BP sets up safety division, restructures upstream

Oct. 11, 2010
BP PLC announced it is creating a safety and operational risk unit that will have authority to intervene in all aspects of BP's technical activities.

BP PLC announced it is creating a safety and operational risk unit that will have authority to intervene in all aspects of BP's technical activities. The unit will have its own expert staff embedded in BP's operating units, including exploration projects and refineries, the company said.

The new unit, to be directed by Mark Bly, will be responsible for ensuring all operations comply with common standards and are in auditing compliance, said Bob Dudley, who became BP's chief executive officer on Oct. 1.

Bly, currently BP's head of safety and operations, led BP's investigation and accident report team that looked into the Apr. 20 Macondo well blowout and resulting fire and explosion on Transocean's Ltd.'s Deepwater Horizon semisubmersible on Mississippi Canyon Block 252 in the Gulf of Mexico (OGJ Online, Sept. 8, 2010).

The accident killed 11 workers on the semi and spilled an estimated 4.9 million bbl of oil, of which BP captured an estimated 800,000 bbl. BP was the operator.

Dudley also announced Sept. 29 that BP will restructure its upstream segment from a single business into three functional divisions—exploration, development, and production—and plans a detailed and wide-ranging review of how it manages third-party contractors. Andy Inglis, now in charge of upstream, is leaving the company at yearend.

The upstream restructuring will foster long-term development of specialist expertise and reinforce accountability for risk management, Dudley said. BP also will review how it incentivizes business performance, including reward strategy, with the aim of improving safety and risk management.

"These are the first and most urgent steps in a program I am putting in place to rebuild trust in BP—the trust of our customers, of governments, of our employees and of the world at large," Dudley said. "That trust is vital to the restoration of shareholder value."

He called safety and risk management "our most urgent priority." In a message to BP staff worldwide, Dudley said, "This is a deeply challenging time for BP. The Macondo incident was a tragedy that claimed the lives of 11 people, caused injury to many others and had a widespread environmental impact."

Dudley said BP's response to the Macondo spill will go beyond deepwater drilling. "There are lessons for us relating to the way we operate, the way we organize our company, and the way we manage risk."

Personnel changes

In stepping down from his leadership of the upstream business, Inglis and the BP board reached agreement that he will step down as a main board director on Oct. 31.

The new upstream divisions will be led by three executives: Mike Daly will be vice-president, exploration; Bernard Looney will be vice-president, development; and Bob Fryar will be vice-president, production. Andy Hopwood will become executive vice-president for strategy and integration. Those four will join an expanded top management team reporting directly to Dudley.

BP plans to review its performance and reward strategy and will focus on how to deliver better safety and risk management.

"As I take up my new role I am aware of two things," Dudley said. "First, there is a pressing need to rebuild trust in BP around the world. Second, BP's people have both the commitment and the capability to rebuild that trust."

He said BP has high-quality assets and "a sound financial footing on which to build."

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