After causing (directly or indirectly) an oil spill of disastrous proportions and with allegations of corporate apathy and a dangerous dose of disinterest on their behalf, British Petroleum (BP) finds itself caught between a rock and a hard place. In the weeks since the explosion, BP remains firstly to stop the spill and secondly to recover its image and therein the greener and CSR values the brand stands/stood for. The test remains on how they handle the situation from here on.
What happened?
On the 20th of April, an explosion on the BP-operated Deepwater Horizon not only killed 11 people but also compromised the rig’s pipe structure, resulting in the opening of an undersea oil well. The flow rate of the well’s disgorgement is hard to determine but revised estimates put it between 12 000 and 19 000 barrels per day.
Why? Preliminary investigations show that BP was aware of part malfunctions:
Abnormalities were experienced some hours prior to the explosion:
- Leaks were noticed and pressure was at three times its normal level
- Pump was shut down, indicating that crew tried to avert further disaster
Structural/procedural problems:
- Cement structure holding well pipe assembled by Halliburton failed to cope under the higher pressure
- The failsafe mechanism, the blowout preventer, which could have averted this crisis also failed and BP’s preliminary report suggests that it may not have been properly tested
Consequences?
BP not only has to deal with the torrent of negative publicity and the undermining and/or debasement of their brand’s values but is now also credited by public opinion as being anything but green.
See Greenpeace’s FLICKR appeal to the public to ‘rebrand BP’:
http://www.flickr.com/photos/greenpeaceuk/sets/72157623796911855
Secondly, BP’s share price has dropped to an 18-year low, in the 42 days since the incident. BP may very well see near-insolvency – the company cannot afford to take this lightly.
Thirdly, in the 1989 Exxon-Valdez episode, despite the relatively limited scope of both media and green consciousness, as soon as pictures of dead birds and oiled coastlines surfaced, Exxon experienced large scale boycotting of its brand. BP may stand to lose this too.
Fourthly, as of the 2nd of June, response expenses total more than $1 billion, which is paltry in comparison to how much this incident will end up costing them. It is in BP’s interest to clean up their act.
Aside from the oil spill’s detrimental effect on the seafood industries on Louisiana coastline, which makes up the livelihoods of many people, the entire gulf ecology may have been compromised as well. The Gulf ecosystem includes sperm whales, dolphins, fish and micro-organism life as well as sensitive wetland environments and birdlife.
Furthermore, the nullification of this extensive fishing area will place will place extra pressure on global fishing areas leading to unsustainable fishing. In addition, the oil spill is also posing significant health risks to the recruits and volunteers helping in the cleanup operations.
This problem may be further exacerbated by the arrival of the annual hurricane season. Meteorologists have little record of the effect of a hurricane on an oil spill of this nature and fear that such activity would only relay contaminants even further across the surface of the water, endangering more shore life and/or cause movement underwater, potentially causing contaminants within the water to be dispersed via currents and threatening undersea life.
So what has BP done?
1. Attempted Crisis Resolution:
BP’s failed strategic attempts at containment have become highly controversial for several reasons. Firstly, BP came under fire for using dispersants, which in themselves are hazardous, which may have diluted some of the oil but ultimately only have spread it further. Thereafter, came “Top Kill” – the dumping of 30 000 barrels of heavy mud, in a failed attempt to plug the hole and settle the oil – and “Junk Shot”, which included a “mud injection” containing rubber balls and other rough textured materials aiming to clog the leaks in the fail-safe mechanism also had no effect. BP also unsuccessfully attempted repairing these with submarine robots as well as attempting to cap the well with a prototype containment dome.
Secondly, the seemingly haphazard and illogical nature suggested to the relevant publics that BP may not have taken solving this crisis seriously and thirdly, dispelling the notion that ‘plugging the well’ may not be possible at all. The latest relief strategy aims to plug the well itself via what an LMRP (Lower Marine Riser Package) a so-called beta containment cap.
However, while BP’s chief executive Tony Hayward said the chances of plugging the well are between 60-70%, many believe BP to be fighting a losing battle. Relief wells to alleviate pressure would be the next best option and are literally in the pipeline but unfortunately would only realistically be completed by August. For the moment, effective clean up is the most feasible operation.
2. Disaster Relief Efforts
BP’s cleanup efforts have also been harshly criticised for being incoherent and disorganised, specifically with regard to the placement of oil booms among other efforts such as shore sweeping/scraping and environmental scrubbing.
BP has also fielded strong condemnation and negative publicity from numerous organisations – including actor Kevin Costner’s team – which tendered alternative measures that were turned down for unspecified reasons. However, a specific hot-line has since been established, for the sole purpose of reviewing public ideas and potential solutions.
3. Communication
Pres. Obama is quoted as saying among his many other comments related to this issue, that “BP is off running around doing whatever it wants and nobody is minding the store.” Whether this is true or not, Obama is definitely a brand ambassador and has the ears and eyes of billions of people and needless to say this is incredibly bad publicity.
BP was undeniably late in establishing their communication efforts but the necessary measures therein were no doubt thoroughly executed. If not too thoroughly? Herein, media are starting to express their frustration at not being allowed unrestricted coverage of the spill and suggest that both officials and locals working onsite are being encouraged not to talk to them at penalty of losing their jobs. The media realise that BP is trying to manage a crisis situation but they fear that BP is controlling the press in an effort to limit bad brand publicity.
Greenpeace, one of the few eyes to get aerial footage of the Gulf:
http://www.flickr.com/photos/greenpeaceusa09/4585891548/
Even though there was a time-delay in BP’s response, BP’s top management, specifically CEO Tony Hayward, have been involved in all of these efforts and have remained centre-stage and public since then.
A crisis command centre was set up – the Deepwater Unified Command to manage all of their response operations – accessible both online and by telephone. BP’s front page of their website, www.bp.com, is now completely dedicated to managing crisis-relief and potential solutions to the “Deepwater Horizon Incident” and is user-friendly. Here anyone can take a look at diagrams and CGI videos of potential solutions as well as monitor a live feed of the well site and of current strategic efforts to solve the crisis. Relevant data updates are now publicised every day.
In addition to crisis-specific Facebook and Twitter platforms, state-specific websites were also set up to bring attention to the state of affairs and relief efforts in Louisiana, Florida, Mississippi and Alabama specifically.
Other specific-focus, telephonic crisis centres have been set up as well, namely to facilitate volunteers’ help, to register professional services’ help, to register boats to assist clean up operations, to bring attention to environmental and social degradation and distressed wildlife and to contact BP’s press offices in the US and the UK as well as to file claims against BP itself.
Final Verdict?
1. Dishonesty?
While other parties such as Transocean and Halliburton were involved in constructing and operating the Deepwater Horizon rig, BP made the fatal panic-stricken mistakes of blaming everyone else and publicly downplaying the incident before the scope of the flow rate and/or damage could be assessed. On the other hand, against charges of BP lying about flow rates, it is hard to determine this either way as differing scientific opinion and varying oil well pressure must be compared against source bias and interest. However, BP would have saved more face had the numbers been overestimated and then revised lower than doing what they did.
In cases of crisis communication, honesty is not only the best policy but also the tried and tested method for brand recovery. To say that BP should have been honest is admittedly a normative recommendation made in retrospect but conversely, dishonesty is simply unacceptable at a corporate level and is tantamount to fraud.
2. Brand Greenwashing?
The spill also brought to the surface past questions regarding BP’s ‘greenwashing’, now understood as the spinning of environmentally unsound corporate practices. In semi-contradiction to these allegations, it must ultimately be said that BP’s business is the mining and refining of fuel sources and while BP has begun integrating greener energy-producing activities into their business plan, the simple fact is that most fuel sources currently available for use and feasible in their production are unsustainable and/or highly carbon emissive.
As of yet, there is only so much BP can do to legitimately ‘greenify’ its business. While there remains high demand worldwide for energy and fuels, business will continue to supply it. For some it may be argued that this is unfortunate but rational given the circumstances, for others, the status quo is inadequate and must be revolutionised. For a business proposition not just answering to shareholders but one employing and responsible for the livelihoods of 92, 000 people worldwide, some middle ground must be found.
3. Corporate Social Responsibility
Without saying BP was the direct cause of the Gulf oil spill, it is both responsible for the damage caused by the incident and responsible to those who/that have been negatively affected by its happening.
BP has shouldered this responsibility to adequate extent but like promotional strategies, recovery marketing strategies, can always be improved upon. BP has not gone unwounded in the process, with its market value falling about $25 billion since the Deepwater explosion.
As it is expected that this spill may have long-term consequences, it may be necessary for BP to look into establishing a long-term strategy so as to begin making good the damage it has caused as well as to rebuild its company image. After all, the world still runs on energy.
“It is an engineer’s nightmare,” said Ed Overton, a Louisiana State University professor of environmental sciences. “They’re trying to fit a 21-inch cap over a 20-inch pipe a mile away. That’s just horrendously hard to do. It’s not like you and I standing on the ground pushing — they’re using little robots to do this.” [Kunzelman and Bluestein, 2010]
Long Term Suggestions for BP:
- Keep the recovery process as a main focus
- Remain positive but realistic, encourage positive attitudes and input from both staff and the public
- Ensure staff are properly informed
- Actively consider public suggestions and publicise this
- Set clean up targets, be honest about reaching or not reaching them
- Continuously publicise strategic and relief efforts
- Maintaining crisis communication efforts may be expensive but is especially necessary to prevent the dismantling of BP’s brand and image
- Make developing and implementing image-building strategies a key focus from here on
Losing hope to say that the damage is irreparable is not helpful. Accomplishing something is only impossible if one believes it to be so. Without comparing the leaks of tankers, to the leak of an undersea well, most major spills to date have been cleaned up almost in their entirety, despite the scope of their damage with the help of local forces boats and volunteers. We can recover our losses, let us not be our own defeat.
Sources:
Achenbach, J and Fahrenthold, D.A. 2010. Estimates revised upward for oil spill. The Day [Online]. 28th May.
<http://www.theday.com/article/20100528/NWS13/305289959/1044 > [29th May 2010]
BP. 2010. BP Global | Gulf of Mexico Response. BP [Online]. 30th May.
<http://www.bp.com/bodycopyarticle.do?categoryId=1&contentId=7052055> [30th May 2010]
Burdeau, C. 2010. Weather hurts Gulf oil fight, new drilling on hold. 30th April.
<http://www.guardian.co.uk/world/feedarticle/9055044 > [29th May 2010]
Kaufman, L. and Krauss, C. 2010. BP Prepares to Take New Tack on Leak After ‘Top Kill’ Fails. New York Times [Online]. 29th May.
<http://www.nytimes.com/2010/05/30/us/30spill.html?hp> [29th May 2010]
Kunzelman, M and Bluestein, G. 2010. BP stock tumbles as feds announce oil-spill probes. Yahoo! News [Online]. 1st June.
<http://news.yahoo.com/s/ap/20100601/ap_on_bi_ge/us_gulf_oil_spill > [1st June 2010]
Philips, M. 2010. BP’s Photo Blockade of the Gulf Oil Spill. Newsweek [Online]. 26th May.
<http://www.newsweek.com/2010/05/26/the-missing-oil-spill-photos.html > [29th May 2010]
Pilkington, E. 2010. BP oil spill: grassroots anger over ‘lack of clean-up plan’. The Guardian [Online]. 28th May.
<http://www.guardian.co.uk/environment/2010/may/28/grassroots-louisiana-bp-oil-spill > [29th May 2010]
Russel, L. 2010. Hurricane plus oil equals more problems. CNN [Online]. 28th May.
<http://edition.cnn.com/2010/US/05/27/hurricane.season.worries/index.html> [29th May 2010]
Sherman. J. 2010. BP had warnings before accident. Politico [Online]. 25th May.
<http://www.politico.com/news/stories/0510/37776.html> [29th May 2010]
Simpson, D. 2010. BP Tries to Shift Blame for Gulf of Mexico Oil Spill. AOL [Online]. 3rd May.
<http://www.aolnews.com/2010/05/03/with-oil-spill-spreading-bp-spreads-blame/19462326/ > [29th May 2010]
