Case Study: Deep Water Horizon Disaster Submit Assignment

Case Study: Deep Water Horizon Disaster Submit Assignment

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C A S E STU DY 1 7

The Deepwater Horizon Disaster

Challenges ;n Eth;cal Dedsfon Mak;ng

Elaine M. Brown

This case explores the complexities involved in ethical decision making in

organizations. Using the British Petroleum (BP) oil spill as an example, the case

suggests that complex interorganizational structures involved with oil drilling

make accountability complicated. In such an environment, decision makers must

consider a range of tensions, including people versus profits and short- versus

long-term benefits in order to account for multiple decisions points and diverse

stakeholders.

We are committed to the safety and development of our people and the communities

and societies in which we operate. We aim for no accidents, no harm to people and

no damage to the environment.

-BP (2009)

In Revelations it says the water will turn to blood. That’s what it looks like out

here-like the Gulf is bleeding. This is going to choke the life out of everything.

-P. J. Hahn, director of coastal zone management for Louisiana’s Plaquemines Parish

(quoted from NBC, MSNBC.com, and News Services, 2010)

Companies today often proclaim to have their stakeholders’ best interests in mind. They may stress a “triple bottom line” of people, planet, and profits; emphasize being good

corporate citizens within their communities; or accentuate the goal of sustainability by

protecting long-term assets such as employees and the environment. However, the prom­

ising rhetoric, even if it is sincere, cannot be fulfilled without an accumulation of strategic

and daily decisions that reflect this discourse of corporate social responsibility. Decisions

233

234 PART V ACCOUNTABILITY

(including not only what is decided but also what issues are determined to be opportuni- ties for decisions in the first place) are where the rubber meets the road-where rhetoric becomes reality, or not.

Ethical decision making, however, is a complicated matter. Very few issues are clear-cut, organizational structures and routines often obfuscate who is responsible for a decision, and organizational culture may define certain actions as common sense and thus don’t require a decision. In addition, decisions are often between competing “goods” such as short-term versus long-term best interests, innovation versus tried-and-true status quo, or minimizing different types of risks. This case study, which explores the 2010 Deepwater Horizon oil rig explosion and Macondo well blowout, provides a clear example of the complexities involved in ethical decision making in organizations. Who, or what, was responsible for the worst oil spill in history? What decisions made the catastrophe inevi- table? Why did those decisions make sense to the decision makers at the time? When were actions taken out of habit or “common sense” instead of as a result of conscious decisions? The sequence of actions (and inactions) that led to the disaster illustrate the challenges entailed in ethical decision making within the daily, time-pressured environment of a com- plex, multicompany organizational site. After a brief overview of the event and its impact, this case study will explore the disaster by explaining the key actors involved, highlight- ing problematic decisions that may have contributed to the catastrophe and considering important factors in how and why those decisions may have been made.

THE BLOWOUT AND ITS AFTERMATH

On April 20, 2010, soon after the completion of a cement job that was supposed to seal the Macondo exploratory well to prepare it for later use as a production well, leaking hydro- carbons (gas and oil) from the well reached the Deepwater Horizon oil drilling rig nearly a mile overhead and caused an explosion. The pressure of the escaping hydrocarbons, in addition to the loss of control of the drilling rig and its operations caused by the explosion, created a blowout of the well. The explosion killed 11 individuals, injured 16 others, and left the remaining 99 survivors traumatized. The “blowout,” the term used for the sudden and continuous surge of oil and gas from a well, resulted in nearly 5 million barrels of oil discharged over a period of 87 days. During those days, there were a variety of techniques attempted to stop the flow including the use of remotely operated vehicles (ROVs) to shut the well by closing the blowout preventer, placing a “cofferdam” over the end of the riser and using “kill mud” and “junk shot” to try to plug the hole. However, the flow was not stopped until July 15 when the riser was successfully capped. Later, a deepwater intercept, or relief, well, which had been started on May 2, was finally completed and ensured that the Macondo well was “dead.”

BP (the official operator of the well). the U.S. Coast Guard, and a number of other public and private agencies were tasked with cleanup both during and after the spill. “At its peak, efforts to stem the spill and combat its effects included more than 47,000 per- sonnel; 7,000 vessels; 120 aircraft; and the participation of scores of federal, state, and local agencies” (Mabus, 2010, p. 2). Millions of feet of boom were used to contain the oil

CASE STUDY 17 The Deepwater Horizon Disaster 235

and keep it from shore. Private boats were recruited and outfitted to skim off the oil. Oil patches on the ocean’s surface were burned. Dispersants were used to break down and change the distribution of the oil. By August, these efforts, as well as the capture of oil from the insertion tube, accounted for the fate of just over one third of the escaped oil. An additional 40 % of the oil has evaporated, dissolved, or been dispersed naturally, leaving approximately one quarter of the oil remaining in the water and along the shore (National Commission, 2011b).

The consequences of this disaster are tragic and extensive. The first cost of the accident, of course, was the immediate loss of life. Amidst the enormity of this catastrophe in which we heard numbers in the thousands and millions (millions of barrels of oil, millions of gal- lons of dispersants, millions of feet of boom, thousands of square miles of closed fishing waters, thousands of miles of coast, etc.), 11 may seem like an almost insignificant num- ber. Yet, when we remember that Jason Anderson, Dale Burkeen, Donald Clark, Stephen Curtis, Roy Kemp, Gordon Jones, Karl Dale Kleppinger, Blair Manuel, Dewey Revette, Shane Roshto, and Adam Weise (National Commission, 2011a) each had loved ones and futures that can no longer be realized, we begin to appreciate how significant the loss of 11 human beings really is.

Other, less immediate but equally troubling outcomes of the disaster have to do with the impact of the oil (and dispersants) on wildlife, human health, and the economy of the area. The oil that was discharged into the Gulf was “a combination of many different chemicals, a number of which are harmful to people” (Mabus, 2010, p. 50) and the environment. Pictures showed the immediate effects of the crude: oil-covered pelicans and sea turtles, dead dolphins and whales, gooey marshlands. But the effects of the spill on wildlife and the environment are more complex than pictures can show. “Rescue workers can clean and treat oiled birds and other relatively large animals that come ashore. But how do you deal with de-oiling plankton?” (Sylvia Earle, quoted in Dell’Amore, 2010). The food chain may be continuing the negative impacts of the oil as larger animals feed on smaller, affected organisms. In addition, although the 1.84 million gallons of dispersant used to break up the oil and keep it from coming ashore were not as toxic as the oil it treated, there is cur- rently no dispersant available that is completely nontoxic (National Commission, 2011 c). Because dispersants had never been used on such a scale and in the same ways before, no one knows its long-term impact. It may be years before the full impact on wildlife of both oil and dispersant is identified.

Negative effects on humans were both immediate and also more insidious through long-term consequences. Cleanup workers felt the first of the health effects because of direct contact with the oil and other toxins. “In Louisiana in the early months of the oil spill, more than 300 individuals, three-fourths of whom were cleanup workers, sought medical care for constitutional symptoms such as headaches, dizziness, nausea, vomiting, cough, respiratory distress, and chest pain” (Solomon &Janssen, 2010, p. 1118). Long-term effects may or may not be from direct contact. As an example of indirect effects, consider that just as the food chain may affect animals, there is also the possibility that humans who eat seafood from the Gulf may ingest “trace amounts of cadmium, mercury, and lead” (Solomon &Janssen, 2010, p. 1118). In addition, there are behavioral health issues involved. Past disasters, including oil spills, have been associated with a rise in mental health issues,

236 PART V ACCOUNTABILITY

substance abuse, and family dysfunction (Mabus, 2010; Solomon & Janssen, 2010). This disaster brings with it the same problems.

In addition to health effects, the spill brought with it negative economic consequences. The spill “caused the closure of 88,522 square miles of federal waters to fishing” (Mabus, 2010, p. 2). Both this closure and continuing concerns over the safety of Gulf seafood has severely interfered with commercial (and recreational) fishing. The loss in gross revenue to Louisiana’s fishing industry through 2013 is estimated to be $115 million to $1 72 million (White, 2010). The travel and tourism industry in the Gulf was hard hit as well. A recent study by Oxford Economics (2010) estimates the loss of visitor spending in Louisiana through 2013 to be $295 million. The economies of other Gulf states have been similarly affected with dollar losses translating into the loss of thousands of jobs.

When put in terms of the consequences, especially consequences this severe, it is obvi- ous that the decisions leading up to this catastrophe were ethical decisions-decisions that had considerable consequences for the organization, the community, and the environment. However, the ethical nature of individual decisions may or may not have been clear at the time those decisions were made. As we consider the key actors in this catastrophe as well as the decisions individuals faced, we must consider to what extent decision makers may or may not have felt that their decisions were ethical in nature (as opposed to simply technical) and how (or if) they took into account the possible consequences of their actions.

WHO IS TO BLAME?

Although many critics have argued that the blowout was ultimately BP’s responsibility, the complex interorganizational structure involved with oil drilling makes accountability much more complicated. The underwater canyon in which the Macondo oil well was located was leased through the Minerals Management Service (MMS) to a group of three companies: (1) BP (who owned 65% of the lease), (2) Anadarko Petroleum (25%), and (3) MOEX Offshore (10%). BP was designated as the lease operator and thus the primary actor in the drama that unfolded.

BP determined it would drill an exploratory well (Macondo) to learn more about the geology of the canyon and to confirm that there was a large enough oil and gas reser- voir to merit a full production well. In order to drill, they needed a partner: Transocean. Transocean’s drilling rig, the Deepwater Horizon (as well as its operations), was contracted by BP for approximately $500,000 per day. Although BP personnel were on board the rig for coordination and oversight, most of the rig personnel were Transocean. Within this con- tractual arrangement, liability (and accountability) has come into question. Tony Hayward (2010), CEO of BP, stated the following in an early interview with CNN:

The responsibility for safety on the drilling rig is Transocean. It is their rig, their equipment, their people, their systems, their safety processes …. The systems processes on a drilling rig are the accountability of the drilling rig company.

However, the contract between BP and Transocean indicates that, as the operator of the well, BP is ultimately responsible:

CASE STUDY 1 7 The Deepwater Horizon Disaster 2 3 7

In the event any well being drilled hereunder shall blowout, crater or control be lost from any cause, company shall bear the entire cost and expense of killing the well or of otherwise bringing the well under control and shall protect, release, defend, indemnify, and hold harmless contractor from and against all claims, suits, demands, and causes of action for costs actually incurred in controlling the well. (quoted in Phillips, 2010)

The question of who is liable is still being investigated and may be argued in courts for years. Contractors, hired for specialized jobs, were also part of the drill operations and as such

were potential actors. Mud engineers, ROV technicians, tank cleaners, evaluation teams, and others were part of the operations required for the drilling project. As the cement con- tractor, Halliburton became a major figure in the Macondo disaster as well. As noted ear- lier, the exploratory stage of the Macondo well was wrapping up. In order to close the well, cement is pumped in to seal the space between the casing and the wellbore, preserving the drill shaft and prohibiting the escape of hydrocarbons. When a well is later reopened as a production well, crews punch holes in the casing and cement and allow oil and gas to flow into the well. Problems with the cement job are likely to have been a contributing factor in the catastrophe, making Halliburton a key actor.

In addition to culpability within the oil industry, many critics have pointed to the U.S. government as partially to blame for the Deepwater catastrophe. Through its dual roles of leasing agent and regulator the MMS, a governmental agency, was also a key organizational actor. Critics maintain that oversight to ensure the safety of drilling operations was com- promised by carelessness and even corruption within MMS.

A final actor, pointed to by many as complicit in the disaster even without direct contact, is us. “Why was a corporation drilling for oil in mile-deep water 49 miles off the Louisiana coast? To begin, Americans today consume vast amounts of petroleum products-some 18.7 million barrels per day-to fuel our economy” (National Commission, 2011a, p. viii). How much of a factor is pressure from consumers? How much do our demands for (cheap) fuel drive potentially risky ventures? Can we in any way be held accountable for mistakes and shortcuts made by others?

The actors previously listed (with the exception of the American people) are organiza- tions. However, even though we may be able to point to organizations as responsible, the culture within those organizations may have led to certain decisions making more “sense” than others, and it was generally individuals who made the call at key decision points. Individuals, or small groups of people, within each of the previously listed organizations were faced with problems that needed solutions. Many of the choices that were made between possible alternatives contributed to the eventual catastrophe.

WHAT WENT WRONG?

Deepwater oil drilling is an extremely complex, often dangerous, enterprise. The techno- logical advances needed for drilling miles below the ocean’s surface has been compared to those required for exploring outer space (National Commission, 2011 a, p. viii). Systems, processes, and materials must be coordinated perfectly for production and safety. In the

238 PART V ACCOUNTABILITY

case of the Macondo well, problems in all three were present. However, it was the deci- sion making involved in choosing to use certain processes or particular materials that has come under scrutiny as the key factor leading to the blowout. “Available evidence and testimony indicates that there were multiple (10 or more) major decisions and subse- quent actions that developed in the days before the blowout that in hindsight (hindsight does not equal foresight) led to the blowout” (Deepwater Horizon Study Group, 2010, p. 7). Decisions about well design, materials selection, and determining how to evaluate job success marked some of the key choice points in the chain of events that followed. These decisions were made by various key actors and were typically not between “good” and “bad” alternatives but rather were made within complicated contexts in which an array of factors influenced choices.

Because of the physical results of the explosion and blowout and the fact that the scene is a mile below the surface of the ocean, the evidence that would shine light on the exact cause of the accident is not available. We may never know exactly what happened to allow the flow of hydrocarbons. However, there are many factors that investigators have pointed to as problematic and that (may have) played at least some part in the disaster.

One of these factors was the well design. There are alternatives involved in the selection of various aspects of well design. These selections are based on industry best practices as well as concerns about the surrounding environment. For the Macondo well, there were (at least) two design choices that have been implicated in the ensuing disaster. First, BP’s design team chose to use a “long-string” casing instead of a more complex “liner” that would have been “easier to cement into place at Macondo” (National Commission, 2011a, p. 95). Although a standard industry design, early computer models showed that the long-string casing was unreliable for the cementing job needed in the particular sur- roundings at Macondo. However, it was attractive because the alternative, a liner, “would result in a more complex-and theoretically more leak-prone-system over the life of the well” (National Commission, 2011a, p. 95). The dilemma for decision makers was one of short-term versus long-term reliability and the possible risks involved in sacrificing that reliability. To reconsider the risk involved with the long-string casing, the computer models (run by Halliburton with BP interaction) that showed the need for the liner system were questioned. An in-house BP expert was brought in, inputs were “corrected,” and the new calculations confirmed that the long-string system could be used after all. Although there is no evidence that this particular choice led to the instability that caused the blowout, it has been flagged in hindsight as problematic.

Another key issue with well design was the decision of the number of “centralizers” used for the well. Centralizers hold the casing string in place and ensure that it hangs in the center of the well bore. This centering is necessary to make sure that cement flows evenly and there are no spaces where drilling mud is caught and ends up compromising the integrity of the cement. The original BP design called for 16 centralizers. Halliburton engineers advised at least that many be used. However, when the time came to implement the design, only six of the type called for in the design were available from the supplier. When substitute centralizers were sent to replace the missing centralizers, the onboard team believed that they were the “stop collar” slip-on type that had been responsible for recent problems in another Gulf of Mexico operation. These centralizers brought with

~’v’,,,1t,”,~’.'[._~————— CASE STUDY 17 The Deepwater Horizon Disaster 239

them the risk of slipping as they were put into place, thereby damaging components and adding debris to the mix (BP, 2010, p. 63). The BP on-rig engineer decided that, because the wellbore was nearly vertical, the risks involved with using the stop collar centralizers were greater than the risks of not using them. To confirm this decision, he e-mailed a drilling engineer on shore who disagreed about the number needed but told him, “but who cares, it’s done, end of story, [we] will probably be fine” (National Commission, 2011a, p. 116). The time needed to find more acceptable centralizers or even to come to agreement about the wisest course of action was not taken. Again, no one knows if this choice directly led to disaster, but it is one more suspect in the eventual cement failure.

Another suspect is the choice of the cement composition itself. The Macondo well was a “nightmare well” that had many problems, not least of which was the possibility of “lost returns,” which is the loss of mud, cement, or hydrocarbons through the fracturing of the surrounding rock formation. On April 9, “pressure exerted by the drilling mud exceeded the strength of the [deepwater rock] formation” (National Commission, 2011a, p. 91) causing fracturing. Although the cracks were able to be filled, it was determined that drill- ing had gone as deep as possible because of the risk of continued fracture and resulting loss. Losing returns became the “No. 1 risk” (National Commission, 2011 a, p. 99) and the pressure that cement would place on the fragile formation was evaluated very carefully. To lessen the pressure of the cement, BP and Halliburton chose to use a “nitrogen foam cement” in which an even distribution of tiny bubbles create a strong but light cement. If the bubbles combine, however, this mixture can become unstable and create unequal dis- tribution and possible fracture sites. Repeated testing of the cement mixture showed that because of environmental factors in the area the mixture would not be stable at Macondo. There is some evidence that suggests that these test failures were not communicated to BP (National Commission, 2011a, p. 101). Other indications suggest that these results were simply not emphasized:

The Halliburton and the BP Macondo well team’s technical reviews of the cement slurry design appeared to be focused primarily on achieving an acceptable circulating density during cement placement to prevent lost returns. Other important aspects of the foam cement design, such as foam stability, possible contamination effects and fluid loss potential did appear to have been critically assessed. (BP, 2010, p. 34)

For whatever reason, cement which was predicted to fail was nonetheless used to seal the well.

There was a process in place to evaluate the success of the cement job after it had been completed to make sure it had not failed. However, “success” and therefore failure were based on the criteria of having no lost returns-no loss of oil or fluids because of additional fracturing of the rock. In order to evaluate this success a decision tree had been created to assess the outcome and to establish whether further tests were needed. Because there had been full returns throughout, the job was determined to have gone well, everyone was congratulated on a job well done, and the contract evaluation team on hand to perform additional testing on the cement was deemed unnecessary and sent home. Further testing

240 PART V ACCOUNTABILITY

by this team may very well have found the problems with the cement job in time to be able to address them without further incident.

Later in the day, one additional required test was conducted on the cement job that could have challenged earlier assurances if it had been believed. A negative pressure test determines if the well is sealed by reducing pressure in the well to zero, sealing it with the blowout preventer, and waiting to see if the pressure remains zero or rises. Rising pressure indicates that there is a leak and hydrocarbons are entering the well. An initial negative pressure test failed-pressure continued to rise. This result, however, was explained away. A drilling expert on board the rig explained that it could be a result of a “bladder effect.” This explanation was not questioned. It was easier to believe the initial findings of suc- cess and look for confirmation of it than to believe a negative result. Therefore, a second test was conducted to confirm nothing was wrong. The second test was conducted on the “kill line,” a smaller parallel line to the original “drill line” that had been tested earlier. Theoretically, testing either of the two would give the same results. The test on the kill line passed. The discrepancy between the first failing and the second passing was never questioned and investigated. The second test was simply accepted as successful. In hind- sight, it is clear that hydrocarbons were leaking into the well and the initial failed negative pressure test was accurate. Decisions about what types of tests were needed and what they indicated played a significant role in realizing too late that there were problems.

The decisions, and decision points, that were previously described represent only a por- tion of those flagged by investigators as problematic. There were a variety of other pivotal decisions as well as oversights and potential negligence that may have also contributed to the blowout. Space limitations make it impossible to fully lay out all that may have gone wrong on the Deepwater Horizon. Additionally, it is still somewhat unclear which factors ultimately caused the catastrophe. Nonetheless, “the most significant failure at Macondo” according to the National Commission’s (201 la) final report to the president, “was a failure of industry management … [and the] management of decision-making processes within BP and other companies” (p. 122). Choice points, such as how many centralizers to use or what to do (or believe) about a test failure, came at every juncture.

THE COMPLEXITIES OF DECISION MAKING

So why were certain decisions made? What were the decision makers thinking? In what ways were ethics considered, or not? The most simplistic explanations about how or why decisions are made focus on costs versus benefits. Determining decision criteria helps decision makers prioritize and weigh their options rationally. In the Macondo case, time, money, productivity, and risk were obvious criteria. Operations cost nearly $1,000 per minute and thus time was of the essence. Additionally, individuals had to determine whether an option would actually work. Computer models and experience (both firsthand and the stories of others) gave information about how likely an alternative was to be pro- ductive. Risk was another consideration. As noted earlier, there are different types of risk. In hindsight we automatically think about safety risks. However, because of the problems

CASE STUDY 17 The Deepwater Horizon Disaster 241

with this particular well, the most prominent risk in the minds of the decision makers was the risk of damaging the well through fracturing the rock formation.

Imagining that decision makers based their decisions objectively on these (and poten- tially other) criteria, however, assumes the use of purely rational, well-informed choice. Based on this view of decision making, it would seem that the inclusion of ethics as an important decision criterion would have led to more ethical decisions. The reality, however, is simply not that straightforward. We must realize that decision makers are “bounded” (Simon, 1979)-they cannot be perfectly rational because of a number of factors, not least of which are the limitations of time and information.

In the case of the decisions in the Macondo blowout, there was a lack of information available to decision makers because of poor communication. “Each individual decision may have made some sense in isolation from the others. But together, they created a time bomb” (Barton, 2010). Because departments and/or organizations did not necessarily com- municate with each other, decision makers were often not aware of the context of their decisions.

Information appears to have been excessively compartmentalized at Macondo as a result of poor communication …. As a result, individuals often found themselves making critical decisions without a full appreciation for the context in which they were being made (or even without recognition that the decisions were critical). (National Commission, 2011 a, p. 123)

For instance, people interpreting the first failed negative pressure test may have taken it more seriously if they had known that there was a strong possibility that there would be problems with the cement. The organizational complexity of interdependent companies- and even different departments within the same organization-created an environment in which the bigger picture may have been lost as individual, department-specific decisions were being made.

Time and distraction also limited decision makers. Not only was time a criterion in deci- sion making but pressure was as well: There was very little (or no) time to carefully con- sider all the options. The expense of the operations cast an overall urgency to all decision processes. Dialogic communication and participation in decision making help to ensure better, more ethical choices. However, these practices take time and therefore would have been very difficult to carry out within the urgency felt by all involved with the Deepwater Horizon.

In addition, daily distractions and the need to multitask were very much a part of organizational life. For example, on the day that the explosion occurred on the Deepwater Horizon, there was a “management visibility tour” going on, a change of shift, and the wrapping up of operations at the end of the exploratory stage. The rig was hopping. Four VIPs, two from BP and two from Transocean, had come in on a helicopter that day in order to tour the rig and celebrate the success of its operations. The tour (the four VIPs along with the guides from the rig) passed through the drill shack where the negative pressure test was being conducted. In addition, since it was 5:00 p.m., the shift was about to change, and people from both shifts were squeezed into the space. This chaos may very well have led to

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the easy acceptance of the explanation of a “bladder effect” instead of a careful investiga- tion into possible problems. Distraction and the tyranny of multiple urgent tasks was a very real component of organizational life.

Besides the limitations involved in making a rational decision there are also ways in which conscious decisions are not made but are instead assumed. Some alternatives and options may never come up for a formal decision; the action to be taken is “common sense.” What happens is based on a collective context as informal discussions occur and a common view emerges (Mintzberg & Waters, 1990). “Decisions” are simply a rubberstamp- ing of what has been worked out in local interactions beforehand and are thus based in organizational culture and discourse (Boden, 1994).

As noted by those appointed to study the disaster, no one made a conscious decision to sacrifice safety (Broder, 2010; Deepwater Horizon Study Group, 2010). However, BP’s organizational culture was brought up time and again in the congressional hearings about the disaster. BP, according to many, was not safety conscious and the willingness to cut corners and take risk was part of its DNA. Local, daily interactions as well as strategic deci- sions upheld and reinforced the company’s value for production over safety. BP’s history of disasters, especially the 2005 Texas City refinery explosion and the 2006 Alaska oil spill, was raised as evidence of a continued “indifference to risk” (Committee on Energy and Commerce, 2010). This culture was destined to lead to (another) disaster: “When the culture of a company favors risk-taking and cutting corners above other concerns, system failures like this oil spill disaster result without direct decisions being made or tradeoffs being considered” (Edward Markey, quoted in Broder, 2010). Decisions that were made (or decision points that were ignored) occurred within a culture that valued some things more than others and made those valuations seem natural. Thus, for ethical decision making to be a regular occurrence within an organization, ethics must be integral within the culture of that organization.

Finally, one additional nondecision technique that should be discussed was the abdica- tion of decision-making responsibility to bureaucratic processes and regulatory bodies. As noted earlier, a decision tree was used to determine whether or not further evaluation of the cement job was necessary. Decision trees can be very helpful, but they may not be sufficient. In this case, the underlying assumptions were faulty. The criteria used were inad- equate. By using the tool, however, those making the call did not have to make a real deci- sion; they simply had to follow the code. Following MMS regulations sometimes worked the same way. As federal regulators, MMS was charged with determining the requirements for drilling, supposedly using worker safety and environmental concerns as key criteria. Thus, when BP met the requirements they could (and did) point to regulations and/or permission as the reason for their actions. Bureaucracy took (at least some of) the responsibility out of the hands of BP personnel and put it into the regulatory system. A major flaw in this, however, was the multitude of problems with the MMS and its system of regulation. All too often, the MMS simply rubberstamped whatever BP (or others in the oil industry) proposed due to lack of personnel and resources as well as potentially inappropriate ties to the oil industry. Thus, the regulations being followed by BP did not include satisfactory safeguards. In following those requirements, BP was assured of nothing except the ability to say they had followed the rules.

CASE STUDY 17 The Deepwater Horizon Disaster 243

ETHICS: AN INTEGRAL PART OF DECISION MAKING

Decisions are the cornerstone of ethics, but values are not always the most obvious fac- tor in the daily, time-pressured environment of the corporate world. Decisions are com- plicated and contextual. Decision makers draw on available information and common understandings to choose best alternatives. In order to make better, more ethical decisions, communication must be improved and common (potentially less-than-ethical) under- standings inherent in an organization’s culture must be challenged. It is not until decision (and nondecision) points are recognized as ethical in nature and decisions become more value-oriented that companies that profess to care about their stakeholders will truly be able to walk the talk.

Prior to the Macondo blowout, BP’s public discourse was one of responsibility and safety. Safety was supposedly a “top priority” at BP, and when Tony Hayward took over as CEO in 2007 he promised a “laser focus on safety” (Committee on Energy and Commerce, 2010). The company has proclaimed, “Our goals are simply stated-no accidents, no harm to people, and no damage to the environment” (Browne, 1996). This statement, from one of the earliest iterations of BP’s website, has been repeated (in one form or another) every year as BP has declared its commitment to sustainability and ethical actions. Yet the Deepwater Horizon disaster (as well as previous disasters and safety violations) make cyn- ics out of even the most trusting of onlookers. Tulk is not enough. Ethical values must be integral in the daily decisions that determine the actions taken by an organization in order for the organization to be truly responsible.

DISCUSSION QUESTIONS

1. Although the resulting catastrophe made it evident that the decisions described in this case study had ethical implications, many did not appear to be clearly ethical choices at the time. Even though they may not have been obvious, however, ethi- cal perspectives may have provided a foundation for some choices. What ethical perspectives, if any, did actors use as they made critical decisions?

2. How might transparency and dialogic communication have prevented the catas- trophe?

3. There were many actors involved in the project. What is the appropriate level of responsibility for each of them? Should one company be fully (or partially or not at all) responsible because of its position as principal and coordinator? What is the responsibility of each partner/contract organization in making sure that the primary company is doing what is right?

4. Bureaucratic forms led, in this case, to the abdication of moral responsibility for particular decisions. Can bureaucracy ever help make our decisions more ethical? How or how can it not?Michael RodriguezMichael Rodriguez1. What went into the organizations decision making process in this case study? How should the the organization have went about making key decisions that had impacted many parties involved? 2. There were many actors involved in the project. What is the appropriate level of responsibility for each of them? Should one company be fully (or partially or not at all) responsible because of its position as principal and coordinator? What is the responsibility of each partner/contract organization in making sure that the primary company is doing what is best/right? 3. Bureaucratic forms led, in this organizations case, to the abdication of moral responsibility for particular decisions. Can bureaucracy within organizations ever help make the decisions better? How or how can it not?

244 PART V ACCOUNTABILITY

5. Acknowledging that many “decisions” are simply a reflection of common under- standings and organizational culture, how can we encourage better, more ethical decision making within our own organizations?

6. Within a complex organizational structure like the one described in this case study, how would you suggest improving communication, especially with regard to providing the context necessary for decision makers to make the best decisions?

REFERENCES —————-~——–•—-,, ..

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Boden, D. (1994). The business of talk: Organizations in action. London: Polity Press. BP. (2009). Sustainability review 2009: Operating at the energy frontiers. Retrieved from http://www.

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BP. (2010). Deepwater Horizon accident investigation report. Retrieved from http://www.bp.com/ liveassets/bp_internet/globalbp/globalbp_uk_english/incident_response/STAGING/local_assets/ downloads_pdfs/Deepwater_Horizon_Accident_Investigation_Report.pdf

Broder,]. M. (2010, November 8). Investigator finds no evidence that BP took shortcuts to save money. New York Times. Retrieved from http://www.nytimes.com/2010/11/09/us/09spill.html

Browne, J. (1996, November 1). BP’s commitment to health, safety and environmental performance. Retrieved from http://web.archive.org/web/19970127223645/www.bp.com/health.html

Committee on Energy and Commerce: Subcommittee on Oversight and Investigations. (2010, June 17). Hearing on “The role of BP in the Deepwater Horizon explosion and oil spill” . Retrieved from http://democrats.energycommerce.house.gov/index.php?q = hearing/hearing-on-the-role- of-bp-in-the-deepwater-horizon-explosion-and-oil-spill

Deepwater Horizon Study Group. (2010, November 24). Letter to the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Retrieved from http://www.oilspillcommission .gov/sites/default/files/documents/DHSG % 20letter% 2011 % 2024 % 2010.pdf

Dell’Amore, C. (2010, May 4). Gulf oil spill a “dead zone in the making”? National Geographic News. Retrieved from http://news.nationalgeographic.com/news/2010/05/ 100504-science-environment- gulf-oil-spill-dead-zone/

Hayward, T. (Interviewee). (2010, April 28). BP CEO outraged over oil spill . CNN. Retrieved from http://edition.cnn.com/video/#/video/us/2010/04/28/tsr.intv.todd.hayward.cnn

Mabus, R. (2010). America’s Gulf Coast: A long term recovery plan after the Deepwater Horizon oil spill. Retrieved from http://www.oilspillcommission.gov/sites/default/files/documents/Mabus_Report.pdf

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National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (201 la). Deepwater: The Gulf oil disaster and the future of offshore drilling: Report to the president. Retrieved from http://www.oilspillcommission.gov/final-report

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (2011 b). The amount and fate of the oil: Staff working paper no. 3. Retrieved from http://www.oilspillcommission. gov/sites/default/files/documents/Updated% 20Amount % 20and % 20Fate % 20of% 20the % 20 Oil% 20Working % 20Paper. pdfMichael RodriguezMichael Rodriguez4. Acknowledging that many ‘decisions’ are simply a reflection of common understandings and organizational culture, how would we encourage better decision making within our own organizations? 5. Within a complex organizational structure like the one described in this case study, how would you suggest improving communication, especially with regard to providing the context necessary for decision makers to make the best decisions?

CASE STUDY 17 The Deepwater Horizon Disaster 245

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White, J. (2010, October 15). BP oil spill may cost Louisiana fishing industry $172 million. Times- Picayune. Retrieved from http://www.nola.com/business/index.ssf/2010/10/bp_oil_spill_may_ cost_louisian.html

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