Private Empire: ExxonMobil and American Power (81 page)

Complacency ran to the top of the American political system. While seeking the White House, Barack Obama excoriated John McCain for proposing to expand offshore drilling, because this would have “long-term consequences for our coastlines but no short-term benefits, since it would take at least ten years to get any oil. . . . When I’m president, I intend to keep in place the moratorium.” In office, he did not. An Interior Department review overlooked the evidence of weak fail-safe systems and implausible cleanup preparations, and, noting the lack of serious accidents to date, Interior secretary Ken Salazar recommended new leasing to the White House in early 2010. In a political trade-off made to advance climate change legislation pending in Congress, legislation that would never pass, Obama announced plans to consider drilling in previously closed areas of the south and mid-Atlantic Ocean and the eastern side of the Gulf of Mexico—if it were approved, this would amount to the largest geographical expansion of domestic offshore leasing in a generation. “I don’t agree with the notion that we shouldn’t do anything,” the president explained. “It turns out, by the way, that oil rigs today generally don’t cause spills. They are technologically very advanced.”
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I
n the sections of the Gulf open to drilling, Exxon was a laggard. Its annual reports and public affairs campaigns boasted about the cutting-edge technologies that made deep-water drilling so promising, but the truth was that ExxonMobil had for long missed many of the big opportunities in the Gulf. Humble Oil’s early exploratory offshore wells, drilled off Texas during the 1970s, were expensive busts. By 2010, Chevron had drilled many more deep-water wells worldwide, proportionate to its size, than ExxonMobil. At the time of the
Deepwater Horizon
accident, ExxonMobil had only a single drilling project under way in the region. The corporation’s major deep-water projects lay offshore in Equatorial Guinea, Angola, and Nigeria. This imbalance was not by design; ExxonMobil had simply missed out on the Gulf’s early deep-water boom.

As a condition for leasing tracks in the Gulf of Mexico, the Minerals Management Service required companies to prepare and file spill response plans that addressed a long list of questions laid out by the regulators. These plans included how boats would be deployed, how chemical dispersants might be managed, how injured wildlife would be cared for, and above all, how oil would be cleaned up. In its filings to the Department of the Interior, ExxonMobil reported that it had developed experience and systems that would allow it to respond forcefully to even a major blowout in the Gulf of Mexico, one that might threaten the economies of built-up coastal areas from Tampa to Galveston.

“ExxonMobil’s primary focus remains the prevention of incidents which might cause pollution” the corporation’s 2009 filing to the regulators declared, “but in recognition that complete elimination of risk is impossible, the Oil Spill Response Plan describes the resources and procedures that would be used to mitigate potential impact.”
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To write and file spill response plans, ExxonMobil turned to The Response Group. So did BP, Shell, Chevron, Conoco, and other Gulf drillers. The Response Group, a business dedicated to providing “effective emergency preparedness and response solutions,” was a small planning and regulatory paperwork consultancy located in a tree-shaded two-building office park in Cypress, Texas, to the northwest of Houston. The firm specialized in helping oil, chemical, and other industrial firms develop, write, and file the disaster response plans required by state and federal regulators. The result was that all of the major American companies operating in the Gulf of Mexico filed essentially the same five-hundred-page boilerplate plan describing their emergency preparedness, even though each of the companies drilled as lead operator in different conditions and had distinct corporate capabilities. Each plan filed with the M.M.S. promised blithely that the driller could handle a spill even larger than the one that began on April 20, 2010, with the blowout of the
Deepwater Horizon
. Each plan declared that the driller would rely on response equipment that, as listed, was transparently inadequate to fulfill the plan’s claims.
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After the
Exxon Valdez
wreck, Lee Raymond reflected, “The lesson learned here was to try and make sure that there were procedures both in the company and in the respective governments that they knew and we knew that if an incident were to happen, exactly what to do and how to do it.” The lesson had not been learned; living up to Raymond’s exhortation would have involved more extensive investments in boats, planes, and predeployed equipment than either the oil companies or the government was prepared to make. The plans on file with Interior did contain credible organizational charts, analysis of oil spill response procedures, and emergency planning manuals. Few of these were linked to real-world capabilities, however. The plans also contained howlers—ExxonMobil’s plan, and several others evidently prepared from the same Response Group text, referred to preparations that had been taken to protect walruses, although walruses have not swum in the Gulf of Mexico for about three million years. The same plans listed as a marine wildlife expert a Florida Atlantic University professor, Peter Lutz, who had been dead for several years. (Tillerson later acknowledged that this was an “embarrassment,” but he added, by way of justification, “The fact that Dr. Lutz died in 2005 does not mean his work and the importance of his work died with him.”) The Department of the Interior accepted the filings as adequate.
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The spill response plans by BP and ExxonMobil on file at the time of the
Deepwater Horizon
blowout were almost identical, except for one feature. ExxonMobil’s plan contained a forty-page appendix K, entitled “Media.” The media management appendix was more than four times longer than the plan for oil removal, and eight times longer than the plan for “resource protection.”
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The appendix provided a snapshot of ExxonMobil’s uniform systems of public information management. It instructed ExxonMobil public affairs officers that information requested by a reporter during an oil spill emergency should be sorted into four categories. The document provided examples of types of information in each category. With Category A information, for example, it was permissible to say, at any time, on any occasion, “ExxonMobil said today no details were yet available.” In Category D, the most sensitive, the example listed in the Interior response plan was “Global Warming.” The document instructed, “All response statements and media releases from Category D are to be issued from” headquarters. If a reporter asked a question on this subject, the correct response was, “We will have someone from our Corporate Headquarters contact you to discuss any impact on global warming.”

The appendix also provided employees and contractors with thirteen draft press releases that might be used. These included a “holding statement,” a statement for “facility fire/explosion,” a “product spill [reported],” a “product spill [actual],” an “employee fatality,” and a “public fatality/serious injury.” In the latter case, the canned statement read, “We are greatly saddened by this tragic event and express our deepest sympathy to the families of those affected. We are working with [APPROPRIATE AUTHORITIES] at the site to investigate the cause of the incident.”

If criminal charges were even a remote possibility, the correct statement would be, preemptively, “We believe that there are no grounds for such charges. This was clearly an accident and we are working to respond to the immediate needs of the incident.”
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F
lying over Prince William Sound twenty-three years earlier, as the
Valdez
’s oil spread into dark shapes, BP’s Lord Browne had reflected about how the oil industry would now be “measured by its weakest member, the one with the worst reputation,” that is, Exxon. After long years of resentment and competition between the two companies, the tables had turned.

Browne was no longer around to face criticism. He had resigned as BP’s chief executive on May 1, 2007, after admitting that he had made false statements in a British court document about the origins of his relationship with a Canadian man, Jeff Chevalier, with whom he had been romantically involved. The pair had been dining and social companions, court records showed, of Prime Minister Tony Blair; Peter Mandelson, Blair’s controversial adviser; and other former luminaries of New Labor in Britain. Lord Browne’s resignation from BP had seemed, in 2007, only a distasteful coda to the end of credulity about the Blair era. By 2011, it was plain that BP’s corporate culture, more focused on hubristic global strategy than on day-to-day execution, had helped to set conditions for the
Deepwater Horizon
accident.

When Browne took charge of BP in 1995, he inherited a bloated, government-influenced corporation in deep trouble. Collapsing oil prices threatened BP’s viability. Browne had responded much as Lee Raymond and Lawrence Rawl had done when confronting oil price declines in the 1980s, during the years leading up to the
Valdez:
He slashed costs and reorganized departments aggressively. After timely acquisitions of Amoco and Atlantic Richfield, he cut the corporation’s combined costs by one fifth. “For us, it was clear that it [scale through merger] could permanently change the cost structure of the company. . . . It opens up opportunities to do new things because they’re cheaper.”
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His financial engineering turned the corporation’s profitability around and vaulted BP to the top of the global oil tables, positioning the company to compete anywhere. Browne also oversaw a successful push into the Gulf of Mexico. In 1999, with Exxon as a minority partner, BP discovered a billion-barrel offshore Gulf field called Thunder Horse, which would pump, after costly delays, 250,000 barrels of oil a day by 2009, or almost 5 percent of all American production. BP became the largest holder of deep-water leases in the Gulf and had exploration wins in American waters where ExxonMobil had struggled. At a prospect called Tiber in the Gulf, BP found a field it estimated to contain about 5 billion barrels of oil.
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Cost cutting and management redesign undermined BP’s safety culture, however. “We have never seen a site where the notion ‘I could die today’ was so real,” Telos, a consulting firm that inspected BP’s Texas City, Texas, refinery, reported in 2005.
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Two months later, fifteen workers perished in an explosion there. Browne vowed reform, but neither he nor his successor, Tony Hayward, who styled himself as a work boots–and-coveralls antidote to Browne’s slick globalism, actually delivered. The year after the Texas City disaster, a BP pipeline broke and dumped 200,000 gallons of oil in Alaska. Inspectors fined a BP refinery in Ohio $3 million because it had persisted with dangerous practices that had contributed to the Texas City explosion.
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The Center for Public Integrity found that between 2007 and 2010, BP refineries in Texas and Ohio were responsible for 97 percent of the “willful, egregious” safety violations documented by the federal Occupational Safety and Health Administration, the American regulator in charge of workplace safety. Many citations involved BP’s failure to live up to previous settlements and commitments. The corporation racked up 760 violations in the willful category; during the same period, ExxonMobil had 1.
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On the morning after the
Deepwater Horizon
caught fire, if a pollster had telephoned executives or engineers in the American oil industry, described the circumstances of the blowout, and asked which major oil corporation was most likely to have been the platform’s operator, an overwhelming majority probably would have blurted out, “BP.” The corporation had partnered over the years with all of its major competitors and in these projects had earned a reputation for poor operations management in project after project.

BP paid $34 million in March 2008 to lease Mississippi Canyon Block 252, about nine square miles, which it renamed Macondo. Houston project managers dispatched the
Deepwater Horizon
to drill a single well, confirm the presence of oil, and if the prospect looked promising, cap the well and return later to begin production. In such deep water, high pressure at the seabed and temperatures at the bottom of the well that can reach 240 degrees Fahrenheit require extraordinary vigilance. Macondo was troublesome from the start. A drill bit stuck in rock. By mid-April, the project was running six weeks behind deadline and more than $58 million over budget. The pressure to finish the well, cap it, and move on intensified.
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The medley of errors that led to the April 20 blowout “can be traced back to a single overarching failure—a failure of management,” the national commission concluded. That management failure encompassed BP and its two largest contractors on the project, Halliburton and Transocean. Supervisors at each company made errors that if avoided might have prevented the blowout. During the final critical hours, Transocean’s team failed to monitor the well properly. Halliburton provided cement to seal the well that tests later showed was probably unstable—a problem that Halliburton knew about from its own internal testing, but failed to report. BP’s project managers, who had ultimate responsibility, made a series of decisions apparently aimed at reducing costs that made failure more likely. Government regulators also “lacked the authority, the necessary resources, and the technical expertise” to prevent these transgressions, the commission found.
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