Deepwater Horizon Case

Intro Paragraph

On April 20, 2010 an explosion on the Deepwater Horizon oil rig disabled a blowout preventer which allowed more than 200 million gallons of crude oil to spill into the Gulf of Mexico. Although the drilling equipment belonged to the offshore drilling company Transocean, British Petroleum (BP) fell under intense scrutiny in the months that followed. The media and political pressure would prove to be costly as it severely tarnished BP's public image. This paper will examine the ways in which British Petroleum can restore its public image and the opportunity that has been created for the oil giant following one of the worst oil spills in history.

Overview of spill

On April 20, 2010 and explosion and fire on the Deepwater Horizon, Transocean's semisubmersible rig in the Gulf of Mexico occurred which resulted in the death of 11 crew members. Transocean had been drilling an exploration well as a contractor to BP in BP's Macondo project 42 miles southeast of Venice, Louisiana, beneath about 5,000 feet of water and 13,000 feet under the seabed. Two days later the Deepwater Horizon rig sank and a major oil spill response was activated, including a fleet of response vessels, protective boom, dispersant for use at sea and initial plans for relief wells. It is initial projected that approximately 5,000 barrels of oil is leaking into the Gulf, which in later months was determined to be significantly underestimated.

Over the course of the next three months BP unsuccessfully tried different tactics in trying to plug the undersea leak by pumping materials such as shredded up tires and golf balls into the well at high pressure, a method called a "junk shot" and well "top kill" maneuvers. On July 15, the leak was stopped by capping the gushing wellhead, after it had released about 4.9 million barrels of crude oil. It was estimated that 53,000 barrels per day were escaping from the well just before it was capped and that the daily flow rate diminished over time, starting at about 62,000 barrels per day and decreasing as the reservoir of hydrocarbons feeding the gusher was gradually depleted.

On September 19, the relief well process was successfully completed and the federal government declared the well "effectively dead". The following sections detail the public relations mistakes BP made following the initial explosion.

Haywards/BP's mistakes Creating a Bad Public Image

The manner in which a corporation conducts themselves when they are in the limelight sets the tone for how they are viewed by the public. Very often a corporation takes on the personality of its CEO who becomes the personality of the company. In the aftermath of the oil spill, BP took on the personality of Tony Hayward. There were many comments made by Hayward himself that gave people the impression BP was a cold and unapologetic corporation. This did not help BP out as the public was already taken back by the magnitude of the oil spill. When BP became opaque and did not give a lot of information about the spill, its public perception started to go downhill. According to Tony Hayward, "It wasn't our accident, but we are absolutely responsible for the oil, for cleaning it up." - OIL SLICK 5/5/10. This statement left many people wondering what exactly Hayward was saying. The public was unsure if BP was actually sincere or if they were just trying to save their reputation. The right move would have been for Hayward to simply apologize for the oil spill and enforce the fact that BP was working on cleaning it up. By saying that the oil spill was not BP's accident was pretty much an act of denial. Political pressure began to take its toll on BP as well. At a congressional hearing on June 17, 2010, Hayward was accused of evading tough questions. Many lawmakers found it hard to believe that Hayward, the CEO of a multibillion dollar oil company was not familiar with well design and drilling processes. This was a sentiment shared by not only politicians but by many private citizens as well. BP's inability to be transparent particularly on the part of Hayward created a sense of distrust and served to further damage BP's public image. It is often believed that actions speak louder than words. Perhaps this is what BP had in mind when they offered relief to victims of the oil spill. BP's initial idea of relief came in the form of $5,000 to coastal residents if they would give up their right to sue. This tactic was not only ineffective but also dangerous to BP's image. Instead of owning up to their mistakes, BP was seen as trying to pay people off so they would not have to deal with lawsuits. Hayward himself has admitted his faults and poor choices in dealing with the media after the spill. "If I had done a degree at RADA rather than a degree in geology, I may have done better, but I'm not certain it would've changed the outcome." - POLITICO 11/9/10. Here Hayward admits that having a little tact and sensitivity when speaking to the media may have improved his situation when handling public relation issues. He recognizes the detrimental affects of silence and denial in times of a crisis. Communication is essential in maintaining a positive image when your reputation is on the line.

Among the hidden traps that many managers make, the main trap made by BP was the estimating and forecasting trap. BP underplayed the spill immediately and from that point forward it was difficult for them to claim accountability without seeming dishonest. Hayward, (identify his role), told London's Guardian newspaper on May 14 that the "Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume" (Online,). Moreover, for fear of being held accountable, BP took the advice of lawyers rather than considering the advice of public relation specialists in the attempt to protect themselves. This mistake backfired and impacted their credibility.

Four days after Hayward dismissed the spill as minor, he was forced to maintain his position. Hayward told British TV station SkyNews on May 18 that the "the environmental impact of this disaster is likely to have been very, very modest."

At this time, the severity of the spill and the impact on the environment was reaching a crisis point. At that time, BP focus had turn to how to stop the flow of oil into the waters, which was having an impact on local economies as well as the environment. With each failed attempt, the urgency to stop the leak increased, and their inability to do so was emphasized. It was difficult to devise a public relations strategy when the spill continued to last from weeks