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( explosion )
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( inaudible radio chatter )
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>> Safety remains our
number one priority.
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>> BP can talk about safety all
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they want, but they're not going
to become a safer company.
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>> They base everything on risk.
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"How many lives can we afford to
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lose before we need
to deal with this?"
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>> 9-1-1.
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>> Yes, this plant just blew up!
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>> From Texas and Alaska to the
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Gulf of Mexico... >>
BP apologized again...
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>> ... Apology after apology.
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>> They pledged repeatedly to
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run a safer operation, yet
they continued to cut costs.
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>> We have a facility here that
could produce a cloud of gas
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that would make this place
look like Hiroshima.
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>> What went wrong at BP?
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>> The culture of BP
management has to change.
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They refuse to change.
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>> Tonight on Frontline,
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correspondent Martin Smith
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joins forces with ProPublica to
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investigate... "The Spill."
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>> The oil rig Deepwater
Horizon exploded.
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>> There was growing desperation
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along the US Gulf Coast today...
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>> NARRATOR: It's been called
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the worst environmental
disaster in US history...
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>> 42,000 gallons of oil a day...
>> 210,000 gallons are
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leaking... >> 2.1 million
gallons a day...
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>> NARRATOR: ... A geyser of
oil that caught the government
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off-guard... >> No
more oil spills!
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Arrest BP!
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>> NARRATOR: ...and threw a
spotlight on a company that
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Americans knew little about.
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>> In Washington today,
protesters called for the US
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government to get
hostile with BP.
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>> Mr. Hayward!
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>> NARRATOR: When two months
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after the blowout, BP's CEO Tony
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Hayward, came to Capitol Hill...
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>> The testimony you are about
to give to be the truth, the
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whole truth... >> NARRATOR: .
..he was there to
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explain what happened and why.
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>> Begin your opening statement,
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and let me again, on behalf...
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>> NARRATOR: From the
start, it didn't go well.
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>> Chairman Waxman, Chairman...
>> Tony Hayward, look at my
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hands.
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This is what it looks like for
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the Plaquemines down there, and
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I think you need to be
charged with a crime!
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You need to go to jail.
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As a matter of fact, I've
got some chains and I'll...
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You need to be charged
with a crime!
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>> Can you tell us under oath
that the decision to use six
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centralizers instead of....
>> NARRATOR: Amidst the
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technical questions, there
were deeper concerns...
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>> You're the CEO
of the company!
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>> With respect, sir, we drill
hundreds of wells a year all
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around the world.
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>> Yeah, I know.
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That's what's scaring
me right now.
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>> NARRATOR: ...about whether
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this was a company
that could be trusted.
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>> Mr. Hayward, when you became
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CEO three years ago, you said
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that safety was going to
be your top priority...
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>> NARRATOR: The interrogation
produced few new answers.
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>> One of the reasons that
I am so distraught...
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>> I don't want to know
whether you're distraught.
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>> NARRATOR: It was
mostly political theater.
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>> We're going to have a hard
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time reaching conclusions
if you stonewall them.
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>> I'm not stonewalling.
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>> NARRATOR: It was also not the
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first time the company
had been in trouble.
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In London, the board had been in
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crisis mode for much
of the last years.
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They've encountered disasters
on all fronts-- at their
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refineries, in their oil fields.
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The blowout in the Gulf
is just the latest.
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>> This is a company that
has brought us the worst
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environmental disaster
in US history.
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That's not an accident.
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>> NARRATOR: Critics say
BP has a very bad record.
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It's a company that has grown
too fast and taken on too many
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risks.
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This is a story about ambition
and its consequences.
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To investigate BP's corporate
history, we started here in
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Texas City, the site of the
company's largest and one of its
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most troubled refineries.
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>> Hi, Don.
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My name is Abrahm Lustgarten.
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I'm a reporter with ProPublica.
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I'm calling you because I'm
working on an in-depth piece
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about the history of BP and
its management culture.
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>> NARRATOR: BP had an accident
here in 2005 where 15 people
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died in an explosion and fire.
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170 more were injured.
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Afterwards, there were charges
that BP's management valued
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profits more than safety.
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We came to the refinery
hoping to talk to managers.
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>> So this is all BP, right?
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>> Yeah.
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>> NARRATOR: BP declined.
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>> And the explosion would have
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happened, then, on the far side
of all this big equipment.
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>> Right.
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>> NARRATOR: The 1,200-acre
refinery was acquired by BP in
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1999 as part of a $61 billion
takeover of the American oil
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company Amoco.
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But built in 1934, the
refinery was in bad shape.
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Workers and contractors
were wary of the place.
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>> The refinery was not in
prime shape, put it that way.
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Rotted-out columns, things that
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were rusted, not protected
from corrosion, fire hazards
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everywhere.
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>> It was typical for them to
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experience a fire every
week, on average.
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A fire every week is a warning
sign that something is
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critically wrong
at the facility.
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It was the worst refinery
around this area, for sure.
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>> NARRATOR: When the refinery
was under Amoco's management,
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major upgrades had
been postponed.
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For example, in 1991, Amoco
considered replacing its
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antiquated blowdown drums, used
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to collect volatile liquids and
gases in an emergency, with
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safer modern flares.
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They decided against it.
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>> A flare is more efficient and
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safer than a blowdown stack.
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And there were several blowdown
stacks within... within the
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refinery that were
old technology.
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Long after a lot of other folks
said, "We're not using those
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anymore," BP still
was using them.
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>> NARRATOR: It was a
question of saving money.
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These emails from 2002 reveal
that BP had also considered
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updating the blowdown drums.
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"We need to decide if we want to
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invest $150,000 now to save
more money later on," wrote one
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employee.
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A senior manager responded,
capital expenditure is "very
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tight.
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Bank the $150,000
in savings now."
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>> And at that point, BP culture
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was "Show me the money," and
refining was not showing them
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the money.
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>> You can only
spend a penny once.
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"Should we do it fixing
up this refinery?"
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You're choosing among
priorities, and they did not
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give this deferred maintenance
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priority at Texas City refinery
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the attention, the priority,
it should have gotten.
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>> NARRATOR: The pressure to cut
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costs came from the
very top of BP.
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After the buyout of Amoco, Tony
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Hayward's predecessor, Lord John
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Browne, ordered a 25% cost
cut across the company.
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The message was relayed
down through the ranks.
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>> I don't know if they realized
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just how devastating the cost
cutting ethos was when it
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actually played
out in the field.
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When there is a whisper at the
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top of the company, it becomes
like a shout at the bottom.
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>> You were starting to hear a
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little bit more about, "Make due
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with what you got and try
to make it more efficient."
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So you were taking older equipment
and pushed it to a hilt.
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If something didn't blow
up, it was a good day.
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>> NARRATOR: In March 2004,
there was a major fire.
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Fortunately, it was in an
unmanned part of the refinery.
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Nobody was hurt, but
problems continued.
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Don Parus, a safety conscious
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engineer, took over the refinery
a few months later and was
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trying to turn things around.
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>> Don was the refinery manager,
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or as locals liked to say, he
was the second mayor of the
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town.
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The workforce tended to trust in
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him because, I think, for the
first time, they were having a
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refinery manager who was harping
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a little bit more about safety.
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>> NARRATOR: One of the first
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things Parus did was
commission an employee survey.
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In it, workers talked about
their "exceptional degree of
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fear."
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They worried about dying.
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>> There was a fatality once,
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approximately every
18 months or so.
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The feeling of the workforce
was that there was an imminent
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catastrophic accident that could
happen in the near future.
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>> NARRATOR: Parus alerted his
boss in London, John Manzoni,
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BP's chief of refining, about
the severity of safety issues.
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>> Don Parus had held several
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meetings with John Manzoni,
the head of refining.
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In each, he expressed grave
concerns about the safety of
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working at the Texas
City refinery.
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>> NARRATOR: Parus even went to
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BP headquarters in London and
showed Manzoni a PowerPoint
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presentation.
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In it, a list of dead workers;
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details on two recent fatal
accidents; a tally of more than
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20 fatalities in 30 years.
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>> The basic response Don Parus
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got was, "Well, that's your job
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to make sure this stuff
doesn't happen."
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And he was pleading for, "Well,
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let me have the materials
to do my job that way."
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London saw it a different way.
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And that's part of that
culture that BP didn't get.
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>> We know we have to beat
the others to win you over.
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Can we do it?
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>> You bet your BP we can!
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>> NARRATOR: 20 years ago, BP
was nothing like the powerful
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multinational corporation
it is today.
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The years of the once great
Anglo-Persian oil company were
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long past.
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A revolution in Iran had
crippled the company.
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>> Among its peers, it was a
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company to be pitied
rather than emulated.
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It had had to cut its dividends,
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its share price was at a low.
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BP was in a very dark place
in the late '80s, early '90s.
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>> NARRATOR: It was then that a
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new group of managers came along
and attempted to rescue the
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company from mediocrity.
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>> It was a good year for BP
in very challenging times.
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>> They had not found a way to
replace the Iranian reserves.
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They were not going to do so
remaining hierarchical and
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stuffy.
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They had to get out there
and they had to compete.
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>> NARRATOR: A young engineer,
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John Browne, was one
of the new managers.
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From early on, he had a
reputation as an aggressive cost
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cutter.
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>> Jobs can be made wider,
without necessarily moving
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people.
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>> NARRATOR: He was a math whiz,
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a numbers man, and
the board liked him.
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In 1995, he was made CEO.
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But he was a different
kind of oilman.
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>> In many ways, yes, he wasn't
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a Texas oilman, but he was also
not even a European oilman.
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He had very refined tastes, he
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enjoyed, obviously, fine wine,
and he enjoyed his cigars.
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He was a very big
opera-goer and opera buff.
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00:12:23,642 --> 00:12:26,144
>> NARRATOR: He never married
and lived with his mother, who
250
00:12:26,278 --> 00:12:30,782
often accompanied him
to BP functions.
251
00:12:30,916 --> 00:12:40,191
>> He doesn't have that larger
than life J.R. Ewing kind of
252
00:12:40,326 --> 00:12:42,260
thing going on at all, but he
was definitely willing to take
253
00:12:42,394 --> 00:12:43,394
big risks and make
big, big bets.
254
00:12:43,529 --> 00:12:45,663
>> NARRATOR: Browne surrounded
himself with a small group of
255
00:12:45,798 --> 00:12:48,399
executives, including Bob
Dudley, Tony Hayward, and John
256
00:12:48,534 --> 00:12:52,303
Manzoni, known inside the
company as his "turtles."
257
00:12:52,438 --> 00:12:56,407
>> As in Ninja Turtles, rising
stars in the BP corporate
258
00:12:56,542 --> 00:12:57,842
structure who he thought, one
day, had the ability or the
259
00:12:57,977 --> 00:13:00,745
potential to lead the company.
260
00:13:00,880 --> 00:13:04,516
>> NARRATOR: Until then,
Browne set the agenda.
261
00:13:04,650 --> 00:13:06,684
It was Browne who took the
company on a gigantic buying
262
00:13:06,819 --> 00:13:07,886
spree.
263
00:13:08,020 --> 00:13:10,455
>> John wanted to
be the biggest.
264
00:13:10,589 --> 00:13:13,024
He was competing with Mobil,
competing with Exxon, competing
265
00:13:13,159 --> 00:13:15,927
with Chevron.
266
00:13:16,061 --> 00:13:17,662
And he was bound and determined
267
00:13:17,797 --> 00:13:20,665
to use mergers and acquisitions
268
00:13:20,800 --> 00:13:23,301
as the lever to propel
BP into the big leagues.
269
00:13:23,435 --> 00:13:25,904
>> By merging our assets and
our prospects with those of
270
00:13:26,038 --> 00:13:29,707
Amoco... >> NARRATOR: Browne
began by purchasing Amoco.
271
00:13:29,842 --> 00:13:31,709
>> If you put the two together,
272
00:13:31,844 --> 00:13:34,712
you have a world-class set
of complementary assets.
273
00:13:34,847 --> 00:13:38,249
>> NARRATOR: Then, quickly,
Browne would buy six other
274
00:13:38,384 --> 00:13:41,219
companies, including Arco with
its large Alaskan holdings.
275
00:13:41,353 --> 00:13:43,321
>> Putting the two
companies together...
276
00:13:43,455 --> 00:13:45,523
>> NARRATOR: In just five years,
he quadrupled the company's
277
00:13:45,658 --> 00:13:47,225
value.
278
00:13:47,359 --> 00:13:49,127
>> We'll be the largest producer
279
00:13:49,261 --> 00:13:50,795
of oil in the non-OPEC world.
280
00:13:50,930 --> 00:13:52,964
>> It's a remarkable feat.
281
00:13:53,098 --> 00:13:55,366
Almost overnight, BP
became a world player.
282
00:13:55,501 --> 00:13:55,934
>> Time to go beyond.
283
00:13:56,068 --> 00:13:56,301
>> Beyond.
284
00:13:56,435 --> 00:13:57,235
>> Beyond.
285
00:13:57,369 --> 00:13:59,137
>> They went from a struggling
286
00:13:59,271 --> 00:14:00,705
also-ran into a company that was
287
00:14:00,840 --> 00:14:01,439
fast on the heels of Exxon, the
288
00:14:01,574 --> 00:14:04,542
largest company in the world.
289
00:14:04,677 --> 00:14:06,811
>> The people of BP believe it's
290
00:14:06,946 --> 00:14:07,912
time to go beyond what the world
291
00:14:08,047 --> 00:14:11,216
expects from an energy company.
292
00:14:11,350 --> 00:14:14,953
>> NARRATOR: But by the end of
his buying spree, Browne was
293
00:14:15,087 --> 00:14:17,722
under pressure both to cut costs
294
00:14:17,857 --> 00:14:19,090
and to reinvent his company.
295
00:14:19,225 --> 00:14:22,260
>> One of the problems with
building a company up in bits...
296
00:14:22,394 --> 00:14:23,661
>> NARRATOR: Browne spoke of the
297
00:14:23,796 --> 00:14:26,664
challenge at this
management retreat in 2003.
298
00:14:26,799 --> 00:14:30,468
>> Here's the practical, real
299
00:14:30,603 --> 00:14:31,202
danger-- a complex organization
300
00:14:31,337 --> 00:14:34,372
cannot be specified in rules.
301
00:14:34,506 --> 00:14:37,542
>> Growth creates
challenges to management.
302
00:14:37,676 --> 00:14:39,177
There's no question about that.
303
00:14:39,311 --> 00:14:41,112
I've worked with small
companies, I've worked with big
304
00:14:41,247 --> 00:14:41,613
companies.
305
00:14:41,747 --> 00:14:43,748
Big companies are
harder to manage.
306
00:14:43,883 --> 00:14:48,086
>> So Enron melted down,
Worldcom had an accounting
307
00:14:48,220 --> 00:14:49,754
scandal, Adelphia, you know, the
308
00:14:49,889 --> 00:14:51,856
CEO has gone to jail, I think.
309
00:14:51,991 --> 00:14:53,725
>> BP, in this case, just grows
310
00:14:53,859 --> 00:14:54,926
beyond its management ability to
311
00:14:55,060 --> 00:14:56,494
watch everything they need to
watch when they need to watch
312
00:14:56,629 --> 00:14:57,595
it.
313
00:14:57,730 --> 00:15:01,199
>> Delegation, of course,
comes with limits.
314
00:15:01,333 --> 00:15:03,968
>> Browne has shown himself as
315
00:15:04,103 --> 00:15:07,906
having an ability to get deals
done, understanding how to
316
00:15:08,040 --> 00:15:09,641
negotiate complex deals.
317
00:15:09,775 --> 00:15:12,644
>> It's about integration, too,
and I'll come back to that.
318
00:15:12,778 --> 00:15:16,214
>> But while they were
successful in expanding
319
00:15:16,348 --> 00:15:20,351
commercially, they were less
successful in instituting a
320
00:15:20,486 --> 00:15:22,887
sense of operational excellence
within the organization.
321
00:15:23,022 --> 00:15:27,525
>> You must be very clear as
a leader who it is you are
322
00:15:27,660 --> 00:15:28,793
delegating authority to.
323
00:15:28,928 --> 00:15:32,196
>> NARRATOR: In an interview
that year, Browne acknowledged
324
00:15:32,331 --> 00:15:34,966
that the real measure of
his new company lay ahead.
325
00:15:35,100 --> 00:15:40,038
>> And the real quality of a
company is, of course, the test
326
00:15:40,172 --> 00:15:44,342
on how well things are going
when things go well, but the
327
00:15:44,476 --> 00:15:46,210
real test is, how do we
respond when things go wrong?
328
00:15:53,018 --> 00:15:57,889
>> NARRATOR: Things went wrong
on March 23, 2005, as workers
329
00:15:58,023 --> 00:16:00,725
at the Texas City plant were
starting up the isomerization
330
00:16:00,859 --> 00:16:03,361
unit.
331
00:16:03,495 --> 00:16:07,465
The ISOM unit, used to boost
the octane level of gasoline,
332
00:16:07,599 --> 00:16:12,737
had been down for maintenance,
the so-called turnaround.
333
00:16:12,871 --> 00:16:15,239
>> The most dangerous time of a
334
00:16:15,374 --> 00:16:17,675
refinery unit is when it's being
335
00:16:17,810 --> 00:16:19,744
started up, and when it's being
336
00:16:19,878 --> 00:16:21,346
decommissioned and taking the
337
00:16:21,480 --> 00:16:24,782
product out of it and turning
it off, so to speak.
338
00:16:24,917 --> 00:16:27,752
>> NARRATOR: Dave Senko,
a supervisor with Jacobs
339
00:16:27,886 --> 00:16:32,824
Engineering, a BP contractor,
was off site at the time, but
340
00:16:32,958 --> 00:16:34,792
his team, unaware of any danger,
341
00:16:34,927 --> 00:16:38,863
had gathered inside a trailer
near the adjacent ISOM unit.
342
00:16:38,998 --> 00:16:43,201
>> We were not told that that
unit was in a turnaround mode.
343
00:16:43,335 --> 00:16:44,535
None of my people were aware.
344
00:16:44,670 --> 00:16:46,371
>> We were never told.
345
00:16:46,505 --> 00:16:48,539
We have a morning meeting before
we start the day, to talk
346
00:16:48,674 --> 00:16:50,375
about... >> NARRATOR:
Dave Leining of BP
347
00:16:50,509 --> 00:16:52,710
was meeting with Senko's team.
348
00:16:52,845 --> 00:16:55,480
He was also unaware
of the startup.
349
00:16:55,614 --> 00:17:00,651
>> Nobody said a word to us
about the ISOM starting up.
350
00:17:00,786 --> 00:17:03,087
>> NARRATOR: By midday, workers
351
00:17:03,222 --> 00:17:05,289
had unknowingly overfilled the
ISOM tower with flammable
352
00:17:05,424 --> 00:17:07,358
liquids.
353
00:17:07,493 --> 00:17:08,960
>> The tower steadily filling
354
00:17:09,094 --> 00:17:12,663
with liquid, more than 15
times the normal level.
355
00:17:12,798 --> 00:17:14,365
>> NARRATOR: A gauge that was
supposed to measure the amount
356
00:17:14,500 --> 00:17:17,702
of liquid in the tower failed.
357
00:17:17,836 --> 00:17:20,638
Some alarms that should
have sounded didn't.
358
00:17:20,773 --> 00:17:25,410
Other alarms were
simply ignored.
359
00:17:25,544 --> 00:17:27,011
In an emergency, excess gas and
360
00:17:27,146 --> 00:17:29,414
liquid can be rerouted to the
361
00:17:29,548 --> 00:17:31,549
blowdown drum, but
there was too much.
362
00:17:31,683 --> 00:17:36,054
>> As flammable hydrocarbons
overfilled the blowdown drum,
363
00:17:36,188 --> 00:17:37,755
operators nearby saw a geyser of
364
00:17:37,890 --> 00:17:40,058
liquid and vapor erupt
from the top of the stack.
365
00:17:40,192 --> 00:17:42,927
>> NARRATOR: The antiquated
blowdown drum had no flare to
366
00:17:43,062 --> 00:17:45,596
handle the emergency.
367
00:17:45,731 --> 00:17:48,900
>> The actual flammable liquid
is flying out the top of this
368
00:17:49,034 --> 00:17:51,002
thing like Old Faithful.
369
00:17:51,136 --> 00:17:53,471
>> The trailer started
shaking real violent.
370
00:17:53,605 --> 00:17:55,706
And as I got up and turned
sideways, that's when the
371
00:17:55,841 --> 00:17:57,375
explosion happened.
372
00:17:57,509 --> 00:18:02,447
And then, just the force of the
blast knocked me down to the
373
00:18:02,581 --> 00:18:03,581
ground, and then you could see a
374
00:18:03,715 --> 00:18:06,317
big ball of fire just roll
over our heads, right over the
375
00:18:06,452 --> 00:18:07,785
trailer.
376
00:18:07,920 --> 00:18:08,986
It just got real quiet.
377
00:18:09,121 --> 00:18:11,422
It got real dark.
378
00:18:11,557 --> 00:18:13,458
I figured, you know, "That's...
that's the end."
379
00:18:13,592 --> 00:18:14,358
>> 9-1-1.
380
00:18:14,493 --> 00:18:15,660
>> A plant just blew up.
381
00:18:15,794 --> 00:18:17,195
Oh, my God.
382
00:18:17,329 --> 00:18:18,296
>> Texas City 9-1-1,
state your emergency.
383
00:18:18,430 --> 00:18:19,664
>> Yes.
384
00:18:19,798 --> 00:18:20,998
This plant just blew up.
385
00:18:21,133 --> 00:18:24,402
>> It's the ISOM, the ISOM!
386
00:18:24,536 --> 00:18:26,170
>> NARRATOR: It was the biggest
387
00:18:26,305 --> 00:18:28,172
industrial accident in decades.
388
00:18:28,307 --> 00:18:30,541
>> Get me at least a half
dozen available firemen.
389
00:18:30,676 --> 00:18:32,043
We got people trapped in these
390
00:18:32,177 --> 00:18:36,714
trailers, trying to get to them.
391
00:18:36,849 --> 00:18:40,418
>> It's been a sad day for
the BP Texas City Titans.
392
00:18:40,552 --> 00:18:42,987
It's a really sad day for
me, personally, as well.
393
00:18:43,122 --> 00:18:45,790
At this time, regretfully and
394
00:18:45,924 --> 00:18:47,892
with shock, I have to report to
395
00:18:48,026 --> 00:18:50,161
you that there have
been some fatalities.
396
00:18:50,295 --> 00:18:53,397
>> Mr. Browne has spent the
morning visiting our site.
397
00:18:53,532 --> 00:18:56,167
He's now agreed to spend
a few minutes with you.
398
00:18:56,301 --> 00:18:59,770
This is John Browne, our
group chief executive.
399
00:18:59,905 --> 00:19:01,105
>> Thank you.
400
00:19:01,240 --> 00:19:02,540
Ladies and gentlemen, good
morning and thank you for
401
00:19:02,674 --> 00:19:05,109
joining us.
402
00:19:05,244 --> 00:19:10,081
Yesterday was a dark
day in BP's history.
403
00:19:10,215 --> 00:19:11,949
All of us at BP are very deeply
404
00:19:12,084 --> 00:19:14,952
saddened by the loss of life and
405
00:19:15,087 --> 00:19:17,188
injuries suffered
by so many people.
406
00:19:17,322 --> 00:19:18,723
>> NARRATOR: Lawsuits ensued.
407
00:19:18,857 --> 00:19:21,459
>> My name is John Manzoni.
408
00:19:21,593 --> 00:19:22,994
I live in London and
I'm with BP and my...
409
00:19:23,128 --> 00:19:26,564
>> NARRATOR: In a taped
deposition, John Manzoni, head
410
00:19:26,698 --> 00:19:29,634
of refining, was asked about
his visits to Texas City.
411
00:19:29,768 --> 00:19:31,636
>> When was the first time you
learned there were serious
412
00:19:31,770 --> 00:19:33,838
safety concerns
at BP Texas City?
413
00:19:33,972 --> 00:19:36,541
>> NARRATOR: Manzoni claimed
he'd never been made aware of
414
00:19:36,675 --> 00:19:38,376
serious safety
issues at the plant.
415
00:19:38,510 --> 00:19:40,778
>> The 23rd of March, 2005.
416
00:19:40,913 --> 00:19:44,382
>> Before that, you had no
idea that there was a risk of
417
00:19:44,516 --> 00:19:50,421
catastrophic injury?
418
00:19:50,556 --> 00:19:53,257
>> No.
419
00:19:53,392 --> 00:19:55,726
I think had I been aware that we
420
00:19:55,861 --> 00:19:57,862
could have had a catastrophic
failure, we would have taken
421
00:19:57,996 --> 00:19:59,864
action earlier.
422
00:19:59,998 --> 00:20:01,499
>> When Mr. Manzoni was asked
423
00:20:01,633 --> 00:20:03,401
directly, "Were you aware of all
424
00:20:03,535 --> 00:20:05,970
of the multiple safety concerns
425
00:20:06,104 --> 00:20:08,439
being raised?" his
response was "No,"
426
00:20:08,574 --> 00:20:10,908
And I just... I couldn't
believe that was true.
427
00:20:11,043 --> 00:20:12,176
>> NARRATOR: Manzoni also denied
428
00:20:12,311 --> 00:20:14,912
knowing about the
cost-cutting in Texas City.
429
00:20:15,047 --> 00:20:20,351
>> After the merger, there was
apparently a decision made to
430
00:20:20,485 --> 00:20:23,387
advise the various business
unit leaders at the various
431
00:20:23,522 --> 00:20:25,223
refineries to cut their fixed
432
00:20:25,357 --> 00:20:26,924
operational budgets another 25%.
433
00:20:27,059 --> 00:20:28,993
Do you know anything about that?
434
00:20:29,127 --> 00:20:32,697
>> No, not specifically.
435
00:20:32,831 --> 00:20:34,865
I don't know when that was.
436
00:20:35,000 --> 00:20:36,834
>> NARRATOR: Eventually, BP paid
437
00:20:36,969 --> 00:20:39,237
victims and their families over
438
00:20:39,371 --> 00:20:41,005
a billion dollars in exchange
for their agreeing never
439
00:20:41,139 --> 00:20:45,576
publicly to criticize
the company.
440
00:20:45,711 --> 00:20:47,878
Everyone signed except for this
441
00:20:48,013 --> 00:20:51,949
woman, Eva Rowe, who lost
both her mother and father.
442
00:20:52,084 --> 00:20:55,720
>> BP wanted to meet and
talk about a settlement.
443
00:20:55,854 --> 00:20:58,189
In my mind, I was thinking, "You
444
00:20:58,323 --> 00:21:00,224
people are crazy that I'm just
445
00:21:00,359 --> 00:21:00,992
going to sign this and go away,
446
00:21:01,126 --> 00:21:03,594
and you guys are going to get
away with what you've done?"
447
00:21:03,729 --> 00:21:05,763
>> What did you say to them?
448
00:21:05,897 --> 00:21:09,133
>> I specifically told
them that that sucks.
449
00:21:09,268 --> 00:21:11,102
This was not an accident.
450
00:21:11,236 --> 00:21:14,438
This was profits over people.
451
00:21:14,573 --> 00:21:15,973
I mean, they were, like, small
452
00:21:16,108 --> 00:21:17,174
repairs that would've cost their
453
00:21:17,309 --> 00:21:20,211
company like $100,000 for,
like, a flare system.
454
00:21:20,345 --> 00:21:22,747
That would've prevented the
explosion also, and they didn't
455
00:21:22,881 --> 00:21:24,782
do that.
456
00:21:24,916 --> 00:21:27,251
>> NARRATOR: Rowe says that BP
did not get in touch with her
457
00:21:27,386 --> 00:21:29,887
until a month after the blast,
458
00:21:30,022 --> 00:21:32,523
when they sent her
$25,000 and this letter.
459
00:21:32,658 --> 00:21:34,892
>> I got a form letter.
460
00:21:35,027 --> 00:21:35,826
"Dear Ms. Rowe, we're sorry for
461
00:21:35,961 --> 00:21:37,995
the loss of your
father, James Rowe."
462
00:21:38,130 --> 00:21:40,798
>> NARRATOR: But it was the
only letter she received.
463
00:21:40,932 --> 00:21:43,034
>> I never received one that
apologized for the loss of my
464
00:21:43,168 --> 00:21:44,402
mother.
465
00:21:44,536 --> 00:21:53,010
So, it was kind of upsetting.
466
00:21:53,145 --> 00:21:53,744
>> NARRATOR: A year and a half
467
00:21:53,879 --> 00:21:57,248
after the accident, BP finally
settled with Rowe for an
468
00:21:57,382 --> 00:21:59,517
undisclosed amount of money and
$32 million in donations to
469
00:21:59,651 --> 00:22:03,454
charities of her choice.
470
00:22:03,588 --> 00:22:06,390
She also insisted that BP be
forced to release seven million
471
00:22:06,525 --> 00:22:08,059
internal documents.
472
00:22:08,193 --> 00:22:16,133
>> That's all I wanted in the
first place, was for the world
473
00:22:16,268 --> 00:22:17,401
to able to have the information
474
00:22:17,536 --> 00:22:18,202
from BP on what happened there.
475
00:22:18,337 --> 00:22:20,371
>> NARRATOR: Those documents
contributed substantially to
476
00:22:20,505 --> 00:22:24,408
government investigations into
what happened at Texas City.
477
00:22:24,543 --> 00:22:28,012
Another investigation,
commissioned by BP, was led by
478
00:22:28,146 --> 00:22:31,349
former Secretary of
State James Baker.
479
00:22:31,483 --> 00:22:33,217
>> BP is going to approach
process safety....
480
00:22:33,352 --> 00:22:35,286
>> NARRATOR: The
reports concurred.
481
00:22:35,420 --> 00:22:38,689
>> BP has not adequately
established process safety as a
482
00:22:38,824 --> 00:22:39,990
core value.
483
00:22:40,125 --> 00:22:43,294
>> NARRATOR: At the end of
Baker's press conference, Browne
484
00:22:43,428 --> 00:22:45,996
apologized via
satellite from London.
485
00:22:46,131 --> 00:22:50,101
>> BP gets it, and
I get it, too.
486
00:22:50,235 --> 00:22:52,503
This has happened on my watch,
487
00:22:52,637 --> 00:22:54,372
and as chief executive, I have a
488
00:22:54,506 --> 00:22:57,007
responsibility to learn
from what has occurred.
489
00:22:57,142 --> 00:23:00,611
>> NARRATOR: $71 million in
federal fines were paid, but no
490
00:23:00,746 --> 00:23:04,482
BP official was ever
charged with a crime.
491
00:23:04,616 --> 00:23:07,651
>> What bothers me most is that
here we are, five plus years
492
00:23:07,786 --> 00:23:12,790
after that blast, and not a
single person has been blamed
493
00:23:12,924 --> 00:23:20,131
for the incident or the
conditions that caused it.
494
00:23:20,265 --> 00:23:22,433
>> NARRATOR: Today, the refinery
495
00:23:22,567 --> 00:23:26,837
continues to be one of BP's
most troubled and dangerous.
496
00:23:26,972 --> 00:23:30,941
Four people have died here
since the 2005 accident.
497
00:23:31,076 --> 00:23:39,150
And in June 2010, T.J. Aulds
of the Galveston "Daily News"
498
00:23:39,284 --> 00:23:41,919
reported that BP Texas City
released toxic gases over a
499
00:23:42,053 --> 00:23:43,287
40-day period this last spring.
500
00:23:43,422 --> 00:23:47,525
It resulted in more than half a
million pounds of pollution.
501
00:23:47,659 --> 00:23:49,293
BP reported the release
to regulators.
502
00:23:49,428 --> 00:23:55,032
The EPA is investigating.
503
00:23:55,167 --> 00:23:55,599
>> It's their history.
504
00:23:55,734 --> 00:23:59,537
Bad things have happened
everywhere BP operates.
505
00:23:59,671 --> 00:24:03,674
Everywhere they operate,
something bad happens.
506
00:24:03,809 --> 00:24:05,910
>> BP is in crisis mode after
507
00:24:06,044 --> 00:24:07,678
severe pipeline corrosion
forced the company...
508
00:24:07,813 --> 00:24:12,416
>> The conditions at the spill
site: nothing less than
509
00:24:12,551 --> 00:24:16,587
brutal.
510
00:24:16,721 --> 00:24:17,922
>> ...calls now for
investigative hearings into why
511
00:24:18,056 --> 00:24:18,656
the company had to shut down...
512
00:24:18,790 --> 00:24:21,559
>> NARRATOR: A year after the
explosion in Texas City, there
513
00:24:21,693 --> 00:24:22,293
were problems on another front:
514
00:24:22,427 --> 00:24:23,894
Alaska.
515
00:24:28,667 --> 00:24:31,402
This is BP's giant Prudhoe Bay
oil field on Alaska's North
516
00:24:31,536 --> 00:24:33,771
Slope.
517
00:24:33,905 --> 00:24:39,777
It represents 8% of America's
domestic oil production.
518
00:24:39,911 --> 00:24:43,614
But opened more than 30 years
ago, inadequate or deferred
519
00:24:43,748 --> 00:24:46,784
maintenance here, too,
has workers worried.
520
00:24:46,918 --> 00:24:49,186
>> The pipelines are rusted
where insulation has fallen
521
00:24:49,321 --> 00:24:50,087
off.
522
00:24:50,222 --> 00:24:54,391
>> NARRATOR: Managers won't
talk, but workers like Marc
523
00:24:54,526 --> 00:24:56,694
Kovac, protected by their union,
524
00:24:56,828 --> 00:24:58,596
explained how, back in the '60s,
525
00:24:58,730 --> 00:25:02,533
everyone thought the field
would last 20 years.
526
00:25:02,667 --> 00:25:04,802
They were wrong.
527
00:25:04,936 --> 00:25:09,306
>> All of the modules were
designed in 1966 and put in
528
00:25:09,441 --> 00:25:12,510
place in the '70s.
529
00:25:12,644 --> 00:25:14,411
And the expected lifespan of the
530
00:25:14,546 --> 00:25:18,115
field and that equipment was
designed to last till 1987, and
531
00:25:18,250 --> 00:25:21,085
then it was supposed
to be pulled out.
532
00:25:21,219 --> 00:25:25,055
After they started drilling,
they knew that the pay zone was
533
00:25:25,190 --> 00:25:27,525
a lot deeper, but we're
still using a lot of the
534
00:25:27,659 --> 00:25:31,328
infrastructure that was supposed
to be pulled out in '87.
535
00:25:31,463 --> 00:25:34,198
They're going to run everything
to failure, which means that
536
00:25:34,332 --> 00:25:35,599
everything here is going to be
537
00:25:35,734 --> 00:25:40,471
worn out completely by the
time they decide to leave.
538
00:25:40,605 --> 00:25:42,172
>> There is so much money here
539
00:25:42,307 --> 00:25:46,277
and still so much oil to be made
RíRw!
540
00:25:46,411 --> 00:25:50,247
that they're kind of in the
quandary of having all this
541
00:25:50,382 --> 00:25:53,918
aging infrastructure, but they
have to stay here to make the
542
00:25:54,052 --> 00:25:58,088
big money that they're
making off of here.
543
00:25:58,223 --> 00:26:00,291
>> NARRATOR: As in Texas City,
544
00:26:00,425 --> 00:26:05,095
the workers say BP has
focused on cost cutting.
545
00:26:05,230 --> 00:26:07,364
>> When I was doing reporting on
546
00:26:07,499 --> 00:26:10,968
Alaska, that's when I really
began to hear about this
547
00:26:11,102 --> 00:26:13,170
incredible focus on cost
cuts and that there was just
548
00:26:13,305 --> 00:26:16,774
tremendous pressure.
549
00:26:16,908 --> 00:26:19,376
It was just shocking to me that
a company would be flying so
550
00:26:19,511 --> 00:26:20,711
close to the edge on something,
551
00:26:20,845 --> 00:26:24,848
you know, where the
downside is so huge.
552
00:26:24,983 --> 00:26:27,084
>> NARRATOR: BP employs nearly
553
00:26:27,218 --> 00:26:28,886
300 contractors to inspect the
554
00:26:29,020 --> 00:26:31,589
pipes and wells, but
it's a huge challenge.
555
00:26:31,723 --> 00:26:34,692
>> Okay, you are set.
556
00:26:34,826 --> 00:26:36,460
>> Our plan would say, "This
line, this line, and this line,
557
00:26:36,595 --> 00:26:39,296
you're going to do five
inspections on it this year."
558
00:26:39,431 --> 00:26:43,000
And it might be miles
and miles long.
559
00:26:43,134 --> 00:26:45,135
And it's kind of like a
crapshoot, as far as, are you
560
00:26:45,270 --> 00:26:47,438
going to find some
damage or not?
561
00:26:47,572 --> 00:26:50,741
We're inspecting as much as
we have time to inspect, but
562
00:26:50,875 --> 00:26:52,610
BP's... they base
everything on the risk.
563
00:26:52,744 --> 00:26:55,646
You know, "What's the risk?
564
00:26:55,780 --> 00:26:57,715
How far can we go with this
before we're going to lose a
565
00:26:57,849 --> 00:26:58,749
life?" or, "How many lives can
566
00:26:58,883 --> 00:27:05,122
we afford to lose before we
need to deal with this?"
567
00:27:05,256 --> 00:27:07,691
>> Narrator: In 2002, oil worker
568
00:27:07,826 --> 00:27:11,328
Don Shugak was about
to inspect well A-22.
569
00:27:11,463 --> 00:27:13,230
>> He did not know and was not
570
00:27:13,365 --> 00:27:15,132
told that that well had a
leak and had a problem.
571
00:27:15,266 --> 00:27:17,334
The well blew up.
572
00:27:17,469 --> 00:27:20,671
He was smashed against his
truck, and he had broken bones
573
00:27:20,805 --> 00:27:23,140
and was burned.
574
00:27:23,274 --> 00:27:26,610
>> NARRATOR: Don Shugak lay
in a coma for six weeks.
575
00:27:26,745 --> 00:27:29,880
These pictures were
taken after he awoke.
576
00:27:30,015 --> 00:27:33,517
He settled with BP for
an undisclosed sum.
577
00:27:33,652 --> 00:27:36,654
In exchange, he agreed not
to speak to the media.
578
00:27:36,788 --> 00:27:38,689
>> It's essentially a gag order.
579
00:27:38,823 --> 00:27:40,391
There are many people who would
580
00:27:40,525 --> 00:27:43,293
say that BP devotes more effort
581
00:27:43,428 --> 00:27:44,428
and attention to making that a
582
00:27:44,562 --> 00:27:45,663
priority than they do to keeping
583
00:27:45,797 --> 00:27:48,899
their facilities safe
in the first place.
584
00:27:49,034 --> 00:27:52,136
>> NARRATOR: But far from
quieting concerns, Shugak's
585
00:27:52,270 --> 00:27:55,873
accident spurred workers once
again to bring safety problems
586
00:27:56,007 --> 00:27:58,208
to the attention of management.
587
00:27:58,343 --> 00:28:01,512
>> And we would send
a letter to London.
588
00:28:01,646 --> 00:28:04,815
Normally, we get a nice
answer back but no action.
589
00:28:04,949 --> 00:28:07,685
>> Information had been brought
forward by the corrosion
590
00:28:07,819 --> 00:28:11,455
technicians and other employees
to management, had been
591
00:28:11,589 --> 00:28:16,593
summarily ignored, people had
been told to shut up about it,
592
00:28:16,728 --> 00:28:19,496
and the potential for a
corrosion-related rupture was
593
00:28:19,631 --> 00:28:21,799
significant.
594
00:28:21,933 --> 00:28:25,869
And, lo and behold, in March
of '06, it proved to be true.
595
00:28:26,004 --> 00:28:29,973
>> NARRATOR: In March 2006,
260,000 gallons of oil leaked
596
00:28:30,108 --> 00:28:32,576
from a pipeline.
597
00:28:32,711 --> 00:28:36,447
It was the worst spill
ever on the North Slope.
598
00:28:36,581 --> 00:28:39,016
>> We told management there was
going to be spills and that
599
00:28:39,150 --> 00:28:41,151
these lines were going to break.
600
00:28:41,286 --> 00:28:44,054
And we had a lake of oil out
there that was over three
601
00:28:44,189 --> 00:28:48,125
foot-deep and rippling
in 40-below weather.
602
00:28:48,259 --> 00:28:51,562
>> 200,000 gallons is
nothing to be sneezed at.
603
00:28:51,696 --> 00:28:55,532
However, being that it was
wintertime, it made the response
604
00:28:55,667 --> 00:28:56,934
possible to basically get most,
605
00:28:57,068 --> 00:29:01,405
if not all, of the hydrocarbons
up out of the environment.
606
00:29:01,539 --> 00:29:02,806
Had it been mid-summer and the
607
00:29:02,941 --> 00:29:06,677
sheet flow of water across
the North Slope and into the
608
00:29:06,811 --> 00:29:09,012
Beaufort Sea, 200,000
gallons would have been an
609
00:29:09,147 --> 00:29:13,050
environmental,
ecological disaster.
610
00:29:13,184 --> 00:29:15,753
>> As it turned out, they
weren't doing enough of what
611
00:29:15,887 --> 00:29:18,388
they call pigging, which is
putting through a metal thing--
612
00:29:18,523 --> 00:29:19,189
they call it a pig-- that clears
613
00:29:19,324 --> 00:29:24,294
the sediment from the pipes.
614
00:29:24,429 --> 00:29:27,598
This was an actual cost cut.
615
00:29:27,732 --> 00:29:29,233
They figured they didn't need to
616
00:29:29,367 --> 00:29:31,802
do it as often and
they'd be just fine.
617
00:29:31,936 --> 00:29:35,139
>> We had not pigged and cleaned
618
00:29:35,273 --> 00:29:40,310
the line for a long, long time.
619
00:29:40,445 --> 00:29:41,678
>> NARRATOR: The pipe had not
620
00:29:41,813 --> 00:29:44,515
been pigged for nearly a decade.
621
00:29:44,649 --> 00:29:50,053
BP managers had concluded that
pigging wasn't necessary.
622
00:29:50,188 --> 00:29:51,021
>> Several years previous to
623
00:29:51,156 --> 00:29:52,723
this, they had wanted to do away
624
00:29:52,857 --> 00:29:55,626
with the pigging crew entirely
in union negotiations.
625
00:29:55,760 --> 00:29:57,094
They didn't want them.
626
00:29:57,228 --> 00:29:58,362
They wanted to lay them off.
627
00:29:58,496 --> 00:29:59,496
>> What, not pig at all?
628
00:29:59,631 --> 00:30:00,964
>> Right.
629
00:30:01,099 --> 00:30:01,999
They actually made that proposal
630
00:30:02,133 --> 00:30:04,468
across the bargaining table.
631
00:30:04,602 --> 00:30:08,505
And we said, "Absolutely not."
632
00:30:08,640 --> 00:30:10,207
>> NARRATOR: Five months after
633
00:30:10,341 --> 00:30:12,342
the spill, Lord Browne arrived
to personally inspect the
634
00:30:12,477 --> 00:30:14,812
pipelines.
635
00:30:14,946 --> 00:30:17,414
He was assured by his chief
corrosion expert that the leak
636
00:30:17,549 --> 00:30:19,750
was an isolated incident.
637
00:30:19,884 --> 00:30:21,118
>> The other lines that we still
638
00:30:21,252 --> 00:30:23,520
have in operation today aren't
639
00:30:23,655 --> 00:30:25,489
showing this problem at all, so
640
00:30:25,623 --> 00:30:28,792
we believe right now that the
problem was located to this
641
00:30:28,927 --> 00:30:30,861
specific segment of the line.
642
00:30:30,995 --> 00:30:33,931
>> This is the only time that
something has happened, but
643
00:30:34,065 --> 00:30:35,699
one... one time is too many.
644
00:30:35,834 --> 00:30:39,336
>> NARRATOR: Two days later,
there was another spill.
645
00:30:39,470 --> 00:30:41,939
>> BP is in crisis mode after
severe pipeline corrosion
646
00:30:42,073 --> 00:30:43,407
forced the company to shut down
647
00:30:43,541 --> 00:30:46,677
its Prudhoe Bay field in Alaska.
648
00:30:46,811 --> 00:30:50,447
>> NARRATOR: BP was forced
to shut down its operations.
649
00:30:50,582 --> 00:30:53,250
It caused a major disruption in
650
00:30:53,384 --> 00:30:55,752
oil supplies, and in the lower
48, a spike in prices at the
651
00:30:55,887 --> 00:30:58,121
pump.
652
00:30:58,256 --> 00:30:59,690
>> BP apologized again this
morning for their failure to
653
00:30:59,824 --> 00:31:02,492
keep the crucial
commodity flowing.
654
00:31:02,627 --> 00:31:03,460
>> NARRATOR: In the wake of the
655
00:31:03,595 --> 00:31:07,397
shutdown, a senior BP
official was reassigned.
656
00:31:07,532 --> 00:31:08,966
>> Is the pipeline corrosion in
657
00:31:09,100 --> 00:31:10,367
Alaska just the latest example
658
00:31:10,501 --> 00:31:12,536
of bad luck for the company, or
are there serious management
659
00:31:12,670 --> 00:31:14,972
issues for BP?
660
00:31:15,106 --> 00:31:18,842
>> NARRATOR: Meanwhile, the
subcontractor responsible for
661
00:31:18,977 --> 00:31:22,346
pipe inspections, Acuren,
had hired a new supervisor.
662
00:31:22,480 --> 00:31:23,480
>> Welcome to BP's
Prudhoe Bay operations.
663
00:31:23,615 --> 00:31:25,382
>> NARRATOR: His name
was Martin Anderson.
664
00:31:25,516 --> 00:31:26,850
>> My name is Marty Anderson.
665
00:31:26,985 --> 00:31:28,752
I am the quality assurance
and radiation...
666
00:31:28,887 --> 00:31:31,521
I had received a phone call from
North Slope project manager
667
00:31:31,656 --> 00:31:35,025
with Acuren at the time who
was responsible for providing
668
00:31:35,159 --> 00:31:36,827
nondestructive testing for the
669
00:31:36,961 --> 00:31:39,363
corrosion inspection
chemicals group for BP.
670
00:31:39,497 --> 00:31:42,232
He asked me if I'd be interested
in a supervisor's position.
671
00:31:42,367 --> 00:31:43,233
>> What do you begin to find?
672
00:31:43,368 --> 00:31:44,868
What do you uncover?
673
00:31:45,003 --> 00:31:46,837
>> As you know, I'm not at
liberty to discuss too many
674
00:31:46,971 --> 00:31:48,438
details.
675
00:31:48,573 --> 00:31:52,309
>> You're saying you can't talk
freely because you signed a
676
00:31:52,443 --> 00:31:52,910
nondisclosure agreement?
677
00:31:53,044 --> 00:31:55,512
>> That's correct.
678
00:31:55,647 --> 00:31:57,347
>> NARRATOR: Anderson can't say
anything that criticizes the
679
00:31:57,482 --> 00:32:02,452
company... >> I'm not
at liberty to...
680
00:32:02,587 --> 00:32:05,422
>> NARRATOR: ...and has never
spoken to the media before.
681
00:32:05,556 --> 00:32:06,823
But independently, ProPublica
682
00:32:06,958 --> 00:32:08,225
and Frontline have learned that
683
00:32:08,359 --> 00:32:13,363
some pipe inspectors were not
certified or trained properly.
684
00:32:13,498 --> 00:32:15,365
>> I've shown you this letter,
685
00:32:15,500 --> 00:32:16,566
this e-mail, previously, and you
686
00:32:16,701 --> 00:32:18,568
had a chance to look through
that and read it, right?
687
00:32:18,703 --> 00:32:24,908
>> Yes.
688
00:32:25,043 --> 00:32:25,642
>> NARRATOR: Anderson's findings
689
00:32:25,777 --> 00:32:26,476
are cited in this email sent to
690
00:32:26,611 --> 00:32:28,211
BP officials from an attorney
who deals with worker
691
00:32:28,346 --> 00:32:29,446
complaints.
692
00:32:29,580 --> 00:32:32,249
The concerns are described
as "serious," revealing a
693
00:32:32,383 --> 00:32:36,687
"significant quality control
breakdown" with "inspectors in
694
00:32:36,821 --> 00:32:38,555
the field performing inspections
for which they were not
695
00:32:38,690 --> 00:32:40,457
qualified."
696
00:32:40,591 --> 00:32:44,027
>> Is there anything in
there that is inaccurate?
697
00:32:44,162 --> 00:32:45,762
>> No, that's a very
factual document.
698
00:32:45,897 --> 00:32:51,168
>> You found that inspectors
were unqualified?
699
00:32:51,302 --> 00:32:53,737
>> Yes, everything in
that letter is factual.
700
00:32:53,871 --> 00:32:56,373
>> Have you ever suspected
that what you were seeing was
701
00:32:56,507 --> 00:33:01,044
actually intentional and
therefore criminal?
702
00:33:01,179 --> 00:33:02,913
>> I've had concerns.
703
00:33:03,047 --> 00:33:07,818
Not being an attorney, knowing
what is breaking the law and
704
00:33:07,952 --> 00:33:10,721
what is not breaking the law,
but I can tell you that I was
705
00:33:10,855 --> 00:33:16,660
very uncomfortable with the
situation that they had.
706
00:33:16,794 --> 00:33:20,197
>> NARRATOR: BP has since
acknowledged that more than 19
707
00:33:20,331 --> 00:33:22,966
inspectors, responsible for
13,000 inspection points, were
708
00:33:23,101 --> 00:33:27,204
unqualified.
709
00:33:27,338 --> 00:33:29,306
They say they've corrected the
710
00:33:29,440 --> 00:33:31,241
problem and that at least 10,000
inspection points have been
711
00:33:31,376 --> 00:33:32,743
re-examined.
712
00:33:46,424 --> 00:33:48,692
By 2006, BP's most promising oil
713
00:33:48,826 --> 00:33:53,130
fields were here in
the Gulf of Mexico.
714
00:33:53,264 --> 00:33:56,033
They had bet their future on it.
715
00:33:56,167 --> 00:33:57,134
>> If you want to continue to
716
00:33:57,268 --> 00:33:58,769
grow as an oil company, you have
717
00:33:58,903 --> 00:34:00,037
to keep extracting more oil.
718
00:34:00,171 --> 00:34:02,739
It's simple.
719
00:34:02,874 --> 00:34:05,675
So, deepwater was
the next frontier.
720
00:34:05,810 --> 00:34:08,812
>> NARRATOR: The US government,
worried about dependence on
721
00:34:08,946 --> 00:34:11,314
Middle East oil, encouraged it.
722
00:34:11,449 --> 00:34:15,085
>> They wanted the deep waters
of the Gulf of Mexico to be
723
00:34:15,219 --> 00:34:16,219
explored, and BP was the kid in
724
00:34:16,354 --> 00:34:18,522
the front of the class putting
725
00:34:18,656 --> 00:34:21,591
up its hand before it even
had an answer, basically.
726
00:34:21,726 --> 00:34:24,594
They like to be pushing
into ever-deeper territory.
727
00:34:24,729 --> 00:34:26,897
It's how you get kudos in the
industry, and it's hugely
728
00:34:27,031 --> 00:34:29,666
impressive, what
they were doing.
729
00:34:29,801 --> 00:34:32,369
>> They were very confident.
730
00:34:32,503 --> 00:34:33,403
They actually believed they were
731
00:34:33,538 --> 00:34:36,173
going to overtake Exxon
in terms of production.
732
00:34:36,307 --> 00:34:37,808
They'd found a lot of oil in the
733
00:34:37,942 --> 00:34:41,278
Gulf and they were feeling
on top of the world.
734
00:34:41,412 --> 00:34:45,649
>> NARRATOR: BP is the leading
operator here, producing 25%
735
00:34:45,783 --> 00:34:46,850
of all Gulf oil from some of the
736
00:34:46,984 --> 00:34:50,320
deepest waters in the world.
737
00:34:50,455 --> 00:34:52,622
>> In fact, it was BP who had
found the deepest ever, so
738
00:34:52,757 --> 00:34:54,324
everybody was actually pretty
excited about this and people
739
00:34:54,459 --> 00:34:59,729
were just losing
sight of the risks.
740
00:34:59,864 --> 00:35:01,565
>> The deep Gulf was regarded as
741
00:35:01,699 --> 00:35:04,601
a very difficult place to drill.
742
00:35:04,735 --> 00:35:07,704
Storms, hurricanes, just putting
743
00:35:07,839 --> 00:35:09,739
a deep well down through
a lot of water.
744
00:35:09,874 --> 00:35:17,114
It's geologically a difficult
place in which to operate.
745
00:35:17,248 --> 00:35:20,650
>> NARRATOR: Thunder Horse,
which towers 43 stories above
746
00:35:20,785 --> 00:35:24,721
water, was BP's showcase
platform-- a symbol of the oil
747
00:35:24,856 --> 00:35:25,622
giant's ability to innovate, to
748
00:35:25,756 --> 00:35:31,261
push technology to the limit.
749
00:35:31,395 --> 00:35:34,764
But in July 2005, Hurricane
Dennis swirled over the Gulf of
750
00:35:34,899 --> 00:35:36,633
Mexico.
751
00:35:36,767 --> 00:35:39,436
The rig's celebrity
would be short lived.
752
00:35:39,570 --> 00:35:45,408
Thunder Horse toppled over.
753
00:35:45,543 --> 00:35:47,177
>> This was a state-of-the-art
754
00:35:47,311 --> 00:35:48,612
rig which had cost BP billions
755
00:35:48,746 --> 00:35:50,113
of dollars to design and build,
756
00:35:50,248 --> 00:35:52,082
and it looked like it
was going to sink.
757
00:35:52,216 --> 00:35:54,151
It was very embarrassing.
758
00:35:54,285 --> 00:35:57,487
>> NARRATOR: After an
investigation, BP discovered
759
00:35:57,622 --> 00:36:00,023
that the storm
wasn't the problem.
760
00:36:00,158 --> 00:36:03,660
>> That, in itself, shouldn't
have been disastrous.
761
00:36:03,794 --> 00:36:07,464
It turns out that BP engineers
had incorrectly installed a
762
00:36:07,598 --> 00:36:09,232
number of valves that are meant
763
00:36:09,367 --> 00:36:11,868
to control the flow of water in
764
00:36:12,003 --> 00:36:14,204
the supports that
keep the rig afloat.
765
00:36:14,338 --> 00:36:15,438
And the rig, as a result, took
766
00:36:15,573 --> 00:36:17,707
on water instead of shedding it.
767
00:36:17,842 --> 00:36:22,412
>> NARRATOR: A senior engineer
on the Thunder Horse project
768
00:36:22,547 --> 00:36:23,680
agrees it was human error.
769
00:36:23,814 --> 00:36:25,115
>> The storm is not really the
770
00:36:25,249 --> 00:36:27,017
cause of why that
thing almost flipped.
771
00:36:27,151 --> 00:36:31,354
It's because the check valve
was installed backwards, okay?
772
00:36:31,489 --> 00:36:33,957
And all that was probably caused
by being in a hurry and not
773
00:36:34,091 --> 00:36:38,461
dotting their Is and crossing
their Ts, in this case.
774
00:36:38,596 --> 00:36:39,729
>> NARRATOR: The platform became
775
00:36:39,864 --> 00:36:42,465
one more big black eye for BP.
776
00:36:42,600 --> 00:36:44,000
>> You had Texas City, you had
777
00:36:44,135 --> 00:36:47,871
Alaska, you had the
problems at Thunder Horse.
778
00:36:48,005 --> 00:36:49,239
I think the first one or two
incidents, people were able to
779
00:36:49,373 --> 00:36:52,442
say, "Well, you know, everybody's
had these accidents."
780
00:36:52,577 --> 00:36:57,214
But after a while, so many
things mount up that you've got
781
00:36:57,348 --> 00:36:59,149
to wonder, "Is there a
deeper systemic problem?"
782
00:37:02,520 --> 00:37:04,588
>> NARRATOR: Back in London,
BP's board had seen enough of
783
00:37:04,722 --> 00:37:06,590
Browne.
784
00:37:06,724 --> 00:37:12,162
>> He had Texas City; he had
the leak at the pipeline.
785
00:37:12,296 --> 00:37:15,398
These were a series of closely
spaced accidents which caused
786
00:37:15,533 --> 00:37:17,534
the board to lose
confidence in John.
787
00:37:17,668 --> 00:37:20,804
And then, the embarrassment
of his personal life.
788
00:37:20,938 --> 00:37:21,905
Terrible.
789
00:37:22,039 --> 00:37:24,641
That was the end.
790
00:37:24,775 --> 00:37:27,143
>> "Lie over gay partner
ends BP chief's career."
791
00:37:27,278 --> 00:37:30,647
>> The surprise resignation
of Lord John Browne.
792
00:37:30,781 --> 00:37:32,249
>> NARRATOR: A newspaper had
pursued a story of Browne's
793
00:37:32,383 --> 00:37:34,117
private life.
794
00:37:34,252 --> 00:37:38,288
While trying to contain the
scandal, Browne lied to a judge
795
00:37:38,422 --> 00:37:40,557
about how he met
his gay partner.
796
00:37:40,691 --> 00:37:44,594
Browne's departure
was expedited.
797
00:37:44,729 --> 00:37:47,497
The board had already been
considering three of his top
798
00:37:47,632 --> 00:37:49,866
turtles to replace him.
799
00:37:50,001 --> 00:37:52,502
Two of them had
strikes against them.
800
00:37:52,637 --> 00:37:53,770
Bob Dudley, then head of a big
801
00:37:53,904 --> 00:37:57,407
BP venture in Russia, was
viewed as an outsider.
802
00:37:57,541 --> 00:37:59,576
>> He is the only guy who was
803
00:37:59,710 --> 00:38:02,912
actually a possible candidate to
804
00:38:03,047 --> 00:38:05,649
succeed John Browne who had run
a company, but he came from
805
00:38:05,783 --> 00:38:06,016
Amoco.
806
00:38:06,150 --> 00:38:08,184
He's an American.
807
00:38:08,319 --> 00:38:11,921
>> NARRATOR: And then there was
John Manzoni, who had been
808
00:38:12,056 --> 00:38:13,290
groomed to take over, but he was
809
00:38:13,424 --> 00:38:16,626
marked by the accident
at Texas City.
810
00:38:16,761 --> 00:38:20,330
That left Tony Hayward, an
engineer who had headed oil
811
00:38:20,464 --> 00:38:23,133
exploration worldwide.
812
00:38:23,267 --> 00:38:27,504
He took over in 2007.
813
00:38:27,638 --> 00:38:30,640
>> Tony Hayward was well
regarded-- BP guy, engineer,
814
00:38:30,775 --> 00:38:32,442
extremely capable, an oilman
815
00:38:32,576 --> 00:38:35,378
through and through, and someone
to consider a very worthy
816
00:38:35,513 --> 00:38:37,047
successor for John.
817
00:38:37,181 --> 00:38:38,181
>> I guess I should start by
818
00:38:38,316 --> 00:38:39,382
saying this has been
one hell of a year.
819
00:38:39,517 --> 00:38:40,650
I mean, it really has.
820
00:38:40,785 --> 00:38:42,652
It started with a tsunami.
821
00:38:42,787 --> 00:38:44,921
It continued with Texas City.
822
00:38:45,056 --> 00:38:47,123
>> NARRATOR: When Hayward took
over, he spoke candidly about
823
00:38:47,258 --> 00:38:49,159
BP's problems.
824
00:38:49,293 --> 00:38:52,162
>> We then nearly sunk our
flagship project in the
825
00:38:52,296 --> 00:38:54,130
deepwater Gulf of Mexico.
826
00:38:54,265 --> 00:38:55,398
And I think the only good thing
827
00:38:55,533 --> 00:38:56,466
I would say about all of this
828
00:38:56,600 --> 00:38:58,702
is, A, it's good to
have it all behind you.
829
00:38:58,836 --> 00:39:02,505
>> The message he was sending
was not only that things had
830
00:39:02,640 --> 00:39:08,011
been bad, but that he was
splitting away from John Browne.
831
00:39:08,145 --> 00:39:12,449
>> This is about a fundamental
lack of leadership and
832
00:39:12,583 --> 00:39:15,885
management in the area
of safety, period.
833
00:39:16,020 --> 00:39:18,488
>> Tony Hayward came into BP's
834
00:39:18,622 --> 00:39:19,956
CEO role on a mission to fix the
835
00:39:20,091 --> 00:39:21,925
problems that the company had.
836
00:39:22,059 --> 00:39:25,495
In his view, he thought that
Browne had been too aloof and
837
00:39:25,629 --> 00:39:28,698
too focused on growing the
company, and had lost sight of
838
00:39:28,833 --> 00:39:32,435
what it took to mine
those resources.
839
00:39:32,570 --> 00:39:35,038
>> We had a major, major
oil spill in Alaska.
840
00:39:35,172 --> 00:39:36,573
>> NARRATOR: Hayward gave this
841
00:39:36,707 --> 00:39:39,175
blunt analysis of what had
gone wrong at BP to a group of
842
00:39:39,310 --> 00:39:41,244
business students at
Stanford University.
843
00:39:41,379 --> 00:39:43,513
>> We diagnosed the following--
844
00:39:43,647 --> 00:39:45,548
a company that was too top down,
845
00:39:45,683 --> 00:39:48,351
too directive, and not
good at listening.
846
00:39:48,486 --> 00:39:50,720
We had too many people that
were working to save the world.
847
00:39:50,855 --> 00:39:52,489
We'd sort of lost track of the
848
00:39:52,623 --> 00:39:54,023
fact that our primary purpose in
849
00:39:54,158 --> 00:39:55,091
life is to create value for our
850
00:39:55,226 --> 00:39:59,629
shareholders, and we failed to
recognize we're an operating
851
00:39:59,764 --> 00:40:00,797
company.
852
00:40:00,931 --> 00:40:02,832
We had too many people that did
853
00:40:02,967 --> 00:40:06,536
not understand what it
took to run operations.
854
00:40:06,670 --> 00:40:09,038
We had too many
shallow generalists.
855
00:40:09,173 --> 00:40:12,375
>> NARRATOR: Hayward
set out to refocus BP.
856
00:40:12,510 --> 00:40:14,844
He allocated $14 billion
to upgrade operations, and
857
00:40:14,979 --> 00:40:17,781
established a new safety group.
858
00:40:17,915 --> 00:40:21,818
The changes were well
received internally.
859
00:40:22,086 --> 00:40:26,289
>> BP folks had been
through the wringer.
860
00:40:26,424 --> 00:40:27,457
They had not felt proud of the
861
00:40:27,591 --> 00:40:29,058
company they worked for, and I
862
00:40:29,193 --> 00:40:29,893
think, in general, they sighed a
863
00:40:30,027 --> 00:40:34,864
great sigh of relief when
a new management came in.
864
00:40:34,999 --> 00:40:37,634
>> NARRATOR: But London's
bankers weren't happy.
865
00:40:37,768 --> 00:40:40,703
BP's stock price was slumping.
866
00:40:40,838 --> 00:40:45,041
Hayward came under renewed
pressure to keep cutting costs.
867
00:40:45,176 --> 00:40:46,910
>> Now, BP has announced a bid
868
00:40:47,044 --> 00:40:48,945
to cut costs, boost revenues and
869
00:40:49,079 --> 00:40:52,449
improve the oil giant's
lagging performance.
870
00:40:52,583 --> 00:40:55,151
>> It just doesn't make sense.
871
00:40:55,286 --> 00:40:58,354
It's not clear how the company
can continue to shave its
872
00:40:58,489 --> 00:41:02,892
expenses while supposedly
reinvesting in the procedures
873
00:41:03,027 --> 00:41:05,595
and the equipment and the
operations that have placed it
874
00:41:05,729 --> 00:41:09,332
at such great risk
over so many years.
875
00:41:09,467 --> 00:41:11,501
>> Safety remains our number one
876
00:41:11,635 --> 00:41:16,206
priority, and I'm pleased
to report we can see clear
877
00:41:16,340 --> 00:41:17,106
progress.
878
00:41:17,241 --> 00:41:18,942
>> NARRATOR: But if Hayward was
going to reform BP's safety
879
00:41:19,076 --> 00:41:20,577
culture, he would be doing it
while taking bigger and bigger
880
00:41:20,711 --> 00:41:26,349
risks in deeper
and deeper water.
881
00:41:26,484 --> 00:41:29,385
By 2010, BP had over 100 wells
882
00:41:29,520 --> 00:41:31,421
in the Gulf under rigs like the
Atlantis, Mad Dog, and the
883
00:41:31,555 --> 00:41:34,991
Deepwater Horizon.
884
00:41:35,125 --> 00:41:37,393
>> The US government made it
very easy and very attractive
885
00:41:37,528 --> 00:41:38,995
for them to move quickly.
886
00:41:39,129 --> 00:41:41,564
>> NARRATOR: And they were
encouraged with generous
887
00:41:41,699 --> 00:41:45,401
subsidies and limited penalties
if something went wrong.
888
00:41:45,536 --> 00:41:47,036
>> For example, their liability
889
00:41:47,171 --> 00:41:48,805
cap, if there was a spill, was
890
00:41:48,939 --> 00:41:52,942
$75 million, which is basically
five cents to you and me.
891
00:41:53,077 --> 00:41:56,246
So, why would you go drill
somewhere else where,
892
00:41:56,380 --> 00:41:58,248
politically, it's more
difficult, and perhaps the
893
00:41:58,382 --> 00:41:59,916
geology isn't as great and your
894
00:42:00,050 --> 00:42:03,186
liability is going
to be really high?
895
00:42:03,320 --> 00:42:06,356
It made sense for
BP to be there.
896
00:42:06,490 --> 00:42:09,425
>> Today, we're announcing the
expansion of offshore oil and
897
00:42:09,560 --> 00:42:11,060
gas exploration.
898
00:42:11,195 --> 00:42:12,929
>> NARRATOR: As the Deepwater
899
00:42:13,063 --> 00:42:14,764
Horizon was drilling the Macondo
900
00:42:14,899 --> 00:42:16,566
well, President Obama announced
901
00:42:16,700 --> 00:42:18,801
a major expansion of
offshore drilling.
902
00:42:18,936 --> 00:42:20,503
>> There will be those who
strongly disagree with this
903
00:42:20,638 --> 00:42:21,905
decision.
904
00:42:22,039 --> 00:42:23,306
>> NARRATOR: He delivered his
905
00:42:23,440 --> 00:42:25,475
speech at Andrews Air Force Base
906
00:42:25,609 --> 00:42:29,112
to underscore that oil was
an urgent strategic issue.
907
00:42:29,246 --> 00:42:32,248
BP could only be pleased.
908
00:42:32,383 --> 00:42:33,349
>> Clearly, the company that
909
00:42:33,484 --> 00:42:36,452
will do most of that drilling
in the Gulf of Mexico is BP.
910
00:42:36,587 --> 00:42:38,021
They own the vast majority of
911
00:42:38,155 --> 00:42:39,889
the leases for new and promising
912
00:42:40,024 --> 00:42:42,825
areas that would be explored.
913
00:42:42,960 --> 00:42:44,661
Yet, at exactly the same time,
914
00:42:44,795 --> 00:42:48,731
multiple agencies in the Obama
administration are actively
915
00:42:48,866 --> 00:42:52,402
investigating BP
on several fronts.
916
00:42:52,536 --> 00:42:54,671
>> NARRATOR: At the EPA, lawyers
917
00:42:54,805 --> 00:42:57,540
representing several agencies,
including the Departments of
918
00:42:57,675 --> 00:43:02,245
Interior and Defense, were
considering disqualifying BP
919
00:43:02,379 --> 00:43:05,114
from getting any more
government contracts.
920
00:43:05,249 --> 00:43:08,885
At the Department of Labor,
attorneys were evaluating a
921
00:43:09,019 --> 00:43:10,687
series of ongoing violations at
922
00:43:10,821 --> 00:43:14,691
several BP refineries, and at
the Chemical Safety Board,
923
00:43:14,825 --> 00:43:20,163
investigators were demanding
that BP act on promises made in
924
00:43:20,297 --> 00:43:24,801
2005 to address safety
issues in Texas City.
925
00:43:24,935 --> 00:43:27,503
But in the White House, Carol
Browner, Obama's chief
926
00:43:27,638 --> 00:43:33,042
environmental advisor, said
that, in the policy discussions
927
00:43:33,177 --> 00:43:35,378
over drilling, BP's safety
record never came up.
928
00:43:35,512 --> 00:43:38,781
They relied instead on the
industry's overall 30-year
929
00:43:38,916 --> 00:43:40,416
offshore drilling record.
930
00:43:40,551 --> 00:43:46,422
>> If you have a 30-year
record, that speaks volumes.
931
00:43:46,557 --> 00:43:47,657
I think most of us, if making
932
00:43:47,791 --> 00:43:50,827
decisions in our own lives, had
30 years of information that
933
00:43:50,961 --> 00:43:52,629
suggested something was safe, we
934
00:43:52,763 --> 00:43:54,998
would pay attention to that.
935
00:43:55,132 --> 00:43:57,600
>> But at what point does the
936
00:43:57,735 --> 00:44:01,104
safety and environmental record
937
00:44:01,238 --> 00:44:03,740
of a company rise to an issue of
938
00:44:03,874 --> 00:44:04,707
concern for you in
the White House?
939
00:44:04,842 --> 00:44:07,844
>> The White House is not
involved in individual leasing
940
00:44:07,978 --> 00:44:10,513
decisions or
permitting decisions.
941
00:44:10,648 --> 00:44:11,848
Those are handled, you know,
942
00:44:11,982 --> 00:44:15,785
outside of the political
system, and appropriately so.
943
00:44:15,919 --> 00:44:16,619
They're factual decisions made
944
00:44:16,754 --> 00:44:18,054
by the Department of Interior.
945
00:44:18,188 --> 00:44:19,689
That's their responsibility.
946
00:44:19,823 --> 00:44:22,992
It's not part of the broader
policy decision, which is,
947
00:44:23,127 --> 00:44:24,560
"Should we enhance and increase
the amount of domestic oil
948
00:44:24,695 --> 00:44:27,764
production?"
949
00:44:27,898 --> 00:44:31,501
>> NARRATOR: At Interior,
Secretary Ken Salazar's Chief
950
00:44:31,635 --> 00:44:33,202
Deputy is David Hayes.
951
00:44:33,337 --> 00:44:38,975
But here, too, BP's track
record failed to alarm anyone.
952
00:44:39,109 --> 00:44:40,410
>> Would an application from BP
953
00:44:40,544 --> 00:44:44,147
receive any special attention,
given BP's troubled track
954
00:44:44,281 --> 00:44:45,415
record?
955
00:44:45,549 --> 00:44:51,821
>> I don't believe so.
956
00:44:51,955 --> 00:44:55,958
The track record for BP as a
company, in terms of deepwater
957
00:44:56,093 --> 00:45:01,698
performance, I'm not aware that
BP would be singled out for
958
00:45:01,832 --> 00:45:04,233
special attention.
959
00:45:04,368 --> 00:45:09,872
>> The Thunder Horse rig--
almost completely destroyed.
960
00:45:10,007 --> 00:45:13,342
They had the Texas City
disaster, they had the problems
961
00:45:13,477 --> 00:45:15,211
on the North Slope of Alaska.
962
00:45:15,345 --> 00:45:17,880
At what point does the company
963
00:45:18,015 --> 00:45:20,383
performance start
to raise red flags?
964
00:45:20,517 --> 00:45:24,687
>> Well, we are absolutely
committed to having safe
965
00:45:24,822 --> 00:45:29,559
offshore drilling,
I'll leave it at that.
966
00:45:29,693 --> 00:45:32,195
I mean, if there's an issue with
967
00:45:32,329 --> 00:45:34,030
a company that is systemic and
968
00:45:34,164 --> 00:45:36,332
that is appropriate for special
969
00:45:36,467 --> 00:45:37,800
enforcement, I have to defer to
970
00:45:37,935 --> 00:45:40,002
our enforcement
experts on that one.
971
00:45:40,137 --> 00:45:41,437
>> NARRATOR: That would mean
972
00:45:41,572 --> 00:45:43,573
lawyers at either the EPA or the
973
00:45:43,707 --> 00:45:47,310
Justice Department, but former
Chief of the Environmental
974
00:45:47,444 --> 00:45:50,012
Crimes section at Justice, David
975
00:45:50,147 --> 00:45:52,749
Ulhmann, says that the
laws have no teeth.
976
00:45:52,883 --> 00:45:53,850
>> How do you explain that a
977
00:45:53,984 --> 00:45:57,420
company with an egregious record
978
00:45:57,554 --> 00:46:01,424
is allowed to participate in
the most challenging kind of
979
00:46:01,558 --> 00:46:02,959
drilling in a sensitive
environment?
980
00:46:03,093 --> 00:46:09,132
>> That's a great question, and
the answer is that our laws
981
00:46:09,266 --> 00:46:12,635
don't today create any
barriers, any limits on their
982
00:46:12,770 --> 00:46:16,439
ability to continue operating.
983
00:46:16,573 --> 00:46:19,575
As soon as they've cleaned up
whatever mess they've made,
984
00:46:19,710 --> 00:46:20,843
they're off the hook.
985
00:46:20,978 --> 00:46:22,745
>> And if you're a
repeat offender?
986
00:46:22,880 --> 00:46:23,746
>> The law's no different.
987
00:46:23,881 --> 00:46:24,914
>> The law's no different?
988
00:46:25,048 --> 00:46:25,948
So you can get another contract,
989
00:46:26,083 --> 00:46:28,050
you can drill again, you
can operate a refinery?
990
00:46:28,185 --> 00:46:28,918
>> That's correct.
991
00:46:29,052 --> 00:46:30,653
>> Simple as that?
992
00:46:30,788 --> 00:46:33,523
>> Simple as that.
993
00:46:33,657 --> 00:46:36,893
( explosion )
994
00:46:37,027 --> 00:46:40,163
>> ( indistinct
voice over radio )
995
00:46:40,297 --> 00:46:43,332
>> Time, 21:03:15 Greenwich Mean
Time, the Deepwater Horizon
996
00:46:43,467 --> 00:46:45,301
on fire.
997
00:46:45,435 --> 00:46:48,037
>> NARRATOR: The explosion came
just 20 days after Obama's
998
00:46:48,172 --> 00:46:51,140
speech at Andrews
Air Force Base.
999
00:46:51,275 --> 00:46:56,612
11 workers killed,
17 more injured.
1000
00:46:56,747 --> 00:46:59,015
Things had gone wrong
here from the beginning.
1001
00:46:59,149 --> 00:47:00,616
A worker had called the project
1002
00:47:00,751 --> 00:47:04,687
a "nightmare," the
"well from hell."
1003
00:47:04,822 --> 00:47:05,922
Internal documents show that BP
1004
00:47:06,056 --> 00:47:07,890
engineers were debating how to
1005
00:47:08,025 --> 00:47:12,628
cut costs on a project that
was already way over budget.
1006
00:47:12,763 --> 00:47:16,399
>> Every indication was that
the well that blew out, it was
1007
00:47:16,533 --> 00:47:20,770
already $10 million over, and
to get caught doing a remedial
1008
00:47:20,904 --> 00:47:24,907
cement job and going back in
there and doing all this work
1009
00:47:25,042 --> 00:47:25,508
was another $10 million.
1010
00:47:25,642 --> 00:47:26,809
And that was going to impact
them, so they were cutting
1011
00:47:26,944 --> 00:47:35,351
corners on an operation side
trying to get by with less.
1012
00:47:35,485 --> 00:47:37,220
>> NARRATOR: BP bypassed a key
1013
00:47:37,354 --> 00:47:41,023
test called a cement bond log.
1014
00:47:41,158 --> 00:47:45,461
BP saved more than $100,000.
1015
00:47:45,596 --> 00:47:47,964
BP cut the number of
centralizers used to secure and
1016
00:47:48,098 --> 00:47:51,000
plug the well.
1017
00:47:51,134 --> 00:47:55,571
This saved over a million.
1018
00:47:55,706 --> 00:47:57,406
BP also chose to remove heavy
1019
00:47:57,541 --> 00:47:59,475
drilling mud that was helping to
1020
00:47:59,610 --> 00:48:03,145
keep gas under ground, instead
replacing it with lighter sea
1021
00:48:03,280 --> 00:48:10,419
water, saving millions more.
1022
00:48:10,554 --> 00:48:13,789
>> Please rise and raise
your right hands.
1023
00:48:13,924 --> 00:48:17,159
>> NARRATOR: And in a
Congressional hearing after the
1024
00:48:17,294 --> 00:48:18,227
spill, executives of four of the
1025
00:48:18,362 --> 00:48:20,863
world's largest oil companies
1026
00:48:20,998 --> 00:48:21,898
all testified that, in the case
1027
00:48:22,032 --> 00:48:26,535
of Deepwater, BP did not
operate to industry standards.
1028
00:48:26,670 --> 00:48:31,374
>> I sent a letter to Tony
Hayward, the CEO of BP, and the
1029
00:48:31,508 --> 00:48:34,677
letter describes a series of
decisions that BP made that
1030
00:48:34,811 --> 00:48:39,315
seemed to increase the risk
of catastrophic blowout.
1031
00:48:39,449 --> 00:48:41,784
I'd like to ask each of you
whether you think mistakes were
1032
00:48:41,919 --> 00:48:43,319
made by BP.
1033
00:48:43,453 --> 00:48:46,455
>> Well, in reviewing the letter
1034
00:48:46,590 --> 00:48:48,691
that you sent, it appears clear
1035
00:48:48,825 --> 00:48:56,632
to me that a number of design
standards were... that I would
1036
00:48:56,767 --> 00:48:58,334
consider to be the industry
norm were not followed.
1037
00:48:58,468 --> 00:48:59,802
>> It's not a well that we
would have drilled with that
1038
00:48:59,937 --> 00:49:03,472
mechanical setup, and there
are operational concerns.
1039
00:49:03,607 --> 00:49:04,140
>> Not all standards that we
1040
00:49:04,274 --> 00:49:06,909
would recommend or that we
would employ were in place.
1041
00:49:07,044 --> 00:49:10,880
>> NARRATOR: Two days later,
Tony Hayward was summoned.
1042
00:49:11,014 --> 00:49:13,382
>> Mr. Hayward, we had a hearing
1043
00:49:13,517 --> 00:49:17,253
earlier this week with CEOs
from the other oil companies.
1044
00:49:17,387 --> 00:49:20,856
They were unanimous in their
view that you made risky
1045
00:49:20,991 --> 00:49:28,464
decisions that their companies
would not have made.
1046
00:49:28,598 --> 00:49:29,565
And the conclusion that I draw
1047
00:49:29,700 --> 00:49:30,766
is that BP used a more dangerous
1048
00:49:30,901 --> 00:49:31,500
well design to save $7 million.
1049
00:49:31,635 --> 00:49:33,169
Don't you feel any sense of
responsibility for these
1050
00:49:33,303 --> 00:49:33,936
decisions?
1051
00:49:34,071 --> 00:49:36,072
>> In the three years that
I've been CEO, I've focused on
1052
00:49:36,206 --> 00:49:38,007
improving dramatically our
safety and environmental
1053
00:49:38,141 --> 00:49:40,409
performance.
1054
00:49:40,544 --> 00:49:43,312
Prior to this accident, that has
1055
00:49:43,447 --> 00:49:45,047
indeed been the case, and that
1056
00:49:45,182 --> 00:49:46,515
is why, amongst all the otheroBn
1057
00:49:46,650 --> 00:49:47,416
reasons, I am so devastated byoF
1058
00:49:49,419 --> 00:49:52,488
>> His testimony before the
Congress on Macondo well was
1059
00:49:52,622 --> 00:49:53,689
really embarrassing.
1060
00:49:53,824 --> 00:49:55,624
>> I'm not a cement
engineer, I'm afraid.
1061
00:49:55,759 --> 00:50:02,164
>> "I didn't know anything
about the centering, I'm not a
1062
00:50:02,299 --> 00:50:02,665
cementing expert."
1063
00:50:02,799 --> 00:50:03,899
That was really... >> He
said he wasn't part of the
1064
00:50:04,034 --> 00:50:04,500
decision-making process.
1065
00:50:04,634 --> 00:50:05,601
>> Outlandish.
1066
00:50:05,736 --> 00:50:06,836
You're supposed to know.
1067
00:50:12,576 --> 00:50:13,609
>> NARRATOR: In the weeks and
1068
00:50:13,744 --> 00:50:16,178
months following the spill,
BP's board lost faith in Tony
1069
00:50:16,313 --> 00:50:19,315
Hayward.
1070
00:50:19,449 --> 00:50:23,019
He was replaced with Bob Dudley.
1071
00:50:23,153 --> 00:50:26,489
Dudley would be the third
CEO in four years.
1072
00:50:26,623 --> 00:50:28,124
>> No questions guys, please.
1073
00:50:28,258 --> 00:50:29,658
No questions at all, please.
1074
00:50:29,793 --> 00:50:32,294
>> NARRATOR: For months, we
asked BP to grant an interview.
1075
00:50:32,429 --> 00:50:34,563
They declined.
1076
00:50:34,698 --> 00:50:36,999
>> What are the
changes going to be?
1077
00:50:37,134 --> 00:50:39,468
>> Well, there's no question
we're going to learn a lot from
1078
00:50:39,603 --> 00:50:41,704
this accident in the Gulf Coast.
1079
00:50:41,838 --> 00:50:43,506
>> NARRATOR: They agreed to
consider written questions.
1080
00:50:43,640 --> 00:50:46,208
We sent more than 40.
1081
00:50:46,343 --> 00:50:49,145
They gave us a
three-paragraph response.
1082
00:50:49,279 --> 00:50:52,481
In it, they pledged to
restructure and improve safety
1083
00:50:52,616 --> 00:50:55,351
in all their operations.
1084
00:50:55,485 --> 00:50:57,586
>> Several oil executives that
I spoke with described this
1085
00:50:57,721 --> 00:51:02,491
process of reforming a company
culture as a monumental task.
1086
00:51:02,626 --> 00:51:03,726
>> Tony and I are going to work
1087
00:51:03,860 --> 00:51:05,227
through a transition
between now and....
1088
00:51:05,362 --> 00:51:06,862
>> And it's something that will
1089
00:51:06,997 --> 00:51:09,098
occupy a chief executive's focus
1090
00:51:09,232 --> 00:51:12,068
and attention every single day,
every day of the week, every
1091
00:51:12,202 --> 00:51:15,071
week of the year, in perpetuity.
1092
00:51:15,205 --> 00:51:16,605
>> Thanks ever so much.
1093
00:51:16,740 --> 00:51:17,039
>> Thank you.
1094
00:51:17,174 --> 00:51:19,341
>> Thank you.
1095
00:51:19,476 --> 00:51:20,276
>> Thank you, all.
1096
00:51:20,410 --> 00:51:22,111
>> NARRATOR: BP now faces the
1097
00:51:22,245 --> 00:51:27,716
largest liabilities
in corporate history.
1098
00:51:27,851 --> 00:51:28,818
In July 2010, a bill passed the
1099
00:51:28,952 --> 00:51:33,522
House of Representatives that
would ban BP from drilling new
1100
00:51:33,657 --> 00:51:37,026
deepwater wells for seven years.
1101
00:51:37,160 --> 00:51:41,330
It's not likely to
pass the Senate.
1102
00:51:41,465 --> 00:51:42,731
In Texas City, the Department of
1103
00:51:42,866 --> 00:51:45,468
Labor just levied $50 million in
1104
00:51:45,602 --> 00:51:48,304
new fines for BP's failure to
address safety issues they had
1105
00:51:48,438 --> 00:51:54,910
promised to correct after
the 2005 explosion.
1106
00:51:55,045 --> 00:52:00,216
And in Alaska, maintenance
documents from October 2010 show
1107
00:52:00,350 --> 00:52:03,052
that the pipelines here
remain seriously corroded.
1108
00:52:10,160 --> 00:52:15,531
>> There's much more on
Frontline's web site.
1109
00:52:15,665 --> 00:52:16,232
Watch nearly 100 programs from
1110
00:52:16,366 --> 00:52:16,966
our archive, explore interactive
1111
00:52:17,100 --> 00:52:19,869
timelines and maps, and
follow ongoing Frontline
1112
00:52:20,003 --> 00:52:21,504
investigations.
1113
00:52:21,638 --> 00:52:24,840
Learn more about BP's
management culture...
1114
00:52:24,975 --> 00:52:26,909
>> Almost overnight, BP
became a world player.
1115
00:52:27,043 --> 00:52:32,748
>> And the US government made
it very easy and very...
1116
00:52:32,883 --> 00:52:33,749
>> ...more insights from
1117
00:52:33,884 --> 00:52:34,517
regulators and journalists...
1118
00:52:34,651 --> 00:52:36,385
>> The worst environmental
disaster in US history.
1119
00:52:36,520 --> 00:52:37,553
>> ... And read additional
1120
00:52:37,687 --> 00:52:38,320
reporting from our partners at
1121
00:52:49,132 --> 00:52:49,999
>> Learn more about this and
1122
00:52:50,133 --> 00:52:53,435
other Frontline
programs at pbs.org.
1123
00:53:04,681 --> 00:53:07,449
Frontline's "The Spill"
is available on DVD.
1124
00:53:07,584 --> 00:53:08,417
To order, visit shopPBS.org or
1125
00:53:08,552 --> 00:53:08,417
call 1-800-PLAY-PBS.