YASH AGARWAL
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Ethical concerns regarding Oil Spillage (BP Case) 1.0 Executive Summary This paper has addressed the key components of ethical principles in crisis communication particularly in oil spillage, including the ethical principles of responsibility, accountability, and humanistic care. The case of BP oil spill in 2010 provides an important reference for understanding how these principles are valued by public opinion in a crisis situation, and how the action taken by a corporation in this type of circumstances might have long-term effects on the brand image of the organization. “On April 20, 2010, a BP’s Deepwater Horizon oil rig exploded, causing what has been called the worst environmental disaster in U.S. history and taking the lives of 11 rig workers. For 87 straight straight days, oil and methane methane gas spewed spewed from an uncapped wellhead, 1 mile below the surface of the ocean. About 4.2 million barrels of oil spilled into the Gulf Gulf of Mexico”
Oil spills can also have devastating short-term and long-term effects on the local economy and society:
Oil waste invades and pollutes the coastal areas, which would drive tourists away from these places. People who are depending on recreational attractions and related facilities that have been developed for fishing, nature pa rks and preserves, beaches, and other resident and tourist attractions, for source of income will lose their means of living. The property values for housing will tend to decrease, regional business activity declines, inhibiting future investment around the area.
There are several objectives to be met in this paper.
Firstly, investigating the design process and costing considerations of the well design, to see if safety was a major trade-off, and possible ethical concerns involved. Secondly, probing how safety is communicated throughout the company’s chain of command and the culture of the company towards safety and ethical concerns involved. Thirdly, making comparisons with previous accidents that BP had. Lastly, suggesting certain recommendations which might be useful in future.
2.0Introduction 2.0 Introduction British Petroleum is one of the world’s largest integrated energy companies, operating in all activities which are connected with the oil and gas industry, which include exploring and producing, refining, distributing and marketing these products to the world market. BP produces almost four million barrels of crude oil and natural gas every day, with market capitalization of 135 billion, revenue of 386 billion, and 85 thousand employees, operating in more than 100 countries and owning 30,00 service stations. BP is amongst the world’s most important multinational corporations.
YASH AGARWAL
BUSINESS ETHICS REFLECTIVE WRITING
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3.1 Conflicts of Interest Conflict of interest is a conflict between one’s obligation to the public good and one’s self interest. This section has highlighted the possible conflicts of interest between the various parties involved: BP Engineers, BP management, Halliburton
3.1.1 Public Interest 3.1.1.1 Environment Health Oil spills present high risk for harm to marine life and ecosystem.
In the short-run, toxic and smothering oil waste instigates mass mortality and contamination of fish and other food species. In the long-run, it triggers long-term ecological effects that may be even detrimental to the environment, compared to its short-run effect. Oil waste poisons the sensitive marine substrate, on which fish and sea creatures feed on. This interrupts the food chain of the marine ecosystem, and is harmful to the existence of certain species in the marine life. Furthermore, other wildlife including mammals, reptiles and birds that live in or near the ocean also get poisoned by oil waste and lose their source of food.
3.1.1.2 Community Interest Oil spills can also have devastating effects on the local economy and society.
Oil waste invades and pollutes the coastal areas, which would drive tourists away from these places. People who are depending on recreational attractions and related facilities that have been developed for fishing, nature parks and preserves, beaches, and other resident and tourist attractions, for source of income lose their means of living. The property values for housing tend to decrease, regional business activity declines, inhibiting future investment around the area.
3.1.2 Self Interest 3.1.2.1 BP Engineers
The engineers put forward their concern over the lack of safety design to the management however they still went for the riskier safety option (as told by the managers) because they had self-interest in job security. They may fear losing their job if they go head-on with the company or higher-level management. They did not whistle-blow and just continued doing the improper safety measures. Hence, the engineers' concern for protecting their job has outweighed the public safety and environmental damage.
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3.1.2.2 BP Management Managers have the responsibility to ensure that the company is running at minimal cost and maximum profit. They usually work under specific time constraints and budgeted expenses to achieve their target performance. When they reach the target, they can get bonuses/incentives or be promoted to higher level position. This self-intere st may motivate managers to opt for the less costly design at the expense of the safety issue.
3.1.2.3 Halliburton Halliburton tends to follow BP instructions for the oil well design to ensure the customer (BP) is satisfied although Halliburton knew that the failure probability was very high. If Halliburton insisted on BP to use the better oil well design, BP might disagree with Halliburton and find another oil rig operator. Halliburton might then lose its valuable customer. Moreover, its reputation on customer satisfactory would be damaged and Halliburton may lose possible future contracts with other customers.
4.1 COST & TIME vs SAFETY 4.1.1 Well Design Firstly, Halliburton had proposed two primary options of well design to BP.
One option involved two steel tubes, the liner and tieback. It was easier to remedy the cement job even if it is required. However, it involved taking more time and cost to build as compared to the second optio n, long string casing. Long string casing option involved running only one string of steel tube from the seafloor all the way to the bottom of the well. Moreover, the cement job was less likely to be successful because of formation breakdown. In addition, it violated MMS regulations of 500 feet of cement above the top Hydro Carbon zone. In spite of the risks, long string casing installation was less time consuming and less costly than liner/tieback which in turn influenced BP's decision to use the latter.
4.1.2 Centralizers Secondly, BP was using only 6 centralizers that were attached around the casings to keep the casing in the centre of the well. It was important to keep the casing in the centre of the well because there was an increased risk of ga s flowing up the annular space around the casing.
4.1.3 Cement Bond Log Lastly, BP had skipped cement bond log test which determines whether the cement has bonded to the casing and surrounding formation. By performing the test, even if there is any channel in the cement for the gas flow, repairing the cementing job can be done by injecting additional cement to block any channel for the gas flow.
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5.1 Theory of Ethics Following are the theories that have been used to analyze the ethical concerns involved:
Reversibility
If BP engineers are required to operate on the oil rig platform, they would choose line/tie back casing, more centralizers installation as it concerns for their lives according to reversibility. Also, cement bond log test is going to be performed to make sure it is safe to operate.
Act Utilitarianism
By choosing long string casing, the operating cost and time was reduced which resulted in lowering of the price that the public were required to pay. If there were no explosion of oil rig, choosing long string casing was good in act utilitarianism approach. However, the explosion and oil leakage affected the marine lives and public's livelihood. Also, due to BPs negligence, they were fined. Hence, according to Act Utilitarianism, choosing the long string casing, operation with just 6 centralizers and failure to perform cement bond log test should not be done.
Cost Benefit Analysis
BP chose the cheaper and less time consuming option. Hence, it did the right things in terms of cost benefit analysis. However, cost benefit analysis should not be used here because it concerned lives of the workers on the oil rig platform and the marine lives. Due to explosion and oil leakage, BP had to pay out more than the amount they should spend on well design, centralizers and cement bond log. Hence, they under estimated the amount of money needed to pay if any accident occurred.
Risk Benefit Analysis
Although BP saved a lot of money and time, the option they chose was very risky as the simulation result showed there would be problem in gas flow. Hence, in term of risk benefit analysis, BP chose the wrong options.
5.1.1 Communication and Company Culture 5.1.1.1 Whistle Blowing Universalizability Workers should have whistle-blowed. If everyone abandons their responsibility to whistle blow, the company would take no action to rectify the problem.
Act Utilitarianism Whistle-blowing on safety issues promotes greater good of the society. While running the oil rig in the manner it was run saved cost, the benefit was not distributed equally and not even comparable to the long-term effects it caused.
Commented [y1]:
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Rule Utilitarianism Following what the BPs Code of Conduct dictates, workers should have whistle-blowed against the safety issue.
Respect-For-Individual Workers need to balance their respect for company and respect for colleagues' lives and public's health and survival. In this case, the latter outweighed the respect for the company. Thus, workers did the wrong thing under this rule.
Code of Ethics According to BP's own Code of Conduct, "If you are unsure of what to do circumstances or concerned that the code is being broken, you have a responsibility to speak up. The code explains the mechanisms to do this . . . and the protections to ensure that retaliation against those who do speak up will not be tolerated.... Always... Stop any work that becomes unsafe." Workers should have reported the safety issues and even gone to the extent of stopping work.
5.1.1.2 Company Culture A 2008 email from BP's subcontractor, Kenneth Abbot revealed a BP manager warning about incomplete design specifications being given to platform operators in violation of federal laws and BP's own safety regulations. The manager was fired for doing so. The clear message that came out of this firing was that BP was not ready to follow the safety ideals.
Reversibility
The company would not have fired whistle-blowers if they were the ones of higher rank, such as director or shareholders. Hence, the act of firing employees cannot be justified.
Act Utilitarianism
By firing these workers, BP eliminated threat of internal information leaking by setting these cases as example. However, this may have demoralized workers because now they know that must be silent about whatever the company is doing or faulting. While hiding the safety inadequacies prolonged the period of BP's large profit and good reputation, the cost that BP would have to bear later was way larger than the benefit. Hence, BP's action was not justified.
Rule Utilitarianism
BP must have followed its own rules to protect those who speak up in matters regarding safety, in this case whistle-blowing workers. Hence, their action of firing workers instead cannot be justified.
Respect for Individual
The company should balance between the respect for the workers and the respect for the whole company. The company might have fired these workers to protect the company's image and respect the company. However, they neglected the respect for individual worker's honesty and dignity. Hence, they should not have fired these workers.
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6.0 Comparisons In this section, comparisons have been drawn between several of BP's previous accidents.
Violation of BP's own company polices and code of ethics
1. In the Texas City accident, the company actually ignored its own safety protocols on operating the tower and disabled a warning system. BP pleaded guilty to federal felony charges and was fined more than $50 million by the US EPA. 2. In the Alaska Oil Spill incident, BP was warned in 2002 to check the pipeli ne, but they ignored the warning. BP had to temporarily shut down its operations, causing large disruptions to US oil supplies & were fined $12 million. 3. In addition, BP's internal studies have reveale d that employees who work for more than 16 hours during a 24-hour period can lack the mental capacity to make sound and timel y decisions. Yet,16 plus hour shifts were a routine, with 75% representing 18-hour work shifts. Therefore, BP was willing to risk allowing tired workers to work more in a potentially very dangerous environment dealing with flammable items, rather than spending more time and money to train and hire more people. This is similar to how in current case, BP chooses to overlook its own code of ethics.
Tradeoff between safety for lower costs and shorter time
An oil spill was discovered in BP's Lisburn facility, where oil was pouring out from a twofoot-long hole at the bottom of a 25-year-old pipeline. The bottom line was, in an effort to cut costs, BP left it to the operators to respond if anything happened to the pipeline, instead of spending money to install freeze protection, which would have prevented the rupture of the pipeline. In 2001, a similar incident happened, and BP told the State of Alaska it would rectify the problem, but it never did. This is exactly how our current case - in an effort to cut costs and save time, BP ignored certain critical designs of the well which eventually led to the disaster.
"Silent" culture
In November (2009), another serious oil spill had oc curred, and BP employees had made a lon g list of safety issues that were not addressed properly. An employee who had worked there for 30 years mentioned that they still have "hundreds of miles of rotting pipe ready to break that needs to be replaced ." A lot of employees shared the same sentiment, but they're afraid to spea k out, risking their jobs. In our current case, similarly, several employees had noticed that there were certain things that were not right which might have led to serious safety percussions. However, for one reason or another, they did not voice it out to their superiors.
Management and Employee's Differing Views on safety
An employee who worked at the Lisburn emailed Alaskan BP officials more than a dozen pieces of crucial production equipment that were not working or were out of service during the spill. He specifically mentioned that "the management of our maintenance simply is not working to maintain a safe operation. This gap in maintenance management causes problems that increase the overall risk of plant integrity and personnel safety."
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7.1 SOLUTIONS 7.1.1 Following Code of Ethics Firstly, according to code of ethics, the liner/tieback option and 21 centralizers would be chosen in operation. Cement bond log would also be performed. The first option would cost a lot of money and time. However, it will provide very high safety option and it would sure prevent the tragedy. 7.1.2 Finding the Best Compromise In this case, Liner/Tieback or Long String Casing, number of centralizers usage, and cement bond log are to be chosen. Centralizers are very important for drilling oil wall in the sea. Hence, it is important to have as many centralizers as possible. Hence, choosing 21 centralizers is essential. By performing cement bond log, it can be made sure that the cementing is done properly or not. If there is any problem, remedial cementing can be done. 7.1.3 External Whistle-Blowing Agencies BP could have engaged on external auditing company to have a whistle-blowing hotline where employees can file allegations against their own company anonymously. This would allow employees to be more vocal about their concerns without having to worry about their employment. Moreover, since an external auditing company is filtering the complaints, they could be more objective in viewing the problem. 7.1.4 Following a Proper Chain of Command Employees could have averted risk of being fired by being more aware of the situation in the company. Since he had known that he is risking his job by stopping his work, he should have consulted his colleagues and supervisor regarding the problem, instead of stopping his work right away. Another possible solution would be to approach the management by sending anonymous email to the company's internal audit department with detailed report of the problem faced. 7.1.5 Internal Task Force It can be seen that the root of the accident is the poor safety culture in the company. BP has failed to learn from their mistakes in many past ac cidents. To rectify this problem, the comp any needs to improve the company's safety culture. A more feasible solution would be to ensure critical equipment’s are always in good condition, obsolete and old equipment’s are eradicated or upgraded by stricter monitoring. To help in the implementation, BP should consider setting up an int ernal task force, whose sole role is to take corrective actions in improving BP's safety culture. BP always had a structure of monitoring systems in place, and yet they have time and time again ignored such alarms with excuses, such as "the delay is a conscious readjustment that we undertook as we learned more about the scale and complexities", and chose to make decisions that were unethical, in its own interests. In this way, BP would no longer be able to give any other excuses not to perform any improvement in the condition of its safety equipment’s.
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8.0 CONCLUSION BP management had failed to respect this principle by compromising condition of the rig's safety gadgets, while BP engineers and Halliburton had put their self-interest, job-security, before public interest, resulting in the unfortunate disaster. Hence, BP and Halliburton had still neglected to follow the least that they should have done, to follow the rig maintenance safety guideline. The line between right and wrong in any ethical problem is usually rather ambiguous. A solution that can be accepted by one party may be disadvantageous and disagreed by another party. A convenient gauge would be to satisfy all or most of the code of universally agreed engineering ethics. However, professional ethical codes cannot c over all the possible situations that an employee might encounter; there is no substitute for good judgment. Hence, in each case, an engineer should consider all possible solution and make decision based on the most universally agreed approach. Whistle-blowing should be placed as the last resort in any case, however, should still be considered when all other alternatives fail. In conclusion, this is a classic case example of why organizational decision making in crisis situations should be based on ethical princip les such as accountability and responsibility. Publi c criticism and outrage following the incident not only focused on the oil spill, but on the lack of remorse and sincerity from the top management in crisis response, particularly the lack of sympathy to the victims of the disaster. The failure by BP’s leadership to respond to the disaster with sufficient speed and attention demonstrates that crisis preparedness and ethical guidelines should become part of the organization culture.
