BP AND THE GULF OF MEXICO OIL SPILL Harvard Case Solution & Analysis

BP AND THE GULF OF MEXICO OIL SPILL Case Solution

SHORT INTRODUCTION OF THE CASE:

The case deals with the accident that took place at Gulf of Mexico in 2010. The incident known as Deep water Horizon incident was caused by the negligence of the BP workers, technicians, Board of Directors, engineers and the lack of any governmental controls and proper rules and regulations in order to eradicate the troubles caused to BP.

It started basically as a state-owned company during Sir Winston Churchill’s era;however it was later privatized by Margaret Thatcher, the British premier at that time.

BP ventured into deep water exploration, which was mainly stimulated by companies being self-complacent about the safety and security during the 1970s and 1980s ensured by passing of the requisite rules and regulations related to oil explorations. BP and Shell Oil were among the companies however,BP used to do it more frequently that only resulted in increased profits but also proportionally increased risks.

Under the dynamic and wise leadership of Robert Browne, who became the CEO of the company and received accolades for his work, was responsible to improve the financials of the company immensely, but he could not conver this success into safety measurements as the Texas incident could be taken as an example in which 15 people were left dead and more than 100 injured. Other disasters ensued and that due to other reasons, he left. That paved way for entry of Mr. Hayward and the central idea of the case is about the blunders he and every management level and their partners (contractors) made that led to that catastrophe. Eventually, the incident took place on April 2010, leaving a number of casualties and bad reputation for the company.

Analysis

BP FAILURE OR ACCIDENT?

Disaster was a BP failure, definitely.

SIGNIFICANT FLAWS:

The disaster could have been averted if attention was paid at every aspect of the operations. There are numerous loopholes in the operations or the manner of doing work and the entire responsibility of the incident falls on BP’s management and Board of Director. Firstly, the negative pressure test, when the pressure was applied, which did not show 0 psi reading, showed that they lacked proper instrumentation and application of the technology which was required from them.

Also, the robustness test or the negative pressure test proved to be ineffective as the cement was shown to be lacking in robustness, as it was deviating from its expected operation. Moreover, greed on the part of BP management to explore deep waters was risky;however it was profitable for the company. In addition,the level of mud displaced should not have been that much greater than they had, as they had displaced 3,300 feet of mud in lieu of 300 feet of mud that could had been required. Furthermore, the fail safe mechanism installment proved to be a failures it failed to perform it expected function.

On the other hand, the whole process of temporary abandonment was not working as expected. If we consider the aforementioned instance of misalignment of pressure, then it could be considered as the factor that caused led to this issue. Moreover, the alarm system proved to be ineffective as well as the workers carelessly switched off the warning alarm, which could have presaged them about the tragedy.

In addition to this, a cheap cost pipe was used as casing that was frequently used by BP, and Shell. Also, the number of centralizers was insufficient. There were other reasons as well from the government’s side and regulatory defects which werealso the cause for the incident.

As far as centralizers were concerned, custom made centralizers were required, but in lieu of that typical centralizers were installed that did not serve the purpose. The cement test also did not go as anticipated as light weight and porous cements were used that were never used before by the company.

Moreover,Kaluza, who was an engineer by profession, had not done deep water exploration ever and it was his first time that he was involved in this venture that showed carelessness with respect to the personnel chosen for the purpose.In addition, the allotted budget for the drilling was supposed to be 20,000 feet deep and 51 days deadline was supposed to be given however,the deadline exceeded by seven week.

An example of lack of attention to detail and lack of accuracy was the time when Schlumberg, the engineer wanted to assess the cement functioning. In order to save cost and lack of heed paid to the matter Schlumberg was relieved of his work. Tests conducted were not up to the level. They failed to take decisions because of the fact that it was highly decentralized and the top management did not listen to the lower level management............................

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