BP Oil Spill Capping Decision, Research Paper Example

Introduction

The problems with the recent disaster in the Gulf of Mexico surrounding the BP oil leak demonstrated that BP had a serious problem on its hands to overcome the risks associated with the oil spill and its impact on the environment. This is an important step towards understanding the impact of the Gulf spill and BP’s role in reducing any further risks associated with the spill through its capping strategy.  The containment cap represents an approach that is based upon the ability to effectively understand the risks associated with the capping mechanism, and how to minimize those risks through effective strategic choices to successfully support the cap and its objectives.

Sources of Construction Project Risk

There are many risks associated with the BP capping project, which include the ability of the capping mechanism to perform at the anticipated levels to reduce environmental risks (Luscombe, 2010). Based upon evaluations of pressure at the site, it will be determined whether or not the cap will be able to withstand the potential for more leakage (Luscombe, 2010). Capping the well demonstrates that BP has made a good faith effort to minimize any further risks associated with the spill, but at the same time, continues to struggle because there are no guarantees with a fix of this nature (Luscombe, 2010).

Timeline

When this disaster took place, the primary objective was to implement a strategy that was based upon an astute and intelligent strategy to cap the well as effectively as possible. With the rate of oil leaving the well at alarming rates, capping the well required a brief turnaround time, but also required an accurate and detailed approach to managing the spill and its consequences. Over a period of months, the spill was contained, but not without significant damage to the Gulf and the surrounding environment (National Post, 2010).

Costs

Based upon the damage that was caused, the cost of the BP oil spill topped $54 billion, which sent BP into a negative profit situation for the first time in many years (Vanguard, 2011). Furthermore, many environmental organizations have threatened to file lawsuits against BP for damages associated with the spill and the environment (Vanguard, 2011).

Disruptions

The tremendous disruption that the BP oil spill created was significant on many levels. The spill caused a “massive disruption” to the Gulf and the surrounding coast, leading to a significant loss of sea life, and damage to the coast, which also disrupted the lives of many residents living and working in this area (CNN, 2010). In addition, the disruption also spread as a result of a loss of fish and other forms of seafood that were killed as a result of the spill, and were unavailable for consumer purchase (CNN, 2010). This was one of many problems that occurred after the initial oil spill took place, and as the spill continued to occur without any real sense of containment, continuous damage took place that was very difficult to overcome (CNN, 2010). The difficulties of this process were obvious, but they also reflected the environmental damage that was already done that could not be ignored, and the impact of this damage for BP and its subsidiaries.

Force Majeure

In response to the problems that were associated with the BP oil spill, there were also many legal implications that created new challenges for legal counsels associated with oil drilling in the gulf. For example, “A freeze on deepwater drilling most likely would trigger a force majeure clause. A good example is a contract where an oil company hires a drilling company to start or run a new deepwater well. The moratorium makes it impossible for the drilling company to honor the contract” (Lawyers.com, 2010). Therefore, the spill created a wave of legal problems due to the spill and its impact on the region and its routine operations (Lawyers.com, 2010). This is an important step for the

Systems to Address Construction Project Risk

The risks associated with capping the well were significant, and they demonstrated that the project faced a number of important problems that were difficult to ignore in determining how to approach the problem with a viable solution. This process is even more difficult because the company did not conduct a risk management process as the project went on, and in some ways, the company faces a number of political and PR challenges as a result of other failures to cap the well: “each new attempt to cap the well or channel the oil flow to a surface ship seems to be a new shot in the dark and continually ends in failure.  It’s easy to say that customer confidence is at an all time low right now for BP…Best practices project management says do a good job defining your requirements and spend the right amount of time up front planning your project before beginning the engagement.  That clearly didn’t happen here – at least not with the right people involved” (Egeland, 2010). In this context, BP failed to assess the construction project risk, which created many different problems for the organization in its efforts to overcome the spill and to rectify the choices that have been made (Egeland, 2010).

Technology

The utilization of different forms of technology was essential in developing a response mechanism and solution strategy that would cap the well and cease all oil spilling into the Gulf. This process requires technology-based solutions to eliminate the spillage and to reduce oil seeping, even after the cap had been mounted. Technology-based solutions were necessary components in facilitating a cap that would stop oil from leaking permanently.

People

Based upon current reports, it has been determined that BP has made some poor decisions in recent years that have increased the risks associated with oil drilling, and that there have been insufficient control mechanisms in place to manage potential leaks and other problems (BBC, 2011). Poor testing procedures and lack of oversight may be to blame in this tragedy, and these also reflect the difficulties that are likely to occur with respect to BP’s reputation in the future (BBC, 2011).

Planning

In a disaster of this magnitude, capping the well required a detailed assessment of the situation, as well as the different opportunities to explore strategies to cap the well and to make the leak a permanent memory. However, the ability of BP to effectively respond to the oil spill had some serious consequences, and it failed to manage the spill and the leak in an efficient manner for many reasons (Nola.com, 2010). Based upon existing knowledge of the response strategy, “The lengthy plans approved by the federal government last year before BP drilled its ill-fated well vastly understate the dangers posed by an uncontrolled leak and vastly overstate the company’s preparedness to deal with one” (Nola.com, 2010). Therefore, it is important to consider the ways in which planning could improve the response time and effort to reduce environmental damage.

Catastrophic Failure Fault Tree

In evaluating the significance of a disaster of this magnitude, there are a number of alternatives to consider that are instrumental in determining the level of risk associated with a given strategy. For the BP oil spill catastrophe, the use of a fault tree is an important step in understanding the overall disaster and the risks associated with different response alternatives. The proposed fault tree design would be useful in addressing the problems that are directly associated with the oil spill, and would be comprised of different containment strategies to support the overall direction of the capping project. The design template to be considered is noted as follows:

Discussion of Fault Tree

In exploring the purpose of the fault tree further, it is important to explore each option and to determine whether or not these are feasible options to support a successful capping effort. This is an important step to ensure that the well is capped appropriately and all possible leaks are eliminated as best as possible. Capping the well in an effective manner also requires each step of the fault tree to be considered in the manner in which it was designed, and to determine how to best approach this catastrophe through these steps. This process is important to determine if there are any other additional risks involved in the decisions that are made.

Reduce Risks

Reducing the risks associated with the oil spill and the capping strategy might be considered a moot point by some standards at this stage of the process. However, despite the level of environmental damage that has already accumulated, there are additional factors involved in the process that are used to reduce additional risks to the environment and to the coast. Reducing these risks requires a strategic interface that will support long-term outcomes, rather than merely supporting the capping process over the short term.

Mitigate Risks

Mitigating the risks involved in oil well drilling requires an effective understanding of the drilling process, as well as any possible risks associated with it. In this context, reducing future risks associated with these developments are of critical importance so that the outcomes are effective for BP in managing its oil drilling strategy.

Avoid Risks

Avoiding the risks related to oil drilling and possible leaks requires an ongoing effort on the part of BP, and this supports the development of strategic processes that will assess risk management processes at all stages so that risks are eliminated as best as possible.

Course Project Part 1 – Smaller Risks

Smaller, less evident risks are a likely component of this process, and these involve an effective understanding of the challenges of oil drilling and their impact on the environment. Drilling must incorporate smaller steps that are designed to reduce these less critical risks, and in addition, the recognition that there could be sufficient consequences if the oil drilling process failed for any reason are instrumental in shaping the entire strategy and its likely impact on oil drilling on a regular basis.

Conclusions

In evaluating the problems related to the BP oil spill catastrophe of 2009, many problems were evident, from establishment of the drilling process, to ongoing efforts to assess risk. When the explosion occurred and the spill began, it was obvious that BP did not take the appropriate measures that were necessary to assess all possible risks involved in the drilling process. Therefore, when the incident occurred, the company was ill-prepared to manage the problems that it faced in determining how to stop the spill and the subsequent catastrophic events that took place afterwards, not only for the surrounding environment, including the coast and sea life, but also the development of strategic outcomes that would reduce the impact on humans living on or near the coast. Since BP was blamed for the majority of this disaster, these claims were warranted, and demonstrated that there are significant risks associated with oil drilling and possible explosions or leaks that must be evaluated in the future.

Works Cited

BBC (2011). US oil spill: ‘bad management’ led to BP disaster. Retrieved from http://www.bbc.co.uk/news/world-us-canada-12124830

CNN (2010). BP chief to Gulf residents: “I’m sorry”. Retrieved from http://articles.cnn.com/2010-05-30/us/gulf.oil.spill_1_oil-spill-heavy-oil-dudley?_s=PM:US

Egeland, B. (2010). If the BP oil spill were a project…Retrieved from http://pmtips.net/bp-oil-spill-project/

Luscombe, R. (2010). BP tests oil well cap, but says success is not assured Retrieved from http://www.guardian.co.uk/environment/2010/jul/13/bp-tests-oil-well-cap-success-not-assured

National Post (2010). Timeline: BP Gulf of Mexico oil spill. Retrieved from http://news.nationalpost.com/2010/08/04/timeline-bp-gulf-of-mexico-oil-spill/

Nola.com (2010). BP’s Gulf oil spill response plans severely flawed. Retrieved from http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/06/bps_gulf_oil_spill_response_pl.html

Vanguard (2011). $54b oil-spill charge pushes BP into red. Retrieved from http://www.vanguardngr.com/2011/02/54b-oil-spill-charge-pushes-bp-into-red/