The Deepwater Horizon Case Study

The Deepwater Horizon Case Study

The Deepwater Horizon disaster happened in 2010 when a ship owned by BP exploded. Eleven workers were killed in the explosion, and seventeen were injured. The disaster gained global recognition as the largest marine oil spill that has ever occurred in United States waters. This essay reviews some factors that could have contributed to the disaster and how it could have been prevented or mitigated.

The Cause of the Deepwater Horizon Disaster

The underlying cause of the disaster was the lack of proper safety measures and maintenance. According to Ingersoll et al. (2012), the Deepwater Horizon rig had various maintenance issues that began to be pointed out in 2009 after the safety audit. Three hundred and ninety repairs needed to be made to enhance the safety of the drilling process. The company also rushed to begin the drilling process without ensuring the drilling was safe. For example, the company managers did not conduct a cement bond log test to determine whether the cement job met the required standards after being pumped into the well despite cautions of possible channeling. Poor maintenance in British Petroleum (BP) was evident in the March 2006 Baker Report results. The report indicated that most steel pipe parts had corroded to thin levels that could be considered dangerous. The company had not taken any measures to prevent the corrosion by the time the Deepwater Horizon disaster occurred. The company was also experiencing software problems in maintaining the rig’s function. The disaster also happened due to poor decision-making when deciding on the casing design to use. Ingersoll et al. (2012) indicate that the decision on the casing to be used changed many times before the disaster occurred. There were recommendations against using a long string casing due to the risk of having fewer gas barriers, but the recommendation was ignored.

Preventing or Mitigating the Deepwater Horizon Disaster

The disaster could have been prevented or mitigated if those assigned various tasks in the oil drilling process had completed their assigned tasks effectively. For example, Marc Gagliano was hired as the company’s account representative. Gagliano’s primary role was to advise the dementing contractor on ordering products and logistics and running the OptiCem model designed to help foresee possible gas overflow that could have hindered good cementing on the well site. However, a lack of collaboration between Gagliano and the drilling engineering team resulted in poor cementing. Gagliano had expressed concerns that the model’s results showed a very high risk of the cement job encountering channeling. This implies that the cementing contractor did not do a good job. Accordingly, the engineering team could have mitigated the disaster by listening to Gagliano and adjusting the cementing job to prevent channeling. The engineering team could also have prevented the disaster or mitigated it by running the cement bond test to determine the integrity of the cementing done by the cementing contractor after it was pumped into the well, although Gagliano had raised concerns about potential channeling.

Changing the Company’s Culture and Organizational Design

If I became BP Company’s CEO, I would begin by changing the matrix structure to a flat structure to allow everyone to make decisions that can be implemented to prevent disaster and enhance the company’s performance. According to Parmar & Abell (2017), a flat organizational structure promotes direct contact between top management and employees. Leadership in an organization using a flat structure is decentralized, and there is no assigned responsibility or role to mid-management levels. Also, Kortmann (2012) argues that a flat structure would foster collaboration among employees at the company, thus preventing disasters arising from miscommunication and lack of cooperation among teams such as the cementing contractor, quality assurance, and engineering team. I would also introduce a new performance management approach whereby employees would be rewarded based on their performance rather than the site’s overall performance. I would encourage 360-degree feedback in performance evaluation to identify employees that could be lowering the company’s performance before their actions result in a significant negative impact on the company. A 360-degree feedback approach includes receiving anonymous and confidential feedback from employees about their peers (Corbin, 2012). I would also create teams to work on various projects in the company under the supervision of an expert to facilitate effective decision-making among teams and prevent actions that could lead to mistakes such as those that caused the disaster.

Information and Decision-Making Issues That Played a Key Role in the Deepwater Horizon Disaster and Their Contribution to the Disaster

One of the main information and decision-making issues that contributed to the Deepwater Horizon disaster was ignoring the recommendations given by Gagliano on cementing the well site. The engineering team sidelined Gagliano in decision-making and ignored his recommendation on the centralizers that would have been used to prevent gas flow and his warning about the possibility of channeling due to poor cement job. The engineering team failed to pass vital information about cementing to Gagliano, thus preventing him from participating in decision-making. For instance, he learned about the decision to use additional centralizers from one of Halliburton’s employees on the Deepwater Horizon’s board. The managers also made decisions without engaging the engineering team. For instance, they decided not to do the cement bond log test that would be essential in determining the quality of the cementing job and preventing channeling. The managers also fired workers hired to perform a cement log job. The engineering team also failed to consider the opinions of all team members on the accuracy of the OptiCem model.

Organizational Issues and How They Led To the Deepwater Horizon Disaster

One of the organizational issues that led to the disaster was the decentralization of power, which limited collaboration in decision-making. The engineering team held the power to make decisions on the cementing job, thus disregarding the advice given by employees such as Gagliano. The lack of employee involvement in decision-making also allowed BP managers to make decisions without consulting employees. For example, they decided to bypass the cement bond log test without consulting the engineering team, even though it was evident that bypassing the process would lead to channeling. An organizational issue was a lack of proper coordination between employees because responsibilities were divided based on departments. This limited the sharing of information across departments. For instance, the engineering team withheld information from workers and employees outside the department. This is evident in Gagliano’s exclusion from decision-making and the fact that he was not informed about the decision to use additional centralizers. Rewarding employees based on the overall performance of the site also created unhealthy competition among employees. This is because they focused on enhancing the performance of their site by meeting the company’s timelines and targets, even if it meant disregarding advice from professionals if the advice would have altered their operation strategy and caused delays.

Conclusion

The Deepwater Horizon disaster was caused by many factors, including a lack of maintenance and safety measures, information and decision-making issues, organizational issues, and a lack of accountability from the people assigned various tasks in developing the well site. Based on the discussion above, it is evident that the disaster could have been prevented or mitigated by facilitating collaboration in decision-making and the proper flow of information across departments.

References

Corbin, A. K. (2012). 360-Degree feedback. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2288194

Ingersoll, C., Locke, R., & Reavis, C. (2012). BP and the Deepwater Horizon Disaster of 2010. MIT Sloan School of Management.

Kortmann, S. (2012). Organizational structure. The Relationship between Organizational Structure and Organizational Ambidexterity, 12-17. https://doi.org/10.1007/978-3-8349-3630-1_2

Parmar, B. L., & Abell, J. (2017). Going flat: Pursuit of a democratic organizational structure. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2974819

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The BP and the Deepwater Horizon Disaster of 2010 case traces the series of events involving employees of British Petroleum and its contractors leading up to the explosion and sinking of the Deepwater Horizon oil rig on April 20, 2010. While there does not appear to be one clear culprit or reason that led to the disaster, the case explores issues of the organization, information and decision-making, and individuals’ ability (inability) to voice their values as contributing factors.

The Deepwater Horizon Case Study

Your analysis should include:
1. Why did the Deepwater Horizon disaster happen?
2. In order to prevent (or at least mitigate) the Deepwater Horizon disaster, who should have done what, when, where, and why? Who should have stepped up to stop this disaster?
3. If you become the new CEO of BP, what would you do in the short- and long-term to change the company’s culture and organizational design?
4.“What information and decision-making issues played a key role in the Deepwater Horizon disaster and how did they contribute to the disaster?”
5. “What were the organizational issues and how did they lead to the Deepwater Horizon disaster?”