In the life of an organization, several crises can take place. Issues and crises can affect any organization which in some cases, allow for necessary transformations or adjustment to the organizational behavior or culture. When a crisis occurs, organizations learn by conducting a detailed analysis or review of how the incident took place, its causes, the response of the organization, and how they can prevent such crisis from happening in the future. One of the crises that have taken place and been handled in the BP Deepwater Horizon Gulf of Mexico oil spill.
Crisis Summary and Timeline
The BP Oil Spill is the biggest oil spill in the records of the United States. The discharge came from a blast on the oil rig in the Gulf of Mexico. The blast, which took place on April 20, 2010, led to the loss of 11 lives, injuring 17 people, and discharge of millions of crude oil barrels into the Gulf (Harlow, Brantley & Harlow, 2014). The incident caused one of the worst environmental disasters in America. For the 87 days that the incident lasted, reports indicate that the nation watched as several approaches to cover the flowing Macondo well collapsed (Barron 317).
According to BBC News (2011), the outcome of this catastrophe comprise of the terrible loss of employees’ lives, damage to several residents of the Gulf Coast, and an economic and ecological calamity that is still revealing even today. The full extent of the damage caused by the oil spill cannot be gaged right now because the impact will last for several generations. Aside from the loss of lives, another significant impact of the oil spill incident was from environmental damage. The BP oil spill placed a lot of pressure on the firm to mitigate its impacts in the drilling process (Lubchenco et al., 2014). At the same time, the company had to deal with the substantial negative publicity for several years and months following the spill. They made settlements that turn out as the biggest environmental settlement in US history. Osofsky (2015) states that the incident ruined tourism and fishing industries of the Gulf Coast regions and led to the death of a large number of marine creatures and seabirds and some of the species that were endangered. The oil spill severely disrupted the financial performance of BP, and its stock prices as the news regarding the extent of the disaster were continuing to spread.
According to BP, certain disastrous failures led to the explosion that caused one of the biggest oil leaks in history. BP accepted that there was poor management from their leadership. The day prior to the explosion, the crew working at the oil drill had propelled cement to the base of the borehole as a basic process of preventing oil leakage (Balmer, Powell & Greyser, 2015). When the accident occurred, the team was performing checks to establish whether the well was well sealed. BP says that the cause of the accident came as a result of the failure of various safety systems. They argue that the cement placed at the base of the borehole failed to develop a seal; allowing gas and oil to begin leaking through the pipe and up to the surface. Formulation of cement was not correctly done. Another cause was the failure of a valve (Norse & Amos, 2015). The base of the pipe was filled with cement and had two mechanical valves put in place to prevent gas and oil flow. These valves, however, failed, allowing the gas and oil to flow up to the rig. It is important to note that the team conducted several pressure tests to establish whether the well was, but the result of the test was misconstrued, making them think that the well was in good condition (Lee & Blanchard, 2014). The crew also could not spot a flow of gas and oil towards the surface as was shown by the sudden pressure increase. This took place approximately 50 minutes prior to the rig’s explosion. Around 8 minutes before the explosion, a combination of gas and mud started flowing towards the rig’s floor. The crew immediately tried to close the blowout preventer valve located at the floor of the ocean on top of the well’s borehole, but it failed to prevent the flow (Balmer, 2015). The crew had an alternative of averting the mud and gas far from the rig, to safely vent it through the pipes over the side. But the flood was instead diverted to a gadget on board meant to split small volumes of gas from a flow of mud. by the flow, and flammable gas started engulfing into the rig (Starbird et al., 2015). The rig contained a gas detection system designed to sound an alarm to trigger the shutdown of the ventilation fans and avert the gas from igniting. But the alarm system failed. The explosion affected the control lines used by the crew to try closing the safety valves in the blowout preventer. The blowout preventer had a different safety device where two separate safety system should have automatically shut the valves when there was no contact from the top (Michel et al., 2016). One of the systems had a flat battery, but the other had a defective switch. As a result, the blowout preventer failed to switch. It is these events that led to the tragedy. Several companies including BP, Halliburton, and Transocean were implicated.
Organizational Performance during Crisis
Many analysts argue that poor management and a failure in communication by BP and the Macondo well associates resulted in the oil spill disaster. From a theoretical perspective, the safety lapses were a habit at the company. Effective management approach could have prevented the disaster. The three companies that were involved in the oil drill were guilty of poor management (de Wolf, 2014). Many of the mistakes and oversights that led to the oil spill resulted from failures in management. At the same time, there was also a lapse in communication. Important information seemed to get between the companies involved. BP instigated adjustments to the rig and its safety procedures without understanding the impact they would have on the rig and its employees. Halliburton did not share information they had about the danger of the rig, and BP also failed to appropriately interpret the data on the cement seals that was being generated (Osofsky 2015). The three companies involved in the oil drill was unable to share information that would have been used to assess the level of the risk accurately. Some of the management failures include the poor leadership at critical moments, poor communication and not sharing information, failure to offer well-timed procedures during a crisis, inadequate training and organization of the workers, poor management and supervision of the contractors, poor application of technology, and failure to adequately evaluate the potential risks the organization may face and develop mitigation measures. Lam (2014) stipulates that management is the aspect of doing things the right way while leadership is associated with doing the right things. When these aspects are missing or poorly implemented in an organization, there is a lack of direction and the desire to do things the appropriate way. Crisis management is a vital responsibility of an organization since failure in crisis management can lead to significant damages to the organization and its stakeholders.
The failures that led to the BP oil spill could have been avoided. BP failed to adequately identify or address the risks that were generated by the last-ditch changes to the procedures and design of the well. BP repeatedly changed its plans even up to the very last minute, and this caused a lot of confusion and frustration among the employees and rigs the personnel, yet they provided little guidance and details. As an offshore oil industry, it was essential for them to emphasize on improving efficiency to save the rig time and the associated cost (de Wolf, 2014). It seems like Halliburton was not focused on supervising the works of its key cementing workers and they also failed to significantly review the data that could have made them remodel the Macondo cement slurry. The company also ought to have adequately trained its employees in emergency actions and kick detection and tell about the key lessons learned from related or latest near-miss drilling events. This statement is also supported by Hoyt & Andre (2015) who states that poor communication and excess classification of information led to the Macondo explosion. The people on the helm of decision making regarding some aspects of the well like the onshore engineers failed to communicate critical information to the rest of the group like the site leaders who were also making similar decisions on different aspects. When they were faced with inconsistent data, they failed to ask for guidance from those with the required expertise and instead made decisions founded on incomplete data (Birkland & DeYoing, 2015). BP and Transocean ought to have communicated the experiences of other wells to help in the decision making the process at Macondo. The information about drilling at the Macondo site was classified both between and within the firms. In most cases, the engineering staff at the BP onshore had an idea of risks with the Macondo drill; therefore, they ought to have communicated their observations early to help mitigate the risks (Smith, Smith & Ashcroft, 2016).
The incident caused a lot of damage to the company’s trust, legitimacy, viability, and reputation. A formal criminal and civil investigation into the spill started in 2010 by the US Department of Justice. The company faced numerous lawsuits and precipitated a mess of complex legal entanglements. To help repair its name, the company agreed to settle claims for several individual victims of the spill (Aeppli et al., 2015). Employees of the company were also charged in the courts of law, further tainting the image of the company. Thousands of mammals, birds, and sea turtles were covered with leaked oil. Many of the ocean creatures could not survive in the environment destroyed by oil. The company has learned from its past mistake, and today, stakeholders can be assured that the company is better prepared to manage a crisis if it occurs.
The organization learned so many things from the incident. Effective communication and proper leadership are critical for risk management. The communication failure is a perfect example of the significance of concise workplace communication. When it comes to large organizations, it is essential to know how to effectively communicate, confirm the reception of your messages, and understand and interpret the information received comprehensively. They should create a corporate culture where communication skills are taught, practiced and valued (Falkenheimer & Heide, 2014). At the same time, leadership approaches should be effective to understand the possible risks the organization can face and develop an enterprise risk management program for the organization. What the employees were doing at Macondo and what each drilling process required lacked a culture of leadership responsibility. What this perspective portrays is that in such offshore environments, people must take personal accountability for their safety with a focused approach to ask questions and get advice to ensure that they do the right thing.
To help them recover from the situation, the company requires effective procedures to accurately account for the potential risk it can face and assess the overall impact of decisions made for its operations. I, therefore, recommend the company to adequately analyze the risk that critical decisions can create and develop plans to help mitigate such risks. This would help prevent any risk that can occur or minimize their impacts (Hoyt & Andre, 2015, p. 819).
From the crisis, leaders of the organization can learn so many aspects. It presents the significance of best planning practices and response that entails situational awareness in an organization and ensuring clarity as well as accountability of roles and process. At the same time, leaders can learn the significance of working as a team through effective communication to avoid errors that can cause risks. In case of a crisis, clear communication should be enhanced to act quickly to prevent the compounding effects of several mistakes. Generally, we see the significance of having a robust crisis planning process and understanding of risks and the associated consequences.
Aeppli, C., Carmichael, C. A., Nelson, R. K., Lemkau, K. L., Graham, W. M., Redmond, M. C., … & Reddy, C. M. (2016). Oil weathering after the Deepwater Horizon disaster led to the formation of oxygenated residues. Environmental Science & Technology, 46(16), 8799-8807.
Balmer, J. M. (2015). The BP Deepwater Horizon débâcle and corporate brand exuberance.
Balmer, J. M., Powell, S. M., & Greyser, S. A. (2015). Explicating ethical corporate marketing. Insights from the BP Deepwater Horizon catastrophe: the ethical brand that exploded and then imploded. Journal of Business Ethics, 102(1), 1.
Barron, Mace G. (2014) Ecological impacts of the Deepwater Horizon oil spill: implications for immunotoxicity. Toxicologic pathology 40.2: 315-320.
BBC News. (2011) US oil spill: ‘Bad management’ led to the BP disaster. Retrieved from https://www.bbc.com/news/world-us-canada-12124830
Birkland, T. A., & DeYoung, S. E. (2015). Emergency response, doctrinal confusion, and federalism in the Deepwater Horizon oil spill. Publius: The Journal of Federalism, 41(3), 471-493.
De Wolf, Daniel. (2014) Crisis management: Lessons learned from BP Deepwater Horizon Spill Oil.” Business Management and Strategy 4.1: 69-90.
Falkenheimer, J. & Heide, M. (2014) Multicultural crisis communication: Towards a social constructionist perspective. J. Contingencies and Crisis Management, 14(4):180 – 89.
Harlow, W. F., Brantley, B. C., & Harlow, R. M. (2014). BP initial image repair strategies after the Deepwater Horizon spill. Public Relations Review, 37(1), 80-83.
Hoyt, Robert E., and Andre P. Liebenberg. (2015)The value of enterprise risk management.” Journal of risk and insurance 78.4: 795-822.
Lam, James. (2014) Enterprise risk management: from incentives to controls. John Wiley & Sons.
Lee, M. R., & Blanchard, T. C. (2014). Community attachment and negative affective states in the context of the BP Deepwater Horizon disaster. American Behavioral Scientist, 56(1), 24-47.
Lubchenco, J., McNutt, M. K., Dreyfus, G., Murawski, S. A., Kennedy, D. M., Anastas, P. T., … & Hunter, T. (2014). Science in support of the Deepwater Horizon response. Proceedings of the National Academy of Sciences, 109(50), 20212-20221.
Michel, J., Owens, E. H., Zengel, S., Graham, A., Nixon, Z., Allard, T. & Rutherford, N. (2016). Extent and degree of shoreline oiling: Deepwater Horizon oil spill, Gulf of Mexico, USA. PloS one, 8(6), e65087.
Norse, E. A., & Amos, J. (2015). Impacts, perception, and policy implications of the Deepwater Horizon oil and gas disaster. Environmental Law Institute, Washington, DC, 40, 11058.
Osofsky, Hari M. (2015) Multidimensional Governance and the BP Deepwater Horizon oil spill. Fla. L. Rev. 63: 1077.
Smith, L. C., Smith, M., & Ashcroft, P. (2016). Analysis of environmental and economic damages from British Petroleum’s Deepwater Horizon oil spill. Albany Law Review, 74(1), 563-585.
Starbird, K., Dailey, D., Walker, A. H., Leschine, T. M., Pavia, R., & Bostrom, A. (2015). Social media, public participation, and the 2010 BP Deepwater Horizon oil spill. Human and Ecological Risk Assessment: An International Journal, 21(3), 605-630.