Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

The Stack

BP and the Spill: A Clear and Thorough Account

Editor's Rating: Stars_

<cite>Drowning in Oil</cite>, the first in a spill of books, presents little new information but reminds us of what happened and who is responsible

Drowning in Oil:

BP and the Reckless Pursuit of Profit

By Loren C. Steffy

McGraw-Hill, 286 pp, $27

Only five months have passed since BP (BP) plugged the gusher in the Gulf of Mexico, yet the oil spill already has a time-warp feel to it. The whole 24/7 spill-cam experience, which lasted for 107 days, seems like ancient history partly because preliminary studies are showing far less environmental damage than had been predicted last spring. The joy of learning about oil-gobbling bacteria has dulled our recollection of petroleum-drenched pelicans.

Corporate obfuscation has also muddled the memory—as it's supposed to. After Robert Dudley replaced Chief Executive Officer Tony Hayward, BP reshuffled management and created a new worldwide safety division. These actions seemed like a welcome admission that BP had made serious mistakes that required radical reform of its culture. Or not. Said Dudley: "I wouldn't describe it as an admission of anything."

Months later, fingers are still pointing furiously. BP, the owner of the well, blames Halliburton (HAL), which poured the concrete—and vice versa. Transocean (RIG), operator of the doomed Deepwater Horizon rig on which 11 people died, surely bears some responsibility, but no one has clarified what that might be. Protracted litigation, including a civil suit filed last month by the Justice Dept., may shed light on culpability. More likely, though, it will lead to a series of gazillion-dollar settlements without concessions of wrongdoing.

Into these murky waters plunge the quick-turnaround book authors. Among the notable early releases are In Deep Water by Peter Lehner, executive director of the Natural Resources Defense Council, and Blowout in the Gulf by academics William R. Freudenburg and Robert Gramling. More volumes are on the way, including In Too Deep by Bloomberg News reporters Stanley Reed and Alison Fitzgerald. One of the first entries in this oeuvre is Drowning in Oil by Loren C. Steffy, a columnist for The Houston Chronicle.

Unless you spent 2010 on another planet, Drowning in Oil will offer little that's new. Yet it has value as a well-researched, clearly stated reminder of what actually happened. Steffy demonstrates that the rush to pump oil—at bottom, a financial issue—contributed heavily to the disaster, as did overconfidence in technology.

BP became a reckless global oil juggernaut under the leadership of Lord John Browne, Steffy writes. The dashing CEO known for pushing the green-tinged "Beyond Petroleum" marketing campaign also emphasized relentless cost-cutting that translated into postponement of safety improvements and routine maintenance. During Browne's tenure, BP accumulated more than its share of minor oil spills, refinery mishaps, and worker fatalities. The worst was a conflagration, in March 2005, at the company's Texas City (Tex.) refinery, 40 miles south of Houston, in which 15 employees died. BP blamed low-level workers for the blaze. Federal investigators dug deeper and found that a portable meeting room became a death trap because it had been improperly placed in proximity to dangerous equipment. Safety monitors weren't functioning, and alarm bells failed to sound.

When Browne resigned in 2007, Tony Hayward ascended to CEO. A geologist who resembles the actor Colin Firth, Hayward talked a big game about improving safety, but his inaction spoke louder. Steffy, a former reporter for Bloomberg News, explains that the company's offshore operations were characterized by a perpetual race to get oil flowing as quickly as possible. Hayward and other executives assumed that the absence of a deepwater calamity in the Gulf meant there never could be one. That fallacy—believing an unlikely event will not occur because it hasn't—may remind discerning readers of the financial industry's hubris about the unlikelihood of a nationwide real estate bust.

As the BP project began running behind, costing the company $1.5 million a day, Steffy shows that managers and line workers made elementary mistakes under pressure. They used seawater instead of heavy drilling mud to fill the well. They failed to pay close attention to tests showing that the well was unstable. The blowout preventer, a massive device meant to shear through pipe and cut off an unintended release of oil, did not do its job, for reasons that still haven't been determined. The cost of mopping up will total tens of billions of dollars.

Eventually, we'll know why the blowout preventer stalled at the crucial moment. Other authors, whose publishers gave them more time to let investigations play out, may offer more complete accounts of the debacle. In the meantime, by narrating what is known now and providing crucial corporate context, Steffy has cut through the clutter to remind us of some of the basic reasons all that oil got into the Gulf.

Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

blog comments powered by Disqus