question archive CASE STUDY: BP BP and the Deepwater Disaster Christina Ingersoll, Richard M
Subject:BusinessPrice: Bought3
Christina Ingersoll, Richard M. Locke, Cate Reavis
The assignment is at the end of the case study
In May 2007, Tony Hayward replaced John Browne as CEO. Hayward promised to "focus on safety issues, slow down growth and reduce production targets." Hayward improved corporate performance by shrinking the Alternative Energy division and reduce staff and four levels of management. BP's workforce fell from 97,000 to 80,300 people.
In addition to cutting management, Hayward also transformed BP's culture to one that was not afraid to take risk. He believed that too many people were making decisions leading to extreme cautiousness. He said, “being too safe is killing us".
In the mid-2000s, disaster struck BP twice within a 12-month period. On March 23, 2005, an explosion at BP's Texas City Refinery killed 15 people and injured another 180, and resulted in financial losses exceeding $1.5 billion. BP hired outside experts to write an report on the Texas City tragedy. One of the findings highlighted in the Report was that the company had cut back on maintenance and safety measures at the plant in order to reduce costs, and that responsibility for the explosion ultimately rested with company senior executives. Another concern outlined in the Report was that while BP had emphasized personal safety and achieved significant improvements, the company "has mistakenly interpreted improving personal injury rates as an indication of acceptable process safety, creating a false sense of confidence." The Report went on to state the following:
As Transocean's Chief Technician Williams experienced, the crew learned how to develop
casing option took fewer days to install.
"channeling." BP questioned the reliability of the OptiCem results because some of the earlier outputs related to compression factors in the well were different than what the crew engineers measured onsite.49 According to Gagliano, the group spent much of the morning trying to figure out the best way to use the centralizers they did have.
Circulating Mud and the Cement Bond Log
BP's price tag for the lost oil - five million barrels - was $374 million. If a federal court ruled that the company was grossly negligent, BP could face up to $3.5 billion in fines. On April 15, five days before the disaster, BP's stock was trading on the NYSE at $60.57 and on June 25, it hit a 14-year low of $27.02. In addition to the frustration felt by shareholders and the public at large that the company had failed at several attempts to stop the leak, they were also unimpressed with BP's PR strategy, citing skepticism over the company's offer to pay fishermen if they signed a waiver promising not to sue the company.
The economic losses also extended to the thousands of coastal small business owners
PART 1 – Problems in Decision-Making
A. Find examples in the case study for EACH of the following ten (10) Near Miss key terms or concepts. Provide an explanation how these FACTS from the case fit the key term or concept. Complete your answer in full and complete sentences. Review Near Misses to remind yourself of the meaning of the following terms and concepts.
2. heuristically approaching problems
4. not raising alarm and prompting action
6. multiple near misses proceeding a disaster
8. tendency overtime to accept anomalies
10. a process was assumed to be fundamentally sound but was not.
Present your answer as follows:
· Definition of the Hidden Trap:
· Detailed FACTS from the case that agree with the definition of the hidden trap.
PART 2 – Duties and Rights Ethics
1. Answer the following with respect to the BP Case and Rights Based Ethics. Complete your answer in full and complete sentences.
· Provide a definition of Rights Based Ethics.