A sudden bout of semi-candor from BP suggests the top brass of the miscreant oil company recognized that it is in such deep doo-doo that the normal corporate PR playbook is no longer operative. Companies and governments often refuse to admit error or blame it on circumstances out of their control as a way to limit liability. Whether BP survives is now likely to be a function of intersecting political considerations, so BP executives may believe that a show of what looks like candor will buy them more points than obvious obfuscation (subtler forms are an entirely different matter).
Some key sections of an interview in the Financial Times with CEO Tony Howard:
“What is undoubtedly true is that we did not have the tools you would want in your tool-kit,” Mr Hayward said. He accepted it was “an entirely fair criticism” to say the company had not been fully prepared for a deep-water oil leak.
Yves here. This part was where the whitewashing occurred:
Tony Hayward said BP was looking for new ways to manage “low-probability, high-impact” risks such as the Deepwater Horizon oil rig accident.
Yves again. Trying to pass off what happened as a tail event misses the nature of any sort of a production environment. If you understand only the basics about operations, you’ll recognize that his comment is an utter canard.
Why is Six Sigma, a process designed to lower production defects, popular across a wide range of industries? Because the more steps you have in a production process, the lower the odds of having a fault-free end product.
Consider a twenty step process. If each operates at 99% (a 1% failure rate), the failure rate across the entire process is over 18%. Thirty steps brings the odds of failure up over 26%. Fifty takes you to slightly under 40%.
Now let us consider deep sea drilling. Admittedly, it’s not a liner process like a factory environment (as in the rig operators can make decisions and change course). But (and I’d enjoy it if the people who know oil production can chime in), I have to imagine there are more than 20 critical steps and choice points (as in: if you make a bad decision, get a false positive or false negative reading or a process unexpectedly fails, There Are Consequences).
Do you think that all decisions and actions in this setting are at the 99% tolerance level? One would bet against that at BP; it’s safety record alone points to cutting corners. As reader Marshall noted:
They’ve got 760 citations for “egregious, willful safety violations” from OSHA; their nearest competitor in the oil industry, Sunoco, has 8 (Exxon, the last poster-child for oil-industry irresponsibility, has only 1.) They’ve now had three fatal accidents in the U.S. in the last five years. There was plenty of evidence that BP had prior knowledge of the problems that led to its Texas City refinery explosion, which killed 15 people, and the horrific Alaska North Slope oil spill. The fines the company has had to pay just haven’t sufficiently cut into its profits.
Yves again. And as we have seen with previous mishaps in the industry, the consequences are catastrophic for worker, communities, and the environment….but heretofore, not for BP.
So in one sense, Hayward was completely honest when he said the Deepwater Horizon leak was a “low-probability, high-impact” risk. The failure in the past of governments to make oil industry perps pay the true costs of their misdeeds meant that it had always been low probability that an accident would have high impact on BP itself.
Oh, and if you think I’m being unfair to Hayward, consider his reaction to an injunction to force BP to provide cleanup workers with masks and other protective gear:
I’m sure they were genuinely ill, but whether it was anything to do with dispersants and oil, whether it was food poisoning or some other reason for them being ill. … It’s one of the big issues of keeping the army operating. You know, armies march on their stomachs.
It would be hard to find more vivid proof of the company’s attitude towards safety.