Welch grills Tony Hayward about BP safety record

Summary

The transcript captures a critical examination of BP's safety and operational history, focusing on incidents like the 2005 Texas City explosion, the 2006 Alaska pipeline rupture, and the Deepwater Horizon disaster. The CEO's accountability is questioned in light of these events, with emphasis on BP's repeated prioritization of cost over safety, leading to significant fines, loss of life, and environmental damage. The dialogue also touches on the systemic changes implemented by the CEO in response to the Baker report, and the ongoing investigation into the Deepwater Horizon incident.

Takeaways

• 🔥 In 2005, a BP-operated Texas City refinery explosion resulted in the death of 15 workers.
• 💧 In 2006, a BP oil pipeline in Alaska ruptured, spilling 200,000 gallons of crude oil.
• 🏛️ In 2007, BP settled criminal charges and paid $370 million in fines under the new CEO's leadership.
• 🚨 The Occupational Safety and Health Administration (OSHA) found over 700 violations at BP's Texas City refinery, resulting in a record fine of $87.4 million.
• 🛠️ A BP refinery in Toledo, Ohio was fined $3 million for willful safety violations, including the use of a valve similar to those in the Texas City incident.
• 👨‍💼 Former Secretary of State James Baker led the investigation into the Texas City refinery, which was considered credible by the CEO.
• 📝 The Baker report criticized BP management for allowing alterations to procedures without risk assessment.
• 🛑 The CEO acknowledged the findings and stated that systematic changes in safety management and BP's culture were implemented.
• 💭 The CEO could not confirm if the Deepwater Horizon chose a cheaper casing design based on the Baker report's recommendations.
• 🔑 The Deepwater Horizon decision to use fewer casing centralizers was a technical judgment, not necessarily indicating a cost-over-safety motivation.
• 🤔 The CEO expressed inability to make judgments on technical decisions, highlighting the need for expert advice in such matters.
• 🏆 The script raises questions about the CEO's ability to continue in his role, given the company's safety record and financial losses.

Q & A

What major incident occurred at the Texas City refinery in 2005?

In 2005, the Texas City refinery, owned by BP, experienced a catastrophic explosion that resulted in the loss of 15 workers' lives.

What was the outcome of the 2006 BP oil pipeline rupture in Alaska?

The 2006 BP oil pipeline rupture in Alaska led to the spill of 200,000 gallons of crude oil.

What were the consequences for BP after the company settled criminal charges in 2007?

BP agreed to pay $370 million in fines after settling a series of criminal charges in 2007.

How many violations did OSHA find at BP's Texas City refinery in one year?

The Occupational Safety and Health Administration (OSHA) found more than 700 violations at BP's Texas City refinery in one year.

What was the record fine imposed on BP by OSHA for the Texas City refinery violations?

OSHA imposed a then-record fine of $87.4 million on BP for the violations found at the Texas City refinery.

What was the penalty for the willful safety violations at the BP refinery in Toledo, Ohio?

The BP refinery in Toledo, Ohio was fined $3 million for willful safety violations, including the use of a valve similar to those that contributed to the Texas City explosion.

Who was actively involved in the investigation of the Texas City refinery by the U.S. Chemical Safety Board?

Former Secretary of State James Baker was actively involved in the investigation of the Texas City refinery by the U.S. Chemical Safety Board.

What did the Baker panel report find regarding BP's management practices at the Texas City refinery?

The Baker panel report found that BP management allowed operators and supervisors to alter procedural steps at the Texas City refinery without assessing risk.

What systemic changes did BP implement in response to the Baker report findings?

BP implemented a systematic change in how they manage safety and a systemic change in the company's culture based on the findings of the Baker report.

What was the decision made by BP regarding the casing design for the Deepwater Horizon?

BP chose a cheaper and quicker casing design for the Deepwater Horizon instead of a more expensive, safer design.

What procedure was used by BP for the Deepwater Horizon cementing process, and was it approved by the MMS?

BP chose not to circulate drilling mud and used a lighter saltwater base for the cementing procedure, which was a common industry practice and approved by the Minerals Management Service (MMS) prior to implementation.

What is the responsibility of the CEO in the context of the safety and technical decisions made by BP?

While the CEO is in charge of the company, they may not be a technical expert in all matters. The CEO's role is to oversee the company's operations, including safety measures, but the technical judgment for specific decisions may be made by qualified engineers within the company.

In light of the numerous incidents and fines, what is the implication for the CEO's position and confidence in their leadership?

The implication for the CEO's position is significant, as they have presided over a company incurring large fines, loss of shareholder value, and a damaged reputation. This raises questions about their ability to continue leading the company effectively.

Outlines

00:00

🔥 BP's Safety and Environmental Violations

This paragraph discusses a series of safety and environmental incidents involving BP, including the 2005 Texas City explosion that resulted in 15 fatalities, the 2006 Alaskan oil pipeline rupture, and the 2007 criminal charges and fines totaling $370 million. It also mentions the Occupational Safety and Health Administration (OSHA) finding over 700 violations at BP's Texas City refinery and imposing a record fine of $87.4 million. Additionally, there's reference to a BP refinery in Toledo, Ohio fined for willful safety violations. The U.S. Chemical Safety Board's investigation, with the involvement of former Secretary of State James Baker, criticized BP's management practices, leading to systemic changes in safety culture at BP.

05:01

🤔 Accountability and the Future of BP's Leadership

The second paragraph focuses on the accountability of BP's CEO in light of the company's history of safety and environmental violations. It raises the question of whether the CEO, who has overseen significant fines and loss of shareholder value, should continue in his role. The discussion points to the Baker report that indicated a pattern of prioritizing cost savings over safety, leading to tragic consequences. The conversation also touches on the Deepwater Horizon incident, where choices were made that may have compromised safety for the sake of cost efficiency. The CEO emphasizes his focus on the immediate response to the crisis rather than addressing the question of his resignation.

Keywords

💡Texas City

Texas City refers to the location of a BP-operated oil refinery in Texas. The script mentions a catastrophic explosion in 2005 at this facility, which resulted in the tragic loss of 15 workers' lives. This incident is central to the video's theme of safety and corporate responsibility in the oil industry.

💡BP

BP is a multinational oil and gas company that is the main subject of the video script. The company's history of safety violations and environmental incidents, such as the Texas City explosion and the Alaska pipeline rupture, are discussed, highlighting the recurring theme of corporate safety and ethical practices.

💡CEO

The term CEO stands for Chief Executive Officer, the highest-ranking officer in a company responsible for making major corporate decisions. The script involves questioning the CEO's leadership and accountability in light of BP's safety and environmental record.

💡OSHA

OSHA stands for the Occupational Safety and Health Administration, a U.S. government agency that enforces safety standards. The script refers to OSHA finding over 700 violations at BP's Texas City refinery and imposing a record fine, underscoring the severity of safety issues at the company.

💡James Baker

James Baker is mentioned as the former Secretary of State who actively participated in the U.S. Chemical Safety Board's investigation into the Texas City refinery. His involvement adds credibility to the report's findings, which are critical of BP's safety practices.

💡Deepwater Horizon

Deepwater Horizon refers to the BP oil rig that exploded in 2010, causing a massive oil spill in the Gulf of Mexico. The script discusses the rig's safety decisions, suggesting a pattern of prioritizing cost over safety, which is a key point of contention in the video.

💡Casing Design

Casing design pertains to the structural components used in drilling to provide support and prevent uncontrolled flow of fluids. The script mentions BP opting for a cheaper and quicker casing design over a safer one, illustrating a critical decision point in safety versus cost considerations.

💡Casing Centralizers

Casing centralizers are devices used in drilling to ensure the casing is centered in the wellbore. The script indicates that fewer centralizers were used in the Deepwater Horizon, which may have compromised safety, tying back to the overarching theme of cost versus safety decisions.

💡Drilling Mud

Drilling mud is a fluid used in drilling operations to lubricate, cool, and clean the drill bit, and to remove cuttings from the hole. The script notes that BP chose not to circulate drilling mud in favor of a lighter saltwater base, which raises questions about the company's safety protocols.

💡MMS

MMS stands for Minerals Management Service, a U.S. government agency that oversees offshore drilling. The script mentions that the procedure chosen by BP was approved by the MMS, suggesting a regulatory context within which BP's decisions were made.

💡Systemic Change

Systemic change refers to fundamental and widespread changes made to an organization's structure or practices. The script discusses BP's efforts to implement systemic changes in safety management and culture following the Baker report, indicating a response to past safety failures.

Highlights

2005 Texas City BP operation explosion resulted in the loss of 15 workers' lives.

2006 BP oil pipeline in Alaska ruptured, spilling 200,000 gallons of crude oil.

BP settled criminal charges in 2007 and agreed to pay $370 million in fines.

OSHA found over 700 violations at BP's Texas City refinery in one year, resulting in a record $87.4 million fine.

BP refinery in Toledo, Ohio fined $3 million for willful safety violations in 2010.

U.S. Chemical Safety Board investigation into Texas City refinery was headed with active participation of former Secretary of State James Baker.

Baker report found BP management allowed altering of procedures without risk assessment at Texas City refinery.

Baker panel examined all BP's US refineries and found toleration of deviations from safe operating practices.

CEO Tony Hayward implemented systematic change in safety management and culture of BP based on Baker report findings.

Deepwater Horizon chose cheaper, quicker casing design over safer one, raising concerns about cost over safety.

Deepwater Horizon decision to use fewer casing centralizers was a technical judgment, not always more is better.

Deepwater Horizon procedure to displace mud with lighter saltwater base for cementing was approved by MMS.

CEO Tony Hayward unable to make judgment on right choices made in Deepwater Horizon incident.

Baker report indicated BP made systematic choices prioritizing cost over safety, leading to loss of life and pollution.

CEO Tony Hayward focused on response, leak elimination, oil containment, beach defense, and spill cleanup.

Congressman questions CEO's confidence to continue as CEO after incurring $370 million fines and losing shareholder confidence.

Transcripts

is it true that in 2005 the Texas City

operation owned by BP blew up resulting

in the loss of lives of 15 workers that

is true and is it true that in 2006 a BP

oil pipeline in Alaska ruptured and

spilled two hundred thousand gallons of

crude oil that is true and is it true

that in 2007 when you took over as CEO

of BP the corporation settled a series

of criminal not civil criminal charges

and agreed to pay 370 million dollars in

fines that is correct and is it also

true that in one year the Occupational

Safety and Health Administration OSHA

found more than 700 violations at bp's

Texas City refinery and fined BP what

was then a record fine of eighty-seven

point four million dollars is that true

that's correct it is it true that

earlier this year a BP refinery in

Toledo Ohio was fined three million

dollars for willful and I emphasized the

term and the finding willful safety

violations including the use of valve

similar to those that contributed to the

Texas City Blast

that is correct

it is it true as well that the u.s.

Chemical Safety Board which did

investigation into the Texas City

refinery was headed with the active

participation of former Secretary of

State James Baker you're familiar with

that report I'm very familiar with that

report and in that report would you I

take it we regard as credible I believe

it's very credible and it's been the

basis on which we move forward in 2007

in that report and I quote found that BP

management allowed operators and

supervisors to alter to edit

to add and to remove procedural steps at

the Texas City refinery without

assessing risk and the Baker panel

examined all of BP's US refineries and

found a toleration of CBS Pasillas

deviations from safe operating practices

is that an accurate statement of the

findings of mr. Baker's report it is an

accurate findings and based on the

findings of that report and they're the

instances of 2005 and 2006 in Anarchy

implemented a systematic change in how

we manage safety and a systemic change

in the culture of BP I mean it's

something we have done consistently over

the last three years well did that

systemic change that you say you

implemented as a result of the Baker

report account for the reason that a

Deepwater Horizon when faced with the

choice of a cheaper and quicker casing

design or a safer design BP chose the

cheaper in quicker casing design did you

do that on the basis of the

recommendations of the Baker report as

I've said we need to wait for the

results of the investigation to conclude

if there is any evidence whatsoever the

people put costs ahead of safety in this

incident

what their reason was but I'm gonna ask

you in fact it's not in dispute that the

choice was made to use a cheaper and

quicker casing designed rather than a

more expensive design and I will ask you

again there were fewer casing

centralizers than some folks were

recommending is that a leave out

motivation but there was a choice of

more casing centralizers or fewer casing

centralizers more cost more fewer cost

less which choice did BP make of

Deepwater Horizon the decision taken by

the engineering team at the time which

was a technical judgment was to use

fewer centralizers rather than more it

is not always true that more is better

and BP chose the Deepwater Horizon not

to circulate drilling mud that would

have cleaned out the

well it chose a lighter saltwater base

for the cementing procedure is that

correct the procedure to displace the

mud was a procedure that is not uncommon

in the industry it was a procedure that

was approved by the MMS prior to

implementing it are you saying you made

the right choice in this case I'm not

able to make a judgment as to whether

the right choices were made well you're

the CEO but I'm not with respect

congressman a drilling engineer or a

technically qualified engineer in these

matters but you're in charge of them the

that doesn't mean to say I'm an expert

well I mean you know one of the

frustrations that I think folks have is

who is in charge and there was a baker

report that said that there was a

systematic choice being made

consistently by BP that led to the loss

of life that led to pollution that could

be attributed to a decision based on

saving money increasing profits at the

expense of safety and as it turns out

unfortunately human lives you know I'm

going to get back to what I asked you

earlier there is a I think all of us

live in a world where we'd prefer to

have fewer regulations rather than more

we'd like to rely on trust in faith and

our word rather than regulations and

checking over your shoulder and all

those things that I think both sides

find annoying but I'm going to ask you

the question does a CEO who has presided

over a company that's incurred 370

million dollars in fines whose company

was subject to this report by mr. Baker

indicating a choice for first safety the

choice at the expense of safety does

that person who's presiding over over

almost a hundred billion dollars in loss

of shareholder value in the suspension

of a ten billion dollar annual dividend

who's lost the confidence of

shareholders and regulators and most

importantly the families instead

since of the golf does that person enjoy

the confidence necessary to continue

acting a CEO or is it time for that CEO

to resign I'm focused on the response

I'm focused on trying to eliminate the

leak trying to contain the oil on the

surface and defender beaches and to

clean up the spill and to restore the

lives of the people on the Gulf Coast

guilt what I intend to do

yeah yield back