Another bad day for BP

BP’s decision to go to the White House on Mr Obama’s terms was strange enough. I would have thought they should have offered to go in conjunction with their main American sub contractors, saying “We are all in this together. We need all to be available to answer the President’s questions and to show how we can work together to find an answer”. It is the drilling company which offers most hope of a solution, as the end of the oil spill now rests on two new wells they are drilling to relieve the pressures in the failed well.

Yesterday the politicians were bound to be very angry as their constituents are. They were bound to want to know how and why it all happened. Without pre-empting the final results of the enquiry, BP could have been more forthcoming about the problems of drilling so deep so far below the waves, and could have made some preliminary findings public about what failed. Instead of saying he was not involved or did not know, the CEO could have said “our preliminary view is… or subject to further enquiry we believe…”

Let us hope the new wells work as planned. The best answer to BP’s critics is to find a way to stop the spill. BP needs to put up a new senior spokesman who is American and who knows about oil wells to field the US media and politicians.

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20 Comments

  1. Javelin
    Posted June 18, 2010 at 9:19 am | Permalink

    It was also a PR disaster that Hayward said the only time he had heard of the well was when they struck oil. Surey as head of the group wide saftey commitee he should set the standards for reporting and should have known about saftey issues at this "nightmare" well. A simple spreadhseet showing every oil well ranked by issue or problem type should have been collated and passed up to the board.

    Saying he knew about striking oil (and money) at this well and not about a potential problem that could cause the company to obliterate, when it was his responsiblity to know this means by any standard the guy should be sacked. Gievn BP counts for 1/7 of UK pension dividends Cameron should have the guys head on a place.

    Reply: it is not Mr Cameron's job to decide on private sector management – he has enough to do sorting out top management in the public sector.

  2. Stuart Fairney
    Posted June 18, 2010 at 9:19 am | Permalink

    The CEO needs to read ayn Rand, specifically, the concept "Sanction of the victim" is "the willingness of the good to suffer at the hands of the evil, to accept the role of sacrificial victim for the 'sin' of creating values

    Personally I would have been more combative especially before meekly agreeing to hand over 20 Billion

  3. Norman
    Posted June 18, 2010 at 10:01 am | Permalink

    As well as going in with their American sub-contractors they should also go in with the MMS. All drilling plans would have to be submitted to them prior to drilling for ultimate approval or drilling would not have been able to proceed. Any deviation from these plans would also have had to be approved.

    As for the CEO making statements, regardless of any proviso's preceding them, he has to watch what he's saying. The US administration have launched an investigation which may lead to criminal proceedings against BP. No doubt there will be many civil court cases coming out of this too. Until all the facts are known I'd be extremely wary about putting my name below any speculative statements.

  4. Stuart
    Posted June 18, 2010 at 11:21 am | Permalink

    The Congressional Committee re looking for scalps, this is a rough business and it is a shame that our parliamentary processes are not as robust.

    It is amazing to find that the man selected to head the giant BP has obviously no media handling skills or training, his future must be in doubt following repeated and continuing poor performances. Why BP put him up and not a senior American executive we'll never know.

    There are also concerns over how BP got to this stage – their safety record is dreadful – and the role Lord Brown had will have to be explained in full before he joins the coalition in any role.

    • Mark
      Posted June 18, 2010 at 10:23 pm | Permalink

      I think the senior American had already been up before Congress – Lamar McKay, CEO of BP America. Congress wanted a show trial with clips that will play well in the mid term elections – and they got it. There is no way that the hearing could have seriously even begun to consider technical details that will take months for an inquiry to digest in detail.

  5. Bill
    Posted June 18, 2010 at 11:41 am | Permalink

    Much to my surprise I thought that the questioning was reasonable, (I’ve had worse going round the institutions after a profit warning and the figures were Mickey Mouse compared with these) and agree that Mr Hayward could have given some answers, but qualified his responses, pending the investigation.

    At least Mr Hayward kept his cool.

    It’s likely that his legal team briefed him not to speculate.

    Agree too that to put aside 20bn without anything in return seems very odd

    • JohnC_Up_North
      Posted June 18, 2010 at 4:19 pm | Permalink

      Bill,

      "Mr Hayward could have given some answers, but qualified his responses, pending the investigation"

      If you were CEO of one of the biggest companies in the world and had a dreadful accident where 11 people died which also resulted in an environmental and PR disaster wouldn't you be a bit curious to know who made decisions and which level of management knew about these decisions? Who sanctioned these decisions?

      59 days later the CEO of BP does not know this. (Or, more probably, is hiding this information.)

      If this was any airline in the world this would not be acceptable. In aviation we are always given preliminary information to inform the public as soon as it is available.

      You always have to wait for the outcome of the full enquiry but, a CEO of BP cannot simply say, "I cannot tell you until the investigation is complete".

      He must know by now (59 days after the event) who made the critical safety decisions and which level of management were involved in these decisions. If he does not know, he is incompetent.

      Also, no member of the committee ask him what are the terms of reference of the BP internal investigation.

  6. PayDirt
    Posted June 18, 2010 at 12:11 pm | Permalink

    RBS got big, the management did not know the risks the bank was taking. Too big to fail. BP has a Big Problem, but is not in the category of too big to allow failure. Bigness is always a problem, ask any dinosaur, Roman emperor or Hitler with his military machine. The head loses track of what the body is about. Sadly, BP is finished, perhaps it should go back to Beyond Petroleum.

  7. Acorn
    Posted June 18, 2010 at 2:37 pm | Permalink

    … the CEO could have said “our preliminary view is… or subject to further enquiry we believe…”. To be fair, he did do just that on the 27th May to the same committee.
    http://energycommerce.house.gov/documents/2010052

    Starting to look like the DH's BOP had a bit of a history. Read the emails from yesterdays hearing:-
    http://energycommerce.house.gov/index.php?option=

  8. Alders
    Posted June 18, 2010 at 3:04 pm | Permalink

    Agree with John Redwood here. BP must point up their major American participations in operations there. CEO reminded me somewhat of that chap in Coronation St. who was in charge of the local (textile?) firm….

  9. JohnC_Up_North
    Posted June 18, 2010 at 4:08 pm | Permalink

    I've watched this debate for a long time now. In another post, I mentioned that I had watched the entire testimony of the congressional enquiry yesterday.

    Andrew Neil always makes out that these committees put our select committees to shame. As such i was expecting penetrating questions getting to the main issues. Some members of the committee seemed clueless and seemed to waffle on to impress the voters in their state.

    No-one asked what are the implications of the relief wells failing? What contingency plans do they currently have in place if the relief wells fail in August?

    The BP CEO said yesterday that they estimate that this site has about 50 million barrels of oil. What happens, if in August the relief wells fail? (One congressman said yesterday that this has happened before – I think in 1979).

    If the two relief well fail in August, we could end up with oil on our shores, here in the UK.

  10. Demetrius
    Posted June 18, 2010 at 7:38 pm | Permalink

    If the people continue to want to have unrestricted supplies of cheap oil now that we have accessed and used the easiest and cheapest to source. There are problems. The deeper and more off shore you go the greater the risks and possibly the more complex the geology. So then the greater the costs and the chances of blowouts. These have already happened off Africa, it was only a matter of time before one occurred in proximity to the USA or in Northern Waters. The large oil companies are trying to reduce costs to please the people but by doing so they enhance the risks. Governments might all be better off telling the people very clearly that the age of cheap oil is over.

  11. Ex Liverpool Rioter
    Posted June 18, 2010 at 10:19 pm | Permalink

    I sure BP was "Delighted" to hear the thoughts of the Russan Prez today. He gave the impression the BP might not make it. Given BP involment in Russia & its shall we say "Political overreach" in Russian interal matters Am sure knifes are being sharpened by many looking for a quick buck & politacal pay back!
    Mike

  12. Ex Liverpool Rioter
    Posted June 18, 2010 at 10:58 pm | Permalink

    Ah………….Yes http://www.zerohedge.com/article/bp-finalizing-5-

    Bye Bye BP………Tell me John, how much Tax does BP pay into goverment coffers?
    Mike

  13. blokeinfrance
    Posted June 19, 2010 at 12:32 am | Permalink

    I think he handled it badly. Stonewalling an investigative committee was bad strategy. If I'd been him, I'd have tried to turn the hearing into a three hankie for the 11 men who died, which would have made substantive questions seem a bit impertinent.
    Meanwhile, I hope that the upcoming anniversary of Piper Alpha (July 6th( will be an opportunity to concentrate some minds. Occidental(words left out) is still independent, still quoted.

  14. Ace
    Posted June 19, 2010 at 6:39 pm | Permalink

    I'm an American and I agree, generally with Mr. Redwood but our British friends must understand that Mr. Hayward, his company, and his business associates are the targets of a federal criminal investigation led by an administrtion that to para-phrase Reagan, "…the only morality they [the Obama administration] recognize is that which will further their cause." It is impossible to assume Obama's good faith. Yes, it would've have been nice if Anadarko, TransOcean, and Halliburton had agreed to go with BP to pick up the ransom demand from the thugs at the White House but I'm sure BP was warned to come alone. No doubt, BP was also warned that failure to comply with Obama's demands would result in further torture to their company's stock price being held hostage.
    People in Britain should realize that millions of Americans are more outraged at Obama's extortion of a private corporation than the oil spill. An aide to Texas Rep. Barton told me yesterday that Texans jammed their phone lines mad as hell that Barton had retracted his apology to BP over their shakedown by the Obama gang.
    .

  15. Mark
    Posted June 20, 2010 at 1:08 pm | Permalink

    The whole episode is now being driven by lawyers. Anadarko are appealing to the "getout" clause in their joint operating agreement that refers to wilful or gross negligence because the lawyers know that money is at stake: there were Anadarko employees aboard the rig when the accident happened, but their role is being kept for the courtroom arguments. Ultimately, BP will be relying on the US constitution to sort the mess out long after Obama is out of the picture, just as happened with Exxon over the Valdez.

  16. christina sarginson
    Posted June 20, 2010 at 1:18 pm | Permalink

    I agree the cuts should be made for projects which currently cannot be afforded. I work in the heart of the jewellery quarter in Birmingham. The car park which serves the building where I work is to be made into a, what has been termed a picnic area where statue will be erected for all the visitors to see. The cost of this project is one million pounds, the council were getting revenue from the car park users and now there will be none. This seems ridiculous to me when so many people potentially could be losing jobs. What is more my colleague who is disabled

  17. christina sarginson
    Posted June 20, 2010 at 1:19 pm | Permalink

    I do feel the blame culture which surrounds BP is becoming more and more interesting. I think we all know it is a mess and that BP will want to do as much as they can as quickly as they can. I always think that when someone gets a lot of attention from a wrong doing it can provoke a knee jerk reaction and actions are carried out which may be wrong in the long term. We all know this is not a good situation and the president has given it a lot of attention. I do feel now is the time to let them sort it out properly and as quickly as possible.

  18. Lindsay McDougall
    Posted June 21, 2010 at 6:16 pm | Permalink

    Obama and the American body politic are playing a very dirty game. They know perfectly well that after BP has paid out lots of compensation, it (BP) will have legitimate claims against several American partners and sub-contractors. By harrying BP so stridently and publicly they are, from protectionist motives, attempting to give those American contractors effective immunity from being sued. BP should name those American companies that they intend to sue NOW and they should have David Cameron's backing NOW.

    Furthermore, it is high time that a campaign against America over Bhopal was pursued. Twenty-six years on, over 1000 dead, many more incapacitated for life and not one single extradition from America. Come on, Obama, talk your way out of that one.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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