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Commentary By Robert Bryce

Beyond Pathetic: BP’s Sorry Safety Record, A Look Back at 2005

With each passing day, as more news reports explain what happened aboard the Deepwater Horizon drilling rig in the hours before the accident, it becomes ever clearer that BP’s mismanagement of the Macondo well was responsible for the disastrous blowout in the Gulf of Mexico. Last Friday, Anadarko Petroleum, which owns a 25% non-operating stake in the well, issued a statement which said that the blowout was “the direct result of BP’s reckless decisions and actions,” and that “BP’s behavior and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the operating agreement.”

Of course, Anadarko is hoping to avoid a big financial hit on the well. If it can prove negligence on BP’s part, then Anadarko will be off the hook with regard to damage and cleanup costs associated with the disaster.

But the Anadarko move is only the latest in a number of reports that show just how badly BP bungled the operation at Macondo. The best summary of BP’s mismanagement was published on June 11 in the letters section of the Wall Street Journal, when Terry Barr, the president of Samson Oil and Gas, recounted in a simple step-by-step process, all of the mistakes that BP personnel made. Barr said that the accident was largely due to “BP’s inability to follow its existing well-construction policies and those of the industry generally.” And he concluded that the blowout is all “about human failure and it is time BP put its hand up and admitted that.”

Barr’s letter, along with the other recent news reports provides an opportunity to republish a piece that I published in September 2005, when we at Energy Tribune were affiliated with another publication. The final sentence in this piece, that BP “can’t handle the oil they have” remains true today.

BP’s Green Hypocrisy (First published in September 2005)

Accidents happen. And in the case of BP, or any other refiner, an accident every few years is perfectly understandable. Two accidents in the span of a couple of months, well, that’s understandable, too. But BP hasn’t just had two accidents. Or three accidents. No, BP has had five accidents at its Houston-area refineries in a span of 11 months — from September 2004 to August of this year. These accidents, which include the March massive explosion at its Texas City refinery, have injured more than 170 workers and killed 17.

BP’s lapses come while it assures us that it’s a different kind of oil company. BP spends heavily – in newspaper ads and slick TV commercials with beautiful women -- to assure us that it is going “beyond petroleum.” BP understands the dangers of global warming. BP is hip to hydrogen – it is building the world’s first “industrial scale project to generate electricity from hydrogen.”And, as it reminded us in an August 18, full-page ad in The Wall Street Journal BP is cutting its greenhouse gas emissions. In short, BP can be trusted, because it’s a “green” oil company.

Well bully for them. Now if they could just prove that they mean it.

A quick look at BP’s first half 2005 financial report shows that its capital expenditures on renewable projects are falling. During the first half of 2005, BP spent just $72 million on the segment that BP calls “gas, power and renewables.” That segment includes all of BP’s activities in liquified natural gas, natural gas liquids, gas marketing and, lastly, renewables. That $72 million is about half of what BP spent on those businesses during the first six months of 2004, when it spent $137 million. Now $72 million is a lot of money for anybody — anybody, that is, except for BP. For comparision, BP spent nearly $4.8 billion -- or approximately 666 times more — on exploration and production of oil and gas in the first six months of 2005.

I love renewable energy. I think it’s incredibly important and it should be pursued with great vigor by BP and other energy companies. But BP’s attempt at greenwashing does not square with its spending patterns.

The rank hypocrisy of BP’s multi-million dollar green marketing campaign becomes even more striking given the spate of accidents at BP’s Texas refineries. Sure, the refining business is dangerous and complicated. But as a friend of mine who works at a competing refinery in Texas City told me, BP’s string of accidents “are not the result of bad luck.” Over the last 10 years, BP has had more refinery deaths – 22 – than any other company. According to the Houston Chronicle, BP’s Texas City refinery has had more than 100 accidental releases of air pollution -- more than any facility in the Houston area.

In mid-August, the Chemical Safety and Hazard Investigation Board ordered BP to appoint an independent safety review panel. It is the first time in the board’s eight year history that it has taken such an action. The board said BP’s poor management poses an “imminent hazard” to workers and the public and that the March explosion was the product of "systemic lapses in organizational decision-making, safety oversight and safety culture."

For those who think safety issued don’t affect the bottom line, think again. In its second quarter filing with the SEC, BP announced that it would set aside $700 million to cover the legal costs associated with the March accident. More trouble looms. The Texas Department of Environmental Quality and several federal agencies are investigating BP’s recent accidents. All of those agencies should slap BP with the biggest fines allowable.

As it waits for its well-deserved spanking from regulators, BP should stop talking about going “beyond petroleum.” It’s clear that they can’t handle the oil they have — much less lead us to something better.

This piece originally appeared in Energy Tribune

This piece originally appeared in Energy Tribune