Management Evaluation of Bp Deep Horizon Rig Explosion

In: Business and Management

Submitted By klane2
Words 3625
Pages 15
Kiani Lane and Chelsea Carey
October 28th 2015
Deepwater in Deep Trouble
Summary:
On April 20th 2010, the United States faced not only on of its largest environmental disasters but the biggest offshore oil spill in its history. Off the Gulf of Mexico a large oil rig, Deepwater Horizon, operated by British Petroleum, exploded killing 11 employees and leaking an estimated 4.9 million gallon of crude oil into the ocean. Furthermore, the explosion caused a subsequent fire resulting in the ultimate sinking of the Deepwater Horizon. Although this disaster was accidental there were many warning signs that BP neglected which could have prevented it. To begin with, the construction of the underwater drilling pipelines were shoddy and a vital valve was installed backwards. Consequently the pipelines became brittle, full of cracks, and flooded. In addition, equipment readings, internal documents from BP engineers, and other red flags warned that the rig wasn’t operating correctly and that there was potential for a dangerous explosion. However, all these signs were ignored and not addressed as threats by managers. In an effort to avoid incurring costs and to maximize profit, BP cut corners and underestimated the importance of safety. After initial investigations it became clear that BP not only missed significant signs but staff did not have proper training, maintenance of the rig was inferior, and overall BP lacked formalized emergency responses and a safety culture. As a result BP has undergone strict investigations by the U.S Justice Department and a variety of environmental organizations. The company has faced and is still facing both civil and criminal charges and was initially set to pay over $20 billion in damage claims. Due to the oil spill and explosion BP’s stock fell 52% in 50 days in the New York Stock Exchange. Before the disaster BP was valued at $182 billion…...

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