ACCG100 BP Deepwater Horizon Case Study

This case study examines the Deepwater Horizon disaster involving British Petroleum (BP) in 2010, focusing on the ethical issues surrounding the oil spill. It details the technical failures, environmental damage, and the impact on various stakeholders, including employees and the company itself. The...Read More

Running head: ACCG100 ACCOUNTING IN
SOCIETY
ACCG100 Accounting in Society
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Table of Contents
Introduction 3
Overview of Company 3
Ethical Issues 4
Stakeholders Affected by the Ethical Issue 4
Impact of Decisions 5
View on Business Ethics 6
Conclusion 6
References 7
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Introduction
The disaster caused due to oil spill in 2010 at the
Gulf of Mexico is termed as the Deepwater Horizon
Disaster. British Petroleum (BP) was held
responsible for this disaster and was marked by
sinking of the oil rig. Technical failures led the
Deepwater Horizon to catch fire that further led to
loss of life and injury of many workers. Around
205.8 million gallons of oil is noted to have released
into the water due to the spill and is one of the
largest disaster, which is related with the water
frontiers in the United States of America (USA)
(Ingersoll, Locke & Reavis, 2012). The objective of
the paper is to highlight the ethical issues concerned
with oil spill.
Overview of Company
BP is observed to be a leading player in the gas and
oil industry of the global market. It came into
existence during the early 1900s in England. The
organization uses innovative technology so that it is
possible to reduce emission of carbon during
extraction of oil and gas from the deep sea. BP
operates in 72 nations around the globe and has a
total workforce size of above 70,000. Moreover, the
well known brand of BP that operates in the global
market includes Castrol, Aral and ampm (BP p.l.c,
2017; BP p.l.c, 2017a). The business at present is
headed by the Carl-Henric Svanberg, who after the
business operations, ensure that all types of risks are
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well managed. Strategies of BP focuses on reducing
the costs that are involved while extraction of oil
and gas from sea and deserts. The BP therefore
focuses on reducing costs and adhering to
sustainable means of production, thereby leading it
to attain competitive positioning in the
petrochemicals market all round the globe (BP p.l.c,
2017b).
Ethical Issues
As already indicated, the oil spill from the oil rig at
the Gulf of Mexico is one of the greatest ethical
issues that are concerned with BP. Clearly technical
failure can be regarded as one of the most
fundamental ethical issue that is concerned with oil
spill. It means that lack of proper maintenance of
the machines is responsible for the fire issue. The
machine that was supposed to prevent any damage
to the environment during any fatalities such as fire
did not function properly. The standards that were
supposed to be followed by BP for restricting
accidents were also not followed. The committee
that was set up for investigating the ethical issues
involved in the oil spill is known as the Deepwater
Horizon Study Group. As per the report, the
working conditions of the oil refinery was not up to
the mark along with the preventive measures that
were to be taken for preventing fatalities during
accidents (Bryant, 2011; Deepwater Horizon Study
Group, 2011).
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Damage caused to the environment due to such spill
can be regarded as another ethical issue. Turtles and
sea birds that were observed to rely on the sea for
survival were tremendously affected due to the oil
spill. It can hence be estimated that dolphins were
dead due to the spreading of crude oil after the
spillage. Other than the moving animals and birds,
the Deepwater Horizon report mentioned that corals
under the sea have also been affected due to the oil
spill from BP’s refinery. The ethical dilemma that is
involved in this case is that it has not been possible
to exactly trace the impact of oil spill on marine
ecosystem (Bryant, 2011; Deepwater Horizon Study
Group, 2011).
Stakeholders Affected by the Ethical Issue
Stakeholders apparently refer to the parties that are
affected by the tragic oil spill. It can hence be
observed that employees working at the refinery
were mostly affected due to the oil spill. The reports
mentions that a total of 11 workers died due to oil
spill. Search and rescue operations that were
undertaken by the coast guard were unable to
discover the corpse of the workers. It can hence be
observed that the workers were so fatally injured
that some of them had not even recovered till date.
The crew members that were not injured were
heavily panic-stricken after watching their peers get
harmed from fire. Survivors had to jump from the
oil rig for saving themselves (Jarvis, 2010; Mcphee,
2016).
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BP itself falls in the category of stakeholders that
were affected adversely after the deep water horizon
incident. It had to incur huge expenses on
installation of the machines that were damaged
from fire and oil spill. The oil rig hence sank that
caused a loss of around $6.3billion. BP was legally
liable to pay for the compensations that were caused
due to the accident. Fall in the shareholder value
was hence found to be another cause that led to the
financial loss of BP. Just after the incident of deep
water horizon it was observed that shareholder
value of BP dropped by 55%. After the incident the
share price of BP fell to $27, whereas prior to it the
price was $59.48. The barring of BP to raise money
by bidding in stick exchanges was passed by the
U.S. Environment Protection Agency (the EPA)
(Chamberlin, 2014; Ruddick, 2015).
Impact of Decisions
The impact of EPA’s decision to restrict BP from
raising money in the stock exchanges of the USA
has created an adverse impact on the financial
health of the organization. BP is not able to raise
funds from the stock market that is necessary to run
operations in other areas of the globe. However, the
decision can be considered to create a positive
impact as it will prevent BP from being incautious
in the future regarding upgradations of the safety
measures (Chamberlin, 2014; Ruddick, 2015).
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View on Business Ethics
I considered that business ethics is related with the
maintenance of good reputation in the market. For
instance, organizations must maintain proper
product quality and pricing strategies, which are
important to built strong reputation. After reading
the case study, I came to know that there is a
constant need to maintain safety at workplace as a
part of ethics. It is in fact duly important to
undertake preventive measures that reduce fatalities
after accidents.
Conclusion
The accident that took place at the oil rig of BP at
Gulf of Mexico in 2010 is termed as Deepwater
Horizon Disaster. It caused spillage of oil and the
rig caught fire, which in turn led to the loss of lives
of workers and damaged natural habitat. As a result
of this, EPA banned BP from raising money from
the market that caused fall in the share value.
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References
BP p.l.c 2017, BP at a glance, About BP, viewed 14
September, 2017, <
http://www.bp.com/en/global/corporate/about-bp/bp
-at-a-glance.html>
BP p.l.c 2017, Our history, Global, viewed 14
September, 2017, <
http://www.bp.com/en/global/corporate/about-bp/ou
r-history.html>
BP p.l.c 2017b, ‘Annual report’ Content, pp. 1-294.
Bryant, B 2011. Deepwater horizon and the Gulf oil
spill - the key questions answered, Guardian,
viewed 14 September, 2017, <
https://www.theguardian.com/environment/2011/ap
r/20/deepwater-horizon-key-questions-answered>
Chamberlin, A 2014, BP lost 55% shareholder
value after the Deepwater Horizon incident,
Market, viewed 14 September, 2017,
<http://marketrealist.com/2014/09/bp-lost-55-
shareholder-value-deepwater-horizon-incident/>
Deepwater Horizon Study Group 2011, ‘Final
report on the investigation of the Macondo well
blowout’, Berkeley, pp. 1-126.
Ingersoll, C, Locke, R M & Reavis, C 2012, ‘BP
and the Deepwater Horizon Disaster of 2010’, MIT,
pp. 1-28.
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Jarvis, A A 2010, BP oil spill: disaster by numbers,
Environment, viewed 14 September, 2017, <
http://www.independent.co.uk/environment/bp-oil-
spill-disaster-by-numbers-2078396.html>
Mcphee, R 2016, Deepwater Horizon survivor - I
had a death wish for a long time after the rig blew,
Mirror, viewed 14 September, 2017, <
http://www.mirror.co.uk/news/world-news/deepwat
er-horizon-survivor-death-wish-8936532>
Ruddick, G 2015, BP reveals $6.3bn quarterly loss
owing to Deepwater Horizon bill, Guardian, viewed
14 September, 2017, <
https://www.theguardian.com/business/2015/jul/28/
bp-loss-deepwater-horizon-bill>
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