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Deepwater Horizon DisasterAnwar Ansari (140510)Ganesh Shinde (1405007)

Deepwater Horizon

Deepwater HorizonOwned and operated by offshore-oil-drilling company Transoceanand leased by oil companyBPSituated in the Macondo oil well in theMississippiCanyonOccurs when some combination of pressurized natural gas, oil, mud, and water escapes from a well, shoots up the drill pipe to the surface, expands and ignites.

BP oil spill flowed for three months, becoming largest accidental marine oil spill in the history of the petroleum industry. The spill stemmed from a sea-floor oil gusher that resulted from the April 20, 2010, explosion of Deepwater Horizon, which drilled on the BP-operated Macondo Prospect

On July 15, 2010, the leak was stopped by capping the gushing wellhead, after it had released about 4.9 million barrels of crude oil. An estimated 53,000 barrels per day escaped from the well just before it was capped.Incident1. CONTEXT OF THE CASE STUDY

Gulf of Mexico

Effects

Initial ActionsApr. 29, 2010: LouisianaGov. Bobby Jindal declared astate of emergencytoday because of thespill

Apr. 30, 2010: Floridas Governor Crist issued the first state of emergency following the Deepwater Horizon oil spillcrisis.

CONFLICT OF INTEREST

In Causes of Deepwater horizon oil spill

PRODUCTION PROFITS PROTECTION SAFETY

Conflict of InterestsSelfish Interests

Causes- Violate 7 federal regulations at that time- Only one cement barrier Ignorance of negative tests, limitations of control machines- No or little training about the rare dangerous case- Failure to observe and respond to critical indicators- Inadequate well control response- Insufficient emergency bridge responseNo precaution for employees or state regulators-Lack of compliance to safety standards or accepted industry practice-Failure to take timely and aggressive well-control actionsCauses of Oil SpillFailure to notify federal regulators of changes in drilling plans.

Conscious disregard of known riskViolation of lawPoor management,lack of knowledge Deviation from the standard of careNo notification of changingFactsTourism and fishing industry forced to stop. Residents life seriously affected. Substantial damage to environment.21The worst oil spill in the historyKey stakeholders: employees, gulf/coastal residents, environment (water, animals), stockholders, government3Clear causes not available => BP believed that they were just merely negligent4FiguresEstimation of government authorities

Deep underwater plumes of dissolved oil and gas would likely remain confined to the northern Gulf of Mexico68,000 square miles of direct impact by leaked oil (Sky Truth)491 miles (790 km) of coastline in Louisiana, Mississippi, Alabama and Florida might be contaminated by oil (Bloomberg)4.2m barrels 176m gallons (666m liters) spilled (Guardian)62,000 barrels per day entered the Gulf waters while BP estimates were only 1,000 5,000 barrels per day (BBC, NYT)Extended Effects

Naturally seeping oil in the ocean.

Woods Hole Oceanographic InstitutionExpected ConsequencesClaims arising from the spillFines from governmentCost to clean up the water, treat the oil in the deep and middle water, upgrade the quality of the environmentBadly damaged reputationCancellation or Loss of contract in the future

StakeholdersSTAKEHOLDERSEnvironmentGovernmentResidentsCompany BPInvestorEmployeesEnvironmentPAHs indicators were 40 times more than before => reduce marineoxygenlevels => create dead zones

Heart and other organs would be expected to be fatal or at least life-shorteningOil was found in many animals => matuted fish (change of thenucleotide sequenceof thegenome)EnvironmentDead dolphins, dead birds, dead turtles, dead fishDeath of aGulf coral communityTar balls found along the coast, coastal islands, marshes (where rivers enter the ocean) => death of tree and marsh grass (National Graphic, The Atlantic)Oil fell to the ocean floor => remain in the food chain for the long term

Employees11 employees dead108 workers affected by the toxic from oil and dispersant (to separate oil into droplets) in the clean-up effort

ResidentsPhysical health symptoms among their children who lived in less than 10 miles from the coastline (NOAA)Commercial and recreational fishing in affected federal waters is closed (225,290 km2) (NOAA)Fish, crab and other animals found dead => decrease in the quantity => fishermen got much smaller amount of fish

Residentsseafood from the Gulf is not trusted by consumers though samples passed the test of contaminationmany of the Gulf fisheries have collapsed => it is very hard to recovermany people canceled their trip due to the spills => much lower revenue despite lower hotel rates, free service, changed cancellation policy from the hotels

ResidentsThe real estate prices and a number of transactions in the Gulf of Mexico area decreased significantlyMany people lost jobs and wages after the spill

BP CompanyThe spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costsBadly damaged imageBP's stock fell by 52% in 50 days on theNew York Stock Exchange10 40% drop on salesIn July 2015, BP agreed to pay $18.7 billion dollars in fines, the largest corporate settlement in U.S. history

InvestorsInvestors saw their holdings in BP shrink to $27.02, a nearly 54% loss of value in 2010 (New York Post)

Government3 years to investigate and then rule the case Deepwater Horizon oil spillBan of offshore drilling in state watersLaw amendment

RECOMMENDATIONS

4. RECOMMENDATIONS4.1. Short-term

Collecting the spilled oil as soon as possible Asking experts to give the best solution. Ensure that BP would take responsibility for the consequences

Give the full information about the spill Accept the inspection from the government

Find out and sign new contracts.Do business to help BP escape from the issue as soon as possibleIntroduce them to new jobs Recover promotion for tourism.Pay fully finesEnhance the security systemRecover and Improve the ecosystem EnvironmentResidentStockholdersGovernmentPlansEmployeesTest and enhance the system and standards for safetyBP itselfGive training coursesGive the full safety facilities in working4.1. Long-term

4. RECOMMENDATIONSReferencesBBC News, 2013, BP: Gulf of Mexico oil spill shared responsibilityBBC News, 2011, BP oil spill: The environmental impact one year onNational Graphic, Gulf Oil SpillNew York Times, 2011, BP Shortcuts Led to Gulf Oil Spill, Report SaysNew York Times, 2010, Tracking the Oil Spill in the GulfWikipedia, Deepwater Horizon Oil Spill

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