It’s been two years since the Deepwater Horizon disaster. We may still be dealing with its environmental impact, but a number of recent books suggest that we have now obtained the perspective needed to adequately assess the tragedy. Rising to the top of the heap is Abrahm Lustgarten’s Run to Failure: BP and the Making of the Deepwater Horizon Disaster.
Lustgarten details the rise of British Petroleum in a book that maintains the pace of a thriller and lays waste to the notion, promulgated by many industry insiders, that one of the largest environmental calamities of all-time was nothing more than a random accident. Lustgarten was kind of enough to answer some of my questions about BP, environmental regulations, and whether or not we have learned from our mistakes.
I want to start by discussing the success of BP. In your book you detail a company that seemed to be reaching a kind of conclusion, or at least the end of an era. This all changes when John Browne takes control. Where was BP before he became CEO and how did he change its direction?
BP was described at the time as a middling company at the beginning of its decline. It was, of course, a very large oil company, but one with invisible baggage that Browne thought was about to drag the company down. Over the previous decades BP had lost access to all of its huge oil reserves in Iran and throughout the Middle East, as those countries nationalized their oil assets and kicked out the western oil companies. Every oil company faced this problem, but BP was more reliant on these regions, and faced a greater threat.
By 1989, on a year-to-year basis, it still looked like BP would produce lots of oil. But the company had all of its eggs in two baskets — the North Sea and Alaska — which were about to fall apart. Both of those oilfields were old, and running out of oil. So looking at this aspect alone, BP had nowhere to go but down. It was still one of the world’s biggest investor-owned oil companies, but it was far from a top player, and getting worse. The company was also diverse and distracted – it owned metal mines and dog food companies and chemical plants and all sorts of things that had nothing to do with its core business of making oil.
John Browne came in and bluntly assessed these dire straights and set an ambitious agenda to re-focus BP not only as a more pure oil company, but with a concentrated focus on finding a few new promising places to produce oil rather than many mediocre locations. He streamlined, sold off businesses, and charged into new exploration.
When that didn’t grow the company fast enough he started buying other companies, acquiring more than 6 companies in a two-year period and vaulting BP to near the top of the global oil industry. John Browne was charismatic and articulate and very smart and widely heralded as one of the top corporate leaders of his generation.
At the time, when Browne takes control, he aims to rebrand the company as a green outfit. Can you talk about BP’s environmental record prior to the spill and did any of their late 90s environmental declarations turn out to be more than mere rhetoric?
Yes, Browne attempts to define BP as about the future, about renewable energy, and about addressing climate change. There was more than rhetoric behind the effort. BP did begin to invest in solar energy projects (and still does today, though they are a small fraction of the company). BP was also a leader in reducing its own carbon footprint, which went a long ways towards John Browne’s vision of being an oil company that faced climate change head-on.
For example, the company was one of the first to capture all the excess natural gas that leaks or is emitted from facilities across the southwestern United States — an issue that today is at the cusp of the fracking debate and that many other oil companies are now trying to emulate.
But Browne and BP were not able to apply this proactive environmental vision across all operations, or even in the most important ones — where oil was produced. Part of my book is about trying to figure out why Browne failed to do this. In both Alaska and in the Gulf of Mexico, BP had several times more spills than any of its competitors.
Browne and BP were not able to apply this proactive environmental vision across all operations, or even in the most important ones.
The same goes for safety violations — far more BP employees were killed or injured on the job in North American operations than those working for other oil companies. And in the refinery business, BP had nearly seven times as many safety and environmental violations as its competitors. It also was convicted of three criminal cases for its environmental violations in these same years.
In your book, a major disaster ends up seeming almost inevitable based on the regulations BP was bypassing and the way they were operating. Why wasn’t something done sooner? Did anyone attempt to remedy the situation?
Well, you’ll have to read the book to find out. Everyone seems to have dropped the ball here. Part of my narrative chronicles the work of the Environmental Protection Agency’s lead lawyer handling BP’s cases over many years, and looks at the government’s failure to act. At first, she hemmed and hawed over how severely to punish BP for its actions. When she finally was convinced, more than a decade later, that BP should be banned from doing business in the U.S. — it was too late. BP had become more powerful and had more political connections and this attorney had lost influence within the U.S. government to bend things her way.
BP was once “the environmental oil company.” Not anymore.
But it wasn’t just this attorney who dropped the ball. The Department of Justice repeatedly let BP off easy for its crimes. Members of Congress held closed door meetings and public hearings about BP safety concerns and yet did nothing. The Department of Interior accepted BP drilling permits and applications even though they were incomplete or didn’t apply to the correct project and so on. Everyone looked the other way at one time or another.
I believe Obama was the top recipient of BP’s PAC over the last twenty years. Shortly after being elected he declared, “We've still got to make some tough decisions about opening new offshore areas for oil and gas development in ways that protect communities and protect coastlines.” How do you think political clout played into the Deepwater Horizon spill, specifically BP’s financial connection to the President.
I have not looked at BP’s political contributions to the Obama Administration as compared to the company’s donations to other politicians. But surely BP has political leverage and it was an issue. Much of my story is about how BP became too big to fail. You have to look at this on a regional, and even global scale. Its not just about the Gulf. In Alaska BP manages the production of 4% of U.S. oil, and then manages its transportation via the Alyeska pipeline.
Drilling is proceeding as it was before the spill, and BP itself is drilling some of the deepest wells in Gulf waters at this moment.
In Europe and Asia — in Georgia for example — BP is a significant pipeline player helping to assure that American allies and interests get energy and don’t have to rely as much on Russia for it. BP is one of Britain’s largest and most storied corporations — meaning it is a critical aspect of the U.S.’s relationship with the U.K., which plays into everything from forging Iraq war partnerships to trade agreements. And then, of course, there is the fact that BP is an active Gulf of Mexico producer and employs tens of thousands of American workers to do it.
All of this, plus the delicate political dynamic of U.S. energy policy at the moment, led to Obama handling BP and much of the Gulf spill cleanup with kid gloves.
Were you surprised that the disaster didn’t generate more domestic debate on the issue of drilling? Did it result in any definitive change in policy or are we repeating many of the same mistakes that made it possible?
There have been incremental improvements in micro-level drilling regulations in the Gulf of Mexico that should improve safety, but there have been no larger legal changes, no efforts by the U.S. Congress to strengthen environmental and safety protections around drilling, and no significant actions by the U.S. Department of Justice to hold BP accountable since the Gulf Spill.
Drilling is proceeding as it was before the spill, and BP itself is drilling some of the deepest wells in Gulf waters at this moment. It remains to be seen whether BP has improved or changed internally in ways that would prevent further accidents. The company says it has, but only time will tell.
Americans don’t seem to think about where their energy comes from and what the trade-offs are for using so much of it.
As for the public discourse — unfortunately I am not surprised. I can tell you that the people who live along the Gulf of Mexico and are directly affected by the spill, and by the oil economy, have not forgotten. They live with and think about these issues every day. Unfortunately the rest of the country tends to have a very short attention span for anything less than disaster, and now that the dramatic spill pictures and dead sea life have given way to subtler issues of seawater chemistry changes and marsh restoration, its harder to capture peoples’ attention and remind them that this matters.
It has always bothered me that Americans don’t seem to think about where their energy comes from and what the trade-offs are for using so much of it. I think that if individuals took more responsibility for their own habits, and understood that oil companies like BP go out and drill in order to satisfy demand — and that that drilling will always present huge risks — we might change our behavior in ways that compromise our consumption and our drilling, so that both happen in moderation.