Course:MGMT405 2024W2/Case-2ii

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BP Deep Horizon Oil Spill

BP Deepwater Horizon Oil Spill
BP company logo
Official Name British Petroleum Global (BP global)[1]
Founded 1909-Present[1]
Sector Energy[1]
Industry Oil, Gas, & Consumable Fuels[1]
Ticker Symbol TSX: BP[1]
Country of Origin England[1]
CEO Mr. Murray Auchincloss[1]
Webite Home[1]
Annual Revenue $193.93 Billion[1]
Share Price $32.27 (As of February 7th)[1]

What is British Petroleum?

British Petroleum is a British oil company located in London, England.[2] Founded in 1901 and officially registered in 1909 by William D'Arcy, BP is involved in almost every step of the oil and natural gas supply chain, from exploration to the sale and marketing of energy products.[3] Along with the oil and natural gas industry, BP also engages in the production of renewable energy production.[3] Initially starting out as the Anglo-Persian Oil Company, the oil company is now known as BP PLC after the 2000 acquisition of Atlantic Richfield Company.[2] In 1998, BP also became one of the largest oil producers after the purchase of Amoco, the largest oil and natural gas producer in the United States.[3] Ever since the acquisition of Amoco, BP PLC has become a multinational corporation, where they have a footprint in over 60 countries, which focus on three key segments: gas and low carbon energy, oil production and operations, and customers and products.[3]

For 63 years the British Government was the company's principal stakeholder.[1] However, in 1977, the British Government began to sell its shares and by the late 1980's, it sold all of its shares which allowed BP to become entirely privately owned.[1] As a result of this, British Petroleum acquired Britoil PLC, an independent oil company that cleared the way for BP to produce oil from the North Sea fields.[1]

Deep Water Horizon Oil Spill: What happened

Background

Image of Deepwater Horizon Explosion on April 20th, 2010

On April 20th, 2010, the largest marine oil spill in human history occurred on the Deepwater Horizon oil rig, located in the Gulf of Mexico, approximately 66 KM off the coast of Louisiana.[4] The Deepwater Horizon Rig, owned and operated by the oil company Transocean, but also leased by BP, was the site of a natural gas explosion that resulted in 11 deaths and injured 17 more.[1] It was determined that natural gas blasted through the concrete core, which was installed by the contractor Halliburton. It was investigated that it was too weak to withstand the pressure and the rate of which the natural gas was flowing.[1] Deepwater Horizon would eventually sink on April 22nd, two nights after the explosion.[1] This led to significant oil spilling into the ocean. Over the next 84 days, there were many attempts to stop the oil. Approximately 172 to 206 million gallons of oil and gas spilled into the Gulf of Mexico, which resulted in over 57,000 square miles across the Gulf to be impacted from the leak.[5] After numerous investigations, it had been confirmed that the possible causes of the failure resulted from an inadequacy of the design of the rig, a lack of backup in the BOP (safety measure), and the BOP lacked a remote or trigger to control the device in such cases.[6] In the end, the result of the incident led to many lawsuits and settlements with the DOJ, including pleading guilty to 14 criminal charges, paying up to $4 billion [7] as well a $500 million to the SEC for misleading shareholders about the magnitude of the oil spill.[8]

Why the Oil Spill Happened

  • A Halliburton employee sent an email to BP about the need for additional centralizers that plays helps to natural gas leaks.[9]
  • The cement slurry used to seal the well from hydrocarbons was weak and poorly designed.[10]
  • BP pushed to speed up the capping of the well by taking shortcuts, which was weeks behind schedule and well over budget on the Macondo Well project.[11]
  • On the day of the explosion, the crew was in the process of verifying the well that had been sealed so they could abandon it and move on to the next project.[11]
  • BP not learning from its mistakes in a prior incident from 2008 in the Caspian Sea, which the cement in the capping procedure to create the core was too weak to address the pressure of the oil and natural gas.[11]
    • BP already experienced this problem in 2008 and failed to take steps to address adjusting pressure.[11]
  • There was a gas detection safety system onboard the Deepwater Horizon that should have sounded an alarm and shut down ventilation fans and ducts to prevent the flammable gas from reaching a point of ignition, however; had failed to function prior to explosion.[11]
  • The leak was not detected until it was too late.[11] The workers were trained to spot and detect leaks in wells by examining unexpected change in pressure.[11] However, an increase in pressure occurred about an hour before the explosion, but the crew did not consider this to be a leak.[11]

Timeline of Key Events

Timeline of key events that led up to Oil Spill
1995 Lord John Browne, an engineer with a reputation as an aggressive cost-cutter, became CEO[12]
1998 BP merged with US oil giant Amoco, renaming the company BP Amoco[13]
2000 BP Amoco acquires Atlantic Richfield Co. and Burmah Castrol, officially changing its name to BP PLC[14]
2001 Workers at Prudhoe Bay Oil well, located in Alaska, management issued a report that detailed worker concerns about cost-cutting and safety, outlined recommendations to fix the "fundamental lack of trust" at the facility[12].
2002 At the Prudhoe Bay oil well location in Alaska, an employee suffered significant injuries from a well that blew up while he was inspecting it.[12] The result of the incident brought workers to expressively communicate safety concerns, but no action was taken.[12]
2002 An email-chain indicates that BP had considered updating the blowdown drums but decided against it, for cost saving reasons[12]
2004 Texas city engineer Don Paras presented safety concerns to BP, indicating that the plant was "not a safe place to work"[12]
March 23, 2005 A explosion and fire occurred at BP's Texas City refinery that killed 15 workers and injured 170[15]. Observers saw a geyser of excess has and liquid "flying out the top of" the blowdown drum[12] . According the final report, a variety of reasons that caused the explosion, including:
  • Working Environment characterized by resistance to chance and lacking of trust[15]
  • Process safety, operations performance and systematic risk-reduction priorities had not been established and reinforced by management
  • A poor level of hazard awareness and understanding of process safety on the site resulted in people accepting higher levels of risk[15]
March, 2006 260,000 gallons of oil leaked from a BP pipeline in the worst spill ever on the North Slope, resulting from a sediment buildup in the pipe caused from a decade of not cleaning it[12].
September, 2008 BP suffered a blowout on an Azerbaijan gas platform in 2008, was fortunate to evacuate workers safely[16] The incident was a result of a "bad cement job", which resulted in production being disrupted for months[16]
2009 BP was fined $87 millon by OSHA for lack of compliance with safety regulations, and photographs from more than 5 years of reporting on the explosion and its after math[12]
April 16th, 2010 BP ignored ignored safety warnings from Haliburton employee, advising them of "severe risk" of natural gas leaks with only six devices currently in place, which could lead to an explosive blowout[9].
April 20th, 2010 One of the biggest marine oil spills in human history occurred on the Deepwater Horizon rig[2]. On this night, a surge of natural gas blasted through a concrete core recently installed by contractor Haliburton, causing a gas explosion, resulting in 11 workers being killed and 17 more injured[2].
April 22, 2010 On the morning of April 22, two days after the explosion, the rig capsized and sank. rupturing the riser, through which drilling mud had been injected in order to counteract the upward pressure of oil and natural gas[2]. Without any opposing force, oil began to discharge into the gull[2].
(April 22, 2010 to September, 2010) For the next 87 days after the rig sank, crude oil spewed into the Gulf of Mexico, contaminated about 400 square miles of the sea floor and 1300 miles of shoreline.[17] During this time period, there were many attempts to slow and stop the oil spill[17]. To reduce the Leak, a tube was inserted into the ruptured riser pipe and containment cap was used to collect the oil and pump it to the gulf surface.[17]
  • On July 15th, BP was able to stop the flow of oil for the first time since the rig sinking on April 22nd[17]
  • On September 19th, BP reported that the leak had been successfully and permanently plugged[17]

Key Players

British Petroleum (BP)

  • BP controlled 65% of the financial share of the project.[18] At the time of the blowout, British Petroleum had 7 employees working on the rig as well as countless others onshore. [19] The Deepwater Horizon project was behind schedule and over budget.[9]Attempts throughout all levels of management to reduce costs and cut corners was extremely prevalent.[18]
BP's 1995 CEO Lord John Browne

Lord John Browne

  • Lord John Browne (CEO in 1995) proposed an "asset Federation" model in an attempt to give site managers more autonomy.[18] This ultimately created silos of independent management that favour efficiency over executive oversight. The unintended consequences were that safety standards and policies were not enforced unilaterally across all operations.[18]
  • British Petroleum has a long history of decentralizing decision making to enhance performance and remove oversight obstacles; Browne further reinforced these trends.[18]
  • The lack of oversight played a huge role in the disasters that occurred shortly before the Deepwater Horizon accident; Including the 2005 refinery explosion in Texas and the Alaska well blowout.[12]
BP's 2007 CEO Tony Hayward

Tony Hayward

  • In 2007 Tony Hayward was made CEO of BP and continued the long-standing tradition of favouring independent efficiency with an emphasis on cost-cutting culture.[20]
  • In 2010 following the events of the Horizon Deepwater rig disaster Tony Hayward voluntarily stepped down as acting CEO. BP suggested that they will make crucial adjustments in the future, even going as far as to state "it will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board".[21]

Patrick O'Bryan

  • O'Bryan was the Vice president of drilling operations in the Gulf of Mexico.[22] His role was to oversee all projects, even signing key documents promoting the Deepwater Horizon rig. O'Byran was no exception to the cost cutting policies that governed BP.[23]
  • O'Bryan later testified in court claiming that he had never heard of any concerns regarding the safety of the rig or any the cost cutting measures taken.[22]

Bob Kaluza and Don Vidrine

  • Bob Kaluza and Don Vidrine were BP's on site well managers. Their role was to oversee operations and be a liaisons for the company.[24]
  • After the blowout BP claimed that operators including Vidrine and Kaluza did not perform an appropriate response to a negative pressure test that occurred shortly before the blowout.[25]
  • Vidrine and Kaluza were litigated for 11 counts of involuntary manslaughter and 11 counts of maritime manslaughter.[24]
Internal communications of BP Engineers and executives through email indicated their negligence

Brian Morel

  • Brian Morel was a drilling engineer at BP. Internal communication between Morel and other members of BP indicated an inflated focus on cost saving methods over standard safety protocols[18]; Later the House Energy and Commerce Committee concluded that there were definitively trades offs made between costs and well safety.[26]
  • When deciding between the safer linear casing versus long string casing; Morel was on record suggesting long string casing was the less expensive and quicker option.[18]
  • In an email made by Morel six days prior to the accident Morel described the rig as a "Nightmare well".[26]
  • While conferring with Halliburton's cementing service coordinator Nathaniel Chaisson; BP engineers actively ignored Chaissons strong recommendation stating that twenty one centralizers would be required to lower safety risk.[9] Morel even went as far as to question the reliability of Chaissons results.[18] Unsurprisingly, four days prior to the blast, BP responded by saying that six centralizers would instead be adequate[9].
John Guide
  • John Guide was a drilling engineer with plenty of experience within the sector and was responsible for vetting every step of the process.[27]
  • John Guide was implicit and arguably responsible for deciding not to install the additional 15 centralizers recommended by Halliburton.[27]
  • Following the Deepwater rig explosion, Guide made an active effort to avoid the public press, only speaking publicly to defend his decisions to not implement the stabilizers due to the difficult nature of removal.[27]
Transocean Logo

Transocean

  • Transocean owned and operated the Deepwater Horizon vessel. They leased the rig to BP for about $500,000 per day plus an additional estimated $500,000 in contractor fees.[18]
  • The Transocean crew on the rig consisted of 79 Transocean employees.[19]
  • Transocean had a safety record of no serious incidents in 7 years until the spill. [28]
  • They also held a questionable reputation among oil contractors due to weak performance metrics.[28]
  • The U.S. Chemical Safety board says that BP and Transocean had "safety management system deficiencies that contributed to the Macando incident".[23]

Operators

  • Their was a misinterpretation of the pressure test by operators.[29]
  • Operators tested day to day functions of rig but failed to consistently test emergency systems.[29]
  • The crew was unaware of the latent system failures that should be checked for safety, an example being the gas alarm.[29]
Halliburton headquarters In north Houston

Halliburton

  • Halliburton was a renowned cement contracting company that was contracted to seal the well and implement stabilizers.[18]
  • BP and Halliburton were criticized for using a complex nitrogen foam cement program that had little margin for error when implementing.[30]
  • Halliburton was identified as having failed to adequately test the cement slurry prior to the accident.[30]
Jesse Gagliano
  • Gagliano handled the predictive model recommending more centralizers. He only found out about BP's refusal to increase stabilizers later by another employee of Halliburton who manned the Deepwater Horizon.[18]
Minerals Management services Logo

Mineral Management Services (MMS)

  • In March of 2009, BP acquired drilling rights and permits from The MMS.[25] In return the MMS would be compensated with royalties[18] and ensure safety standards were met.
  • The MMS came under fire for regulatory issues. Its dual role for collecting royalties while also ensuring safety standards was a clear conflict of interest.[31]

Who was Responsible

The months following the Deepwater Horizon disaster were notorious for fighting between key players; each attempting to shuffle the blame onto each other[32]. The truth is no one party is entirely responsible; each organization had a role in the destruction of the Deepwater rig. Furthermore, it is far harder to identify any one individual for being the singular cause for the complete safety breakdown that occurred.

BP discusses the consequences of the Deepwater Horizon drill disaster with President Obama

In the court case of "United States V. BP Exploration & Prod, inc (In re Oil Spill by the Oil Rig "Deepwater Horizon")" the judges ruled that the comparative fault of all parties could be expressed as a percentage.[33]

  • Transocean was found to be 30% liable[33]
  • British Petroleum was 67% liable[33]
  • Halliburton was concluded to be 3% liable[33].

The MMS is not absolved of guilt as it is their responsibility to reign in dangerous companies. After the unreasonably consistent prevalence of BP's accidents, it is clear the MMS failed to regulate a company who has a long history of safety violations.[31]

Most responsible

British Petroleum rightfully bears the title of being the most responsible party. The project was over budget and under a time constraint.[11]Executives and engineers alike cut corners and made unsafe decisions that resulted in the rig's ultimate failure. Even after a string of recent disasters there was an unwillingness to make meaningful policy changes which indicates a deep level of both: willful ignorance and incredible negligence among all levels of BP.[18]

  • Tony Hayward was hired in response to BP's negative reputation post disaster in Texas. This was done in an attempt to improve BP's public image[20]. Later, Hayward himself was replaced for a very similar reason[21]. This continues the trend of using CEOs as scapegoats for change and is an example of BP's faux attempts at improvement.
  • The prevailing culture of risk taking is inappropriate in this operational context. Investment firms measure risks by loss or gain of money. BP instead gambled money for lives.[18]
  • Deepwater was BP's fourth accident in the last decade[18]. There were countless accounts of safety concerns being raised prior to these incidents. The board of directors and management were markably absent throughout all these events.[12]
  • The engineering team exhibited gross negligence in both their interpretations and consultations. Mark Haffle, Brian Morel, and John Guide all played a critical role in ignoring safety standards.[27][18][26]

Key Stakeholders / Stakeholder Groups

  • This section explores the economic, physical and well-being, environmental, and legal consequences directly and indirectly attributed to BP's deepwater horizon oil spill.
BP's Deepwater Horizon rig on fire in the Gulf of Mexico
BP stock price LSE 2000-10

1. Shareholders and Investors

  • BP's stock price immediately declined in the days following the disaster. Shareholders and investors were experiencing increased uncertainty of the financial sustainability about BP.
  • It was anticipated that this event would lead to significant costs for BP including legal fees, cleanup costs, and brand reputation which all increase the risk of the long-term financial sustainability of BP.

Short-term impacts

  • This event triggered BP's first loss in almost 20 years.[34]
  • This loss raised shareholder concerns regarding:
    • Damage to brand reputation. [35]
    • Current and potential lawsuit and cleanup costs.
    • Potential regulatory changes.
  • Specific financial impacts on shareholders and investors include:
    • Immediate 54% decline in stock value.[36]
    • 54% decrease in stock price to $27.02 in 2010.[34]
    • 35% decrease in market value to $60 billion. [34]
    • Second-quarter loss (2010) of $17 billion.[34]

Long-term impacts

  • By 2012, their stock price had regained some stability.
  • BP's returns demonstrated no direct impacts from the spill.[35]
  • The demand for BP's products appeared to remain steady.[35]
  • BP's brand reputation has still never fully recovered, 15 years later.
Deepwater Horizon Oil Spill Beach Cleanup

2. Employees, Responders, and Clean-up workers

  • Over 47,000 of responders and clean-up workers were exposed to hazardous conditions as they worked towards site restoration after the spill.[37]
  • They were exposed to hazardous chemicals including the oil, burning oil, dispersants, and cleaning chemicals. [38]

Short-term impacts

  • 17 employees were injured and 11 killed.[39]
  • Over 47,000 employees worked on clean-up duties following the spill.[37]
  • Increased job uncertainty for current BP employees.
  • 34.4 million jobs of employees working in directly affected industries were impacted.[40]
  • Estimated 8,000-12,000 employees temporarily unemployed. [39]
BP Oil spill Chandeleur Islands

Long-term impacts

  • Impacted employees were given access to apply for compensation for their injuries.[41]
  • Despite the impressive $30 billion compensation fund, the employees were unable to access their rightful considerations.[39] [41]
  • Through settlements, impacted workers and local residents have only received $67 million.[41]
  • 79% received only $1,300 per person.[41]

Metal-health impacts

  • Survivors of the rig explosion and employees at the time of the event suffered severe mental health impacts.
  • Residents of the surrounding areas displayed signficant depression and anxiety resulting from the disaster.[42]
  • Studies show that the financial stress caused by the spill had greater psychological impacts on affected individuals.[42]
Deepwater Horizon oil spill fishing closure map 2010-06-02

3. Community and the Environment

  • The oil spill had lasting impacts on the local community and environment.
  • Related industries such as fishing and local tourism suffered related consequences because of their heavy reliance on the fishing waters and local wildlife.
  • 5m barrels of oil spilled into the waters in the Gulf of Mexico put the environment and local communities at an increased risk for survival.[37]
  • The Gulf oil and gas industry contributes almost 20% of all employment in the area.[37]
  • Gulf oil drilling accounts for 31% of all U.S. oil production, and providing almost 150,000 jobs.[26]

Short-term impacts

  • Contamination of local waters resulted in closures of fishing water during the disaster. Killing local wildlife and damaging their habitats. [39]
  • Oil leaking from the damaged well estimated 1,000-60,000 barrels per day. [39]
  • Within two months of the disaster, 37% of federal waters affected were closed to fishing. Waters were not fully opened in the area until April 2010, a full year after the disaster. [38]
  • Wildlife and habitats were killed and destroyed immediately upon explosion.
  • Recreational fishing estimated US $3.5 billion loss. [38]
  • Commercial fishing estimated US $4.9 billion loss. [38]
  • Local industries directly impacted like seafood and tourism faced immediate closures.
  • These temporary closures led to supply chain disruptions and loss of work for local residents. [38]
  • Directly related industries including boating needs, local restaurants, and other local tourism attractions faced significant losses. [38]
    Spinner Dolphin (Stenella longirotris)
Oiled Turtle

4. Fish and local wildlife

  • Dolphins and whales
    • Suffered injuries, directly related to oil.[43]
    • 1,141 dolphins were killed from oil between March 2010 and July 2014.[44]
    • Projected to reduce the total dolphin population in the area by 50%.[43]
    • The population of spinner dolphins are expected to take approximately 100 years to recover.[43]
  • Sea turtles
    • 4,900-7,600 adult sea turtles and 56,000-166,000 juvenile small sea turtles were killed.[44]
    • Killed an estimated 35,000 hatchlings.[44]
    • Reported destroying approximately 25% of sea turtle habitats.[43]
    • Over 300 sea turtles were rescued and rehabilitated.[44]
  • Fish
    • Killing 2-5m larval fish.[43]
    • Killing approx. 8.3 billion oysters, making them an endangered species in the gulf.[43]
    • No indication of reduction in commercially harvested fish species population.[43]
  • Birds
    • Impacting 93 species of birds.[43]
    • Studies show that bird exposure to oil was correlated with anemia in birds.[43]

5. Local industries

Local tourism

  • Public perception of the safety concerns of the area overall led to a decline in local tourism.[40]
  • The Louisiana Office of Tourism did a study on the impacts of the oil spill on local tourism, here are some of the findings:[40]
    • 26% of tourists postponed or cancelled their trips to Louisiana.
    • 25% of people assumed that tourist activities were closed (they were not).
    • 50% of people believed that seafood sourced from the area was unsafe.
VACANCY Sign, Hotel, Ioa

Local hospitality industry

  • Local hotels were home to the 47,000 cleanup workers during the time immediately following the oil spill.[40] [37]
  • A study was done on the hospitality industry impacts in neighbouring communities including Louisiana, Alabama, Mississippi and Florida by the Knowland Group.[40]
    • 60% of hotels had experienced cancellations within 5 months.
    • 42% experienced decreased bookings.
    • Rooms still booked for clean-up workers were purchased at a discounted price.
    • Overall increase in vacancy.
    • Overall decrease in revenue.
Twine, Shreveport Louisiana 2012

Local small businesses

  • Local small businesses including mom and pop restaurants, gift shops, charter boat and watercraft rentals suffered the most from the spill.[40]
  • Dun & Bradstreet conducted a study on over 200 million local small businesses.[40]
    • 7.3 million businesses impacted
    • 34.4 million employees
    • $5.2 trillion in sales volume
  • The overall lack of tourism from public safety perceptions after the disaster made a lot of small businesses suffer.
  • Local businesses rely on tourists to keep their businesses running.
  • Businesses trying to survive the impacts of the disaster that were still open and running after, struggled with public perceptions.[40]
    • 25% of local residents assumed that local businesses were closed when they actually were not.[40]
Obama Portrait 2006
Ken Salazar, U.S. Ambassador

6. Regulators and Government

  • The BP Deepwater horizon oil spill raised public awareness on the need for stricter industry regulations.
  • The issuance of new off-shore drilling leases was ordered to be halted by the United States President Barack Obama until a go-forward safety plan was implemented.[26]
  • Ken Salazar, the United States Department of the Interior secretary, enforced a six-month off-sore drilling moratorium.[26]
  • His recommendations to President Barack Obama included:
    • "Recertification of all Blowout Preventers (BOPs) for floating drilling operations; stronger well control practices, blowout prevention and intervention procedures; tougher inspections for deepwater drilling operations; and expanded safety and training programs for rig workers."[26]
  • This moratorium received pushback from oil companies, concerning the final burdens of these recommendations.[45]
  • This moratorium on offshore drilling left 8,000-12,000 employees temporarily employed.[46]

U.S. Regulations

  • Bureau of Safety and Environmental Enforcement.[47]
  • Bureau of Ocean Energy Management.[48]
    • Resource management and environmental oversight.[48]
  • National Environmental Policy Act.[48]
  • BSEE Blowout Preventer and Well Control Rule.[49]
    • Stricter blowout preventer requirements
    • Real time monitoring of well pressure and stronger shear rams.[49]
  • Oil Pollution Act (OPA).[50]
    • The OPA held oil companies, including BP responsible for costs associated with cleanup of oil spill.[50]
  • Safety and Environmental Management Systems (SEMS).[51]
    • Requirement for offshore drilling safety and risk management plans.[51]
BP Deepwater Horizon Oil Flood Protest 30 May 2010

7. BP

  • Following the disaster, BP was faced with ongoing obligations for cleanup costs, charges and related lawsuits and legal fees.
  • Three years following the disaster, BP was ranked fourth largest major oil company, moving down from their previous second place ranking.[52]
    • One-time $32.2 billion charge.[34]
    • Fine for the Clean Water Act violations of $5.5 billion.[53]
    • Penalty for natural resource damage of $8.8 billion.[53]
    • Compensation fund of $20 billion.[39]
    • Incurred more than $65 billion in total related costs.[54]
  • BP suffered substantial reputation damage.
  • Anything with their name attached was vulnerable to backlash and subject to increased financial risk.
  • BP gas stations, located across the United States reported a 10% - 40% decline in sales, which were believed to be directly attributable to the event.[55]
  • Gas station owners were motivated to rebrand under other business names to avoid the current and ongoing backlash against BP.[55]
  • Beginning in 2017, a number of BP gas stations were renamed and rebranded as Amoco stations.[56]
Chevron Logo

8. Industry as a whole

  • When a company has a corporate governance failure, there is a potential liability for other companies within the same industry.
  • The oil and gas industry is unique because the products each company sells are undifferentiated. According to studies, competitors like Chevron and Shell did not suffer any directly attributed consequences.[35]
  • The event did increase public awareness on social responsibility of oil and gas organizations.
  • Due to the undifferentiated nature of gasoline, brand image is critical for organizations because it is one of the few differentiating factors.
  • Overall market demand did not decrease, only decrease in demand for BP products specifically.

Current Status

Oil spilled throughout the Gulf

Concluded Lawsuits

The lawsuits that were related to the BP oil spill resulted in billions of dollars of settlements, fines and penalties.

1. Government Lawsuits (Federal & State)

  • BP was sued by the federal and state governments of Louisiana, Mississippi, Alabama, Florida and Texas under the Clean Water Act and Air Pollution Act.[48]
  • BP agreed to a $20.8 billion settlement in 2015, the largest environmental settlement in U.S. History.[48]

2. Economic and Property Damage Claims

  • BP was sued by many businesses and individuals to compensate for economic losses and property damage due to the spill. [49]
  • BP set up a fund of $9.2 billion for the individuals affected.[49]

3. Medical Benefits Settlement

  • BP was sued in a class action lawsuit regarding the health of residents and clean up crew affected. [49]
  • BP agreed to pay out individuals from the $9.2 billion fund that they set up.[49]

4. Criminal Penalties

  • Pleaded guilty to 14 counts of felony manslaughter, 1 count of environmental crimes, and 1 count of obstruction of justice[7]
  • BP agreed to pay $4 billion in damages, making it the largest criminal resolution in the United States at the time.[7]

5. Shareholders and Security Fraud Lawsuits

  • The SEC charged BP with securities fraud, stating BP provided misleading information to investors[57]
  • BP agreed to pay $525 million penalty as a settlement, neither admitting or denying the claims [57]

6. Bob Kaluza Don Vidrine

  • The day and night well managers Bob Kaluza Don Vidrine were litigated for 11 counts of maritime manslaughter and 11 counts of involuntary man slaughter[24].
  • Bob Kaluza went to trial and was quitted of all charges. He later expressed his dissatisfaction as he felt he was "Served up to the government" by BP.[24]Don Vidrine settled after being found innocent on the accounts for maritime manslaughter[24].

Pending Lawsuits

As of March 2025, most of the lawsuits against BP have concluded, with most major settlements and judgements being finalized. However there are still some active cases that remain, mostly concerning healthcare claims for individuals who worked on the cleanup crew.

BP was aware of the adverse health effects that would arise from the cleanup of the largest oil spill in United States history. BP set up a fund to address the medical concerns for those who worked in the cleanup project. However, many workers received minimal compensation for the illness attributed to the cleanup. There were a variety of reasons and legal loopholes that BP were able to exploit to get around paying these people out, including [58]:

  • Difficulty proving an illness is directly a cause from toxic exposure in court[58]
  • Due to the nature of who was working on the cleanup crew, many people did not have proof of their illness. In the end, they would not visit the doctors because they did have sufficient medical coverage.
  • Doctors untrained in treating chemical exposures could not link illnesses to the cleanup exposure[58]
  • Individuals who tried to sue BP had a low chance of winning because of how strong BP's legal team was[58]
  • Many law firms simply failed there in representing their clients and claims were deemed deficient[58]

Where is BP now?

BP and its subsidiaries continue to engage in the exploration, production, refining, transportation, and distribution of oil and natural gas, as well as the manufacturing of chemicals, plastics, and synthetic fibers[59]. BP remains one of the global leaders in oil and gas 15 years after the incident. While BP suffered a deep reputational decline -up to 50% in the public eye up until 2017- their stock price has rebounded and remained steady. [60] BP has since made some organizational changes to address this incident as well as regulatory bodies have stepped in to enforce stricter compliance.

Changes at BP

  • In 2025, British Petroleum announced it will increase its oil and gas production to around $10 billion a year, while cutting its investment in renewables and the transition by around $5 billion.[61]
  • Set up a Safety & Operational Risk division (S&OR) with extensive power across the company.[62]
  • They are able to audit and intervene in all aspects of BP's activities globally. [62]
  • The S&OR division was set up to directly communicate with the CEO, ensuring strong top-down management. [62]
  • BP made blowout preventer enhancements[63]
  • BP committed to in more in depth testing of cement used in wells, with internal engineers and external inspectors.[63]

Regulatory Changes

  • The Bureau of Safety and Environmental Enforcement (BSEE) was established in 2011 after the oil spill to enforce safety regulations in offshore drilling. [64]
  • As a part of BSEE, organizations must develop a comprehensive safety and environmental management system to identify and manage operational risk.[65]
  • One of the requirements for this function is real-time monitoring of high-pressure drilling activities.[66]

References

  1. ↑ Jump up to: 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 Britannica Money (March 10th, 2025). "BP PLC". Check date values in: |date= (help)
  2. ↑ Jump up to: 2.0 2.1 2.2 2.3 2.4 2.5 Britannica Money (March 10th, 2025). "BP PLC". Check date values in: |date= (help)
  3. ↑ Jump up to: 3.0 3.1 3.2 3.3 Banton, Caroline (August 22nd, 2024). "The Top 5 Companies Owned by British Petroleum". Check date values in: |date= (help)
  4. ↑ Pallardy, Richard (February 15th, 2025). "Deepwater Horizon oil spill". Check date values in: |date= (help)
  5. ↑ DeCuba, Jeanette (March 13th 2025). "Deepwater Horizon Oil Spill: What Can Benthic Foraminifera Tell Us 14 years After the Spill?". Check date values in: |date= (help)
  6. ↑ Chakraborty, Soham (January to June 2021). "Impact and Aftermath f the Deepwater Horizon Oil Spill, 2010" (PDF). Disaster and Development. 10: 73. Check date values in: |date= (help)
  7. ↑ Jump up to: 7.0 7.1 7.2 U.S. Department of Justice (November 15, 2012). "BP Exploration and Production Inc. Agrees to Plead Guilty to Felony Manslaughter, Environmental Crimes and Obstructionof Congress Surrounding Deepwater Horizon Incident".
  8. ↑ Pallardy, Richard (March 14th, 2025). "Legal Action". Britannica. Check date values in: |date= (help)
  9. ↑ Jump up to: 9.0 9.1 9.2 9.3 9.4 The Maritime Executive. "March 27th, 2013". The Maritime Executive.
  10. ↑ Marder, Jenny (September 8th, 2010). "8 Key Failures Led to Gulf Oil Spill, BP Report Says". PBS News. Check date values in: |date= (help)
  11. ↑ Jump up to: 11.0 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 SS&H (November 13, 2018). "Offshore Accidents: What Caused the Deepwater Horizon Oil Spill?". SS&H.
  12. ↑ Jump up to: 12.00 12.01 12.02 12.03 12.04 12.05 12.06 12.07 12.08 12.09 12.10 PBS (n.d.). "BP's Troubled Past". PBS.
  13. ↑ BBC News (August 11th, 1998). "BP and Amoco in oil mega-merger". BBC News. Check date values in: |date= (help)
  14. ↑ Company-Histories.com (n.d.). "BP p.l.c". Company-Histories.com.
  15. ↑ Jump up to: 15.0 15.1 15.2 Cable, Josh (December 8th, 2005). "BP: Final Report Confirms that Personnel Failures Sparked Texas City Tragedy". EHS Today. Check date values in: |date= (help)
  16. ↑ Jump up to: 16.0 16.1 Reuters (December 15th, 2010). "BP had gas blowout in 2008". Reuters. Check date values in: |date= (help)
  17. ↑ Jump up to: 17.0 17.1 17.2 17.3 17.4 About Resiliance (August 17th 2022). "Under pressure- the disaster". About Resilience. Check date values in: |date= (help)
  18. ↑ Jump up to: 18.00 18.01 18.02 18.03 18.04 18.05 18.06 18.07 18.08 18.09 18.10 18.11 18.12 18.13 18.14 18.15 Ingersoll, C (April 2012). "BP and the Deepwater Horizon Disaster of 2010" (PDF). MIT Management Sloan School.
  19. ↑ Jump up to: 19.0 19.1 "Deepwater Horizon explosion". Wikipedia. |first= missing |last= (help)
  20. ↑ Jump up to: 20.0 20.1 Kanter, Rosabeth (June 2010). "BP's Tony Hayward and the Failure of Leadership Accountability". HBR.
  21. ↑ Jump up to: 21.0 21.1 BP (July 2010). "BP CEO Tony Hayward to step down and be succeeded by Robert Dudley".
  22. ↑ Jump up to: 22.0 22.1 WDSU (April 17 2013). "Ex-BP executive testifies as trial winds down". WDSU. Check date values in: |date= (help)
  23. ↑ Jump up to: 23.0 23.1 Ingram, David (Jan 3 2013). "Transocean to pay $1.4 billion for role in BP oil spill". Check date values in: |date= (help)
  24. ↑ Jump up to: 24.0 24.1 24.2 24.3 24.4 Pavlo, Walter (Jan 2018). "Two Years After Ruling, BP Engineer Still Carries Burden Of Prosecution". Forbes.
  25. ↑ Jump up to: 25.0 25.1 British Petroleum Company Limited. "Deepwater Horizon Accident Investigation Report". Google Books.
  26. ↑ Jump up to: 26.0 26.1 26.2 26.3 26.4 26.5 26.6 CBS (June 14 2010). "BP Engineer Called Doomed Rig a "Nightmare Well"". CBS News. Check date values in: |date= (help) Cite error: Invalid <ref> tag; name ":24" defined multiple times with different content
  27. ↑ Jump up to: 27.0 27.1 27.2 27.3 Carroll, Joe; Klump, Edward (August 2010). "Key manager when BP oil well blew: John Guide". CT Insider.
  28. ↑ Jump up to: 28.0 28.1 Casselman, Ben (May 10 2010). "Rig Owner Had Rising Tally of Accidents". The wall street Journal. Check date values in: |date= (help)
  29. ↑ Jump up to: 29.0 29.1 29.2 WorkBoat (June 10 2010). "Deepwater Horizon blowout preventer failed due to unrecognized pipe buckling, report says". WorkBoat. Check date values in: |date= (help)
  30. ↑ Jump up to: 30.0 30.1 Associated Press (June 11 2011). "Transocean report blames BP for Gulf of Mexico oil disaster". The Guardian. Check date values in: |date= (help)
  31. ↑ Jump up to: 31.0 31.1 Union of concerned scientist (Aug 5, 2010). "The Minerals Management Service: Bad Science in the Name of Private Interests".
  32. ↑ David, Ingram (Jan 2013). "Transocean to pay $1.4 billion for role in BP oil spill". Reuters.
  33. ↑ Jump up to: 33.0 33.1 33.2 33.3 United States District Court E.D. Louisiana (September 4 2014). "United States v. BP Exploration & Prod., Inc. (In re Oil Spill by the Oil Rig "Deepwater Horizon")". casetext. Check date values in: |date= (help)
  34. ↑ Jump up to: 34.0 34.1 34.2 34.3 34.4 Wardell, Jane (July 27, 2010). "BP replaces CEO Hayward, reports $17 billion loss". Chron. Retrieved March 12, 2025.
  35. ↑ Jump up to: 35.0 35.1 35.2 35.3 McGuire, W. (2022). "The impact of the Deepwater Horizon accident on BP's reputation and stock market returns". National Library of Medicine. Retrieved March 15, 2025.
  36. ↑ Pistilli, Melissa (Jan 13, 2021). "What Was the BP Stock Price Before the Deepwater Horizon Spill". Retrieved March 10, 2025.
  37. ↑ Jump up to: 37.0 37.1 37.2 37.3 37.4 CBC News (Oct 19, 2010). "The BP oil spill, by the numbers". CBC News. Retrieved March 18, 2025.
  38. ↑ Jump up to: 38.0 38.1 38.2 38.3 38.4 38.5 Sandifer, Paul A. (June 3, 2021). "Human Health and Socioeconomic Effects of the Deepwater Horizon Oil Spill in the Gulf of Mexico". Oceanography. 34.
  39. ↑ Jump up to: 39.0 39.1 39.2 39.3 39.4 39.5 Pallardy, Richard (Feb 15, 2025). "Deepwater Horizon oil spill". Britannica. Retrieved March 9, 2025.
  40. ↑ Jump up to: 40.0 40.1 40.2 40.3 40.4 40.5 40.6 40.7 40.8 CRED (March 22, 2025). "Tourism industry impacts: the Deepwater Horizon spill". Conversations for Responsible Economic Development. Retrieved March 22, 2025.
  41. ↑ Jump up to: 41.0 41.1 41.2 41.3 Phillis, Michael (April 19, 2024). "Once praised, settlement to help sickened BP oil spill workers leaves most with nearly nothing". AP News. Retrieved March 22, 2025.
  42. ↑ Jump up to: 42.0 42.1 Grattan, Lynn (February 17, 2011). "The Early Psychological Impacts of the Deepwater Horizon Oil Spill on Florida and Alabama Communities". Environmental Health Perspectives. Retrieved March 22, 2025.
  43. ↑ Jump up to: 43.0 43.1 43.2 43.3 43.4 43.5 43.6 43.7 43.8 National Wildlife Federation (March 22, 2025). "Deepwater Horizon's Impact on Wildlife". The National Wildlife Federation. Retrieved March 22, 2025.
  44. ↑ Jump up to: 44.0 44.1 44.2 44.3 Southeast (March 22, 2025). "Sea Turtles, Dolphins, and Whales - 10 Years after the Deepwater Horizon Oil Spill". Fisheries. Retrieved March 22, 2025.
  45. ↑ Kunzelman, Michael (March 2016). [ALeqM5gIXWYBTpLtSayJtg41LKXpxSxVPAD9GGLCS01 "Judge lifts offshore drilling ban as 'overbearing'"] Check |url= value (help). Google News. Retrieved March 22, 2025.
  46. ↑ Pallardy, Richard (March 14, 2025). "Deepwater Horizon oil spill". Britannica. Retrieved March 22, 2025.
  47. ↑ U.S. Department of the Interior (March 23, 2025). "Bureau of Safety and Environmental Enforcement". U.S. Department of the Interior. Archived from the original on January 20, 2025. Retrieved March 23, 2025.
  48. ↑ Jump up to: 48.0 48.1 48.2 48.3 48.4 U.S. Department of the Interior (March 23, 2025). "Regulatory Reforms". U.S. Department of the Interior. Retrieved March 23, 2025. Cite error: Invalid <ref> tag; name ":31" defined multiple times with different content
  49. ↑ Jump up to: 49.0 49.1 49.2 49.3 49.4 49.5 Harvard Law School (August 23, 2023). "BSEE Blowout Preventer and Well Control Rule". BSEE Blowout Preventer and Well Control Rule. Retrieved March 23, 2025. Cite error: Invalid <ref> tag; name ":32" defined multiple times with different content
  50. ↑ Jump up to: 50.0 50.1 Marine Mammal Commission (March 23, 2025). "Deepwater Horizon Oil Spill in the Gulf of Mexico". Marine Mammal Commission. Retrieved March 23, 2025.
  51. ↑ Jump up to: 51.0 51.1 Nieves-Zárate, Margarita (March 8, 2021). "Ten Years After the Deepwater Horizon Accident: Regulatory Reforms and the Implementation of Safety and Environmental Management Systems in the United States". OnePetro. Retrieved March 23, 2025.
  52. ↑ Callus, Andrew (February 5, 2013). "Smaller BP's profits down as oil spill trial looms". Reuters. Retrieved March 12, 2025.
  53. ↑ Jump up to: 53.0 53.1 Strawser, Bryan (April 5, 2022). "Crisis Management Case Study: Deepwater Horizon". BRYGHTPATH. Retrieved March 15, 2025.
  54. ↑ Bousso, Ron (January 15, 2018). "BP Deepwater Horizon Costs balloon to $65 billion". Reuters. Retrieved March 12, 2025.
  55. ↑ Jump up to: 55.0 55.1 Weber, Harry (December 19, 2010). "Time to scrap BP brand? Gas-station owners dividend". NBC News. Retrieved March 12, 2025.
  56. ↑ Holtz, Steve (October 10, 2017). "BP to reintroduce Amoco fuel brand". CSP Daily News. Retrieved March 12, 2025.
  57. ↑ Jump up to: 57.0 57.1 "BP to Pay $525 Million Penalty to Settle SEC Charges of Securities Fraud During Deepwater Horizon Oil Spill". July 28, 2014. |first= missing |last= (help)
  58. ↑ Jump up to: 58.0 58.1 58.2 58.3 58.4 APNews. "Once praised, settlement to help sickened BP oil spill workers leaves most with nearly nothing".
  59. ↑ Britannica Money (March 10th, 2025). "BP PLC". Check date values in: |date= (help)
  60. ↑ Trinidad, Segovia (June 15th, 2022). "Penalties for industrial accidents: The impact of the Deepwater Horizon accident on BP's reputation and stock market returns". Check date values in: |date= (help)
  61. ↑ Brown, Steven (February 26th, 2025). "BP pulls plug on green transition announcing major oil and gas investment". STV News. Check date values in: |date= (help)
  62. ↑ Jump up to: 62.0 62.1 62.2 BP (September 29th, 2010). "Dudley sets up new safety and risk unit and signals sweeping changes at BP". Check date values in: |date= (help)
  63. ↑ Jump up to: 63.0 63.1 Arnold & Itkin. "How Oil Rig Regulations Have Changed Since Deepwater Horizon".
  64. ↑ "Bureau of Safety and Environmental Enforcement". |first= missing |last= (help)
  65. ↑ Bureau of Safety and Environmental Enforcement. "Protecting the Environment and Conserving Offshore Resources".
  66. ↑ Wikipedia. "Bureau of Safety and Environmental Enforcement".

Use of AI

Category/Section AI Usage Information Verification
What is British Petroleum? No use of AI No Use of AI
What Happened No use of AI No use of AI
Background No use of AI No use of AI
Timeline No use of AI No use of AI
Key Players
  • Chat GPT was used to generate an initial list of names of people most responsible.
  • Chat GPT was used to find and summarize court case data [1] and extrapolate key details.
  • Late into the project it was difficult to find how many people worked the rig. We asked Chat GPT for the numbers and it only referred us to wikipedia. Source [2].
  • The Sources were verified to be reputable, from United district court.
  • The list was ultimately incomplete and had crucial figures that were held responsible but ultimately not liable.
  • Wikipedia is not in itself reliable but it has resources available. We followed up Wikipedias sources and found them to be relevant.
Who was most responsible? No use of AI (used findings from previously written section to determine answer) No use of AI
Key stakeholders / stakeholder groups
  • We brainstormed major stakeholders and stakeholder groups.
  • From there, I took the list and put it into ChatGPT and asked for feedback on the list we compiled.
  • Specifically, I asked ChatGPT to identify any unnecessary stakeholder groups and to recommend missed ones.
  • I asked ChatGPT to list the regulations introduced as a result of the oil spill.
  • I verified the information generated by AI conducting actual research.
  • All stats and case facts used as supporting details were extracted from referenced sources.
Current Status
  • AI helped navigate through the legal paperwork that would have been rather difficult without
  • Ai provided thirds party sources to back up the claims from the legal outcomes
  • We verified the information by going through the sources and exploring if the claims it was making were actually there and and if they were correct
  • At times the AI would get little information incorrect such as the payment disbursements for lawsuits, so we had to find multiple articles that reached a consistent consensus
Where is BP now?
  • AI helped with determining what actions BP took after the incident
  • AI helped create a list of regulatory changes made in the oil and gas industry
  • We cross references the sources AI provided with the information it was giving us. Surprisingly AI provided some pretty solid sources, such as BP themselves, the Bureau of Safety and Environmental Enforcement and different law institutions.
  1. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named :23
  2. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named :34
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