BP's disregard for safety spills out into open during polemic

Mon, Nov 29, 2010, 00:00

BOOK REVIEW: Drowning in Oil – BP and the Reckless Pursuit of Profitby Loren C Steffy. McGraw Hill €25.99

A NARRATIVE style permeates Loren Steffy’s polemic against BP. Opening with colourful first-hand accounts from workers about the disaster at Deepwater Horizon in the Gulf of Mexico earlier this year that led to 11 deaths and catastrophic environmental damage, the author’s distaste for the oil giant is never hidden.

Steffy is a business columnist for the Houston Chronicleand has covered BP for many years. He paints a damning picture of a corporation that, he argues, was prepared to compromise the safety of its workers for corporate greed and whose concern for the environment amounted to little more than public relations spin.

Oil spills occupy a prominent position in America’s rogues gallery of corporate villainry, he notes, with only the clubbing of baby seals more detested by the public. BP’s record is scandalous, he says, with the disaster in the Gulf of Mexico the most devastating in a long line of accidents at company sites.

BP’s response to the Horizon explosion compounded the damage. The company’s early response distanced itself from the disaster, with press statements offering its full support to the drilling contractor and sympathy to the families of the victims. As the majority lease owner, BP was responsible for any pollution from the rig.

Initial estimates put the level of leakage at 1,000 barrels a day, with the company grudgingly raising this to 5,000. The figure proved a gross underestimate, with some experts eventually putting the flow rate as high as 70,000 barrels a day.

According to Steffy, BP wasn’t minimising the spill for appearances sake. The level of fines it faced under the US Clean Water Act was determined by the amount of oil that leaks. There was also the longer term issue of access to other oilfields in the gulf. It still had dozens of potentially profitable deepwater prospects to explore and could not afford to allow the government deny it new drilling permits or ban it from US waters.

Chief executive Tony Hayward’s hands-on response to the deepening crisis wasn’t helpful. He told Sky News that the impact of the spill, already on its way to being the worst ever in US waters, would be “very, very modest”. His worst gaffe came when he told reporters following him when he inspected a beach in Louisiana: “There’s no one who wants this thing over more than I do – I’d like my life back.”

Hayward, who ultimately paid for his mistakes with his job, became a focus of ridicule and by mid-summer BP’s $50 million ad campaign showing that it was doing the right thing to “make this right” was being derided as cynical even by President Obama. The company’s stock price declined by $100 billion during this period.

The author spends much of the book examining the influence of former chief executive John Browne. Browne championed what was billed as “the largest ever industrial merger” when it completed a $52 billion deal with exploration company Amoco in 1998. He planned to save $2 billion a year by adopting Amoco’s strategy of concentrating exploration on “elephants” – the giant oilfields that involved taking big risks but that paid big rewards when they succeeded. Further savings would come from firing thousands of workers including many of the company’s engineers, whom he saw as costs centres. Engineers were replaced by accountants, determined to help Browne meet and beat his promises to Wall Street.

Crucially, according to Steffy, safety was compromised along the way. Aging piping systems, he claims, led to corrosions and leaks and known defective alarms were left unmaintained.

In 2005, government inspectors found one safety violation at Exxon’s refineries, while at BP they found over 700. BP was consistently fined for breaching health and safety violations and penalised with millions of dollars’ worth of fines.

In his research, Steffy found many willing to support his thesis, some going on the record and some speaking privately, fearing reprisals or lost business, he claims. Significantly John (now Lord) Browne refused to be interviewed for the book, as did former chairman Peter Sutherland. It would have been interesting to have heard their perspectives, given the seriousness of the charges levelled against the company.

Steffy remains dubious about the future of BP under its recently appointed chief executive, Bob Dudley. Although he reshuffled the management team, created a worldwide safety division that reports directly to him and vowed to realign company incentives to balance short and long-term goals, the author is not convinced.

Tellingly, he says when asked in an interview if these initiatives were an admission of the company’s past mistakes, he replied: “I wouldn’t describe it as an admission of anything.”

Frank Dillon is a freelance journalist and media lecturer