Bp Oil Crisis Deck Final

zAnalysis of BP Oil’s Response to
2010 Oil Spill
April 22, 2020

z
Introduction
Effects
Management
Response
Conclusion

z
Market Information
 BP Oil is a top competitor in the oil & gas industry
 $303.7 in global revenue (2018)
 2nd largest competitor in 2010 (13% market share)
Exxon Mobil
Chevron
Corporation
Valero Energy
$241 billion
$129 billion
$117 billion

z
Deepwater Horizon Oil Spill:
What Happened?
 Macondo oil well ruptured
Natural gas blasted through concrete
core
Gas traveled up the Deepwater rig’s riser
to the platform and ignited, killing 11
200 million gallons of oil released into
the Gulf of Mexico over three months

z
Financial
Fallout
 2010 Income statement shows a
pretax charge of $40.9 billion
 $20 billion escrow account BP had
agreed to establish
 Found guilty of gross negligence
leading to the catastrophic spill
 Adjusted their outstanding claims to
$65 billion in 2018

z
Oil washed up onto more than
1,300 miles of shoreline
~ 10 million pounds of oily
residue was removed from
Louisiana
As climate change pushed
tides higher onto low-lying
shorelines, land erosion
ensued
Tens of thousands of birds,
sea turtles, fish, marine
mammals died.
Environmenta
l Impact

z
Stakeholders
Stakeholder Role Need
Environment Devastated by spill - Plan for cleanup
Fisheries Fish population
devastated by spill
- Compensation
- Apology
BP oil rig workers Work on rigs similar to
one that exploded
- Detailed explanation
- Promise of safety
US population Happened on their turf
(or surf)
- Accurate info
- Assured it won’t
happen again

z
Addressing the Stakeholders
Environment
•Initiated plan
to create well
•Other
immediate
actions
Fisheries
•Provided
compensation
“where people
can present
legitimate
claims”
•“This is
America—”
Workers
•Apologized to
families
affected
•Attended
funerals of
those lost
US pop.
• Dedicated
section of
website to
Deepwater
Horizon
•Titled “Gulf
of Mexico Oil
Spill”

z
Stopping the Leak
 Blowout protector (BOP) failed
 Activating this mechanism would ideally pause the channel through which oil was
drilled
 Two more failed attempts to slow the leak of oil
 Containment dome was thwarted by the buoyancy of gas
 “Top kill” method failed as well
 Lower Marine Riser Package (LMRP) cap
 Fit loosely over the BOP
 Allowed to siphon oil out of the rig

z
Stopping the
Leak Cont.
 “Static kill”
 Similar premise to “top kill”
approach
 Inflow of mud was at a much
lower pressure
 “Bottom kill”
 Pumping cement through another
well that later intersected the
original well
 Construction began in May; they
announced the well was
completely sealed in September

z
Containment
and Cleanup
 Petroleum extending over
more than 57,500 square
miles of Gulf
 National Response Team
coordinated cleanup efforts
 1.8 million gallons of dispersants
were pumped into the leak
 Massive booms were constructed to
corral the oil
 Oil removed manually as it reach
the shore
 BP and others were held
liable

z
Public Reaction
https://www.youtube.com/watch?v=MTdKa9eWNFw

z
PR Disaster
 Tony Hayward, CEO of BP Oil
Date
(2010)
Statement Right or
Wrong?
Effect
May 3 “Well, it wasn't our
accident… it was their
[Transocean’s] rig and their
equipment that failed, run
by their people and their
processes"
• Shifting blame away from
BP
• People want action not
accusation
• This behavior hurts your
brand
May 20 "I think the environmental
impact of this disaster is
likely to be very, very
modest”
• Downplaying the effects of
the spill
• Ignorant, naive
May 30 “There's no one who wants
this over more than I do. I
would like my life back."
• Bringing self-pity into his
company’s response
• Only worried about himself
June 4 BP spends $50M in
dividends and other business
expenses one day after
• Misallocation of money
• PR control is huge as CEO

z
Lukaszewski’s 7 Dimensions
Operation
Decisions
Act fast and
alleviate
anguish
Successful,
creation of
website
section
Victim
Management
•Acknowledge
victims,
recognize
needs
Successful,
condolences
and attended
funeral
Credibility &
Trust
Do everything
to restore
credibility/trust
Unsuccessful,
inaccurate
data voiced to
public
Corporate
Behavior
•Eliminate
behavior that
works against
rebuilding
credibility
Unsuccessful,
shifting blame
Professional
Expectations
•Adhere to
standards set
by community,
government
Successful,
compensation
of fisheries
Ethical
Standards
Act with
•sensitivity,
honor, truth
Unsuccessful,
misallocation
of money
towards
dividends
Lessons-
Learned
Approach
Learn lesson
about
communication
Unsuccessful,
Hayward’s
actions
carried
through June
1) 2) 3) 4) 5) 6) 7)

z
Conclusion
• Website used as
information outlet
• Paid respect to workers’
families
• Moved fast in
mitigating leak
• Misallocating money
• PR, PR, PR!!
• Shifting blame away
from BP
• Downplaying effects
• Self-pity

z
What Should Management Have
Done? Construct a joint press release with the other companies
involved (Transocean, Halliburton) where they would:
 Collectively take blame
 Explain exactly what happened, why
 Articulate compensation for cleanup efforts
 Deliver promises to compensate small business
 Apologize, without self-pity involved
 All parties involved should have come together and created a
plan like this one, instead of pointing fingers at each other

z
Current State
 Stock price dropped over 50% by June 2010
 Currently traded at $23.33 as of 4/22/20
 Market cap as of 2019 placed them as 6th largest company
 Compared to 2nd largest in 2010
 The fallout was not brief

z
References
 Amadeo, Kimberly. “Costs of the Deepwater Horizon Oil Spill.” The Balance, The Balance, 20 Nov. 2019,
www.thebalance.com/bp-gulf-oil-spill-facts-economic-impact-3306212.
 BBC Staff. “BP Boss Tony Hayward's Gaffes.” BBC News, BBC, 20 June 2010,
www.bbc.com/news/10360084.
 Bousso, Ron. “BP Deepwater Horizon Costs Balloon to $65 Billion.” Reuters, Thomson Reuters, 16 Jan. 2018,
ww.reuters.com/article/us-bp-deepwaterhorizon/bp-deepwater-horizon-costs-balloon-to-65-billion-idUSKBN1F50NL.
 BP Staff. “BP Initiates Response to Gulf of Mexico Oil Spill: News and Insights: Home.”
BP Global, 2010,
www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-initiates-response-to-gulf-of- mexico-oil-spill.html.
 Calma, Justine, et al. “Deepwater Horizon: a Decade of Disaster.” The Verge, The Verge, 20 Apr. 2020,
www.theverge.com/2020/4/20/21220595/deepwater-horizon-bp-oil-spill-gulf-of-mexico-10-year-anniversary.

z
 HOUDET, JOËL, and CHARLES GERMANEAU. “THE FINANCIAL IMPACTS OF BP’S RESPONSE TO THE DEEPWATER
HORIZON OIL SPILL.” Researchgate.net, Jan. 2011,
www.researchgate.net/profile/Joel_Houdet2/publication/271770844_THE_FINANCIAL_IMPACTS_OF_BP'S_RESPONSE_TO_
THE_DEEPWATER_HORIZON_OIL_SPILL_COMPARING_DAMAGE_VALUATION_APPROACHES_HIGHLIGHTING_THE_N
EED_FOR_MORE_RELIABLE_ENVIRONMENTAL_ACCOUNTING_AND_REPORTING/links/54d1aaf80cf28959aa7b5195/TH
E-FINANCIAL-IMPACTS-OF-BPS-RESPONSE-TO-THE-DEEPWATER-HORIZON-OIL-SPILL-COMPARING-DAMAGE-
VALUATION-APPROACHES-HIGHLIGHTING-THE-NEED-FOR-MORE-RELIABLE-ENVIRONMENTAL-ACCOUNTING-AND-
REPORTING.pdf.
 Muspratt, Adam. “The Top 10 Oil & Gas Companies in the World: 2019.” Oil & Gas IQ,
Oil & Gas IQ, 24 July 2019, www.oilandgasiq.com/strategy-management-and-information/articles/oil-and-gas-
companies.
 Sönnichsen, N. “Largest Oil and Gas Companies 2019.” Statista, 21 Apr. 2020,
www.statista.com/statistics/272709/top-10-oil-and-gas-companies-worldwide-based-on-market-value/.
 Pallardy, Richard. “Deepwater Horizon Oil Spill.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 13 Apr. 2020,
www.britannica.com/event/Deepwater-Horizon-oil-spill.
 Toor, Amar. “Halliburton Admits to Destroying Evidence in Wake of Gulf Oil Spill.” The Verge, The Verge, 26 July 2013,
www.theverge.com/2013/7/26/4558950/halliburton-pleads-guilty-destroying-evidence-in-bp-deepwater-horizon-oil-spill.

Bp Oil Crisis Deck Final

More Related Content

What's hot (20)

Similar to Bp Oil Crisis Deck Final (9)

Recently uploaded (20)

Bp Oil Crisis Deck Final