Evaluating BP's Business Operations and Environmental Impact

The report highlights that BP, an oil and gas extraction company, is facing environmental safety issues associated with its business operations. It recommends updating operational standards and applying new technologies such as fracturing to reduce these issues. Additionally, expanding into wind energy and biofuels can provide significant benefits to the company. The report also emphasizes the importance of protecting groundwater resources and reducing environmental risks.

Operations Management

EXECUTIVE SUMMERY
In the contemporary business environment, the success of an organization is greatly
depending on its operational efficiency. It includes management of production process, handling
of supply chain, arrangement of different resource etc. It has significant impact on quality of
products and efficiency of management. The present study evaluates different aspects of
operations management with reference to business operation of British Petroleum. British
Petroleum (BP) is a UK based multinational organization which is handling different business
operations in almost 80 countries across the globe. Company has managed business functions
into two as upstream and downstream. The upstream part of operations management is
associated with the finding of oil and gas. On the other hand, downstream segment ensures the
transportation and trading of different kinds of fuel products by using pipelines, ships, trucks and
trains as per the needs of supply chain. Furthermore, this report examines different business
strategies and operations and has found that the safety and security of environment and
employees has been considered as key strategic issues of business operations due to occurrence
of various accidents such as Gulf of Mexico oil spill. Furthermore, expansion of business in bio
fuels and wind energy has been identified as future business opportunities for company. This
report also provides some recommendation in the context of key strategic and operational issue
and has addressed that up-gradation in drilling norms and application of latest technologies such
as 3-D and 4-D Seismic Imaging and CO2-Sand Fracturing could help business entity in order to
reduce safety issues.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
DESCRIPTION OF COMPANY AND BUSINESS CONTEXT...................................................1
OPERATIONAL ANALYSIS.........................................................................................................5
RECOMMENDATION...................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCE...................................................................................................................................9

INTRODUCTION
The operations management is termed as a most important aspect of business
management. The term operations management refers to the administration and development of
an appropriate combination of various business practices through which overall efficiency of an
organization can be increased. The primary objective of the operation management is
conservation of all resources of an organization as efficiently as possible to maximize the profit
of an organization (Al‐Rabadi and Zwick, 2004). This report is going to discuss key strategic
issues faced by the management of British Petroleum during the process of operations. British
Petroleum (BP) is identified as largest producer of oil and gas within UK. This report determines
different aspects of operations management their importance on productivity of business entity
through which overall profitability and business position is hampered. This study also provides
some recommendation as per the strategic issues of BP.
DESCRIPTION OF COMPANY AND BUSINESS CONTEXT
British Petroleum (BP) is a UK based multinational organization which is managing
business in all over the world. The company was started its business as Anglo-Persian Oil
Company in 1908 which was subsidiary of Burmah Oil Company. The company became the
Anglo Iranian Company in 1935 and then become British Petroleum (BP) in 1854. The business
entity has developed a clear strategy by setting clear priorities, actively managing a quality
portfolio along with employing wide range distinctive capabilities (About BP, 2016). These
entire factors are playing important role in the process of operations management. In this regard,
the primary aim of the company is to create shareholder value by growing and ensuring the
sustainable free cash flow over the long term so as business entity always tries to enhance
operational capabilities of business along with several management practices. In this process,
management has aimed to run safe, reliable and compliant operations through which business
entity can ensure better operational efficiency and safety performance.
In the context of oil and gas business, cost of projects are very high therefore business
entity has adopted different strategies in order to achieve competitive project execution in which
management ensures about the project delivery process therefore different project are delivered
efficiently on time and on budget (Chary, 2009). The management has ensured about company's
ability in order to deliver best practices as per the business priorities so as management has built
a right portfolio that depends on our distinctive capabilities. In addition to that business entity
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has adopted advanced technology across the hydrocarbon value chain that plays important role
for finding different resources in order to develop various energy-efficient and high-performance
products for customers. Furthermore, business entity has developed and maintained strong
relationships with various individuals that include governments, partners, civil society and others
while handling different business operations and expansion of business in almost 80 countries
across the globe. And, the proven expertise of our employees comes to the fore in a wide range
of disciplines (Mahadevan, 2010). BP is offering wide range of products and services in the form
of traditional oil and gas products, lubricants and other services. In addition to that business
entity is also focusing the renewable energy, bio fuel and wind energy in order to meet energy
requirement of people by ensuring safety of environment.
The functions of BP are divided into two operating segments such as upstream and
downstream. The upstream part of operations management is associated with the finding of oil
and gas in which business entity tries to assess exploration rights as well as develop various
strategies in order to carry out detail research for hydrocarbons beneath the earth’s surface
(Hajiagha, Mahdiraji and Hashemi, 2013). In the next of section of upstream function is
developing and extraction in which business entity develops an appropriate infrastructure for
extraction of wide range of oil and gas resource. Therefore, the primary objective of BP's
upstream function is to manage exploration, development and production activities.
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(Source: Annual Report and Form 20-F 2014 BP, 2015)
In the contrary downstream function of BP is used for hydrocarbon value chains that are
covering three main businesses – fuels, lubricants and petrochemicals of business entity. In this
context, the management ensures the transportation and trading of different kinds of fuel
products by using pipelines, ships, trucks and trains as per the needs of supply chain (Carroll,
2012). In the next section of this function is manufacturing, which the business entity manages
different process in the form of refine, process and blend hydrocarbons for making fuels,
lubricants and petrochemicals. The last section of this process is to ensure supply of different
products with fuel for transportation, energy for heat and light etc.
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(Source: Annual Report and Form 20-F 2014 BP, 2015)
British Petroleum is operating business in all overall the world. Business entity has
efficient infrastructure for oil and gas extraction in different parts of the world. In this context,
Gulf of Mexico is identified as most important region for company from which BP has been
exploring for more than 25 years along with other activities such as exploration, appraisal and
development and production (Annual Report and Form 20-F 2014 BP, 2015). In addition to that
organization has acquired the licence for 50 years in the North Sea of UK for oil and gas
extraction. In this process, BP is managing more than 20 oil and gas fields that consists two
major terminals and extensive network of pipelines. In addition to that BP is operating several oil
exploration fields in different part of the world.
Furthermore, Safety and security of environment as well as employees is addressed as
key strategic issues for oil Gas Company. In this regard, various incidences and accidents have
been found that business entity has failed to ensure the safety and security of environment along
with employees who are working in different manufacturing units of company. In order to reduce
the negative impact of oil and gas extraction practices, the management of BP is trying to assess
some new business opportunities. In this regard, business entity has developed various
investments in order to increase production of Biofuel and wind energy (Slack, Chambers and
Johnston, 2007). For this purpose, BP has made different joint ventures in different overseas
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nations such as three sugar cane mills in Brazil, bio-ethanol facility in the UK and 16 wind farms
in the US. All these strategies will be found very effective in order to change corporate image
and brand value of company.
OPERATIONAL ANALYSIS
British petroleum is operating the business in all around the world. In this context, it has
been addressed that company is facing several issues associated with different operations of
company that has resulted in emergence of safety and security issues related to environment and
employees. It results several accidents such as Texas City Refinery explosion, Prudhoe Bay oil
spill, Gulf of Mexico oil spill etc. These accidents have resulted in significant damage of
environment and several employees have lost their lives. In the context, Gulf of Mexico oil spill
is identified as one of largest oil spill case which was started in April, 2010. This situation is
occurred due to emergence of several elements in the form of Valve failure, misinterpretation of
pressure test, delay in finding the leakage spot, failure to blowout preventer that stops gas
leakage, unavailability of gas alarm, improper maintenance of blowout preventer etc (Kimura,
2005). This entire element indicates inefficiency of business operations. The accident has
resulted various negative impact on environment in the form of 210 million gallons of crude oil
were released into the Gulf of Mexico that has affected 8,332 species (The BP Oil Spill and the
Global Supply Chain Impacts, 2014). It also hampered trade activities near the port. This spill
has imposed financial burden on various restoration projects. In this process, a systematic is
carried out an assessment of injury to natural resources in the Gulf of Mexico and the
development of a restoration plan.
In order to resolve security issues, BP has designed a group wide framework that is
named Operating Management System (OMS). This system plays important role for managing
the risk in different production operations. In the system, management has grouped several
factors associated with health, safety, security, the environment, social responsibility and
operational reliability. It supports management for developing various strategies associated with
maintenance, contractor relations and organizational learning etc (Lamming and Zheng, 2000).
Further, OMS also provides an opportunity to business in order to improve the quality of
different operating activities. All businesses covered by OMS undertake an annual performance
improvement cycle and assess alignment with the OMS framework. For handling safety issues,
BP develops various strategies in order to promote safe drilling. In addition to that the
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management BP has carried out detail investigation on the Deepwater Horizon accident to assess
risk factor during production operations. In this regard, organization is working with different
contractors, suppliers and partners in order to ensure safety of environment along with
employees with several business operations. Furthermore, business entity takes different
measures in the context of spill preparedness and response planning, and crisis management
(Mahadevan, 2010). In this regard, the sensitivity mapping provide significant assistance to
management in identification of the various types of habitats, resources as well as communities
that could be affected by oil spills through which management is able to develop appropriate
response strategies with reference to different factor such as geographical, operational,
infrastructure, socio-economic, biological and habitat information. In addition to that
management is also testing the applicability of a number of new or emerging technologies that
would increase oil spill responsiveness of company (About BP, 2016). It includes the application
of robotic vehicles with camera sensors to locate spills so as organization will be able to assess
accurate spot of leakage.
As a result of different accident and high risk in oil and gas extraction process, the
management of BP is focusing on various new business opportunities that would help company
in order to reduce environmental safety issues. In this context, BP is investing in alternative
energies such as biofuels. For this purpose, BP is operating three sugar cane mills in Brazil for
production of bioethanol and sugar and exporting power to the local gridSlack, Chambers and
Johnston, 2007). BP is regularly making investment in entire bio fuels value chain, from growing
sustainable higher-yielding and lower-carbon feedstocks that plays important role for increasing
capacity of BP in the form of production and marketing. Furthermore, management of BP is
carrying out detail research on different tactics as well as production process through the
production of biobutanol is carried out. In this context, BP’s has increased its share and total
volume in ethanol-equivalent production for 2014 that was 653 million litres in comparison of
521 million litres in 2013.
In addition to that BP is also focusing on wind energy. Therefore, business entity has
developed an appropriate infrastructure for the wind energy business in the US. Company is
managing 16 wind farms that have gross generating capacity of 2,585MW electricity. This
approach provides significant assistance to management for increasing operational capabilities of
business along with building good public image of company (Annual Report and Form 20-F
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2014 BP, 2015)(. The primary focus of BP is on safe operations and optimizing performance
with various company owned and joint venture wind farms. Currently, BP’s has recorded
1,588MW the net wind generation capacity in 2014. Business entity has developed various long
term plans to expand business in renewable energy.
RECOMMENDATION
Recommendation as per the BP's drinign drilling operating practices and management
systems
 It is recommended to BP that management should have to update and clarify cementing
guidelines as well as Engineering Technical Practices (ETPs) so as business entity can
control oversight business operation.
 Organization need to update requirements for subsea BOP configuration by determining
the minimum requirements for ram types, numbers and capability. In addition to that by
conducting a gap assessment of the BP-operated and BP-contracted, business entity can
ensure safety and security of production operations (Mahadevan, 2010).
 Organization should have to strengthen incident reporting standards for handling various
business operations associated with the well control and well integrity.
 Further, management should have to review and assess the consistency of current risk
management and management of change (MOC) processes practices with reference
different aspect of Drilling and Completions.
 BP should have to develop an advanced deepwater well control training scheme which is
acting as supplement for current industry and regulatory training (The 26
recommendations, 2016). It would enhance management response capabilities along with
a deeper understanding of the different well control conditions of employees so as safety
of workplace can be maintained. Apart from that organization should develop a team of in-house expertise for subsea BOP
& BOP control systems through which business entity will be able take quick response in
the situation of accident.
Application of latest technologies for oil and gas extraction operations
 3-D and 4-D Seismic Imaging: The management of BP should consider this technology
in the process of oil and gas extraction (Mahadevan, 2010). This technology is applied by
company with the help of several traditional seismic imaging techniques along with the
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powerful computers and processors so as company will be able to create a three-
dimensional model of the subsurface layers in drilling process. In addition to that 4-D
seismology has considered the time as a dimension that would provide significant support
to exploration teams in order to identify variation and changes in subsurface
characteristics that have been changed over time (Natural Gas and Technology, 2013).
By using this approach, exploration teams of BP will be able identify natural gas
prospects areas more easily and could place wells more effectively. It will help operations
teams of BP in order to reduce the number of dry holes drilled that would reduce drilling
costs so as company will assess both economic and environmental benefits.
 CO2-Sand Fracturing: It is an another drilling tactic that needs to adopted by BP.
Different companies in all over the world are using wide range of fracturing techniques
since the 1970s that help production team in order to increase the flow rate of natural gas
and oil. But, CO2-Sand fracturing is carried out by using a mixture of sand proppants
along with liquid CO2 for creating and enlarging cracks through which production team,
will be able to ensure the free flow of oil and natural gas. After extraction of oil and gas,
CO2 will be vaporized that leaves only sand in the formation that holds the newly
enlarged cracks open for long duration (Al‐Rabadi and Zwick, 2004). This type of
fracturing has found very effective for opening the formation and increased recovery of
oil and natural gas. This process will not damage the deposit and will help business entity
in order to protect groundwater resources so as management can lower the risk on
environment.
CONCLUSION
As per the above assessment, it can be concluded that BP which is an oil and gas
extraction company is facing several issues during business operations that are associated with
safety and security of environment and employees. This report has found that expansion of
business in wind energy and bio fuels would provide significant benefits to company.
Furthermore assessment of recommendation has addressed that by updating operational
standards and applying new technologies associated with fracturing, BP can reduce
environmental safety issues.
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REFERENCE
Books and Journals
Al‐Rabadi, N. A. and Zwick, M., 2004. Modified reconstructability analysis for many‐valued
functions and relations. Kybernetes. 33(5/6). pp.906 – 920.
Carroll, J., 2012. Effective Project Management in Easy Steps. in Easy Steps.
Chary, S., 2009. Production and operations management. Tata McGraw-Hill Education.
Hajiagha, R. H. S., Mahdiraji, A. H. and Hashemi, S. S., 2013. Multi‐objective linear
programming with interval coefficients: A fuzzy set based approach. Kybernetes. 42(3).
pp.482 – 496.
Kimura, F., 2005. Engineering Information Infrastructure for Product Lifecycle Managment. In
Knowledge and Skill Chains in Engineering and Manufacturing(pp. 13-22). Springer US.
Lamming, R. and Zheng, J., 2000. An initial classification of supply networks. International
Journal of Operations & Production Management. 20(6). pp.675 – 691.
Mahadevan, B., 2010. Operations Management: Theory and Practice. Pearson Education India.
Mahadevan, B., 2010. Operations Management: Theory and Practice. Pearson Education India.
Slack, N., Chambers, S. and Johnston, R., 2007. Operations management. 5th ed. Prentice
Hall/Financial Times.
Online
About BP. 2016. [Online]. Available through: <http://www.bp.com/en/global/corporate/about-
bp/bp-worldwide.html>. [Accessed on 13th January 2016].
Annual Report and Form 20-F 2014 BP. 2015. [Pdf]. Available through:
<http://www.bp.com/content/dam/bp-country/de_de/PDFs/brochures/BP_Annual_Report_
and_Form_20F_2014.pdf>. [Accessed on 13th January 2016].
Natural Gas and Technology. 2013. [Online]. Available through:
<http://naturalgas.org/environment/technology/>. [Accessed on 13th January 2016].
The 26 recommendations. 2016. [Online]. Available through:
<http://www.bp.com/en/global/corporate/sustainability/safety/preventing-incidents-
through-process-safety/the-26-recommendations.html>. [Accessed on 13th January 2016].
The BP Oil Spill and the Global Supply Chain Impacts. 2014. [Online]. Available through:
<https://prezi.com/_j56rmnjpjrx/the-bp-oil-spill-and-the-global-supply-chain-impacts/>.
[Accessed on 13th January 2016].
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