BP's Disgusting Move
Feb 1st 2012 3:09PM
Updated Feb 2nd 2012 9:06AM
The recent court ruling on 2010's Gulf oil spill has probably been among the more popular stories about BP (NYS: BP) in the past seven days. A federal judge ruled that the integrated super-major is still obligated to honor its contract with Transocean (NYS: RIG) and Halliburton (NYS: HAL) and cover some of the damage claims awarded against the two contractors. Not surprisingly, the sparring sides were quick to claim victory for themselves. However, what caught my attention was a relatively minor development, which paints a somewhat unflattering picture of BP.
Not that minor, though
On Monday, the court unsealed 30 motions -- 17 of them filed by BP -- that sought to limit and block testimony by experts who made thorough investigations into a number of issues behind the well blowout. BP had attempted to block California-based Robert Bea and William Gale from testifying in the trial, which begins Feb. 27.
In a report (PDF file, Adobe Acrobat required) published last March by the University of California, Berkeley, the two make a comprehensive study on the causes of and factors behind the blowout. One of the conclusions reached: "This disaster was preventable if existing progressive guidelines and practices [had] been followed -- the Best Available and Safest Technology." The report goes on to reveal BP's corporate culture "that was embedded in risk-taking and cost-cutting."
The study exposes that rather than quantify risk in terms of safety and consequence, BP's business model was primarily based on managing risk in context of the portfolio of assets it controlled. In other words, the company was more interested in cutting down costs, improving capital efficiency, and closing the competitive gap -- all by taking risks and compromising on safety.
And now, it has been revealed that BP wanted to block those who made this report from testifying in the trial. The reason? The experts have ignored the "safety culture of the other parties" involved. I actually find this downright laughable given the company's history of accidents.
The Texas City Refinery explosion in 2005, which killed 15 workers, and the Prudhoe Bay oil spill in 2006 never really seemed to have been a wakeup call for the company. In the aftermath of Hurricane Dennis in 2005, BP's 15-story oil platform -- the Thunder Horse -- in the Gulf of Mexico was listing dangerously to one side. According to The New York Times, this platform was "meant to be the company's crowning glory, the embodiment of its bold gamble" to be ahead in the race against its competitors.
Foolish bottom line
As Fool analyst Alyce Lomax argues, shoddy corporate management structures are responsible for a tragedy of the scale of the Deepwater Horizon disaster. I find no reasons to disagree. Which is why there are reasons to be disgusted with BP's legal maneuvers to evade a fair judgment.
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