a typical situation in which leaders have to take decisions in the absence of all the information they would like to have.

BP and the US Government would both like to minimise the damage to the environment. Where they differ is concerns for damage to BP’s future , the importance of being seen to be doing the right things for important stakeholders, avoiding possible criticisms of ‘doing the wrong things, not acting decisively enough and so on.

BP prefer to leave the well capped. US Govenment sources may agree to some degree but also feel the need to avoid risks of being accused of tardiness, and of weak leadership.

In a further Reuter’s press release, we learn:

Doug Suttles, BP’s chief operating officer, said the company now hopes to keep the damaged well shut until the relief well is completed in August and the leak is sealed off with heavy drilling mud and cement. “We’re hopeful that if the encouraging signs continue that we’ll be able to continue the integrity test all the way to the point that we get the well killed,” he told reporters before Allen issued his statement. “Clearly we don’t want to reanimate flow into the Gulf if we don’t have to.” Suttles’ statement could indicate diverging viewpoints between BP and the U.S. government on plans for the well integrity test. It prompted Allen who will ultimately make the final call on the test to issue a statement that “nothing had changed” in the joint plan going forward.

There is apparent willingness from the US side to permit a further highly visible oil-spill in to the environment to protect against a possible hidden leakage in the future. BP, without such influence, would favor treating the capping as a stage reached, and from which attention can be focussed on the more permanent plans of sealing off the well completely.

Tuesday July 20th 2010

The broad story remains uncertainties over the capping procedure. http://www.bbc.co.uk/news/world-us-canada-10692360. Seepages on the sea floor have been detected near the leaking Gulf of Mexico oil. But Thad Allen, now named as the government’s incident commander suggests they may be unrelated to the oil-spill, or even to the entire drilling operation. The BBC report provides figures for the low pressure at the well-head. The pressure inside the cap is currently at nearly 7,000 pounds per square inch and rising at 1 psi per hour, while the expected reading was 8,000-9,000 psi.

Two side-issues

[1] Drilling of one of the two relief wells has been ‘temporarily suspended’, some 2000 feet above its target at the base of the original well.

[2] Estimates of another kind suggest that the big leakage will be into the bank accounts of the lawyers who will be gainfully employed for years

Thursday 22nd July

Cap remains in place. Weather forecasts suggest bad weather may disrupt plans of progress. There is a 50% chance that a weather pattern currently over the island of Hispaniola will turn into a cyclone by Friday, the National Hurricane Center says. It is currently moving west-northwest.

Friday 23rd July

Weather pattern firms up and heads for the Gulf. Possibility of delays to plans ‘a judgement call’ Allen says

Saturday July 24st 2010 Weather conditions worsen. Ships withdraw from the area, and the entire operation may be left unmanned for up to 48 hours. ‘Hurricane Bonnie’ seems to be making a beeline for the area (do Hurricanes travel in beelines?). Little more news overnight [7am GMT]