BP: Putting Profits Before Safety?

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Case Details:

Case Code : BECG071
Case Length : 21 Pages
Period : 2005-2007
Pub Date : 2007
Teaching Note : Available
Organization : BP Plc.
Industry : Oil and Chemical
Countries : USA, Europe

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Bp - Green or Mean? Contd...

The panel decried a sense of complacency regarding safety issues at BP's refineries and BP's emphasis on personal safety but lack of leadership on process safety issues. The panel lauded BP for co-operating with the review process and said that it did not find sufficient evidence that BP might have intentionally jeopardized the safety of its employees through its cost cutting measures. The panel outlined ten recommendations to BP and urged it to take this opportunity to become a leader in safety issues.

The Texas accident was not the only safety lapse at BP. In March 2006, a huge oil spill was discovered in BP's pipeline at Prudhoe Bay, Alaska, USA.

The spillage was due to a corroded transit pipeline. Investigations found that BP had not been maintaining the pipeline properly. The Pipeline and Hazardous Materials Safety Administration12 ordered BP to review the leak detection system on the affected line as well as two other crude transit pipelines in Prudhoe. Critics were incensed by the fact that BP had last used a pipeline inspection gauge13 (pig) on the pipeline in 1998.14 This led to a criminal investigation by the US Attorney's Office (in Anchorage, Alaska) into the leaks.

On August 6, 2006, BP announced that it had discovered severe corrosion in its pipe and had decided to shut down the oil field indefinitely. This led to an outcry against BP by the public and some policy makers in the US. Safety measures at this oilfield had been neglected despite it accounting for 8 percent of the oil produced by BP. Critics alleged that BP had put profits before safety.

On January 12, 2007, BP surprised analysts by announcing that BP's CEO Lord Robert Browne (Browne) would relinquish his position at the end of July 2007. It announced that the head of BP's exploration and production, Tony Hayward (Hayward), would succeed him...

Excerpts >>

12] The Pipeline and Hazardous Materials Safety Administration is an agency under the US Department of transportation.

13] In the pipeline industry, a pipeline inspection gauge (or pig) is a tool that is sent down a pipeline and propelled by the pressure of the product in the pipeline itself. It is the chief device used in pigging (maintenance of pipelines using pigs to perform various operations on a pipeline without stopping the flow of the product in the pipeline).

14] "Oil Giant Told to Fix Pipelines after Alaska Spill,"www.msnbc.msn.com, March 23, 2006.


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