A better BP? At first glance, the BP of today looks like a safer and more efficient company than the one responsible for the fatal Texas City refinery fire in 2005 and the Prudhoe Bay pipeline burst in 2006. CEO Tony Hayward went on a management overhaul and efficiency spree after his appointment in 2007. He's slashed overhead by one-third and cut 7,500 jobs to date, and last year kept up the momentum and squeezed $4 billion in cost savings out of the company. Hayward also honed in on one of BP's biggest problems: project management, an area where the company regularly overspent by about 20 percent. All the while, Hayward worked hard to improve BP's shoddy image as an irresponsible oil and gas company.
BP became more profitable, but it failed to fix the one problem that continues to get it into trouble: a reactionary management culture that puts an emphasis on cutting costs and efficiency while neglecting preventative maintenance. Companies of every ilk can fall into this trap, and if nothing bad happens, management can be lulled into a false sense of security. BP just can't seem to figure this one out.
Texas City and Prudhoe Bay Both the Texas City refinery and Prudhoe Bay accidents have a similar M.O. Investigations that followed the 2005 Texas City refinery explosion found management focused on cutting maintenance and capital spending costs, and managers' performance was measured in part by their ability to meet these goals, NPR noted recently.
A year later more than 200,000 gallons of oil were discharged during two different spills when BP's transit pipe in Prudhoe Bay burst. The leak, which was caused by corrosion in the pipeline, wasn't discovered for five days and became the worst spill in Alaska's North slope. An investigation found BP had stopped sending probes to clean and inspect the pipeline for corrosion in an effort to curb costs.
More close calls BP avoided any major accidents since Texas City and Prudhoe Bay, until now. However, concerns over safety persist. Three BP gas and oil pipelines on Alaska's North Slope clogged or ruptured between September 2008 and November 2009, according to a letter sent two congressmen and obtained by Propublica. The letter also describes other near misses, including the failure of equipment meant to prevent gas buildups and an improperly installed warning system for workers. BP had another spill in December 2009 when a pipeline broke from its well housing during an inspection. The spill was tiny in comparison to previous incidents, but still left six acres of Alaskan tundra contaminated.
Of course, now all attention is on the oil spill in the Gulf of Mexico, which was triggered after the Transocean (RIG) rig that BP was leasing exploded and subsequently sank. The cause of the oil leak at this point isn't clear, making it difficult to say whether BP neglected safety measures again. This time around, BP's response has been immediate and intense. However, the company has taken a similar approach to how it handles the aftermath, by publicly shifting blame to other companies including Transocean and Halliburton (HAL), the oil-field services company that had cemented the well deep under water.
Photo of pipeline in Alaska from BP
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