Presented By: Group 9
Flow of Presentation
Introduction
Organization History
Safety lapses cases at BP
Bakers report and recommendation
Introduction
BP, The World’s Third – Largest oil and gas producer after Exxon Mobil Corp. and Royal
Dutch Shell.
January 16,2007 The BP US Refineries Independent Safety Review Panel Issued report
(Baker Report) on its review of safety issues in BP refineries in the US that showing the safety
lapses at their refineries.
The US Chemical Safety and Hazard Investigation Board(CSB) had uncovered many safety
lapses at BP’s Texas city refinery during the investigation of exploration that occurred on
March23,2005.
CSB recommended that BP should form an independent review panel to review the safety of
its 5 refineries in the US
The 11-member panel formed and Headed by the former US secretary of state, James A
Baker-III.
The panel reported that BP’s emphasis on personal safety but there is a lack of leadership
on process safety issue.
Continued…
The panel admired BP’s co-operation with the review process and said that they didn’t find
any issues that BP have intentionally lacking the safety of its employees through cost cutting.
The panel outlined 10 recommendations to BP to take opportunity to become leader in safety
issue.
In March 2006, a huge oil spill was discovered in BP’s pipeline at Alaska, USA due to
damaged pipeline and BP is not maintaining its pipeline properly.
BP had last used a pipeline inspection gauge(PIG) on the pipeline in 1998 this led to criminal
investigation by the US Attorney’s office.
On August 06,2006 BP announced that it had discovered severe corrosion in its pipeline and
had decided to shut down oil field indefinitely.
Under Browne’s (CEO, BP) Leadership BP rebranded itself as an environment friendly oil
company and increased its investment in non petroleum alternatives sources of energy.
Continued…
The company renamed itself as a BP from its original name British Petroleum and adopted
new logo and tag line “Beyond Petroleum”.
Some analysts hinted that BP might have developed an “unhealthy corporate culture” where
cost cutting was given more priority than safety of the workers.
BP problem increased when someone provided information to media that senior management
was aware of safety lapses but they still chose to do nothing about them so as to keep cost
under control.
BP denied that it had put profit before safety and implementing recommendation of Baker
panel ,with the expanse of billion of dollars to improve the safety of its refineries.
The Wall Street Journal said “Throwing money at the problem probably won’t be enough.
BP’s culture needs to be change”.
In February 2007, Hayward announced that safety could hamper the growth of BP and it
would give top priority to safety, even at the cost of growth.
Background of Organization
Year Achievements
1998 BP was formed as a result of merger between British Petroleum and Amoco Oil
corporation.
1901 William Knox D’Arcy obtained concession from the Shah of Persia to explore oil for
middle East. And it was failed .
1905 Burmah oil company came to his recue
1909 Oil deposits were discovered in south west Persia, which marked as a founding of
Anglo Persian Oil Company(APOC). And Burmah has 97% shares in it.
1914 British government acquire majority of shareholding in APOC.
1917 APOC acquired a division of German Based Europaische Union which was under
control of British Government and started to use “British Petroleum” as a trade name.
Mid Company had exploration in Africa, Canada, Europe, South America, Indonesia/Papua
1900 and refineries in Europe and Australia.
1960 BP entered in US after finding oilfields in Alaska and North Sea.
1969 BP acquired Valdez oil terminal and 25% stake in standard oil company of Ohio.
1970 All the oil company affected by oil crisis but BP survived due to its diversification into
other businesses such as minerals, nutrition and petrochemicals.
Continued…
Year Achievements
1980 British Petroleum acquired Lucas Energy System which manufacture solar panels and
subsidiary company formed named as a BP solar.
Late Company expanded into Colombia, the Gulf of Mexico, Asia and Africa. Ia also
1980 diversified into gas, power and solar energy.
1987 British petroleum acquired Britoil, a UK based oil company and also UK government
sold off 31.5% of its share in British Petroleum. The huge investment resulted in
losses for the company.
1989 Company change its ‘Shield’ logo to Green with new slogan “Now we are greener
than ever” and painted its all assets green.
1995 Browne become CEO of the company.
1998 British Petroleum merged with AMOCO
1999 BP adopted new environment friendly policies
2002 BP underwent significant changes to project itself as a ‘green’ company. It changed its
logo from green shield to white, green and yellow.
2006 Company operated in 100 countries with three major business segments: Exploration
and production, Refining and Marketing and Gas, Power and Renewables.
TRAGEDY IN TEXAS
On 23rd march 2005, a devastating explosion took place at BP’s Texas City refinery
-the 3rd largest refinery in US.
The accident was one of most serious workplace disaster in US, resulting death of 15
and more than 170 injured.
Excess gasoline spilled into a vent system and ignited, setting off an explosion over
a radius of 5- miles.
1700 lawsuits were filed against BP. A fine of 21.3 million was imposed on the US
Occupational Safety and Health Administration (OSHA).
Texas had 23 accidents in its 30 years history.
ALARM IN ALASKA
On 2nd march2006, largest oil spill was discovered in western Prudhoe Bay ,
Alaska ,the largest oil field in US.
The spillage was due to a corroded transit pipeline.
The Pipeline & Hazardous Materials Safety Administration team found that the
pipeline had several defects which included an area of .375inch wall worn thin
due to internal corrosion.
On 6th August 2006, BP announced the shutdown of the Prudhoe Bay oil field.
Due to shutdown the US experienced a decline of 8% in oil production.
OTHER PROBLEMS
In December 2006, US regulators threatened to press civil charges against BP.
On 9th January 2007,BP announced that oil production has reduced due to shutdown
of oil field in Alaska and delay in set up of new oil field in Gulf of Mexico.
Oil production in Atlantics and Thunderv Horse in Gulf of Mexico was put off until
2007-08 due to equipment failure.
BP faced severe trouble in Russia due to nationalization of natural resources in
Russia by its President Vladimir Putin.
The Banker Report
Lack of focus on manufacturing process safety.
Top management had apparently ignored concerns raised by lower-level
employees regarding safety.
BP failed to devote adequate resources to keep it’s operations safe.
They using the vulnerable building and near processing facilities and failing to
prevent the use of non-approved electrical equipment.
Lack of communication between top management and employees.
There is also high tension between union and contract worker.
Recommendation by panel.
Process Safety Leadership.
Integration and comprehensive process safety Management system.
Process safety knowledge and expertise.
Process safety culture.
Clearly Defined expectation and accountability for process safety.
Support for line Management.
Process Safety auditing.
Board monitoring.
Industry leader.
Question-1
Do you agree with critics that BP had put profits before safety?
“BP can no longer claim to be an environment friendly
company ”- react to this view. What is your opinion about the
question over the BP’s corporate culture? Do you think that the
company’s culture was a factor that contributes to safety
lapses.?
Question-2
“When it comes to social corporate social responsibility. The first
duty of any oil company is to run its oil operations to high standard”.
Discuss the statement in the context of the case. In your opinion
what should Tony Hayward do to counter the criticisms raised
against BP’s process safety system and culture?