Crisis Management – can BP survive the spill?

BP Group is a British global energy company and the 4th largest organisation in the world. 

On April 22 a BP oil drilling rig Deepwater Horizon, situated in the Gulf of Mexico, exploded and sank, resulting in the death of 11 rig workers, their tragic deaths now being over-shadowed by a major environmental disaster.

The British oil giant has vowed to harness all of its resources to battle the spill as it tries to salvage something of its carefully manicured image of environmental responsibility.

“We are determined to fight this spill on all fronts, in the deep water of the Gulf, in the shallow waters and, should it be necessary, on the shore,” said BP Chief Executive Tony Hayward echoing Churchill’s famous World War II speech: “We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets”.

Tony Hayward has been with BP for 28 years and has spent the last five years in charge of restoring the company’s reputation for safety following a deadly blast at the Texas City refinery in 2005. 

Mr Hayward has much to defend. In recent years BP has spent heavily to position itself as an environmentally friendly company, redesigning its logo into a green-and-yellow sunburst and advertising a $4 billion alternative-energy push to move “beyond petroleum”.

The long term reputation of the company is drastically at stake because of this recent accident that in many instances has been labelled “the BP oil spill”.  On the EPA site, for example, it is called “the British Petroleum Oil Spill” and even the link to the site is http:www.epa.gov/bpspill

A situation like this is ultimately not about avoiding negative PR – it’s about minimising the damage as much as possible. To that end the focus has to be less on trying to hide or mask the story – which is virtually impossible on a story this size – and more about trying to manage it as best as possible. 

Given the global society's expectations of transparency in today’s information hungry world, intense media interest is one of the characteristics of a high-pressure environment in a crisis. Leadership communication with the media and stakeholders during this time needs to be controlled and considered, alongside other communication triggers i.e. social media.

It was social media that caused BP to endure communications criticism late last month. Allow me to explain. It took the BP Chief Executive Tony Hayward, three days to issue an official statement after the initial explosion.

In that time the internet was ablaze with angry tweets and Facebook comments on how badly BP were keeping the public informed about clean-up efforts and who exactly was taking onus for the disaster.

For example; 

Screen grab of Twitter reaction to the BP Oil spill

However since that “communication hiccup” the organisation is now utilising social media to the fullest; BP officials are uploading photos and videos on an hourly basis and even daily video blogs from volunteers at clean up zones.

BP is employing local fisherman to help clean up the oil and has sworn to reimburse every business person in the affected areas who has incurred any losses due to the spill.

To date an estimated 1.6 million gallons of crude oil have spilled in the Gulf of Mexico. And last Friday, BP’s shares were recorded to have slumped to a seven-month low as concerns grow over the cost of cleaning up the massive spill.

Prices fell at the fuel pump today, with both BP and Shell announcing a 4c decrease in the cost of petrol

However Mr Hayward’s toughest questioning will come later this month when he is summoned to appear before at least three Congressional committees, to explain who really is to blame.

Can BP survive this nightmare economically? Fadel Gheit, a market analyst with Oppenheimer & Co., estimated that every day that oil seeps into the Mexican Gulf, BP loses hundreds of millions of dollars in liability claims. Overall, Gheit estimated BP could pay anywhere between $5 billion and $15 billion for the cleanup, damage claims and lawsuits

But can BP’s reputation survive this nightmare? Personally I believe, the media will grow tired of the environmentalist stories of goodwill and oil encrusted pelicans and some other “sexy” story will take precedence.

After all BP is not selling clothes or cars, they sell oil and every country and person needs oil, one way or another.

However, what I have learnt personally from BP’s mistakes is what comes from drilling whether it’s for oil or mining for coal is that mistakes can happen and could New Zealand really afford to pay that price?

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Posted by Jillian Keogh on Monday 10th May 2010