Bp Csr free essay sample

Strategic Corporate Social Responsibilities and Law Contents BP Company Info3 Deepwater Horizon Oil Spill Event4 Summary of the Deepwater Horizon Event5 Stock price before and after Deepwater Horizon7 Impact on Stakeholders8 BP’s Oil Spills and Corporate Social Responsibility9 Inadequate disclosure on the oil spill event11 Recommendations for BP to get reputation back13 Conclusion14 BP Company Info BP is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured in terms of their revenues and stock prices. It is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major renewable energy activities, including in biofuels, hydrogen, solar and wind power. BP has operations in over 80 countries and produces around 3. 8 million barrels of oil per day and has 22,400 service stations worldwide. Its largest division is BP America, which is the biggest producer of oil and gas in the United States and is headquartered in Houston, Texas. As at 31 December 2010 it had total proven commercial reserves of 18. 7 billion barrels of oil. [1] The name BP derives from the initials of one of the companys former legal names, British Petroleum. [2] BPs track record of corporate social responsibility has been mixed. The company has been involved in a number of major environmental and safety incidents and received criticism for its political influence. However, in 1997, it became the first major oil company to publicly acknowledge the need to take steps against climate change, and in that year established a company-wide target to reduce its emissions of greenhouse gases. BP currently invests over $1 billion per year in the evelopment of renewable energy sources, and has committed to spend $8 billion on renewable in the 2005 to 2015 period. Deepwater Horizon Oil Spill Event The Deepwater Ho rizon oil spill (also referred to as the BP oil spill, the Gulf of Mexico oil spill, the BP oil disaster)[1] is an oil spill in the Gulf of Mexico which flowed for three months in 2010. It is the largest accidental marine oil spill in the history of the petroleum industry. [2] The spill come out from a sea-floor oil gusher that resulted from the April 20, 2010, explosion of Deepwater Horizon, which drilled on the BP-operated Macondo Prospect. The explosion killed 11 men working on the platform and injured 17 others. [3] On July 15, 2010, the leak was stopped by capping the gushing wellhead, after it had released about 4. 9 million barrels of crude oil. [3] An estimated 53,000 barrels per day escaped from the well just before it was capped. It is believed that the daily flow rate diminished over time, starting at about 62,000 barrels per day and decreasing as the reservoir of hydrocarbons feeding the gusher was gradually depleted. [1] On September 19, 2010, the relief well process was successfully completed, and the federal government declared the well sealed. 3] The spill caused extensive damage to marine and wildlife habitats and to the Gulfs fishing and tourism industries. [4] In late November 2010, 4,200 square miles of the Gulf were re-closed to shrimp-fishing after tar balls were found in shrimpers nets. The amount of Louisiana shoreline affected by oil grew from 287 km in July to 320 km in late November 2010. In Jan uary 2011, an oil spill commissioner reported that tar balls continue to wash up, oil sheen trails are seen in the wake of fishing boats, wetlands marsh grass remains fouled and dying, and that crude oil lies offshore in deep water and in fine silts and sands onshore. 18] A research team found oil on the bottom of the seafloor in late February 2011 that did not seem to be degrading. Skimmer ships, floating containment booms, anchored barriers, sand-filled barricades along shorelines, and dispersants were used in an attempt to protect hundreds of miles of beaches, wetlands, and estuaries from the spreading oil. Scientists have also reported immense underwater plumes of dissolved oil not visible at the surface as well as an 8 km? kill zone surrounding the blown well. [1] The U. S. Government has named BP as the responsible party, and officials have committed to holding the company accountable for all cleanup costs and other damage. [2] After its own internal probe, BP admitted that it made mistakes which led to the Gulf of Mexico oil spill. Summary of the Deepwater Horizon Event February 15, 2010 – Deepwater Horizon drilling rig, owned by Transocean, begins drilling on the Macondo Prospect. [6] The planned well was to be drilled to 18,000 feet (5,500 m) below sea level, and was to be plugged and suspended for subsequent completion as a subsea producer. April 6, 2010– The Department of the Interior exempted BPs Gulf of Mexico drilling operation from a detailed environmental impact study after concluding that a massive oil spill was unlikely. March 17, 2010 – BP Chief Tony Hayward sells one third of his BP stock (223,288 shares). [6] Closing BP price on March 17 on the New York Stock Exchange is 58. 15. April 17, 2010 – Deepwater Horizon completes its drilling and the well is being prepared to be cemented so that another rig will retrieve the oil. The blowout preventer is tested and found to be functional. [8] Gagliano now reports that using only 6 centralizers would likely produce channeling and a failure of the cement job. April 20, 2010 7 am – BP cancels a recommended cement bond log test. Conducting the test would have taken 9–12 hours and $128,000. By canceling the cement test BP paid only $10,000. Crew leaves on 11:15 am flight. BP officials gather on the platform to celebrate seven years with out an injury on the rig. The planned moving of the Deepwater Horizon to another location was 43 days past due and the delay had cost BP $21 million. :45 p. m. CDT – Gas, oil and concrete from the Deepwater Horizon explode up the wellbore onto the deck and then catches fire. The explosion kills 11 platform workers and injures 17 others; another 98 people survive without serious physical injury. April 22 10:21 am – Rig sinks. April 27, 2010 – Slick grows to 160 km across and 32 km from Louisiana coast. June 6, 2010 – BP abandons plans to close three remaining vents on the containment cap noting that with one vent it is capturing as much oil as it can handle. July 24, 2010 BP says an internal investigation has cleared itself of gross negligence in the spill and will publish the findings in the next month. August 4, 2010 – BP reports that the well achieved â€Å"static condition† shortly after midnight after drilling mud is said to now fill the well. September 29, 2010 – Andy Inglis, who headed deepwater drilling operations in the Gulf of Mexico at the time of the spill, steps down as head of the upstream business. October 1, 2010 – Thad W. Allen, the retired Coast Guard admiral leading the federal response to the BP oil spill, stepped down. December 15, 2010 According to a feature Associated Press story on the homepage of Time Magazine, the U. S. federal government is suing BP Exploration and Production, Inc. , and eight other corporations, for unlimited liability, in an effort to have them pay for the massive expenses involved in the cleanup and environmental recovery from the spill, including damages to natural resources; it also seeks civil penalties under the Clean Water Act. Stock price before and after Deepwater Horizon First quarter 2011 (After) (Before) | First uarter 2011| Fourth quarter 2010| First quarter 2010| $ million| | | | Profit for the period(a)| 7,124 | 5,567| 6,079| Inventory holding (gains) losses, net of tax| (1,643)| (953)| (481)| Replacement cost profit| 5,481| 4,614| 5,598| | | | | -per ordinary share (cents)| 29. 13| 24. 55| 29. 82| -per ADS (dollars)| 1. 75| 1. 47| 1. 79| BPs first-quarter replacement cost profit was $5,481 million, compared with $5,598 million a year ago. The group income st atement for the first quarter reflects a pre-tax charge of $0. 4 billion related to the Gulf of Mexico oil spill. All charges relating to the incident have been treated as non-operating items. Share prices for the five companies connected most directly to the Deepwater Horizon disaster have taken their lumps since the April 20 event, with analysts watching the ticker closely April 30. A review of closing New York Stock Exchange prices for those companies from April 19 to April 30 shows Macondo field operator BP off 12%, Macondo field partner Anadarko Petroleum down 15. 2%, rig operator Transocean down 18%, blowout preventer supplier Cameron International off 11. 9% and well cementer Halliburton down 2. 9%. Although Halliburton had gained from the day before the incident through April 28, the companys shares took a steep 5% drop on April 29 with news about the roles of the companies gaining wider attention. Impact on Stakeholders Jack Gerard, President of The American Petroleum Institute (API), stated that disasters are infrequent and that the Deepwater Horizon is an isolated incident. [9] By touting the aggregate safety record of the industry API has refuted any claims of a loss of industry wide credibility. API has also stated that the offshore drilling industry is important to job creation and economic growth. 9] To help prevent a recurrence of the Deepwater Horizon spill, API is setting up its own offshore safety institute that will be separate from APIs lobbying organization. During congressional testimony, key API stakeholders such as Chevron’s CEO John Watson, made an open admission to the industry’s credibility gap stating â€Å"For our industry, this is a humblin g experience. The American people expect that the energy we need will be produced safely and reliably. That did not happen here†. [10] Furthermore, ExxonMobil’s CEO Rex Tillerson, testified that, â€Å"When these things happen, we are not well equipped to deal with them. Additionally, ExxonMobil, Chevron, ConocoPhillips and Shell have made plans to fund a billion dollar joint venture to build a new rapid response capability for deep water offshore drilling response in the Gulf of Mexico. National Incident Commander (NIC), retired Admiral Thad Allen said that the underlying problem with this response was the lack of adequate capability to quickly stop the massive amount of oil discharging from 5000 feet below the Gulfs surface. Neither the private nor public sector was prepared for an event that was not supposed to happen. BPs chief of operations for American EP, Doug Suttles, has warned that the containment concept has never been tested at these water depths either and said it might be three more weeks before it is ready to test. Weve mounted the largest response effort ever done in the world and utilized every technology available, Suttles said in his companys defense. We understand that we need to bring this event to closure as soon as possible. A broad range of stakeholders came together in the wake of the Deepwater Horizon incident to provide effective solutions and build new capabilities. It would have been extremely difficult for any one company alone to address challenges on the scale of the Deepwater Horizon incident. BP’s Oil Spills and Corporate Social Responsibility Basically Corporate social responsibility is the detailed issues on which an organisation exceeds its minimum required obligations to stakeholders. CSR means that a corporation should be held accountable for any of its actions that affect their people, their communities and their environment. It implies that negative business impacts on people and society should be acknowledged and corrected if at all possible. It may require a company to forgo some profits if its social impacts are seriously harmful to some of the corporations stakeholders or if its funds can be used to promote a positive social good. CSR is the degree of responsibility manifested in a company’s strategies and operating practices as they impact stakeholders and the natural environment day to day. Some level of responsibility is integral to any corporate action or decision that has impacts. CSR cannot be avoided because it is the root or foundation of Corporate Citizenship. CSR covers all aspects of corporate governance. It is about how companies conduct their business in an ethical way, taking account of their impact economically, socially, environmentally and in terms of human rights. This moves beyond traditional business stakeholders such as shareholders or local suppliers. CSR includes social partners such as local communities, and global responsibilities such as protecting the environment and ensuring good labour standards in overseas suppliers. CSR also includes relationships with employees and customers. It also involves working in partnership with other organisations or groups. It can be seen as a form of strategic management, encouraging the organisation to scan the horizon and think about how its relationships will contribute long-term to its bottom line in a constantly changing world. On 22nd June 2010, BP announced that it will donate the net revenue it receives from the sale of oil recovered from the MC252 spill to the National Fish and Wildlife Foundation. NFWF, whose mission is to preserve and restore Americas native wildlife species and habitats, will direct this money to projects that bring the greatest benefit to the wildlife of the affected Gulf Coast States. BP will provide $5 million to NFWF immediately, to ensure that their work can begin even as initial oil collections from the Discoverer Enterprise enter the refining process. BPs chief executive officer Tony Hayward said that, With its successful 25-year track record of identifying and funding solutions to Americas toughest conservation challenges, the National Fish and Wildlife Foundation is a strong and responsible steward for this money from the wildlife fund. BP said as well it has paid $104 million to residents along the Gulf Coast for claims filed as a result of the oil spill in the Gulf of Mexico. BP has issued more than 31,000 checks in the past seven weeks. BP claims team member Darryl Willis said, Our focus has been on getting money into the hands of fishermen, shrimpers, condo owners and others who have not been able to earn income due to the spill, of the . We have also been addressing the larger, more complex claims and have been successful in sending more checks to commercial entities. BP has received about 64,000 claims to date. A 1,000-member claim team is working around the clock to receive and process claims. There are 33 field offices set up in the States of Louisiana, Mississippi, Alabama and Florida, and BP is accepting calls through an 800 number as well as accepting applications online. BP has received about 84,000 calls on the claims alone. Inadequate disclosure on the oil spill event 1. * BP completely neglects to list the amount of oil, CO2, and methane released as a result of the Deepwater Horizon disaster under its BP in Figures environmental impact chart which is highlighted in green(above). 2. At the bottom of the BPs report page, BP explains in tiny letters that he Gulf spill was left out of these calculations because Although there are several third-party estimates of the flow rate or total volume of oil spilled from the Deepwater Horizon incident, we believe that no accurate determination can be made or reported until further information is collected and the analysis, such as the condition of the blowout preventer, is completed. And as for those CO2 emissions, BP explains We have not included any emissions from the Deepwater Horizon incident and the response effort due to our reluctance to report data that has such a high degree of uncertainty. * This shows that BP left out the largest oil spill data on purpose which they could have actually made any kind of estimation. 3. BP dedicates two sections of the 50 page reportHow BP is Changing, and the Gulf of Mexico Oil Spillto the spill. In the How BP is Changing section, BP claims that it is working on improving safety and operation risk, values and behaviours, technology, and contractor management, among other things. Unfortunately, the report only skims the surface of these issues. Under behaviours underlined above, a report published by the US Department of Interior has alleged that certain BP staff members tasked with overseeing offshore drilling routinely watched porn on government computers and smoked crystal methamphetamine. 4. When addressing how to prevent future oil spills, BP explains that i t is working on better safety metrics with the Center for Chemical Process Safety, the American Petroleum Institute, American National Standards Institute, and its industry peers. The company also said that it has Enhanced training and development programmes, particularly around the practical aspects of process safety techniques, and that it is creating a new integrity monitoring system for its refineries. The improved safety metrics and integrity monitoring will be helpful, to be sure, but BP neglects to explain what it is doing differently in the short term. 5. A quote from BP directors: From the beginning, BP worked to fight the spill and minimize its impact on the environment. These efforts helped to reduce the amount of oil that reached the shore and environmentally sensitive marsh areas. . * The Gulf of Mexico Oil Spill section is filled with bland assurances from BP that it did everything it possibly could following the spill. Yet, they neglect to give an estimation of how much oil was spilled, which is the important part of the whole report. 6. The Economist columnist Critic Clive Crook said, The proper guardians of the public interests are governments, which are accountable to all citizens. It is the job of elected politicians to set goals for regulators, to deal with externalities, to mediate among different interests, to attend to the demands of social justice, to provide the public goods and to organise resources accordingly. Recommendations for BP to get reputation back BP should conduct a review of the quality of the services provided by those cementing companies in charge of building BP offshore rigs, so that such event in Deepwater Horizon where the oil rig sank do not happen again. BP directors should propose to the API the development of a good practice for design and testing of new cement in high-pressure and high-temperature applications, so that if fire do occur in offshore rigs, it will not be as dramatic as the Deepwater Horizon. Strengthen BP’s rig audit process or find the Big 4 audit firms to oversee all auditing. This is to improve the closure and verification of audit findings and actions across all drilling rigs owned by BP. BP should devel op an advanced deepwater well control training program and ensure trainings are done. In the Deepwater Horizon event, when the well exploded and engineers could not close the valve in time, for each second wasted, tons of oil are flowing into the ocean. BP should spend an appropriate amount of funds under the Clean Water act to restore the ocean or damaged areas. BP should set better safety regulations for deepwater drillings with even tougher standards, and prove that they can deal with risky and dangerous wells such as Deepwater Horizon. BP should report transparencies as they are vital and provide timely and reliable information regarding both the containment and response operations during any future oil spill events. This is to ensure safe operations on such events and also inform stakeholders and the public of current situation. Conclusion There were at least three important stakeholders involved in this project: the BP administration, the employees of BP and the society at large. After the oil spill, it is clear to everyone that this disaster could have been avoided and that the result was not beneficial for anybody. The management of risk, in terms of oil spill prevention, means among other things that the right measures be taken to avoid disaster in the first place. Prevention and remediation go hand in hand. Planning therefore begins before the spill, to avoid it and to have a seamless response process in place. Due to cost cutting, BP incurred a $40 billion in liabilities, loss of life, serious damage to several major industries and vast environmental harm. All because of BPs failure to invest in an effective safety management system, which lead to the Deepwater Horizon event. If the manager of this project had decided to invest more efforts in risk management, BP would have invested more money in contingency plans. If the BP administration had focused on the long term earnings, they would have earned more money than they finally did. Lesson learnt : Cost cutting is essential to maximize profits, BUT not at the expense of safety even though if it is not a dangerous project. The knockback would be tremendous. 1. Key facts and figures. BP p. l. c Retrieved 30 August 2010. 2. Group results – Third quarter 2010. BP p. l. c Retrieved 6 November 2010. 3. Two Westlake Park, Houston, TX : Hines Interests. Hines Interests.. Retrieved 11 Jun. 2010. 4. BP in the United States. BP p. l. c Retrieved 27 August 2010. 5. BP. com: History of BP – Post war.. Retrieved 3 Jul. 2010. In 1954, the board changed the company’s name to The British Petroleum Company 6. Tharoor, Ishaan (2 Jun. 2010). A Brief History of BP. TIME magazine.. Retrieved 3 Jul. 2010. 7. BP tackles climate change threat with ? 200m boost for energy efficiency. London: The Telegraph. 25 October 2005.. Retrieved 9 February 2011. 8. BP to invest $1 bln plus in alt energy this year. Reuters. 13 April 2010.. Retrieved 9 February 2011. 9. Natural G as and Alaskas Future: The Facts page 22 (PDF). Retrieved 5 Jun. 2010. 10. Poole, Robert W.. Privatisation. Econlib. org. Retrieved 5 Jun. 2010.