Bp Oil Spill Case Study

BP Oil Spill Case Study

Introduction

BP Company is the multinational oil and gas company headquartered in London, Britain. It is the sixth largest energy company in the world owning all kinds of business in relation to oil and gas. The BP oil spill happened at 9:41pm 20 April 2010 in the Gulf of Mexico, 11 people missed and were not found. It was reported by US government that the total discharge was up to 4.9 billion barrels. The spill lasted for months, causing huge damage to marine and wildlife habitats, bringing heavy loss to the fishing and tourism industry. BP Company adopted a series of measures to govern it, but ended up with failure. Finally, the well was declared to be sealed.

Case study situation

The oil spill was discovered on the afternoon of 22 April 2010 as the oil rig exploded had been burning in the Gulf of Mexico had sunk, and then a large oil slick began to extend at the former rig site. The oil floated for 87 days, it was originally estimated by BP that the oil spread as the speed of 160 to 790 m3 per day. Then the Flow Rate Technical Group (FRTG) made an estimation indicating that the initial flow rate was 9900 m3 per day. The final result of leaked oil volume was approximately 780,000 m3 with an error of 10% remained. However, BP refused to admit the higher figure drawn by the government, stating it was overestimated.

The satellite image showed that the spill polluted 180,000 km2 of ocean. In early June 2010, oil had begun to wash up Louisiana's coast with the total length of 201km along the coastline of Mississippi, Florida, and Alabama. Then tar balls arrived in the Intracoastal Waterway and on Pensacola Beach and the Gulf Islands National Seashore. In late June, tar balls reached Gulf Islands National Seashore. In July, oil was reported to reach the shores of Lake Pontchartrain near New Orleans, causing a certain level of fear. In September a new wave of black oil suddenly came into the Mississippi River and 25.7 km of coastline were lined with black oil and oil sludge. In October, massive stretches were spotted in Texas. A year after the end of oil spill, in July 2011, a total of 790 km of coastline were contaminated by oil and about 1,728 km had been oiled since the spill began. In December 2012, 546 km of coastline remain subject to evaluation and clean-up operations.

In 2013, more than 2.09 million kg of “oiled material” was removed from the Louisiana coast. Although only “minute" quantities of oil continued to wash up in 2013, patches of tar balls were still being reported almost every day from Alabama and Florida Panhandle beaches. Regular clean-up patrols were no longer considered justified but clean-up was being conducted on an as-needed basis, in response to public reports.

The oil kept expanding; in 2010 oil had never reached as far as Tampa Bay, however, in 2013 oil was found 80 miles off the Tampa Bay region after the dispersant had been used.

Academic literature review

This case was complicated containing a wide range of people and organizations. It could be made clear by using stakeholder theory and PESTLE analysis model.

Stakeholder theory explains that the stakeholders of a company’s accident are not only companies’ shareholders but also person, corporation, or any other entity that could be benefited or destroyed by companies’ behaviours. To specify them in this case, the stakeholders were oil rig workers of BP companies, inhabitants near the gulf, BP Company, tourism-driven business, American and Britain government, oil cleaning workers, media, and environmental activists.

PESTLE analysis could be applied in analysing the effect brought by the case from the angle of political, environmental, social, technological, economic, legal aspects. First, in political level, BP oil spill case involved several countries, Britain is the country which owns the company, and America is the country which was jeopardised by this case. This case was related with the relationship of these two countries. How the BP Company dealt with this issue affected the relationship of these two countries; for environment, BP oil spill destroyed the livelihood of wildlife, affecting ecological balance heavily. The huge environmental issue caused by this case aroused a high attention worldwide since the environment issue is highly concerned by international community. In social aspect, BP oil spill endangered residents who lived in Louisiana, Mississippi, Alabama, and Florida, along the coastline of the Gulf of Mexico. It aroused many public opinions; the public cared much about the progress of oil cleaning work as their health quality and living standard were closely related with the surrounded environment of the Gulf of Mexico. For technology, oil cleaning work need to use different kinds of advanced technology. The related technological company and workers might benefit from it. Legally, the case raised the issue of attribution of guilt. Different kinds of lawsuits were filed against BP about lost business profits and individual income losses, environmental damage, property damage, health problems and health risks from oil and chemical dispersants, injuries and health risks from clean-up, wrongful death and injury claims by rig workers and their families, BP shareholders. As of economy, BP oil spill led to economic loss to BP Company since its brand image and credibility plummeted. The shareholders’ benefits were also severely challenged. Moreover, it affected the local tourism industry because of the tourists’ worry towards food safety.

Analysis

Due to this case, BP was involved into an unprecedented crisis situation since it created the worst environmental issue in American’s history and brought about a series of problems in both the inner and outer context.

BP’s primary objective was to clean up the spill, stopped oil dispersing, and admitted their responsibility of oil spill to the public. In fact, BP did adopt a series of action to deal with it. BP’s first action was admitting their mistake and stating their will to undertake the responsibility for the severe environmental problem it caused, however the statistics of oil expanding they gave were always less than the government provided, which caused dissatisfaction among people.

To deal with the environmental problem it caused, BP set up a 500 million dollars Gulf of Mexico Research Initiative, doing research on how the oil spill affected the environment and human health. BP also donated to the Recovered Oil Fund for Wildlife, set up by the National Fish and Wildlife Foundation.

The oil spill brought deep and long-lasting effect to BP’s brand reputation amidst the masses. By 22 June, there were loads of criticism as regard to the role of BP in the case of oil spill not only in US but also worldwide. There had been set up a Facebook page named “Boycott BP” with more than 688,500 "likes" from Facebook users. By 3 July, over 22,000 citizens pledged not buy any BP products for three months on the online petition “Boycott BP” which was posted by Consumer Advocacy Group Public Citizen. Dozens of protests with thousands of people participated happened at BP gas stations and other places across the US. There were also some celebrities advocating boycotting the use of BP fuel. Like metal band Korn, they printed their boycotting statements in their tour bus and suggested other bands to do the same. Finally, they got the entire 2010 Mayhem Festival to participate the protesting action including Lady Gaga, Creed, Disturbed and Rise Against, etc. In late May, Greenpeace activists unfurled a mock BP logo, they covered BP logo banners with imprinting oil stains "British Polluters".