When a string of mishaps strikes a single company, one possible explanation is bad luck. To his credit, Robert A. Malone, chairman and president of BP America Inc., is having none of that. “I don’t believe in bad luck,” he said in written testimony Sept. 7 to the Subcommittee on Oversight and Investigations of the House Energy and Commerce Committee.
The committee was probing BP’s pipeline corrosion problems in Prudhoe Bay oil field in Alaska. As Malone acknowledged, suspicion was elevated by earlier troubles: the fatal explosion at BP’s Texas City, Tex., refinery in March 2005, a federal investigation of the company’s LPG trading, the mysterious listing last year of the Thunder Horse platform in the deepwater Gulf of Mexico after a hurricane evacuation. “We need to understand these issues and then translate the lessons we learn across all of our operations,” Malone said.
Corrosion, leaks
If not for the problems that preceded it, the incident that triggered the House hearing and a Senate inquiry last week might have received more-hospitable public treatment. After discovering corrosion in low-stress oil transit lines and a small leak, BP on Aug. 6 announced it was shutting in Prudhoe Bay’s 400,000 b/d of production as a precaution. The move briefly stunned the oil market, which proved able to absorb the jolt, especially after BP determined that the shut-in would affect only 200,000 b/d and not last as long as initially feared. Whatever its market effects, the move was prudent and right.
But the corrosion surprise and production halt followed the March spill of 5,000 bbl of crude from a 34-in. transit line in Prudhoe Bay’s Western Operating Area. The spill, largest ever on Alaska’s North Slope, prompted the Department of Transportation to require smart-pig tests and other investigations of all Prudhoe Bay transit lines. It was one of those tests that uncovered the Eastern Operating Area corrosion leading to the field’s closure, which intensified suspicion about BP and made lawmakers summon company executives to inquisition. “For many,” Malone told them, “the shine has come off of BP over the last year as we have stumbled operationally.”
BP has worked hard on that shine. In memorable advertisements suggesting that “BP” means “beyond petroleum,” it has defined itself in terms of environmental concern. It has taken progressive environmental positions, which in comparison with those of other companies were not always radically different but were certainly made to appear that way. The suggestion has been that BP cares more about environmental and human values than other companies do, that it shares public preferences for nonfossil energy, that it is indeed something more than an oil company.
Other companies have tried to buff their images. But none has identified itself more closely with environmentalist energy preferences than BP has, with its unmistakable green-and-yellow sunburst logo and careful iconoclasm. The image program is commendable. It upholds constructive values and no doubt gives BP an edge in many aspects of business competition. But it set a high standard, which didn’t go unnoticed by congressional critics who suggested that the company initials stand for “bloated profits” or “broken pipelines.”
Image problems
It would be regrettable if smudge on the shine made BP discard its polish. The oil industry would benefit if more companies committed themselves as ardently as BP has to their positions vis-à-vis the public. What people think of oil companies and their industry matters greatly. It matters to product sales, to investor allure, to politics, to recruitment, to land access, to relations with foreign governments and populations, and to myriad other elements of business. Unfortunately, what people think of oil companies and their industry-what they thought long before BP’s problems began-is resoundingly negative.
Here, then, are two suggestions, for BP or any oil company hoping to address image problems. First, believe in the contributions oil and gas make to human welfare, and brag about them. Nothing sways public opinion more effectively than unabashed commitment. Second, with health, safety, and environment, accept no mistakes, no compromises, and no excuses. Ever.