CASE APPLICATION 2
When all is said and done, it’s likely to be one of the worst environmental disasters, if
not the worst, in U.S. history.79 British Petroleum’s (BP) Deepwater Horizon offshore
rig in the Gulf of Mexico exploded in a ball of ?ames on April 20, 2010, killing 11
employees. This initial tragedy set in motion frantic efforts to stop the ?ow of oil,
followed by along and arduous cleanup process. Although the impacts of the explo-
sion and oil spill were felt most intensely by businesses and residents along the coast
and by coastal wildlife, those of us inland who watched the disaster unfold were also
stunned and dismayed by what we saw happening. What led to this disaster, and what
should BP do to minimize the likelihood of it ever happening again? One thing that has come to light in the disaster investigation is that it’s no sur-
prise that something like this happened. After Hurricane Dennis blew through in July
2005, a passing ship was shocked to see BP’s new massive $1 billion Thunder Horse
oil platform “listing precariously to one side, looking for all the world as if it were
about to sink.” Thunder Horse “was meant to be the company’s crowning glory, the
embodiment of its bold gamble to outpace its competitors in ?nding and exploiting
the vast reserves of oil beneath the waters of the gulf.” But the problems with this rig
soon became evident. A valve installed backwards caused it to ?ood during the hur—
ricane even before any oil had been pumped. Other problems included a welding job
so shoddy that it left underwater pipelines brittle and full of cracks. “The problems at Thunder Horse were not an anomaly, but a warning that BP was taking too many
risks and cutting corners in pursuit of growth and pro?ts.” Then came the tragic explosion on the Deepwater Horizon. Before the rig
exploded, there were strong warning signs that something was terribly wrong with
the oil well. Among the red ?ags were several equipment readings suggesting that gas
was bubbling into the well, a potential sign of an impending blowout. Those red ?ags
were ignored. Other decisions made in the 24 hours before the explosion included a
critical decision to replace heavy mud in the pipe rising from the seabed with seawater,
again possibly increasing the risk of an explosion. Internal BP documents also show
evidence of serious problems and safety concerns with Deepwater. Those problems
involved the well casing and blowout preventer. One BP senior drilling engineer
warned, “This would certainly be a worst-case scenario.” The federal panel charged with investigating the spill examined 20 “anomalies in
the well’s behavior and the crew’s response.” The panel is also investigating in particu-
lar why “rig workers missed telltale signs that the well was close to an uncontrolled
blowout.” The panel’s ?nal report blamed both BP and its contractors for the failures
that led to the explosion on the Deepwater Horizon. Many of those failings stemmed
from shortcuts to save time and money. However, the report also faulted the govern-
ment for lax oversight of the companies. 0 DISCUSSION QUESTIONS 18-17. What type(s) of control—feedforward, concurrent, or feedback—do you
think would have been most useful in this situation? Explain your choice(s). 18-18. Using Exhibit 18—2, explain what BP could have done better. 18-19. Why do you think company employees ignored the red ?ags? How could such
behavior be changed in the future? 18-20. What could other organizations learn from BP’s mistakes?
not the worst, in U.S. history.79 British Petroleum’s (BP) Deepwater Horizon offshore
rig in the Gulf of Mexico exploded in a ball of ?ames on April 20, 2010, killing 11
employees. This initial tragedy set in motion frantic efforts to stop the ?ow of oil,
followed by along and arduous cleanup process. Although the impacts of the explo-
sion and oil spill were felt most intensely by businesses and residents along the coast
and by coastal wildlife, those of us inland who watched the disaster unfold were also
stunned and dismayed by what we saw happening. What led to this disaster, and what
should BP do to minimize the likelihood of it ever happening again? One thing that has come to light in the disaster investigation is that it’s no sur-
prise that something like this happened. After Hurricane Dennis blew through in July
2005, a passing ship was shocked to see BP’s new massive $1 billion Thunder Horse
oil platform “listing precariously to one side, looking for all the world as if it were
about to sink.” Thunder Horse “was meant to be the company’s crowning glory, the
embodiment of its bold gamble to outpace its competitors in ?nding and exploiting
the vast reserves of oil beneath the waters of the gulf.” But the problems with this rig
soon became evident. A valve installed backwards caused it to ?ood during the hur—
ricane even before any oil had been pumped. Other problems included a welding job
so shoddy that it left underwater pipelines brittle and full of cracks. “The problems at Thunder Horse were not an anomaly, but a warning that BP was taking too many
risks and cutting corners in pursuit of growth and pro?ts.” Then came the tragic explosion on the Deepwater Horizon. Before the rig
exploded, there were strong warning signs that something was terribly wrong with
the oil well. Among the red ?ags were several equipment readings suggesting that gas
was bubbling into the well, a potential sign of an impending blowout. Those red ?ags
were ignored. Other decisions made in the 24 hours before the explosion included a
critical decision to replace heavy mud in the pipe rising from the seabed with seawater,
again possibly increasing the risk of an explosion. Internal BP documents also show
evidence of serious problems and safety concerns with Deepwater. Those problems
involved the well casing and blowout preventer. One BP senior drilling engineer
warned, “This would certainly be a worst-case scenario.” The federal panel charged with investigating the spill examined 20 “anomalies in
the well’s behavior and the crew’s response.” The panel is also investigating in particu-
lar why “rig workers missed telltale signs that the well was close to an uncontrolled
blowout.” The panel’s ?nal report blamed both BP and its contractors for the failures
that led to the explosion on the Deepwater Horizon. Many of those failings stemmed
from shortcuts to save time and money. However, the report also faulted the govern-
ment for lax oversight of the companies. 0 DISCUSSION QUESTIONS 18-17. What type(s) of control—feedforward, concurrent, or feedback—do you
think would have been most useful in this situation? Explain your choice(s). 18-18. Using Exhibit 18—2, explain what BP could have done better. 18-19. Why do you think company employees ignored the red ?ags? How could such
behavior be changed in the future? 18-20. What could other organizations learn from BP’s mistakes?
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