bp oil spill public relations case study

Case Study: BP Oil Spill

This lesson has addressed the key components of ethical principles in crisis communication, including the ethical principles of responsibility, accountability, and humanistic care. The case of BP oil spill in 2010 provides an important example for understanding how these principles are valued by public opinion in a crisis situation, and how the communication actions by a corporation in this type of circumstances might have long-term effect on the brand image of the organization.

On April 20, 2010, a BP’s Deepwater Horizon oil rig exploded, causing what has been called the worst environmental disaster in U.S. history and taking the lives of 11 rig workers. For 87 straight days, oil and methane gas spewed from an uncapped wellhead, 1 mile below the surface of the ocean. The federal government estimated 4.2 million barrels of oil spilled into the Gulf of Mexico.

Mistakes in Initial Response

According to NPR, BP’s action has become a textbook example of how not to do crisis management. BP executives declared it was not their accident, blamed their contractors and made the company look arrogant and callous. CEO Tony Hayward repeated insensitive comments in public, like this one: “There’s no one who wants this thing over more than I do. You know, I'd like my life back.” He also suggested that the environmental impact of the spill would be “very, very modest.” Images of Hayward attending a yacht race just 48 hours after a hostile interrogation by a US congressional committee on the oil spill, provoked sharp criticism on both sides of the Atlantic. Although the company, formerly British Petroleum, officially changed its name to BP in 2001, Americans consider it a foreign company even though it has just as many American shareholders as British ones, and its biggest operations are in the United States.

To sooth angry Americans, BP aired a multimillion-dollar national TV spot in June in which Hayward pledges: "We will make this right." Hayward also promised BP would clean up every drop of oil and “restore the shoreline to its original state.” President Barack Obama said the money spent on the ads should have gone to cleanup and compensating devastated fisherman and small business owners. The ad indicated that the company didn't even follow its own internal guidelines for damage control after a spill. Its own spill plan, filed the year before with the federal government, says of public relations: “No statement shall be made containing any of the following: promises that property, ecology or anything else will be restored to normal.”

BP also bought online ads that pop up when people search for information about the oil spill on Google and Yahoo. The ads, which link to BP's own oil-response sites, typically appear above or to the right of other search results. BP said the idea was to help people on the Gulf find the right forms to fill out quickly and effectively. However, many people suggest it's a move to steer searchers away from bad press for BP.

Crisis management experts stated the only reliable way to repair BP's badly tarnished image should be the obvious one — to plug the hole where oil was still leaking out. It would take nearly 3 months before the leak was stopped, and nearly 5 months before the well was declared effectively dead. Public relations experts pointed out that BP ran its crisis communications in the same “ham-fisted” manner they’ve run the clean-up operation in the Gulf.

"BP's handling of the spill from a crisis management perspective will go down in history as one of the great examples of how to make a situation worse by bad communications," said Michael Gordon, of New York-based crisis PR firm Group Gordon Strategic Communications. “It was a combination of a lack of transparency, a lack of straight talking and a lack of sensitivity to the victims. When you're managing an environmental disaster of this magnitude you not only have to manage the problem but also manage all the stakeholders.”

Consequences

BP attempts to convince people that it appears the Gulf of Mexico is healing itself after a while. In 2015, BP released PR materials that highlight the Gulf’s resilience, as well as a scientific report showing the area is making a rapid recovery. But evidence is mounting that five years after millions of gallons of oil spilled into the Gulf, wildlife there is still struggling to rebound.

In June 2016, BP issued its final estimate of the cost of the spill, the largest in U.S. history. The total amount for the cost of the 2010 oil spill in the Gulf of Mexico was $61.6 billion. Under the settlement with BP, five states in the Gulf area and local governments will receive payments over the next dozen years. The funds will enable them to ramp up vital restoration work along the coast. BP continues to settle claims from business owners and residents who say they were harmed.

Moral of the Story

In conclusion, this is a classic case example of why organizational decision making in crisis situations should be based on ethical principles such as accountability and responsibility. Public criticism and outrage following the incident not only focused on the oil spill, but on the lack of remorse and sincerity from the top management in crisis response, particularly the lack of sympathy to the victims of the disaster. The failure by BP’s leadership to respond to the disaster with sufficient speed and attention demonstrates that crisis preparedness and ethical guidelines should become part of the organization culture.

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The Message Makers: Inside PR And Advertising

Bp: a textbook example of how not to handle pr.

Elizabeth Shogren

In May 2010, then-BP CEO Tony Hayward gave a news conference at Fourchon Beach in Port Fourchon, La. Patrick Semansky/AP hide caption

Part of a series on the communications industry

Within hours of the Deepwater Horizon explosion, Glenn DaGian was on the phone.

He had retired a year earlier after working with BP and Amoco for 30 years. He wanted back in the game.

"Every day thereafter, for about a week, I kept saying, do you want my help, do you want my help?" he says.

DaGian watched from the sidelines as BP executives declared it was not their accident, blamed their contractors and made the company look arrogant and callous. The company's response has become a textbook example of how not to do crisis management.

"I was literally yelling at the TV set," DaGian says. "I thought that the first reactions should have been more humble and more conciliatory. I was very upset that they didn't apologize. It sounded like they were hiding behind the lawyers' skirts."

Still, when BP called DaGian about a week into the disaster, he jumped into his car. BP sent him as an ambassador to groups of fishermen and other people across South Louisiana.

DaGian, who grew up in southwest Louisiana, chokes up when he remembers the encounters.

"They were so scared that they were going to lose their way of life," he says. "I really got real emotional about it."

His accent signaled that he shared their roots. At one meeting, a retired history teacher asked if he knew they were descendants of French pirates, and that long ago, British pirates raped and plundered their ancestors.

"And then she squeezes my hand and she says, 'Tell me, son, does BP stand for British pirates?'" he says. "And I had to explain to her that, no, we were not British pirates, and BP meant well, and we would fix the situation."

'Every Day He Was Making A New Gaffe'

DaGian knew one reason for the company's colossal PR missteps. CEO Tony Hayward had slashed BP's public- and government-relations shop to cut costs. So, Hayward was listening to outside consultants and rookies. They let him walk the beaches in a starched white shirt.

They didn't muzzle him despite repeated insensitive comments, like this one: "There's no one who wants this thing over more than I do. You know, I'd like my life back."

Glenn DaGian, who recently retired after a 30-year career at BP and Amoco, says he was so angry at the company's crisis control effort that he was yelling at the television. He pitched in with the PR effort to try to help the company salvage its reputation. Elizabeth Shogren/NPR hide caption

When a group of Louisiana state officials asked about Hayward, DaGian let his exasperation show.

"I said, 'The only time Tony Hayward opens his mouth was to change feet,' " DaGian recalls. "It seemed like every day he was making a new gaffe. He didn't understand the animal that is the media. He didn't understand the public's perception of a foreigner in south Louisiana."

Current BP officials wouldn't comment on the record for this story. But people familiar with the inside of BP's crisis control effort and outside experts say early on, BP didn't have a public relations strategy. It failed to communicate the three key messages the public needed to hear: That BP was accountable for the disaster, was deeply concerned about the harm it caused and had a plan for what to do.

Experts also agree that Hayward's propensity to say the wrong thing made him the wrong choice to be the face of the crisis, and BP's board took too long to figure that out.

"Clearly he did not mean to be mean, even though in some cases he came across that way," says Glenn Selig, a crisis management consultant whose clients include former Illinois Gov. Rod Blagojevich.

Selig says the company's PR advisers didn't serve Hayward well. Instead of rescuing his image, a slogan the company launched with a slick ad starring its CEO made things even worse.

"We will get this done, we will make this right," Hayward says in the ad.

Selig says it was like a doctor in an emergency room full of dying people telling family members that everything will be fine.

"They were putting out this message saying, 'Trust us. We'll be able to make things right,' at a time when they obviously couldn't. The oil was gushing like crazy and they couldn't cap it. I think that that was a horrible misstep," Selig says. "It's very hard to believe that everything is going to be OK when you're still in a crisis. What we need to hear at that point is, 'We're doing everything we can to get it under control.' "

A 'Failing Grade'

Clarke Caywood, director of Northwestern University's graduate public relations department, is working on a book that delves into BP's crisis response fiasco. Caywood says it was bad public relations for BP executives to initially cover up both the seriousness of the accident and their inability to quickly fix it.

"They should have been prepared to admit that they didn't have it under control, because they didn't have it under control," Caywood says.

And later on, when scientists found signs of huge plumes of oil in the deep water, Caywood says, BP executives were wrong to deny their existence.

"They were either uncomfortable with telling the truth or unable to tell the truth," he adds.

Caywood says he'd give the company's crisis management effort a "failing grade."

"While I think the company will survive, its reputation has been irreparably damaged," he says.

The Benefit Of Social Media

BP does get some compliments for replacing Hayward with Mississippi native Bob Dudley, creating an independent $20 billion compensation fund and running television ads that feature Gulf Coast natives.

And BP insiders say the company quickly ramped up its social media campaign, which helped counteract earlier PR failures.

"I think they did a great job, considering the pressure they were under on so many other fronts," says Steve Marino, a BP consultant who worked for Ogilvy & Mather at the time.

Marino came on board in mid-May to lead BP's fledgling social media team. Before the explosion, BP had no dedicated social media staff and only a couple-hundred followers on Facebook. Marino set up a YouTube channel. He says the detailed technical briefings posted there helped people understand what BP was up against.

During the peak of the crisis, tens of thousands of people were following BP on Facebook, Twitter and YouTube. Marino says people's rage toward the company came through loud and clear.

"We let people vent their anger and their frustration on Facebook or in response to any of the tweets that we put up there," says Marino, who now works for MSL Group. "I think the best thing that social media did was to give people that outlet and allow people to feel that BP was hearing them, which they were."

Twitter gave BP a way to get its news out fast — without the media in the middle. And it created a new way to interact with traditional media.

On the day BP finally capped the well, Marino's team was monitoring CNN when an expert guest incorrectly told viewers that something was amiss.

"When we were on the phone with the producer from CNN, we literally just told them to read the most recent tweet, and they used that tweet to correct the story," Marino recalls. "It was great to see social media be able to, in real time, get the right information out about such an important critical moment," Marino adds.

Yet BP's image is still in tatters. And retiree Glenn DaGian is still trying to help rescue it by pushing BP to do more to restore the Gulf Coast.

"I want to be able to proudly tell people I worked for BP. I don't want people to snicker by saying we were an environmental corporate criminal," he says.

He is determined not to end up like the people he knows who worked for Enron. BP will start doing the right thing, or he'll become the company's biggest critic.

Related NPR Stories

Can bp tweet its way to a better image, around the nation, bp's pr doesn't make things right with locals.

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BP and the Deepwater Horizon oil spill : a case study of how company management employed public relations to restore a damaged brand

Kanso, am; nelson, ra; kitchen, pj.

The Deepwater Horizon oil spill, also known as the British Petroleum (BP) oil spill, is considered the largest marine accident in the history of the industry. The 2010 incident in the Gulf of Mexico resulted in the killing of 11 crew members, posing serious health risks to thousands of people and creating massive damages to wildlife habitats and fishing and tourism industries. This case study investigates how British Petroleum dealt with the crisis that left lasting serious negative impacts on its brand and reputation. The investigation reveals that BP used a wide range of public relations activities to rebuild its reputation, but the company was not well prepared to handle such a disaster. The authors report that BP also originally made grave mistakes in: (1) trying to spin its way of the crisis rather than tackling the challenges head on and (2) focusing heavily on advertising during the clean-up operation. The authors conclude that BP’s corporate brand continues to lag behind that of competitors such as Shell and Exxon, but that a change in company leadership has undertaken a more ethical communication strategy that is showing signs of success.

Kanso, A., Nelson, R., & Kitchen, P. (2020). BP and the Deepwater Horizon oil spill : a case study of how company management employed public relations to restore a damaged brand. Journal of Marketing Communications, 26(7), 703-731. https://doi.org/10.1080/13527266.2018.1559218

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• Corpus ID: 264244700

Communicating During Crisis: A Case Study of the 2010 BP Gulf Oil Spill

• Aubrey Nichole Villines
• Published 2011
• Environmental Science, Business

4 Citations

Crisis communication and ghana's financial sector, a content analysis case study of media and public trust in japan: after the quake, contrasting cases of corporate crisis management systems: a research report, „practical experience” related to crisis communication during the oil and oil products shortage, 57 references, crisis communications: a casebook approach, communication, organization, and crisis, scientific argument in organizational crisis communication: the case of exxon., the role of perception in crisis planning, the media politics of oil spills, choosing the right words, communication and attributions in a crisis: an experimental study in crisis communication, crisis management ‐ public relations, deliberative rhetoric as a step in organizational crisis management: exxon as a case study, a strategic approach to managing crises., related papers.

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A deep dive into BP’s Deepwater Horizon Spill: a case study

Under pressure – the disaster

Considered as the biggest marine disaster in history, on April 20 th , 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, killing 11 crew members working onsite. The rig eventually sank and damaged the pipe underneath and started to spew millions of barrels of crude oil into the gulf over the next four months. It contaminated about 400 square miles of the sea floor and 1,300 miles of shoreline of the Gulf of Mexico (DOI: 10.1002/jcaf.22306).

Search-and-rescue operations were executed on April 22 nd and within the same day, BP’s CEO Tony Hayward released a statement that they were determined to do everything to contain the oil spill and resolve the situation . When the rig capsized, BP’s initial response comprised of: 1) releasing of a small fleet of response vessels, 2) relief well planning, 3) skimming of oily surface water, 4) implementing protective boom to prevent oil from reaching the shoreline, and 5) placing chemical dispersants in the spill site to break up the oil and keep them from damaging marshes, mangroves, and beaches .

Efforts were made to seal the leaking well but were initially unsuccessful, and as a back-up, they have started drilling relief well in May. To reduce the leak, a tube tool was inserted into the ruptured riser pipe and containment cap was used to collect the oil and pump it to the gulf surface. On July 15 th , BP was able to stop the flow of oil for the first time in 87 days but was still under monitoring to ensure that the cap would stay in place. More than 2 weeks later, the US government announced that almost three-quarters of the spilled oil had been cleaned up, and on September 19 th , BP reported that the leak had been successfully and permanently plugged .

Several service providers (DOI: 10.1002/jcaf.22306) were involved in the offshore drilling operations of the Macondo well, the area of exploration where BP is operating. BP leased the rig from TransOcean, while the processes such as cementing the well and other critical functions were done by Sperry-Sun, Halliburton’s subsidiary. Other companies involved were Dril-Wuip, Oceaneering, M-I-SWACO, Cameron, and Weatherford.

Numerous investigations were held to find the root cause of the disaster, as well as the parties responsible for the damages. The BP report 2010, the Commission Report 2011 and the Joint Report 2011 concluded that the tragedy occurred due to a series of failures from the multiple parties involved in the operation. BP had been identified as the primary responsible for ensuring the safety and protection of personnel, equipment, natural resources, and the environment under the Oil Pollution Act (OPA). The other companies also shared the same accountability for violating several offshore safety regulations based on the Joint Report 2011.

It was revealed that the crisis has cost BP more than US$65 billion covering the total charges, net of reimbursements and recoveries, as well as insurance claims. However, a study (DOI: 10.1002/jcaf.22306) showed that the ultimate cost of the oil spill was twice what was reported in BP’s income statement, amounting to US$144.89 billion. The detailed computation included not just those mentioned above but also the hidden costs such as the revenue lost, unearned profit, and reputational damage. Needless to say, the spill also damaged fisheries, beaches, and coastal wetlands, including several species of birds, sea turtles, marine mammals, fishes, oysters, and other sea animals. A recent study showed that Gulf inhabitants such as brown pelican and menhaden fish have showed robust recovery while many species such as deep-sea coral, common loons, and spotted sea trout are still struggling to multiply.

The Deepwater Horizon spill also brought significant impacts to the economic activity in the surrounding communities. A research (DOI: 10.1007/978-3-030-11605-7_33) revealed that the total economic costs during the period of 2010-2020 of the foregone commercial fishing revenues and recreational fishing expenditures are loss of 25,000 jobs, US$2.3 billion worth of industry output, US$1.2 billion gross regional product, US$700 million labor income, US$160 million state and local tax revenues, and US$160 million federal tax revenues.

A deep well of learnings

Oil spills are not uncommon in the Gulf of Mexico but the magnitude of impact of BP’s Deepwater Horizon had been massive that it attracted so much attention from various stakeholders, not to mention the several missteps BP took as they navigated through the whole crisis. Here is the list of some lessons learned from the accident that, in some way or another, brought lasting impact on the safety of succeeding oil operations in the industry.

• Never learning enough from previous mistakes. In a high-risk business like oil-drilling, it is expected that large companies such as BP would have anticipated negative events in many of its operations. Even more so when there had been several accidents that happened prior the major oil spill. In 2005, BP’s refinery in Texas City exploded and their Thunder Horse rig in the same gulf got into an accident. In the following year, BP’s pipeline leaked in Prudhoe Bay. It was reported that BP was still paying for the violations in these previous disasters when the Deepwater Horizon spill happened .
• Culture of safety must be embraced by the whole industry. The disaster showed how neither the industry, nor the governments were prepared for risks involved in oil exploration. The investigations revealed how failures in following procedures to mitigate risks, and loose coordination among operators and regulatory bodies led to this disaster. It is important for organizations to understand that regulations are for their benefit, and it can provide level playing field for all stakeholders, especially during a crisis. In addition, regulations must be well-enforced, and penalties must be tantamount to the damages incurred in a disaster. Lax safety enforcement for the part of Minerals Management Service (MMS), the regulating body for offshore oil drilling, was found in the investigations. In fact, in the report released by the General Accountability Office (GAO), MMS showed a series of inconsistencies and omissions in their National Environmental Policy Act analyses and was described to lack organization, guidance, technical expertise, and qualified personnel .
• Plans must be prepared and reviewed to the highest standard possible. BP had MMS-approved Gulf Oil Spill Response Plan that detailed cleanup equipment and techniques, surface containment methods, and the use of chemical dispersants while missing out the more important parts of preventing or stopping a blowout. It was later found that BP’s response plan was written by the same contractor that prepared the plans for other oil companies such as ExxonMobil, Chevron, ConocoPhillips, and Shell Oil. Congressional inquiry described the plans as “cookie-cutter” that similar errors were found in some of the companies’ response plan . Furthermore, BP received a categorical exclusion for exploration plan for Macondo Prospect, allowing them to drill without preparing detailed site-specific environmental assessment based on the outdated assumption that “the impacts from the common operations are expected to be negligible to non-existent…”.
• Ensure that Business Continuity Plan includes third-party agreement. Several subcontractors involved in the Deepwater Horizon operations had made the already complex nature of the business even more complicated. Complex risks may arise from third party contractors and their capability to continue their operations. This is why it is important that critical suppliers must have Business Continuity Management arrangement in place. Furthermore, a robust action plans as part of collective response among suppliers in case of a disruption must be included in their contractual obligations. Had the employees well-informed of their responsibilities and safety actions, the death of 11 crew members would have been prevented. Had BP and its contractors have pre-arrangement contracts that included BCM, they would have not blamed each other and engaged in multi-billion dollar litigation after the accident.
• Communication is an integral aspect of crisis management. BP has become a textbook example of how not to handle public relations. Several studies evaluating BP’s actions in terms of crisis communication have been published following the major incident. Below is a quick rundown of both weaknesses and strengths of BP’s campaign (DOI: 10.1080/13527266.2018.1559218).

Digging deeper

Initially, BP’s several mishaps in managing the disaster making it easy for environmentalists, politicians, media, and other concerned individuals to paint the company as uncaring and greedy organization that cares for profits more than anything else . When the rig exploded and oil spill happened, BP was quick to shift the blame to TransOcean through their official statements, and the former CEO Hayward’s media interview. He said: “ This wasn’t our accident. This was a drilling rig operated by another company. It was their people, their systems, their processes. We are responsible not for the accident, but we are responsible for the oil and for dealing with it and cleaning the situation up.”

Lack of concern for the victims was also seen by many when there were reports that BP asked the cleanup workers and those who were affected by the spill to sign a waiver that would limit BP’s liability. This was during the ironic time that BP reported their 135% first quarter profit of $5.6 billion. The company also failed to be transparent, hindering people to build confidence and trust that they were on top of the situation early on. For example, the initial estimate of the leak was only 1,000 barrels per day, increased it to 5,000 barrel per day after more than a week, then later submitted a figure of 100,000 barrels per day to the Congress for investigation.

Lastly, former CEO Tony Hayward’s statements and actions attracted a lot of negative attention. In an interview with The Times of London, he mentioned that some victims would try to scam them for profit (Ibid) “I could give you lots of examples. This is America – come on. We’re going to have lots of illegitimate claims. We all know that.” Furthermore, he tried to downplay the damage caused by the accident by saying “ 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.” He was also recorded saying in front of many reporters, “The first thing to say is I’m sorry. We’re sorry for the massive disruption it’s caused their lives. There’s no one who wants this over more than I do. I would like my life back.” He was later seen on a yacht off the Isle of Wight, 2 days after testifying before Congress.

The reputation repair

As BP struggled to find solution to stop the oil spill and its dwindling reputation, its share price and credit rating also grappled. The shareholder value of BP plummeted by 55% after the incident, from US$59.48 per share on April 19 th , 2010 to US$27 per share on June 25 th , 2010 . Furthermore, Fitch cut its credit rating from AA to BBB after US politicians demanded US$20 billion deposits in an escrow account to fund the damage claims for the oil spill as the agency was concerned about the ratio between long-term and near-term cost payments would become skewed towards the near-term cost . However, the meeting of BP’s executives with Obama in June was considered a turning point. BP’s Chairman Carl-Henric Svanberg told Obama: “ Our boat is keeling over right now. We’re not taking on water but we’re not far away. If you and the administration can be supportive going forward, that would help us do the right thing.” Obama responded that it is the country’s interest for the company to remain strong and viable to be able to fulfill its commitments . It was on this meeting that BP agreed to fund the US$20 billion escrow account, which investors received positively .

In the same month, BP hired Purple Strategies, a public affairs firm run by a Democratic and a Republican strategist, for its US campaign, alongside Anne Womack Kolton, a former US Energy Department official, to manage its US media relations. The new strategy team was able to showcase what BP had been doing for those affected by the crisis. Television, radio, and print campaign featured BP workers and Gulf Coast locals, volunteers, and BP officials. They were able to put faces on the real and human stories related to the incident. After the leak was plugged, they expanded the communication strategies to image-building by highlighting how BP was helping the Gulf Coast residents to get back to business as usual. They created two major campaigns – “Voices from the Gulf” and “My Gulf”.

Voices from the Gulf: Mississippi Fishermen

Voices from the Gulf: Louisiana’s Restaurant Owners

Voices from the Gulf: Florida Business Owners

My Gulf: Dawn Moliterno – Walton Tourism Development

My Gulf: New Orleans, Louisiana – Cooking the Perfect Gumbo

My Gulf: Josephine, Alabama: Shrimpin’ with Papa Roy

Another unprecedented albeit necessary decision happened in the following month, Tony Hayward, whose gaffes had enraged a lot of Americans, announced that he was stepping down as CEO and would be replaced in October by Bob Dudley, a Mississippi native who was in charge of BP’s clean-up response .

A year of change – the post crisis phase

Changing leadership amidst the crisis was a pivotal step for BP to redirect its direction through the crisis. Bob Dudley’s first tasks as the CEO were: 1) securing the company’s finances, 2) ensuring the safety of BP’s operations worldwide, and 3) restoring the environment of the Gulf Coast . He needed to sell BP’s oil and gas assets quickly, including their prized assets such as the Texas City refinery, Gulf of Mexico oilfields and Russian joint venture , and also do forward sale oil to safeguard BP’s future while meeting its commitment to the Gulf.

Guided by his principle of “value over volume”, Dudley cut the number of BP-operated upstream installation by 50%, the number of wells by more than 30%, and oil and gas reserves by 10%. In addition, he formed a new global Safety and Operational Risk team to instill the culture of safety in the company . Apart from the operation and culture, he mentioned in an interview that capital allocation and decision-making were also reformed . BP became “ inclusive, and modern place to work where leaders were encouraged to listen to the quietest voices in the room ”.

BP’s support to its business partners and people during the crisis did not wane but even strengthened. Dudley found that while several of BP’s partners such as banks were pulling away, there were some partners that were supportive and willing to help. Moreover, he also felt the need to rebuild the confidence of their employees in their company as he was worried that competitors might try to hire their talent away .

The oil company remained committed to environmental restoration. They provided up to US$1 billion for restoring natural resources that were impacted by the accident. In addition, BP has allocated US$500 million for a decade of support to independent research designed to provide better understanding of the Gulf ecosystem and industry. With the help of experts in high-hazard sectors such as nuclear energy, chemicals and the military, BP strengthened their operational risk function. Furthermore, they were able to design and prepare a capping stack that can be used in case another leak in deep water happens .

BP: A year of change

Rising above pressure

The post-crisis organizational reform was able to regain the investors’ trust as shown by the share price increase from June 29 th , 2010. Although the share has not gone back to its pre-oil spill crisis price at around US$60, it did not go below US$27 until the COVID-19 pandemic hit.

BP strengthened its finances after the crisis by cutting costs to reduce breakeven point while improving oil production . In 2017, Moody’s increased BP’s credit rating for the first time in 19 years citing the company’s resilience to oil price volatility and increased clarity in terms of the remaining cash payments related to the US$20 billion Deepwater Horizon settlement .

BP continued to acquire various projects including those that focus on natural gas such as shale gas production from about 200 wells in Oman , the natural gas production at Atoll gas field in Egypt , and several American oil and shale projects bought from mining firm BHP, its first major US investment since the oil spill ,  among others. Although only a small fraction of their total spending, BP started investing in renewable energy at around US$400 million a year. They invested in startup firms like Freewire, which possesses a technology that allow charging electric vehicles faster. It also acquired Chargemaster, UK’s biggest network of EV charging stations, as well as 43% share of Lightsource, Europe’s largest solar development firm . Like other oil companies, BP received several criticisms for doing inadequate efforts to reduce carbon emissions and increase renewable energy, especially that between 2016 and 2019, BP expanded its oil and gas production by 20% .

In 2020, BP announced that it aims to become a net-zero emissions company by 2050 or sooner. It revealed their commitment to a 10-fold increase in low-carbon investment or an estimate of US$5 billion per year, and a 20-fold increase in renewable generating capacity to 50 gigawatts . Headed by the current CEO Bernard Looney, who succeeded Dudley in February 2020, the oil giant plans US$25 billion in fossil-fuel asset sales by 2025, with US$15 billions of which has already been liquidated by unloading the Oman deal, oil and gas field in Alaska and the North Sea, and BP’s entire petrochemical operation . Although the company does not expect profits from its clean-energy business such as solar, EV-charging, and wind ventures until 2025, Looney continues to spend on renewable energy.

The Final Cap

To keep its commitment to meet its obligations in the Gulf of Mexico in spite of almost losing its whole business to the accident is praiseworthy; to move forward, learn its lessons, and transform into a better organization is even more admirable; but nothing can beat a well-prepared company that can prevent a crisis to happen, or at least mitigate the risks. The BP’s Deepwater Horizon Oil Spill is a great example of how return on investment of robust emergency response and business continuity programs can worth priceless.

In addition, the accident showed us that the most critical aspect of crisis leadership is clear and trustworthy communication. The goal of communicating during a crisis is not to lessen the uncertainty but to acknowledge it and the fear that comes with it. Transparency, honesty, and empathy are always the best policy.

If you liked this case study, you might also want to read this one .

Author: Lucil Aguada

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• Crisis Communication

Crisis communication failures: The BP Case Study

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• Mar 5, 2019

Beyond the Spill: How BP Managed Its Brand Image and Public Relations

There are times when the fallout from a company crisis seem insurmountable. When everyone - the public, industry peers and the government - is opposed to your business. And unlike Domino’s, a case which we examined last November, it’s impossible to overhaul the product itself. Or is it?

You likely know the story of the BP oil spill. If not, to express a very traumatic incident as briefly as possible: BP had been working with Transocean and Halliburton to dig a deep exploratory well, 18,360 feet (5,600 m) below sea level. On April 20, 2010, pressured methane gas rose into the drilling rig and exploded, spilling 210 million gallons of oil into the U.S. Gulf of Mexico. Besides the obvious environmental destruction, 11 people working the rig lost their lives. To date, it is still the largest oil spill in world history. In addition to the tragedy all around, this was a public relations nightmare, which many companies could never repair.

Re-Brand Failure

This incident was doubly traumatic in light of the company’s brand history. BP had been a trailblazer with respect to its concern for its environmental impact. Its 1998 corporate responsibility report outlined the company’s plans to address greenhouse gas emissions, along with other environmental data and information aimed at providing transparency about the company’s business around the world. BP had also been the leading U.S. solar panel manufacturer.

In 2000, ten years before the oil spill, BP, which had been known as “British Petroleum” rebranded itself, to “BP,” at a cost of over $200M. The company’s new tagline, “Beyond Petroleum” reflected the company’s identity as an environmentally-concerned player in the oil and gas space and its interest in moving beyond offering strictly petroleum-based products.

The original logo (above) reflected classic gasoline logos of the early twentieth century. The new one (also above), modeled after the Helios - the Greek god of the sun - implicitly alluded to a clean, natural energy source (rather than petroleum). In the wake of the incident, Greenpeace offered a challenge to the public to design “a new logo design” for BP. Some of the results are below:

Clearly these logo designs indicate the public’s view of the company, thus negating the benefits of its rebranding work. After having been so progressive in its corporate responsibility and having poured all of that interest into its public persona, the oil spill was certainly a blow to the company’s confidence in its future.

Governmental Penalties

Not to mention the governmental penalties. after the spill, BP agreed to four years of government monitoring of its safety practices and ethics; it was temporarily banned from new contracts with the US government; and the company agreed, with the Department of Justice, to pay record fines of $4.525 billion.

Still, BP was wisely penitent and submissive with the government. Michael Bromwich, President Obama’s top regulator of offshore drilling safety stated that "BP was appropriately remorseful and dealt with us forthrightly and transparently. They fully cooperated with our investigation and with countless others."

"The rest of the industry tried to paint BP as the black, noncompliant sheep of the Big Oil family," Bromwich said. "That was its way of arguing that company-specific rather than industry-wide reforms were called for. We disagreed with that line of argument, and independent studies exposed it as nonsense."

BP’s new CEO, Robert Dudley, understood one thing very well: that a government that institutes billions of dollars in damages, fines and coastal science research, is a government that will want to keep BP around to pay for all that. By submissively complying, BP established the US administration’s desire to protect the company.

Time Heals…Some Wounds

That said, the US government’s interest is only step one. The business must go on. And that’s something that only the company can orchestrate. As we’ve talked about before, there’s much that time will heal. Eventually, if a company makes the right choices for long enough, the public will forget (or choose to overlook) the past.

For an oil company, that can be a hard road. There will always be people and entities who object to the oil & gas industry for one reason or another. To some extent, those in controversial industries can never truly overcome the opposition of those who are determined to act against them. However, assuming nothing illegal is transpiring, the only way to move forward is often to go back to business as usual.

That’s what BP did. After settling payments totaling close to $70 Billion (from fines and lawsuits), BP focused on its production. Recently that has included the acquisition of BHP’s onshore U.S. shale portfolio. Currently, the company is investing in sizeable massive oil and natural gas projects including a gas pipeline in the Caspian Sea, offshore Egyptian wells and shale fracturing projects in Louisiana.

Of course, the safety concerns of the past also had to be addressed. One of BP’s notable initiatives was to rework its facilities and to give every employee the ability and empowerment to stop the company’s operations in the case of safety risks.

Fresh Product, Fresh Image

And in 2017 BP did the seemingly impossible: launching a new product in a commodity market: new, “dirt-cleaning, “ultimate” fuels. BP marketed these as part of its new “Active” technology.

This new branding move did two important things for the company.

First, it was a return to BP’s pre-2010 reputation to focus on clean energy and environmental responsibility. BP diesel fuels help engines run more efficiently, enable smoother driving and protect a vehicle against breakdowns. BP claims that the BP Ultimate fuel with Active technology removes more than 50% of the harmful dirt deposits in the essential components of the engine, and also protects it from future build-up.

Second, the company made a strong move towards the consumer by launching a new brand character ambassador: “Orby.”

https://www.youtube.com/watch?v=2ZVe_j8FNm0

As the UK head of marketing, Natalie Cattermole, explained, “[Orby] helps us have a different conversation around fuel. We’re shifting from an engineering focus to something that is more relevant. We wanted to make the campaign friendly and approachable, so that’s a shift for the brand. It is important for the brand’s communications to stand out in a ‘cluttered’ market, which is something Orby can achieve for us.”

In short: BP launched Orby in an effort to relate to the consumer and to express the importance of the car and, by default, fuel in everyday life. Orby makes an international oil company accessible to the average consumer.

That said, what has the impact of all of these initiatives been? After the firing of two executives and the sale of $75 billion in assets to cover government fines, private damage claims and legal bills, BP posted a strong 2018.

Part of this was due to the company’s focus on its production. Investment reports cited “record utilization” of its oil and gas fields and refining capacity as the bulk of the substance behind the company’s improvement. But the other part of it is due to a positive focus on renewing its brand and reaching the consumer in ways that are relevant for the future.

Whereas after the spill, the company’s stock dividend had dropped to zero, in 2018 BP reported a doubling of profits. Now BP is producing over 3.6 million barrels of oil and oil equivalents a day. This is approximately 10% lower than the output prior to the 2010 oil spill, but the company’s output increased 10% from 2017 and is forecasted to rise.

BP's 2018 profit reached a five-year high of $12.7 billion, double the previous year's $6.17 billion. And their adjusted net income was the highest since 2012. Chief Executive Officer Bob Dudley said the shale acquisition will "transform" the company's position in the U.S.

As we’ve talked about before, never lose hope. A new approach to branding and public relations, such as BP’s Orby character ambassador, and a strong record of performance today can do much to lay the groundwork for a profitable future. Even in the most sensitive industries, it’s never too late to move forward with a new brand image.

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BP and the Deepwater Horizon Disaster of 2010

Christina Ingersoll

Richard M. Locke

Cate Reavis

Apr 3, 2012

The explosion and sinking of the Deepwater Horizon oil rig on April 20, 2010, resulted from a series of events and decisions involving employees of BP and its contractors. While there does not appear to be one clear culprit or reason that led to the disaster, the case explores issues of organization, information, and decision-making, as well as the ability or inability of individuals to voice their values as contributing factors.

Learning Objectives

To engage students in what it means to act ethically in today’s business world; understand that decisions are strongly influenced by broader factors such as culture, organizational design, and decision-makers’ values; and think critically about ethical dilemmas and how to voice their values in response to those dilemmas.

Appropriate for the Following Course(s) 

leadership, ethics, corporate responsibility, operations management

BP and the Deepwater Horizon Disaster of 2010 

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Business Continuity and Crisis Management Consultants

Lessons in Crisis Communications: Deepwater Horizon

September 24, 2018 By //  by  Bryan Strawser

The  Deepwater  Horizon spill was among the worst environmental disasters in history. Eleven platform workers lost their lives when the rig exploded on April 20, 2010. Over 4.9 million barrels of crude oil were released into the Gulf of Mexico, and many experts say that irreversible damage may have been done to the local environment.

In addition to these very tangible losses, however, BP’s poor communication in the wake of the disaster compounded their mistakes in myriad ways. It resulted in such damage to their brand that BP-branded gas stations throughout the country changed their name to avoid association.

There were many missed opportunities throughout the timeline of the crisis; times when BP could have shown leadership and compassion that would have helped them mend trust. Other organizations can learn from these errors to ensure that their planning and their reactions are better. Taking some time to examine specific mistakes can help reveal a number of specific lessons that other organizations can take if they are ever faced with a severe disaster.

“You know, I’d like my life back.”

CEO Tony Hayward proved early on that he  did not understand the gravity of the situation . Hayward made a number of PR missteps, including making insensitive comments to reporters. Several days into the crisis, Hayward said, “There’s no one who wants this thing over more than I do. You know, I’d like my life back.” He was quick and harshly taken to task for making such a flip statement about his life when nearly a dozen employees had lost theirs.

This gaffe and others, such as appearing  unrelatable  while walking on the beach in Louisiana in a starched white shirt, showed that Hayward did not appreciate the very real impact the spill had on many in the area.

The lesson: Remember that it isn’t about you. No matter what happens, executives communicating with the press and the public need to remember to keep the focus on those injured, dead or harmed in some other way.

Cutting Budgets to the Bone

In the wake of the tragedy, it soon became apparent that BP had not planned properly for the safety of their workers or of the local environment. The company had also failed to plan for the health of its public perception. According to former BP executive Glenn  DaGian , Hayward had slashed budgets for PR and government relations in an effort to cut costs. The result was an organization that was not ready to face the public.

The time to hire a crisis communications consultant is not in the hours after a tragedy. It is in the months and years before. Your crisis communications plan should include a list of possible disaster scenarios and how executives and other stakeholders should respond to each one. Public facing employees should be trained so that they know what words and actions can help and which are likely to cause further problems.

It should also have a list of people to contact as soon as possible in order to help communicate effectively with the public to save trust.  DaGian , who is from the Louisiana coast, said that he immediately called old contacts at BP to offer his help.  A highly damaging week passed  before they took him up on his invitation and brought him to the coast to talk to fishermen and others worried about their jobs and their future.

The lesson: Crisis communications planning is not optional.

The release of BP’s disaster plan for  Deepwater  Horizon further damaged trust in the company and its ability to make its errors right. Mentions of wildlife that included walruses, sea lions, and seals (none of which live in the Gulf of Mexico) revealed that the details of the plan had not been created with  Deepwater’s  ecosystem in mind.

Additionally, the plan named a Japanese home shopping website as one of its primary equipment providers in the Gulf of Mexico region. Needless to say, the website did not stock equipment integral to contain a spill.

While safety and continuity plans are internal documents, organizations should assume that they will be made public in the event of a disaster. Plans should be made to fit specific contingencies appropriately and updated when needed to fit the latest knowledge about disaster mitigation. A quality plan doesn’t just ensure an appropriate response. It shows the public that your organization is competent, trustworthy and attentive.

The lesson: invest the time in a relevant and actionable plan for your most likely disasters.

A “Very, very modest” impact

A month after the oil spill, Hayward described the environmental impact of the  Deepwater  Horizon spill as likely to be “very, very modest.” This, however, proved to be far from true. Experts estimate that the spill was among the worst in history and that its impact on the local area would be indelible.

Additionally, the public soon learned that BP had significantly underestimated the flow rate of the damaged oil well. By their calculations, the well would have spilled under 1,000 barrels of oil per day. However, outside scientists found that the real flow rate could be as high as 60,000 barrels per day but was at least 35,000 barrels per day. BP’s  lowball  estimate, along with their refusal to amend it, came off as disingenuous to the public.

The lesson: be transparent and accurate. When the public uncovers lies, it destroys credibility.

“Small People.”

After a meeting with former President Barack Obama to discuss the impact of the spill, BP board Chairman  Carl-Henric   Svanberg  said that he shared Obama’s compassion for the “small people” who lived and worked by the Gulf.

Svanberg’s  wealth, paired with American connotations of class privilege, meant that the comment did not sit well with most who heard it. However, it is likely that there was no negative connotation intended in  Svanberg’s  words. In  Svanberg’s  native language, Swedish, the word “ småfolket ” has a positive and egalitarian connotation. However, since most Americans are not familiar with this aspect of Swedish language and culture, the meaning was lost in translation. As a result, it further drove perceptions that BP was uncaring.

The lesson: Understand the people and communities who are affected.  Communicate  using the sort of language that those most affected will use.

Don’t Forget Your Investors

In the months after the spill, BP’s stock price plummeted for what should seem to be obvious reasons.

However, in a statement from the company about the drop in value, BP said, “the company is not aware of any reason which justifies this share price movement.”

While the company was trying to convey that it could handle the costs of the oil spill clean-up, they instead seemed dismissive of the disaster. The trust of BP investors was irreparably harmed. To this day, BP shares have not regained the price levels they had before the spill.

The lesson: overconfidence does not win investors’ trust.

Putting Your Money Where Your Mouth Is

A month and a half after the beginning of the  Deepwater  Horizon disaster, BP launched a $50 million TV ad campaign. In this campaign, the company promised to restore the environment in the local area.

Barack Obama commented that the money should have been applied to actual clean up efforts and damage claims instead of promises.

Few in business can deny the importance of quality crisis communications and public relations efforts after a disaster. However, appearances matter. When the public feels that more effort is being put into saving face than in fixing the problem, the most expensive ad campaign in the world can’t fix that.

The lesson: Be careful about advertising. An effort to save face should match up with what the public knows of your efforts.

The Takeaway

Sometimes, disasters blindside us. In other cases, hindsight provides clear signals that one was about to occur. By learning from the errors of other companies, your enterprise can avoid costly disasters and recover from them more effectively.

About Bryan Strawser

Bryan Strawser is Founder, Principal, and Chief Executive at Bryghtpath LLC, a strategic advisory firm he founded in 2014. He has more than twenty-five years of experience in the areas of, business continuity, disaster recovery, crisis management, enterprise risk, intelligence, and crisis communications.

At Bryghtpath, Bryan leads a team of experts that offer strategic counsel and support to the world’s leading brands, public sector agencies, and nonprofit organizations to strategically navigate uncertainty and disruption.

Learn more about Bryan at this link .

PO Box 131416 Saint Paul, MN 55113 USA

[email protected]

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The explosion

Leaking oil.

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When did the Deepwater Horizon oil spill happen?

The Deepwater Horizon oil spill began on April 20, 2010, when an explosion damaged the Deepwater Horizon oil rig. The rig's sinking on April 22 began the discharge of oil into the Gulf of Mexico.

Who owned the rig responsible for the Deepwater Horizon oil spill?

The oil rig involved in the Deepwater Horizon oil spill was owned and operated by offshore oil-drilling company Transocean and leased by the oil company BP .

The Deepwater Horizon oil spill occurred after a surge of natural gas blasted through a concrete core recently installed to seal an oil well for later use. Once released, the natural gas traveled up a riser to the platform of the Deepwater Horizon oil rig that was over the well, where it ignited, killing 11 workers and injuring 17.

Birds were particularly vulnerable to the effects of the Deepwater Horizon oil spill. Many died from ingesting oil or because it interfered with their ability to regulate their body temperatures. Brown pelicans and laughing gulls were among the species most affected. A study showed that up to 800,000 birds were thought to have died.

Deepwater Horizon oil spill , largest marine oil spill in history, caused by an April 20, 2010, explosion on the Deepwater Horizon oil rig—located in the Gulf of Mexico , approximately 41 miles (66 km) off the coast of Louisiana —and its subsequent sinking on April 22.

The Deepwater Horizon rig, owned and operated by offshore-oil-drilling company Transocean and leased by oil company BP , was situated in the Macondo oil prospect in the Mississippi Canyon, a valley in the continental shelf . The oil well over which it was positioned was located on the seabed 4,993 feet (1,522 metres) below the surface and extended approximately 18,000 feet (5,486 metres) into the rock . On the night of April 20 a surge of natural gas blasted through a concrete core recently installed by contractor Halliburton in order to seal the well for later use. It later emerged through documents released by Wikileaks that a similar incident had occurred on a BP-owned rig in the Caspian Sea in September 2008. Both cores were likely too weak to withstand the pressure because they were composed of a concrete mixture that used nitrogen gas to accelerate curing.

Once released by the fracture of the core, the natural gas traveled up the Deepwater rig’s riser to the platform, where it ignited, killing 11 workers and injuring 17. The rig capsized and sank on the morning of April 22, rupturing the riser, through which drilling mud had been injected in order to counteract the upward pressure of oil and natural gas. Without any opposing force , oil began to discharge into the gulf. The volume of oil escaping the damaged well—originally estimated by BP to be about 1,000 barrels per day—was thought by U.S. government officials to have peaked at more than 60,000 barrels per day.

Although BP attempted to activate the rig’s blowout preventer (BOP), a fail-safe mechanism designed to close the channel through which oil was drawn, the device malfunctioned. Forensic analysis of the BOP completed the following year determined that a set of massive blades known as blind shear rams—designed to slice through the pipe carrying oil—had malfunctioned because the pipe had bent under the pressure of the rising gas and oil. (A 2014 report by the U.S. Chemical Safety Board claimed that the blind shear rams had activated sooner than previously thought and may have actually punctured the pipe.)

Efforts in May to place a containment dome over the largest leak in the broken riser were thwarted by the buoyant action of gas hydrates —gas molecules in an ice matrix—formed by the reaction of natural gas and cold water. When an attempt to employ a “ top kill,” whereby drilling mud was pumped into the well to stanch the flow of oil, also failed, BP in early June turned to an apparatus called the Lower Marine Riser Package (LMRP) cap. With the damaged riser shorn from the LMRP—the top segment of the BOP—the cap was lowered into place. Though fitted loosely over the BOP and allowing some oil to escape, the cap enabled BP to siphon approximately 15,000 barrels of oil per day to a tanker . The addition of an ancillary collection system comprising several devices, also tapped into the BOP, increased the collection rate to approximately 25,000 barrels of oil a day.

In early July the LMRP cap was removed for several days so that a more permanent seal could be installed; this capping stack was in place by July 12. Though the leak had slowed, it was estimated by a government-commissioned panel of scientists that 4,900,000 barrels of oil had already leaked into the gulf. Only about 800,000 barrels had been captured. On August 3 BP conducted a “ static kill,” a procedure in which drilling mud was pumped into the well through the BOP . Though similar to the failed top kill, mud could be injected at much lower pressures during the static kill because of the stabilizing influence of the capping stack. The defective BOP and the capping stack were removed in early September and replaced by a functioning BOP.

The success of these procedures cleared the way for a “ bottom kill,” considered to be the most likely means of permanently sealing the leak. This entailed pumping cement through a channel—known as a relief well—that paralleled and eventually intersected the original well. Construction of two such wells had begun in May. On September 17 the bottom kill maneuver was successfully executed through the first relief well. The second had been intended to serve as a backup and was not completed. Two days later, following a series of pressure tests, it was announced that the well was completely sealed.

Claims by several research groups that subsurface plumes of dispersed hydrocarbons had been detected in May were initially dismissed by BP and the National Oceanic and Atmospheric Administration (NOAA). However, it was verified in June that the plumes were in fact from the Deepwater spill. The effect of the microscopic oil droplets on the ecosystem was unknown, though their presence, along with that of a layer of oil several inches thick discovered on portions of the seafloor in September, cast doubt on earlier predictions about the speed with which the discharged oil would dissipate. Bacteria that had adapted to consuming naturally occurring gas and oil seeping from the seabed were thought to have consumed a portion of it.

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BP’s Tony Hayward and the Failure of Leadership Accountability

• Rosabeth Moss Kanter

BP doesn’t need an engineer at the helm. It needs a leader. Of course engineers matter, when the task is stemming damage from the largest oil spill in U.S. history. BP needs all the talent it can get. Scientists, engineers, and technicians, including the 2500 BOP employees sent to the Gulf from all over the […]

BP doesn’t need an engineer at the helm. It needs a leader.

• Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School, the founding chair of the Harvard Advanced Leadership Initiative, and a former chief editor of Harvard Business Review. She is the author of Think Outside the Building: How Advanced Leaders Can Change the World One Smart Innovation at a Time (Public Affairs, 2020). RosabethKanter

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