1 00:00:22,856 --> 00:00:24,223 ( explosion ) 2 00:00:24,357 --> 00:00:26,358 ( inaudible radio chatter ) 3 00:00:26,493 --> 00:00:29,194 >> Safety remains our number one priority. 4 00:00:29,329 --> 00:00:30,362 >> BP can talk about safety all 5 00:00:30,497 --> 00:00:33,799 they want, but they're not going to become a safer company. 6 00:00:33,933 --> 00:00:35,367 >> They base everything on risk. 7 00:00:35,502 --> 00:00:36,502 "How many lives can we afford to 8 00:00:36,636 --> 00:00:38,404 lose before we need to deal with this?" 9 00:00:38,538 --> 00:00:39,104 >> 9-1-1. 10 00:00:39,239 --> 00:00:41,073 >> Yes, this plant just blew up! 11 00:00:41,207 --> 00:00:43,042 >> From Texas and Alaska to the 12 00:00:43,176 --> 00:00:46,045 Gulf of Mexico... >> BP apologized again... 13 00:00:46,179 --> 00:00:48,180 >> ... Apology after apology. 14 00:00:48,314 --> 00:00:48,947 >> They pledged repeatedly to 15 00:00:49,082 --> 00:00:53,018 run a safer operation, yet they continued to cut costs. 16 00:00:53,153 --> 00:00:56,021 >> We have a facility here that could produce a cloud of gas 17 00:00:56,156 --> 00:00:58,891 that would make this place look like Hiroshima. 18 00:00:59,025 --> 00:01:01,060 >> What went wrong at BP? 19 00:01:01,194 --> 00:01:04,563 >> The culture of BP management has to change. 20 00:01:04,697 --> 00:01:06,031 They refuse to change. 21 00:01:06,166 --> 00:01:07,299 >> Tonight on Frontline, 22 00:01:07,434 --> 00:01:08,667 correspondent Martin Smith 23 00:01:08,802 --> 00:01:10,869 joins forces with ProPublica to 24 00:01:11,004 --> 00:01:13,038 investigate... "The Spill." 25 00:01:32,759 --> 00:01:35,727 >> The oil rig Deepwater Horizon exploded. 26 00:01:35,862 --> 00:01:36,929 >> There was growing desperation 27 00:01:37,063 --> 00:01:39,298 along the US Gulf Coast today... 28 00:01:39,432 --> 00:01:40,599 >> NARRATOR: It's been called 29 00:01:40,733 --> 00:01:43,202 the worst environmental disaster in US history... 30 00:01:43,336 --> 00:01:46,972 >> 42,000 gallons of oil a day... >> 210,000 gallons are 31 00:01:47,107 --> 00:01:49,708 leaking... >> 2.1 million gallons a day... 32 00:01:49,843 --> 00:01:51,610 >> NARRATOR: ... A geyser of oil that caught the government 33 00:01:51,744 --> 00:01:52,945 off-guard... >> No more oil spills! 34 00:01:53,079 --> 00:01:58,250 Arrest BP! 35 00:01:58,384 --> 00:01:59,585 >> NARRATOR: ...and threw a spotlight on a company that 36 00:01:59,719 --> 00:02:00,252 Americans knew little about. 37 00:02:00,386 --> 00:02:01,653 >> In Washington today, protesters called for the US 38 00:02:01,788 --> 00:02:05,924 government to get hostile with BP. 39 00:02:06,059 --> 00:02:06,959 >> Mr. Hayward! 40 00:02:07,093 --> 00:02:08,660 >> NARRATOR: When two months 41 00:02:08,795 --> 00:02:10,129 after the blowout, BP's CEO Tony 42 00:02:10,263 --> 00:02:11,663 Hayward, came to Capitol Hill... 43 00:02:11,798 --> 00:02:13,298 >> The testimony you are about to give to be the truth, the 44 00:02:13,433 --> 00:02:16,902 whole truth... >> NARRATOR: . ..he was there to 45 00:02:17,036 --> 00:02:19,004 explain what happened and why. 46 00:02:19,139 --> 00:02:20,973 >> Begin your opening statement, 47 00:02:21,107 --> 00:02:22,207 and let me again, on behalf... 48 00:02:22,342 --> 00:02:24,810 >> NARRATOR: From the start, it didn't go well. 49 00:02:24,944 --> 00:02:27,312 >> Chairman Waxman, Chairman... >> Tony Hayward, look at my 50 00:02:27,447 --> 00:02:29,348 hands. 51 00:02:29,482 --> 00:02:32,985 This is what it looks like for 52 00:02:33,119 --> 00:02:34,453 the Plaquemines down there, and 53 00:02:34,587 --> 00:02:35,587 I think you need to be charged with a crime! 54 00:02:35,722 --> 00:02:37,089 You need to go to jail. 55 00:02:37,223 --> 00:02:40,859 As a matter of fact, I've got some chains and I'll... 56 00:02:40,994 --> 00:02:45,130 You need to be charged with a crime! 57 00:02:45,265 --> 00:02:48,634 >> Can you tell us under oath that the decision to use six 58 00:02:48,768 --> 00:02:50,636 centralizers instead of.... >> NARRATOR: Amidst the 59 00:02:50,770 --> 00:02:52,905 technical questions, there were deeper concerns... 60 00:02:53,039 --> 00:02:54,373 >> You're the CEO of the company! 61 00:02:54,507 --> 00:02:56,208 >> With respect, sir, we drill hundreds of wells a year all 62 00:02:56,342 --> 00:02:56,775 around the world. 63 00:02:56,910 --> 00:02:57,476 >> Yeah, I know. 64 00:02:57,610 --> 00:02:58,944 That's what's scaring me right now. 65 00:02:59,078 --> 00:02:59,678 >> NARRATOR: ...about whether 66 00:02:59,812 --> 00:03:02,281 this was a company that could be trusted. 67 00:03:02,415 --> 00:03:03,982 >> Mr. Hayward, when you became 68 00:03:04,117 --> 00:03:05,584 CEO three years ago, you said 69 00:03:05,718 --> 00:03:08,020 that safety was going to be your top priority... 70 00:03:08,154 --> 00:03:10,656 >> NARRATOR: The interrogation produced few new answers. 71 00:03:10,790 --> 00:03:13,358 >> One of the reasons that I am so distraught... 72 00:03:13,493 --> 00:03:14,693 >> I don't want to know whether you're distraught. 73 00:03:14,827 --> 00:03:16,695 >> NARRATOR: It was mostly political theater. 74 00:03:16,829 --> 00:03:17,696 >> We're going to have a hard 75 00:03:17,830 --> 00:03:20,732 time reaching conclusions if you stonewall them. 76 00:03:20,867 --> 00:03:22,801 >> I'm not stonewalling. 77 00:03:22,936 --> 00:03:24,136 >> NARRATOR: It was also not the 78 00:03:24,270 --> 00:03:32,477 first time the company had been in trouble. 79 00:03:32,612 --> 00:03:34,112 In London, the board had been in 80 00:03:34,247 --> 00:03:38,684 crisis mode for much of the last years. 81 00:03:38,818 --> 00:03:42,454 They've encountered disasters on all fronts-- at their 82 00:03:42,589 --> 00:03:45,457 refineries, in their oil fields. 83 00:03:45,592 --> 00:03:49,161 The blowout in the Gulf is just the latest. 84 00:03:49,295 --> 00:03:51,230 >> This is a company that has brought us the worst 85 00:03:51,364 --> 00:03:54,099 environmental disaster in US history. 86 00:03:54,234 --> 00:03:55,300 That's not an accident. 87 00:03:55,435 --> 00:03:58,804 >> NARRATOR: Critics say BP has a very bad record. 88 00:03:58,938 --> 00:04:01,373 It's a company that has grown too fast and taken on too many 89 00:04:01,507 --> 00:04:04,209 risks. 90 00:04:04,344 --> 00:04:07,212 This is a story about ambition and its consequences. 91 00:04:15,255 --> 00:04:19,458 To investigate BP's corporate history, we started here in 92 00:04:19,592 --> 00:04:22,394 Texas City, the site of the company's largest and one of its 93 00:04:22,528 --> 00:04:24,930 most troubled refineries. 94 00:04:25,064 --> 00:04:26,365 >> Hi, Don. 95 00:04:26,499 --> 00:04:27,899 My name is Abrahm Lustgarten. 96 00:04:28,034 --> 00:04:29,434 I'm a reporter with ProPublica. 97 00:04:29,569 --> 00:04:33,472 I'm calling you because I'm working on an in-depth piece 98 00:04:33,606 --> 00:04:36,742 about the history of BP and its management culture. 99 00:04:36,876 --> 00:04:41,213 >> NARRATOR: BP had an accident here in 2005 where 15 people 100 00:04:41,347 --> 00:04:44,182 died in an explosion and fire. 101 00:04:44,317 --> 00:04:46,652 170 more were injured. 102 00:04:46,786 --> 00:04:50,956 Afterwards, there were charges that BP's management valued 103 00:04:51,090 --> 00:04:55,694 profits more than safety. 104 00:04:55,828 --> 00:04:59,264 We came to the refinery hoping to talk to managers. 105 00:04:59,399 --> 00:05:00,165 >> So this is all BP, right? 106 00:05:00,300 --> 00:05:02,234 >> Yeah. 107 00:05:02,368 --> 00:05:04,436 >> NARRATOR: BP declined. 108 00:05:04,570 --> 00:05:05,537 >> And the explosion would have 109 00:05:05,672 --> 00:05:07,072 happened, then, on the far side of all this big equipment. 110 00:05:07,206 --> 00:05:11,710 >> Right. 111 00:05:11,844 --> 00:05:16,615 >> NARRATOR: The 1,200-acre refinery was acquired by BP in 112 00:05:16,749 --> 00:05:20,218 1999 as part of a $61 billion takeover of the American oil 113 00:05:20,353 --> 00:05:24,523 company Amoco. 114 00:05:24,657 --> 00:05:30,362 But built in 1934, the refinery was in bad shape. 115 00:05:30,496 --> 00:05:36,535 Workers and contractors were wary of the place. 116 00:05:36,669 --> 00:05:42,007 >> The refinery was not in prime shape, put it that way. 117 00:05:42,141 --> 00:05:43,642 Rotted-out columns, things that 118 00:05:43,776 --> 00:05:46,311 were rusted, not protected from corrosion, fire hazards 119 00:05:46,446 --> 00:05:49,781 everywhere. 120 00:05:49,916 --> 00:05:51,917 >> It was typical for them to 121 00:05:52,051 --> 00:05:55,787 experience a fire every week, on average. 122 00:05:55,922 --> 00:05:59,324 A fire every week is a warning sign that something is 123 00:05:59,459 --> 00:06:03,161 critically wrong at the facility. 124 00:06:03,296 --> 00:06:08,367 It was the worst refinery around this area, for sure. 125 00:06:08,501 --> 00:06:11,470 >> NARRATOR: When the refinery was under Amoco's management, 126 00:06:11,604 --> 00:06:16,074 major upgrades had been postponed. 127 00:06:16,209 --> 00:06:20,011 For example, in 1991, Amoco considered replacing its 128 00:06:20,146 --> 00:06:21,413 antiquated blowdown drums, used 129 00:06:21,547 --> 00:06:24,783 to collect volatile liquids and gases in an emergency, with 130 00:06:24,917 --> 00:06:27,452 safer modern flares. 131 00:06:27,587 --> 00:06:30,021 They decided against it. 132 00:06:30,156 --> 00:06:32,023 >> A flare is more efficient and 133 00:06:32,158 --> 00:06:34,259 safer than a blowdown stack. 134 00:06:34,394 --> 00:06:38,697 And there were several blowdown stacks within... within the 135 00:06:38,831 --> 00:06:42,667 refinery that were old technology. 136 00:06:42,802 --> 00:06:45,771 Long after a lot of other folks said, "We're not using those 137 00:06:45,905 --> 00:06:47,973 anymore," BP still was using them. 138 00:06:48,107 --> 00:06:52,744 >> NARRATOR: It was a question of saving money. 139 00:06:52,879 --> 00:06:56,882 These emails from 2002 reveal that BP had also considered 140 00:06:57,016 --> 00:06:59,518 updating the blowdown drums. 141 00:06:59,652 --> 00:07:02,621 "We need to decide if we want to 142 00:07:02,755 --> 00:07:05,123 invest $150,000 now to save more money later on," wrote one 143 00:07:05,258 --> 00:07:06,992 employee. 144 00:07:07,126 --> 00:07:09,795 A senior manager responded, capital expenditure is "very 145 00:07:09,929 --> 00:07:11,897 tight. 146 00:07:12,031 --> 00:07:15,901 Bank the $150,000 in savings now." 147 00:07:16,035 --> 00:07:17,536 >> And at that point, BP culture 148 00:07:17,670 --> 00:07:19,371 was "Show me the money," and refining was not showing them 149 00:07:19,505 --> 00:07:21,807 the money. 150 00:07:21,941 --> 00:07:25,610 >> You can only spend a penny once. 151 00:07:25,745 --> 00:07:27,546 "Should we do it fixing up this refinery?" 152 00:07:27,680 --> 00:07:31,850 You're choosing among priorities, and they did not 153 00:07:31,984 --> 00:07:33,051 give this deferred maintenance 154 00:07:33,186 --> 00:07:35,520 priority at Texas City refinery 155 00:07:35,655 --> 00:07:38,457 the attention, the priority, it should have gotten. 156 00:07:38,591 --> 00:07:40,125 >> NARRATOR: The pressure to cut 157 00:07:40,259 --> 00:07:43,662 costs came from the very top of BP. 158 00:07:43,796 --> 00:07:45,764 After the buyout of Amoco, Tony 159 00:07:45,898 --> 00:07:48,800 Hayward's predecessor, Lord John 160 00:07:48,935 --> 00:07:53,104 Browne, ordered a 25% cost cut across the company. 161 00:07:53,239 --> 00:07:57,309 The message was relayed down through the ranks. 162 00:07:57,443 --> 00:08:00,212 >> I don't know if they realized 163 00:08:00,346 --> 00:08:03,448 just how devastating the cost cutting ethos was when it 164 00:08:03,583 --> 00:08:07,819 actually played out in the field. 165 00:08:07,954 --> 00:08:09,721 When there is a whisper at the 166 00:08:09,856 --> 00:08:13,592 top of the company, it becomes like a shout at the bottom. 167 00:08:13,726 --> 00:08:15,660 >> You were starting to hear a 168 00:08:15,795 --> 00:08:17,195 little bit more about, "Make due 169 00:08:17,330 --> 00:08:18,497 with what you got and try to make it more efficient." 170 00:08:18,631 --> 00:08:22,300 So you were taking older equipment and pushed it to a hilt. 171 00:08:22,435 --> 00:08:24,503 If something didn't blow up, it was a good day. 172 00:08:29,208 --> 00:08:34,579 >> NARRATOR: In March 2004, there was a major fire. 173 00:08:34,714 --> 00:08:38,917 Fortunately, it was in an unmanned part of the refinery. 174 00:08:39,051 --> 00:08:44,990 Nobody was hurt, but problems continued. 175 00:08:45,124 --> 00:08:46,625 Don Parus, a safety conscious 176 00:08:46,759 --> 00:08:49,794 engineer, took over the refinery a few months later and was 177 00:08:49,929 --> 00:08:51,696 trying to turn things around. 178 00:08:51,831 --> 00:08:53,565 >> Don was the refinery manager, 179 00:08:53,699 --> 00:08:55,834 or as locals liked to say, he was the second mayor of the 180 00:08:55,968 --> 00:08:59,604 town. 181 00:08:59,739 --> 00:09:01,373 The workforce tended to trust in 182 00:09:01,507 --> 00:09:03,909 him because, I think, for the first time, they were having a 183 00:09:04,043 --> 00:09:07,546 refinery manager who was harping 184 00:09:07,680 --> 00:09:10,081 a little bit more about safety. 185 00:09:10,216 --> 00:09:10,949 >> NARRATOR: One of the first 186 00:09:11,083 --> 00:09:15,053 things Parus did was commission an employee survey. 187 00:09:15,187 --> 00:09:16,721 In it, workers talked about their "exceptional degree of 188 00:09:16,856 --> 00:09:19,024 fear." 189 00:09:19,158 --> 00:09:25,530 They worried about dying. 190 00:09:25,665 --> 00:09:26,965 >> There was a fatality once, 191 00:09:27,099 --> 00:09:30,101 approximately every 18 months or so. 192 00:09:30,236 --> 00:09:33,138 The feeling of the workforce was that there was an imminent 193 00:09:33,272 --> 00:09:37,609 catastrophic accident that could happen in the near future. 194 00:09:37,743 --> 00:09:41,513 >> NARRATOR: Parus alerted his boss in London, John Manzoni, 195 00:09:41,647 --> 00:09:46,117 BP's chief of refining, about the severity of safety issues. 196 00:09:46,252 --> 00:09:47,519 >> Don Parus had held several 197 00:09:47,653 --> 00:09:50,255 meetings with John Manzoni, the head of refining. 198 00:09:50,389 --> 00:09:53,425 In each, he expressed grave concerns about the safety of 199 00:09:53,559 --> 00:09:56,761 working at the Texas City refinery. 200 00:09:56,896 --> 00:09:57,696 >> NARRATOR: Parus even went to 201 00:09:57,830 --> 00:10:00,665 BP headquarters in London and showed Manzoni a PowerPoint 202 00:10:00,800 --> 00:10:03,234 presentation. 203 00:10:03,369 --> 00:10:07,606 In it, a list of dead workers; 204 00:10:07,740 --> 00:10:12,243 details on two recent fatal accidents; a tally of more than 205 00:10:12,378 --> 00:10:15,547 20 fatalities in 30 years. 206 00:10:15,681 --> 00:10:20,151 >> The basic response Don Parus 207 00:10:20,286 --> 00:10:21,653 got was, "Well, that's your job 208 00:10:21,787 --> 00:10:24,289 to make sure this stuff doesn't happen." 209 00:10:24,423 --> 00:10:25,423 And he was pleading for, "Well, 210 00:10:25,558 --> 00:10:29,060 let me have the materials to do my job that way." 211 00:10:29,195 --> 00:10:31,396 London saw it a different way. 212 00:10:31,530 --> 00:10:37,502 And that's part of that culture that BP didn't get. 213 00:10:39,438 --> 00:10:43,274 >> We know we have to beat the others to win you over. 214 00:10:43,409 --> 00:10:45,844 Can we do it? 215 00:10:45,978 --> 00:10:48,647 >> You bet your BP we can! 216 00:10:48,781 --> 00:10:51,750 >> NARRATOR: 20 years ago, BP was nothing like the powerful 217 00:10:51,884 --> 00:10:55,754 multinational corporation it is today. 218 00:10:55,888 --> 00:10:58,490 The years of the once great Anglo-Persian oil company were 219 00:10:58,624 --> 00:11:00,992 long past. 220 00:11:01,127 --> 00:11:05,096 A revolution in Iran had crippled the company. 221 00:11:05,231 --> 00:11:06,431 >> Among its peers, it was a 222 00:11:06,565 --> 00:11:09,134 company to be pitied rather than emulated. 223 00:11:09,268 --> 00:11:11,102 It had had to cut its dividends, 224 00:11:11,237 --> 00:11:14,406 its share price was at a low. 225 00:11:14,540 --> 00:11:19,210 BP was in a very dark place in the late '80s, early '90s. 226 00:11:19,345 --> 00:11:20,912 >> NARRATOR: It was then that a 227 00:11:21,047 --> 00:11:23,248 new group of managers came along and attempted to rescue the 228 00:11:23,382 --> 00:11:25,784 company from mediocrity. 229 00:11:25,918 --> 00:11:30,588 >> It was a good year for BP in very challenging times. 230 00:11:30,723 --> 00:11:33,758 >> They had not found a way to replace the Iranian reserves. 231 00:11:33,893 --> 00:11:35,660 They were not going to do so remaining hierarchical and 232 00:11:35,795 --> 00:11:36,661 stuffy. 233 00:11:36,796 --> 00:11:40,899 They had to get out there and they had to compete. 234 00:11:41,033 --> 00:11:43,068 >> NARRATOR: A young engineer, 235 00:11:43,202 --> 00:11:46,304 John Browne, was one of the new managers. 236 00:11:46,439 --> 00:11:48,339 From early on, he had a reputation as an aggressive cost 237 00:11:48,474 --> 00:11:51,109 cutter. 238 00:11:51,243 --> 00:11:52,377 >> Jobs can be made wider, without necessarily moving 239 00:11:52,511 --> 00:11:54,012 people. 240 00:11:54,146 --> 00:11:55,714 >> NARRATOR: He was a math whiz, 241 00:11:55,848 --> 00:11:58,883 a numbers man, and the board liked him. 242 00:11:59,018 --> 00:12:04,089 In 1995, he was made CEO. 243 00:12:04,223 --> 00:12:07,158 But he was a different kind of oilman. 244 00:12:07,293 --> 00:12:09,160 >> In many ways, yes, he wasn't 245 00:12:09,295 --> 00:12:14,232 a Texas oilman, but he was also not even a European oilman. 246 00:12:14,366 --> 00:12:15,633 He had very refined tastes, he 247 00:12:15,768 --> 00:12:19,604 enjoyed, obviously, fine wine, and he enjoyed his cigars. 248 00:12:19,739 --> 00:12:23,508 He was a very big opera-goer and opera buff. 249 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.