Impact of Legal and Environmental Factors on Pipeline Transportation by British Petroleum

This report analyzes the impact of legal and environmental factors on pipeline transportation by British Petroleum. It discusses the pipeline transportation issues faced by the company, the impact of PESTLE factors on pipeline transportation, and the impact of pipeline transportation on the lives of the indigenous people and local community. The report also includes a conclusion and references.

Running head: MANAGEMENT
Management
Name of the student
Name of the university
Author note

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Table of Contents
Introduction................................................................................................................................2
Pipeline transportation issues.....................................................................................................2
Impact of Environmental and legal PESTLE factors on pipeline transportation.......................4
Environmental........................................................................................................................4
Legal.......................................................................................................................................5
Impact of pipeline transportation on the lives of the indigenous people and local community.6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

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Introduction
Industrialization has impacted the surrounding environment drastically and oil and
natural gas companies have been one of the major contributors to the current environmental
issues faced globally. The activities of different oil and gas organizations, starting from the
upstream operations to downstream operations have resulted in harmful impacts on
surrounding flora and fauna. There has been significant increase in concerns from the public
regarding the operational impacts of oil and gas production, transportation and refining. Mid-
stream activities is responsible for transportation of crude oil and major mishaps, such as oil
spills and pipeline leakages have contaminated those areas of discharge. Pipeline safety has
become one of the most critical issues in transportation of oil and gas.
This is one of the major challenges faced by oil and gas companies and in this
scenario, British petroleum has been chosen as the organization of choice. British Petroleum
is one of the largest oil and natural gas companies in the world and falls among the top seven
“supermajors” (BP global 2019). In terms of market capitalization is the among the top six
energy companies in the global market. British petroleum has a long history with accidents
especially in the United States such as giant oil leaks at Prudhoe Bay oilfield which is
considered as one of the largest oil leaks in the United States (Masnadi and Brandt 2017).
The report would highlight the major transportation used by British Petroleum company plc.
along with the impact of legal and environmental factors on transportation using pipelines.
The impact of pipeline transportation on the local community and the indigenous people has
also been discussed in the report.
Pipeline transportation issues
The major pipeline transportation issues faced by British Petroleum is vandalism and
leakage. This issues have been going in on for decades where due to vandalism and leakage,

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BP had to lose a large sum of their market capitalization. The latest statistical review of the
energy resources all over the world shows that BP owns the second largest oil reserves and
the largest gas reserves in Nigeria (Adams 2010). Vandalism is one of the major issues faced
by the company in Nigeria where they have faced incessant attacks by different vandal
groups over the past decades. The number of records of pipeline vandalism in the Nigeria
goes to roughly 3000 cases in the past two decades. There has been sharp increase in those
case in the past decade where vandal groups have become more efficient, criminally
disciplined and sophisticated in performing vandalism of the oil pipelines (Costa et al. 2018).
Criminal activities are very high in countries like Nigeria due to high poverty and people
resort to unfair means to fulfil their livelihood. Militant groups in the Niger Delta are also
causing issues where they have had deliberately attacked different transport pipelines and
killed workers to gain attention and shed light on their grievances.
Similarly, the organization faced similar problems in Iraq, where they had to evacuate
their officials from Rumaila oilfields in the region of Basra (Smithsonian Ocean 2019). The
oil spill in the Gulf of Mexico also resulted in protest and vandalism (Ihsmarkit.com 2013).
Oil Spill is another major issue faced by BP over the years where there has been number of
incidents that has heavily contaminated the corresponding environment. The oil spill at the
Deep Horizon oil rig was one of the major oil spills in the history of accidents (Chen 2018).
The oil leak started at the gulf of Louisiana where oil leaked for around 87 days which results
in 3.19 million barrels of oil leaking into the gulf (Smithsonian Ocean 2019). Similarly, in the
year of 2006, BP had to face heavy civil fines due to their two oil spills in the two pipeline
networks in Alaska. This resulted due to the wilful failure of the company to comply with the
guidelines provided by the federal agencies in managing corrosion and maintenance of
pipelines. The investigation of the operations of BP in Alaska clearly showed that poor
maintenance and corrosion of the pipelines in Alaska resulted in more than 5000 barrels of oil

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discharge into the North Slope and onto the Arctic Tundra (Broder 2011). There were several
other similar spills that occurred that year which resulted in the contamination of the
surrounding environment. As per the report from the safety division of Department of
Transportation, it has been seen that BP has not complied with the regulation of cleaning and
replacing pipelines of miles in length (Broder 2011). This shows that time and again, the
company has been involved in major oil spill accidents and incidents resulting from
vandalism and oil spills where majority of the fault lies within the company as they have
deliberately tried to avoid safety practices and regulations to reduce their cost of operation.
Negligence has played a greater role in this devastating phenomenon where the company has
been sued and had to pay heavy fines which resulted in reduction in their market
capitalization.
Impact of Environmental and legal PESTLE factors on pipeline
transportation
The environmental and legal environment has the highest impact on pipeline
transportation for British Petroleum as oil and gas companies are majorly contributing to the
environmental issues in the world.
Environmental
The environmental standards in different markets vary and with increase in global
warming and greenhouse effect, the regulations for oil and gas companies operating have
become strict due to the emergence of sustainable measures. Moreover, different states within
a country have diverse liability and environmental laws. In Florida and Texas, there is
significant difference in liability clauses in case of environmental disaster and mishaps. The
regulatory laws regarding air pollution and safety measures are critical as BP has failed to
fulfil the safety standards earlier in different countries (Dusyk, Axsen and Dullemond 2018).

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The world is moving towards achieving low carbon emission into the environment and this
highly impacts the operation of the organization as they need to make considerable amount of
changes to develop green and sustainable supply chain practices. The climatic changes, the
severity of the weather conditions, water and air pollution regulations, waste management
and development of renewable source of energy are key factors for transportation of oil and
gas. The developed countries have contributed heavily to the degradation of the
corresponding environment so BP has to face more strict rules when compared to the
developing countries.
Legal
The legal requirements vary from country to country and there is lack of robustness in
some of the countries. This makes it difficult for companies to protect their intellectual rights
which results in loss of competitive advantage in the market. The antitrust laws I the oil and
gas companies in any country and the industry would highly affect the transportation of oil
and gas (Stafford 2017). The health safety law is another law which affects the operation of
the organization. Health and safety of the workers and the corresponding surrounding is key
factor as majority of the companies have faced issues in gas and oil leakage and major
accidents leading to death of workers. Moreover, the government in most countries have
focused on developing regulations for implementing sustainable development goals in the oil
and gas operations in all three stages, starting from upstream to downstream. British
Petroleum has already paid heavy fines for their negligence and corner cutting methods to
increase their productivity and lack of maintenance.
These factors clearly impact the operations of British petroleum in respect to
midstream activities. The company has become much more responsible since the major oil
spills. The company has been moving towards developing effective sustainable practices
where they have been aiming to reduce carbon emission and use of safety and health

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measures in transportation. This includes regular maintenance of the firm’s transportation
pipelines to prevent mishaps and oil spills. The company had lost a huge amount of market
capitalization when they had to huge fines for their irresponsible actions.
Impact of pipeline transportation on the lives of the indigenous people and
local community
The pipeline transportation has heavily impacted the lives of the indigenous people in
different parts of the world where BP has been manipulative to use the government to its
advantage to make the legal and environmental laws lenient for themselves. BP has shattered
the dreams of the local community in West Papua by not fulfilling their end of the bargain
(Vidal 2008). The British giants had promised the native community living on the edge of the
rainforest in Papua full protection of environment, long-term jobs and better homes. BP had
been trying to extract 14 trillion cubic metric of gas from this region and village had
complained that have not fulfilled their agreements. The company has provided very few jobs
for the local community, blocked the fishing grounds of the locals and attracted a large
amount of migrants into the country (Vidal 2008). Moreover, the organization has cited with
the Indonesian government against the native in the Papuan region who had been engaged in
their independence struggle for their long time.
The local community were not allowed to catch shrimps and other fishes in the
exclusive zones and the inflation had increased significantly due to the flow of foreign direct
investment. BP has followed the same thing such as the other oil and gas companies such as
Shell, where oil and gas transportation and extraction has left a trail of human rights abuses,
distressed people and pollution without any share of wealth achieved from the land extraction
(Jones and Cousteau 2018). Similarly, the leakage into the Gulf of Mexico due to the Deep
water Horizon oil spill has affected the livelihood, communities and wildlife along the coast.

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The human cost in this incident was catastrophic and can be considered one of the worst
disaster due to oil and gas transportation. The citizens had continued to struggle years after
the oil spill due to its level of contamination and impact on the health of the general people.
Moreover, BP had to settle medical claims of the indigenous people living on the gulf
coast consisting of the clean-up workers and the coast residents (Das 2015). The people
living in on the gulf coast had complained various health issues consisting of respiratory
ailments and skin problems. There had people who suffered chronic ailment due to the oil
spill into the Gulf coast. Native Alaskan had also complained on the operation of British
Petroleum as they have affected the arctic tundra and water (BBC News 2010). The oil has
heavy heavily affected the lives of the indigenous people as they are dependent on the Arctic
water for their various activities. The implementation of oil and gas extraction and
transportation have heavily affected the surrounding climatic conditions due to the negligence
of the company. The native people are dependent on fresh food in the arctic region and they
have their unique way of living. This shows that BP had made some positive contribution to
the lives of the people in those areas but the negative impact is more. The comparison of the
positive and negative had clearly shown that operation of transportation lines have caused
more pain to the native people than benefiting them.
Conclusion
The analysis of the activities of British Petroleum in the past decade have clearly
shown that they have clearly exploited every opportunity to increase their market
capitalization. The analysis has clearly shown that the company has faced issues with their
pipeline transportation where due to vandalism and oil leakage they have been under scrutiny
and incurred huge losses. The evaluation of the legal and the environmental laws have
portrayed the significance of these factors in the operation of the business entity in the

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modern business environment. The lives of indigenous people have been affected heavily due
to extraction and transportation of oil. The majority of the promises and agreements made by
British Petroleum had not been fulfilled. Moreover, the lack of sustainable measure and
negligence have affected the surrounding environment resulting change in climatic condition
and disruption of the normal livelihood of the native people in most countries of operation.
The majority of the native people have been oppressed which has caused BP to provide
remunerations to different people due to their unethical and careless practices.

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References
Adams, S., 2010. BP, Nigeria And CSR. [online] Forbes.com. Available at:
<https://www.forbes.com/sites/csr/2010/06/17/bp-nigeria-and-csr/#a558cf37335b>
[Accessed 10 March 2019].
BBC News, 2010. Native Alaskans Fear New Oil Drilling. [online] BBC News. Available at:
<https://www.bbc.com/news/world-us-canada-10549107> [Accessed 10 March 2019].
BP global, 2019. Home. [online] BP global. Available at: <https://www.bp.com/> [Accessed
10 March 2019].
Broder, J., 2011. BP Is Fined $25 Million For ’06 Pipeline Spills. [online] Nytimes.com.
Available at: <https://www.nytimes.com/2011/05/04/science/earth/04pipeline.html>
[Accessed 10 March 2019].
Chen, J., 2018. BP Oil Spill. [online] Investopedia. Available at:
<https://www.investopedia.com/terms/b/bp-oil-spill.asp> [Accessed 10 March 2019].
Costa, H.K., Brito, T.L., Pinto, R.P. and dos Santos, E.M., 2018. Midstream Regulation in
Brazil: Main Issues in Pipeline Natural Gas System. In Energy Law and Regulation in
Brazil(pp. 67-90). Springer, Cham.
Das, S., 2015. Communities Make Oil Giants Pay For Pollution. [online] Downtoearth.org.in.
Available at: <https://www.downtoearth.org.in/news/communities-make-oil-giants-pay-for-
pollution-45046> [Accessed 10 March 2019].
Dusyk, N., Axsen, J. and Dullemond, K., 2018. Who cares about climate change? The mass
media and socio-political acceptance of Canada’s oil sands and Northern Gateway
Pipeline. Energy Research & Social Science, 37, pp.12-21.

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Ihsmarkit.com, 2013. BP Removes Staff From Iraq's Rumaila Oilfield Over Fears Of Violent
Protests At Drilling Sites. [online] Ihsmarkit.com. Available at:
<https://ihsmarkit.com/country-industry-forecasting.html?ID=1065984697> [Accessed 10
March 2019].
Jones, J. and Cousteau, P., 2018. This Is The Worst Oil Disaster You’Ve Never Heard Of |
Janis Searles Jones And Philippe Cousteau. [online] the Guardian. Available at:
<https://www.theguardian.com/commentisfree/2018/dec/28/worst-oil-disaster-youve-never-
heard-of-taylor-energy-gulf-of-mexico> [Accessed 10 March 2019].
Masnadi, M.S. and Brandt, A.R., 2017. Climate impacts of oil extraction increase
significantly with oilfield age. Nature Climate Change, 7(8), p.551.
Smithsonian Ocean, 2019. Gulf Oil Spill. [online] Smithsonian Ocean. Available at:
<https://ocean.si.edu/conservation/pollution/gulf-oil-spill> [Accessed 10 March 2019].
Stafford, S.L., 2017. Pipeline Performance and Safety in a Federal System: A Study of
Natural Gas Pipeline Enforcement by States in the USA. Journal of Transport Economics
and Policy (JTEP), 51(3), pp.193-207.
Vidal, J., 2008. BP's West Papua Gas Plant Shatters Villagers Illusions. [online] the
Guardian. Available at:
<https://www.theguardian.com/environment/2008/mar/19/fossilfuels.indonesia> [Accessed
10 March 2019].