Who Put Oil in the Ocean? The Responsibility of an Oil Company

Of course a private oil company is allowed to earn money. We live in a free market economy. But, just like electricity producers need to take care that their nuclear power stations do not explode, BP needs to make sure its rigs don’t leak and cause irreparable environmental damage, Filip van den Abeele explains.

“The easy oil is gone.” There is no more easily accessible petroleum left. It was Tony Hayward, CEO of the British oil company BP, who, in the summer of 2008, alluded with witticism to the fact that his company needs to deal with ever larger challenges to cover the worldwide demand for energy. Hayward made his comments during a lecture on the World Petroleum Congress in Madrid, when the oil price peaked at almost $150 per barrel. Hardly a year later, BP was ordered to pay a historically high fine because of infringements in the safety regulations.

During an explosion at a refinery in Texas City (March 2005), fifteen employees died and more than 170 others were injured. The American Department of Labor found the company guilty of recurring shortcomings in the area of security regulations. And on April 20 of this year, a fire broke out on the oil platform, Deepwater Horizon, that sank two days later off the American coast. Since then, over 800,000 liters of crude oil, according to the estimations of experts, have leaked into the Gulf of Mexico every day. It is a sad track record for an oil giant that tried to profile itself as Beyond Petroleum, with attention to bio fuels, CO2 reduction and investments in alternative energy sources.

The environmental disaster that is currently happening is of a rarely seen size, and that is being shown in the reactions of press and public opinion. The largest common denominator is one of fear, indignation and even anger. Who throws oil on the waves? As a pipeline engineer working in the steel industry, I do not feel obliged to either exonerate or condemn BP. However, I would like to place several arguments in perspective, as some reasoning seems to have also been leaking in the animosity of the past days.

British Petroleum is accused of financial gain, even though making profit is, by definition, the legitimate goal of all commercial companies, among which are the local bakery and the newspaper store on the corner. The accusation of financial gain does not prove anything: Just like Shell, ExxonMobil or Total, BP will never exploit oil in extremely difficult circumstances in the absence of an unambiguous return on investment. In other words, an oil company will only drill wells if they are able to drill on a significant market potential as well.

And our economy is still addicted to oil. Petroleum is and remains an important energy source for the industrial sector, and is, until further, notice the most important fuel for cars, ships and planes. Moreover, oil is the main raw material for many derived products, such as asphalt, lubricants and plastics. This, however, does not imply at all that the consumer is an accomplice: He is, in my eyes, much more a hostage. Our dependence on energy does not allow anyone to put the oceans at risk (and in turn our human habitat). A comparison with nuclear energy is in the air: An electricity producer only has the right to use a nuclear reactor if he or she can demonstrate that the risk of a new Chernobyl scenario is virtually nonexistent.

The government needs to protect the consumer against the possible catastrophic consequences of a completely free market. The recent banking crisis has once again painfully laid bare the inability of self regulation of markets. Also, on other fronts, the consumer remains vulnerable: The dioxin crisis, and also the recent milk powder scandal in China, underlines the need for legal restraint of the food industry. The American Food and Drug Administration (FDA) imposes draconian demands on the development of new medicines to prevent tragedies like Softenon. But what does the oil and gas industry do?

The safety regulations for the exploitation of an oil platform have been considerably tightened up since the incident with Piper Alpha. In July 1988, an explosion on this drilling platform of Occidental Petroleum led to the death of 167 workers. Since then, every manager needs to present a voluminous file (the Safety Case) to the Health and Safety Executive to gain access for the exploitation of oil and gas fields. The basis of the document is the identification of the possible safety risks, in which a risk is estimated as the chance that an incident can occur, multiplied by the consequences of a potential failure. The manager is obliged to identify and subsequently reduce all risks to a minimum. In the catastrophe with the Deepwater Horizon, the blowout preventer (the final safety valve on the bottom of the sea) failed for as of yet unclear reasons. BP estimated the chance of such a failure to be “as good as impossible,” and the possible repercussions on the environment as “low.”

For me, there is no doubt that BP has done everything to reduce the safety risks. But has the company succeeded in correctly estimating the chance of this incident, and the catastrophic consequences of it? The answer is visible, about 10,000 square meters in size, and will soon reach the American coast. Through strangely reactive crisis communication, BP is emphasizing the measures it is taking to control the oil spill, but it currently is only able to combat the symptoms. A true solution only presents itself when the leak is closed (by drilling a relief well), and this is in danger of taking months. Meanwhile, the brand BP shares the sad fate of too many sea birds and turtles: the stigma of a smelly sludge that will stick for a long time hereafter.