Case study: BP’s policies and measures for preventing and managing accidents and oil spills
The BP oil disaster of 2010 began on April 20 of that year in the Gulf of Mexico: following the explosion and sinking of the Deepwater Horizon oil rig, a sea-floor oil gusher flowed for 87 days until it was capped on July 15, 2010. Eleven people went missing and were never found and it is considered the largest accidental marine oil spill in the history of the petroleum industry. The cover of BP’s 2010 GRI- based CSR report has a picture of the oil spill in the Mexican Gulf. In the report, BP emphasizes how it is trying to earn back the trust that was lost by making substantial changes to the way it works.
This case study is based on the 2012 Sustainability Review by BP published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate that CSR/ sustainability reporting done responsibly is achieved by identifying a company’s most important impacts on the environment and stakeholders and by measuring, managing and changing.
In the aftermath of the Deepwater Horizon oil spill, BP implements a comprehensive programme to strengthen safety, risk management and compliance across the company, working to prevent, mitigate and ensure its preparedness to respond to accidents and spills across its operations. Following the accident, a range of measures were taken by BP to reduce the risk of accidents and oil spills, including, among others, implementing the Bly Report (the company’s internal investigation into the Deepwater Horizon incident), indicators to help BP track its progress in process safety management, monitoring the loss of primary containment and measures for achieving safer drilling and safety in the Downstream business.
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With this case study you will see:
- Which are the most important impacts (material issues) BP has identified;
- How BP proceeded with stakeholder engagement, and
- What actions were taken by BP to prevent and manage accidents and oils spills
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What are the material issues the company has identified?
BP has identified – as seen in the company’s Sustainability Reviews – a number of material issues over the last years, such as alternative energy, climate change, BP’s code of conduct, corporate governance and risk, environmental performance, host societies and local communities, human rights. However, since 2010 a recurring material issue for the company, following the Deepwater Horizon oil spill, has been preventing and managing accidents and oil spills.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups BP engages with:
| Stakeholder Group |
| Academic institutions |
| Industry peers |
| Local communities |
| Non-governmental organizations |
| Shareholders and analysts |
| Governments and regulators |
| Employees |
| Contractors, suppliers and partners |
| Customers |
How stakeholder engagement was made to identify material issues
Input from its stakeholders is a key part of BP’s reporting process, because it helps the company to identify and report on sustainability topics that really matter. Indeed, CSR reporting done responsibly comes by measuring, setting targets and taking action on what matters where it matters.
BP made decisions about which topics to cover in the company’s Sustainability Review 2012 (the most recent Sustainability Review of the three on which the present case study was based) and on the sustainability section of its website by talking with external stakeholders and by reviewing the year’s developments with its own internal subject matter experts.
In preparing to publish its 2012 report BP surveyed more than 300 sustainability stakeholders for their views on its sustainability reporting, met with socially responsible investors and engaged with stakeholders from more than 40 non-governmental organizations, academic institutions and other types of organizations, including BSR, Center for Corporate Citizenship at Boston College, Environmental Law Institute, European Bank for Reconstruction and Development, Forum for the Future, HSBC, International Chamber of Commerce UK, Jaguar Land Rover, Khazar University, Oxford Policy Management, Pact, ShareAction (formerly FairPensions), Transparency International UK, USAID. Many of these conversations took place in one-to-one meetings held in London, Washington DC and New York. BP also held a one-day sustainability roundtable discussion in Baku, Azerbaijan, focusing on diverse viewpoints from a strategically significant market for the company.
What actions were taken to prevent and manage accidents and oils spills?
In BP’s Sustainability Review 2012 the following targets were set regarding the prevention and management of accidents and oil spills, based on the company’s approach to materiality – on taking action on what matters, where it matters:
- Tracking process safety performance
[tweetthis]BP tracks progress in process safety management through leading indicators, to prevent incidents.[/tweetthis] These include inspections and tests of equipment critical to process safety. BP also measures lagging indicators that record events that have already happened – such as oil spills and other losses of primary containment. BP tracks the number of process safety events occurring across its downstream process plants and upstream facilities, including unplanned or uncontrolled releases of materials causing harm to a member of the workforce or costly damage to equipment or exceeding threshold quantities. Tier 1 process safety events are those with the greatest consequence. There were 43 tier 1 process safety events reported in BP in 2012, compared with 74 in 2011. BP reported tier 2 process safety events, which are losses of primary containment of lesser consequence, externally for the first time in 2012 – 154 tier 2 events were reported.
- Monitoring the loss of primary containment
BP monitors the integrity of its operations, tanks, vessels and pipelines used to produce, process and transport oil, hydrocarbons and other energy, with the aim of preventing the loss of material from its primary containment. Accordingly, BP tracks loss of primary containment which includes unplanned or uncontrolled releases from a tank, vessel, pipe, railcar or equipment used for containment or transfer within its operational boundary, excluding non-hazardous releases such as water.
- Achieving safer drilling
BP’s global wells organization (GWO) now employs more than 2,000 people, bringing functional wells expertise into a single organization with common global practices. BP has committed to establishing a global wells institute and has invested in state-of-the art simulator facilities to support practical learning and testing, which will be made available to all deepwater rig teams, including its contractors. Competence testing is a vital part of safe operating, so BP has developed a competency assurance programme to enhance drilling competency for key operational and leadership positions.
- Implementing the Bly Report
BP continues to work on implementing the 26 recommendations made by the Bly Report – the company’s internal investigation into the Deepwater Horizon incident. The investigation was led by BP’s head of safety and operational risk, Mark Bly, and drew upon the expertise of more than 50 technical and other specialists from within BP and the industry. Published in September 2010, the resulting Bly Report concluded that no single cause was responsible for the accident. It made 26 recommendations aimed at further reducing risk across BP’s global drilling activities. BP accepted the recommendations of the Bly Report and is implementing them across its worldwide drilling operations. At the end of 2012, 14 of the 26 recommendations had been completed.
- Independent verification of progress
In June 2012, the board appointed Mr Carl Sandlin to provide the safety, ethics and environment assurance committee (SEEAC) of the board with an objective and independent assessment of BP’s global progress in implementing the Bly Report recommendations and on process safety observations in the Upstream. He had direct access to the chair of SEEAC. Mr Sandlin’s role was to review evidence of the actions being taken and to provide assurance to the board, via SEEAC, that the deliverables and corresponding recommendations had been closed. He had access to all levels of the company’s GWO, including well site leaders and senior management.
- Capping and containment
Capping and containment, including the ability to both cap the well and collect oil that has escaped, plays a pivotal role in being prepared to respond to any potential incident. BP continues to advance its capability to respond to potential incidents and works with industry to further enhance access to equipment and technologies around the world.
- Achieving safety in the Downstream business
In its facilities across the Downstream business BP focuses on the safe storage, handling and processing of hydrocarbons through the systematic management of associated operating risks. In seeking to manage these risks, BP takes measures to: a) prevent loss of hydrocarbon containment through well-designed, maintained and operated equipment, b) reduce the likelihood of any hydrocarbon releases and the possibility of ignition that may occur by controlling ignition sources and c) provide safe locations, emergency procedures and other mitigation measures in the event of a release, fire or explosion. Some examples of specific risk reduction work across its refining and petrochemicals portfolio in 2012 include: a) Installation of additional safety instrumentation and equipment to reduce the likelihood of risks occurring. b) Continuing work to improve the safety of site occupied buildings, with a major programme to install safety shelters for personnel, to move people further away from hydrocarbon-containing equipment and to reduce the number of vehicles on site. For example, during 2012 a building hardening programme was completed at the company’s Toledo refinery in the US and at its Bulwer refinery in Australia it constructed new offices to move employees away from higher risk processing areas. The business also continues to train and drill personnel to respond to emergencies. c) Work to reduce explosion and toxic risks through inventory reduction by, for example, reducing ethylene and propylene refrigerants in the company’s petrochemical plants.
- Appointing a new process safety expert for BP’s Downstream business
Mr Duane Wilson’s five-year board appointment as independent expert to provide an objective assessment of BP’s progress in implementing the recommendations of the BP US Refineries Independent Safety Review Panel came to an end in May 2012. Recognizing the extensive experience he had acquired during his years as independent expert and following the end of his term, SEEAC appointed him as a process safety expert and assigned him to work, in a global capacity, with the Downstream business, having frequent and direct access not only to the board, but also to BP employees from the most senior executives down to the shop floor.
- Appointing a process safety monitor
Following the settlement with the US government of all federal criminal claims related to the Gulf of Mexico, BP has agreed in 2012 to appoint a process safety monitor in the US for a term of four years to review, evaluate and provide recommendations for the improvement of BP’s process safety and risk management procedures concerning deepwater drilling in the Gulf of Mexico.
Which GRI indicators/Standards have been addressed?
The GRI indicator addressed in this case is: G4-EN24: Total number and volume of significant spills and the updated GRI Standard is: Disclosure 306-3 Significant spills
References:
1) This case study was compiled using published information by BP which is located at the links below. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following links:
http://www.bp.com/content/dam/bp/pdf/sustainability/group-reports/bp_sustainability_review_2010.pdf (March 2011)
http://www.bp.com/content/dam/bp/pdf/sustainability/group-reports/bp_sustainability_review_2011.pdf (March 2012)
http://www.bp.com/content/dam/bp/pdf/sustainability/group-reports/BP_Sustainability_Review_2012.pdf (March 2013)
2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page
3) https://g4.globalreporting.org/Pages/default.aspx
4) https://www.globalreporting.org/standards/gri-standards-download-center/
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