BP GULF OF MEXICO OIL SPILL

The BP Gulf of Mexico Oil Spill



The BP Gulf of Mexico Oil Spill

Introduction

British Petroleum (BP) is one of the major global oil and Gas Company. The company is based in London, and operates in 80 countries of the world. BP is considered to be the third largest company of the world. This paper discusses the accident that took place in the company in April 2010. As a result of this accident, 28 people were immediately killed when an explosion occurred in the offshore drilling ring (Gulf Mexico). More critical than the explosion was the fact that oil was leaking from the BP refinery into the Gulf of Mexico.

I have been assigned the responsibilities of Engineering Accident Investigator, in order to find out the root causes of this serious accident, so that it can be prevented in the future. In this paper, I present the analysis of investigation from the management perspective.

Case Facts and Figures

Technically, it was the methane bubble that came out from the well and caused the massive explosion. The accident involved the largest petroleum spill of the history which resulted in the huge economic and environmental losses. The major affected was the fishing and tourism industries of Gulf. The workers of the company and the residents of the nearby area suffered from severe illnesses that resulted from the use of toxic materials; the toxic materials were used in huge quantities for the process of clean up. A large range of industries, businesses and wildlife were affected. The major affected beach areas included the Louisiana, Mississippi, Alabama and Florida.

The investigation conducted by the government showed that the wrong drilling decisions led to the accident, as far as engineering is considered. In addition to the engineering operations, poor communications and management were also important factors for causing the accident.

The BP Company later accepted the responsibility of the accident and, agreed to execute the clean-up process. Also, they made a commitment to the stake holders that they will use trained workers for the process of clean-up. Finally, on July 15, the leakage was stopped. According to a rough estimate, the leakage was resulting into a loss of 53,000 barrels of oil per day from the well.

When considering the losses to the BP, as a result of this accident, the company suffered a loss of 50% of market share values. All this loss in the stock market capitalization occurred within the two months of the accident, a rough approximate of which is around $80 billion. In addition to the loss in the stock market, BP also had to face nearly 200 law suits by the victims who suffered from the spill either directly, or indirectly. It was estimated that the total expenditures for oil spill response was around $16billions. The most serious point is, in addition to heavy economic losses, the accident resulted into loss of lives of numerous workers who got injured. Except human lives, the spill treats nearly 4 living species ...