Deepwater Horizon Disaster: A Case Study in Leadership & Management

This case study examines the Deepwater Horizon disaster of 2010, focusing on the leadership and management failures that contributed to the oil spill. It begins with a company profile of British Petroleum (BP) and details the events of the disaster. The study identifies the causes of the oil spill, including defective cement, valve failures, misinterpreted pressure tests, and a series of safety negligence measures. It then analyzes the implications of the disaster on decision-making and organizational structure within BP. The report highlights the ethical leadership issues for stakeholders and argues that the Deepwater Horizon oil spill was a disaster of strategy and leadership. Effective leadership styles, principles, business ethics, and organizational behavior are discussed in relation to preventing such disasters. The document concludes by emphasizing the importance of ethical leadership, robust safety measures, and proactive risk management in the oil and gas industry to prevent future environmental catastrophes. This document is available on Desklib, a platform offering a wealth of study resources and solved assignments for students.

LEADERSHIP AND
MANAGEMENT SKILLS

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Contents
Introduction...........................................................................................................................................1
Company profile and Deepwater Horizon Disaster of 2010..............................................................3
Causes of Oil spills.............................................................................................................................4
Ethical leadership issues for the stakeholders....................................................................................7
Deepwater horizon Oil Spill was a disaster of strategy and leadership..............................................9
Conclusion...........................................................................................................................................14
REFERENCES....................................................................................................................................17
Introduction
Oil and gases industry is one of the biggest industries in all over the world. They are
high contributors to the economy and GDP of the nation. They are also known for various

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kinds of pollutants they release in the environment. They generally release hydrocarbons in
the environment and create a whole lot of land, sea and air pollution (Akhtar, Khan and
Mujtaba, 2013). There are many kinds of hazards that are created by the oil firm. One of them
is oil spill. It is one of the most common environmental hazards that are created by the oil
companies. Many cases have been registered all around the world regarding similar hazards.
Oil spills results in degradation of land as well as it also affect the life persisting there. Most
disastrous affect was on the aquatic life as most of the oils spills occur in deep oceans.
Hydrocarbons are responsible for destruction of many coral reefs all around the world which
is not good for many of the flora and fauna species (Al-Majed, Adebayo and Hossain, 2012).
All the firms in the industry are making hard attempts to make sure that this kind of hazards
does not occur.
In order to avoid oil spills companies make larger amount of strategic plans. Apart from this
companies also take managerial initiatives so as to control such cases. The way in which
these disasters can be controlled depends on the ethical leadership of the management and
leaders (Atteya, 2012). Companies make several strategies so as to reduce such cases. The
leadership approach that is followed within the firm determines the chances of oil spills.
Various kinds of stakeholders get affected with such hydrocarbon release. It is essential that
all the stakeholders must be involved in this kind of ethical decision making. Organisational
behaviour also affects the approach that is being used for reducing oil spills (Antonovsky,
Pollock and Straker, 2014). It is also essential for the sustainability of the firm and
environment. Governments all around the world have become strict on the unethical working
process of these oil companies and are forcing firms to avoid incidents of oil spills. BP oils
are one of the biggest companies in the Oil industry (Asghari and Rakhshanikia, 2013). It has
also faced many oil spills cases.
This report highlights the ways in which factors that are responsible for Deep Horizon Oil
Spill Disaster. It also showcases the causes of Oil Spills and its implications for the
management’s decision making, Organisational structure as well as communication. The role
of leadership in avoiding such disasters has also been illustrated in this report. Some other
factors like the strategy and the initiatives that are taken by the firm to avoid such incidents
have also been reflected in this report. A comprehensive detailed explanation of effective
leadership styles, principles, business ethics and organisational behaviour has been provided
in the later part of the report.

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Company profile and Deepwater Horizon Disaster of 2010
British petroleum is one of the biggest companies in the overall world. It was established in
the year 1909 as the Anglo-Persian Oil Company (Ávila, Pessoa and Andrade, 2013). It was
discovered by William Knox after eight years of search. In the later years its 51 % of stake
was purchased by the British government as they needed petroleum supply for the people.
Majority of the ownership of the company was released by the government in the year 1970s
when the firm was selling most of its shares so as to increase the productivity of the firm
(Creasy and Anantatmula, 2013). This was one of the initial privatisation measures taken by
the government of UK. When the government shared its final 31 % share in the year 1987 the
performance of the British petroleum was floundering. In the year 1992 company faced huge
lose up to 811 million dollars. Due to this company adopted many kinds of cost cutting
measures so as to avoid the situation of bankruptcy.
This company applied many kinds of strategies for excessive growth of the firm which
involved strategies such as merger with its rivals Amoco and ARCO. Due to its excessive
brand management and environment friendly business initiatives helped it to make a
considerable amount of profits (Cullen and Parboteeah, 2013). Apart from this it is also to be
understood that even after such measures being taken there was an oil spill case in the year
2010. This challenged the whole brand management initiatives of the firm.
BP oil spill also known as Gulf of Mexico oil spill or Macondo blowout was an industrial
disaster that started from April 2010 in the Gulf of Mexico on the BP operated Macondo
Prospect. It was responsible for killing of eleven people. It was understood to be the world’s
largest ever recorded oil spill in the history of petroleum industry. An estimate by the US
government approximated that it was total discharge of around 4.9 million barrels (Dahl,
2013). When the spill got uncontrollable then it was declared to be sealed in 2010. As per the
reports in the year 2012 site was still leaking. Many of the strategies were implemented so as
to safeguard the lives of aquatic species with the activities such as floating booms, controlled
burns etc.
The effect of this massive oil spill was recorded in many parts of the world where sea
beaches were flooded with hydrocarbon pollutants. Many dolphins and other aquatic animals
died at the infant stage of their life due to heart diseases.

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Causes of Oil spills
In order to analyse the actual reasons of Oil spills many researches were conducted by
various researchers. The US government in its report of September 2011 pointed out that the
sill was the cause of the defective cement that was used in the construction of well. This
report founded British Petroleum as the main culprit along with the rig operator Transocean
and Contractor Halliburton (Freudenburg and Gramling, 2011). Some other researchers
suggested that it was due to cost cutting decisions adopted by the company that they used
inadequate safety system. The report also concluded that spills was a result of systematic root
causes and absent significant reforms in both industry practices and the policies of
government. Due to the spill in the oil rig there was an explosion where 11 people were never
found even after the search operation. Deepwater Horizon was the semi-submersible,
floating, mobile and dynamically positioned oil rig which was capable of operating up to
10000 feet deep. To be precise it was analysed that at night of 20 April 2010, high pressure
methane gas got expanded into the drilling riser and rose into the drilling rig. This was the
place where it ignited and exploded and hence the whole platform was engulfed in the
explosion.
In various other reports it was founded that there were low grade of construction materials
that was used in the well which resulted in generation of cracks after few years of operations
(Harlow, Brantley and Harlow, 2011). There were total of eight different safety negligence
measures which caused such a large Oil spill.
 Dodgy Cement: This was considered to be the most crucial reason for this incident.
The cement at the bottom of the borehole did not create a seal. This resulted oil and
gas began to leak through its pipes and come to the surface. The standards that should
not have been used were utilised for the constructive. This was done to reduce the cost
of construction (Heller, 2012). Along with this lesser amount of centralisers were put
for measuring the cement evenness as well as no bond logs were used for testing the
integrity of the cement.
 Valve failure: This was another important reason for the oil spill where the bottom of
the pipe was sealed in two ways. First it was filled with cement and second it
contained two mechanical valves designed to stop the flow of gas and oil. Both these
failed which allowed gas and oil to travel up the pipe towards the surface.
 Pressure test misinterpreted: There are certain kinds of pressure test that is conducted
for determining whether the well is sealed or not (Hoffman and Devereaux Jennings,

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2011). The results of these tests were miscalculated and interpreted which led them to
come to a conclusion that well was under control.
 Leak was not early noticed: Even when there were some failures in the construction
process and there was bad estimation of whether the well is under control or not, crew
that was working at the surface should be able to detect the flow of gas and oil in the
upward direction. This could have been done by checking the increase in the pressure
inside the well (Inkpen and Moffett, 2011). Even when the pressure was increased to
similar level before 50 minutes of the actual explosion nobody took it seriously and
the high pressure was expected to be as just a leak.
 Valve failure before the explosion: Around 8 minutes before the rig exploded, a
mixture of gas and mud began pouring onto the floor of rig. The crew on the rig
immediately attempted to close a valve in the device that was installed to prevent
blowout. This valve lies on the floor over the top of the borehole of the well but this
valve also failed at that moment.
 Overwhelmed separator: The crew members had the choice of deviating the mud and
gas away from that of the rig. This could have vented it safely through pipes over the
side. Instead of this the flow was diverted to a device on board the rig designed to part
small amount of gas from the flow of the mud. The so called mud-gas separator was
quickly overwhelmed and the flammable gas began to destroy the rig.
 No gas alarm: This rig had an on board gas detection system which should have
sounded the alarm and triggered the closure of ventilation fans to prevent the gas
reaching to the area that was potentially cause the ignition like rig’s engines (Khdair,
Shamsudin and Subramanim, 2011). This system also failed at the right time.
 No battery for BOP: The explosion crashed the control lines the crew were utilising
for making the failed attempts to close safety valves in the blowout preventer. The
blowout preventer was having its own safety mechanism using which two separate
systems should have closed the valves automatically when it got from the surface.
One of the systems seemed to have had a flat battery and other inappropriate switch.
Hence the blowout preventer did not close.
All this series of incidents were responsible for mistakes or failures that led to the Oil Spill.
There were several implications that were caused on the decision making, organisational
structure and the decision making.
Decision making after the incident

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After the incident took place there were several questions that were raised in the
public regarding the decision making process of the company (Kleinnijenhuis, Schultz, Utz
and Oegema, 2015). The question was also raised as to whether in concert with the chaotic
mix. There was a considerable change in the process of decision making after the incident.
Since the leadership was new at the time when the disaster took place and hence they took
many changes in the style of decision making. They added larger numbers of people in the
decision making (Shultz, Walsh, Garfin, Wilson and Neria, 2015). Some of the officials from
government also become part of the decision making process as they were also looking at the
safety measures which was to be adopted inside the firm.
Implications of Organisational structure due to incident
After the incident took place significant amount of changes in organisational structure
was noticed in the cited firm. Government also become the part of the decision making
process and there officials were positioned at several positions for few years so as to check
the safety standards inside the company (Wickman, 2014). All the executives were made
responsible for the decision making. Strong bureaucratic arrangements was transformed into
a more flexible and organic structure (Liu, Y.Y., Weisberg, Hu and Zheng, 2013). The
hierarchical departments were converted into smaller teams. More junior level staffs or
managers were included in tackling of the strategic issues. British Petroleum also adopted an
organisational structure with cross functional teams. Some changes were also noticed in the
participation of external members in the decision making of the company.
Implication on the communication due to the incidents
Implications of the incidents were also noticed on the communication that has been
followed within the company (Ruggiero and South, 2013). It became the role of leader to
make an effective communication with all its stakeholders. Since most of the plans were
made by the management and employees point of view was not listed. There was a single
sided communication which was challenging the ethical concerns of the firm also
(Marquardt, 2012). Both the companies Transocean and Halliburton both blamed the
leadership of BP for the lack of communication which was also the reason why the incident
took place. After the incident took place effective communication system were placed at all
the work stations of British Petroleum. It was noticed that at the time of the incident that took
place there were no extra system that was placed for informing the people who can come for

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rescue. Company leadership created a system where all the grievances and ideas of the
employees were heard.
Ethical leadership issues for the stakeholders
Ethics being a part of the business in the modern times and hence it has become an
issue to manage ethical leadership (Mohamed, Sapuan, Ahmad, Hamouda and Baharudin,
2012). There were number of stakeholders that were attached with the company and have the
responsibility of maintaining the ethical consciousness of the firm. Leadership always have
the role of acting as a crucial guidance for employees as well as they must be responsible for
moral development in a firm.
Since there are many kinds of ethical challenges that comes in front of the company and
hence many kinds of ethical leadership issues arises in front of the stakeholders from time to
time (Barron, 2012). Stakeholder does not only have to think about the profit margins but
also have to check the implications of business on the society. There are various kinds of
issues are faced by the ethical leadership for the stakeholders are as follows:
 Consistency: It has become difficult in the present day business to maintain the
consistency in the ethical practices of the firm. It is hard to stick to the rules and
regulation of the firm following firm’s own ethical standards which serves as an
aspiration for their workers. This indicates that company stands by the core values
 Policies: Making ethics is a critical and complex process and maintaining it is more
difficult. To ensure clarity a firm needs to have clear policies in terms of mission
statements, practices, rules and regulations (Mulabagal, Yin, John, Hayworth and
Clement, 2013). At the time an employee is hired within a firm a formal copy of the
written policies needs to be given. This helps in reducing the loopholes that might
reduce the exploitable loopholes.
 Maintaining environment within the firm: This is another issue in front of the
stakeholders to maintain the internal culture of the company in a way that it reduces
the burden on the employees. The culture must give them rights to speak out on the
topics they want to (Muralidharan, Dillistone and Shin, 2011). For British Petroleum
it is essential that they have an open door policy where employee can approach to
their supervisors regarding any issue they notice.
 Gray areas: There is an issue in the ethical leadership when faced with moral gray
areas. This was the area where the stakeholders of the BP lagged the most. For

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example in order to reduce the expenses during the bankruptcy of the company they
started to reduce the expenditure on safety measures. The safety regulation under the
ethical practice suggests company to upgrade safety equipment on the timely basis
which will cost large amount of money (Wheelen and Hunger, 2011). But what firm
did was to rationalise its present equipment to be fine. BP bended its rules which
resulted in deep water oil spill incident.
 Some other measures: Cost cutting measures were adopted by BP. In this process only
they did not cared about the amount of money they need to invest in safety and
construction of the units. This is not in the goodwill of the company.
Stakeholders that are facing these ethical leadership issues
 Government: It is the role of the government to make the policies related to ethics and
force companies to follow all these. Governments are facing the issue that they have
to ensure that there is ease in doing business within the country while ensuring that all
the rights of people attached to it are safeguarded (Obasan Kehinde and Hassan
Banjo, 2014). Maintaining the ethical values as well as promoting business within the
state is always difficult. In the case of BP oil Spill government had to compensate to
the people that was affected by the Oil spill while ensuring that BP business shall not
get affected.
 Environment: In the case of petroleum industry firm’s need to ensure that
environment does not get affected by their operations. Many types of strategies are
made in order to make sure that least amount of damage to the environment is caused
by the operations of the firm. There were many aquatic life animals that died due to
Deepwater Oil spill and also destructed the beaches of the many coastal areas. Larger
area of the sea water got affected due to the Oil spill incident. This also destroyed
many of the tourist places.
 Investors: Increasing the profit of the investors while ensuring that ethical concerns
are properly managed is an important issue of the firm. They always have to check
that resources were properly managed within the firm so as to make cost cuts in
unnecessary activities (Odida, 2011). It was due to the cost cut measures that such an
incident took place in the year 2010.
 BP Company: One of the major challenges that come in from of the company is to
ensure its growth while making sure that they stick to their basic ethics. The issue of
making policies which satisfies each and every stakeholder is a difficult task for the

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Company. This company faced a huge amount of loss in terms of brand name as well
as in economic terms due to the deepwater Oil spill incident of 2010. This disaster
resulted in many kinds of legal issues for the firm. All this happened because they did
not followed ethical practices while they were constructing their well just for saving
some money.
 Residents: People who were living in the Coastal areas in the regions where oil spill
incident took place were badly affected by the accident. There were claims by
millions of people that they need compensation as they faced huge financial loses.
The beaches were flooded with hydrocarbon contents which resulted in the
destruction of tourism spots. These tourist spots were the source of income for many
of the local people. There were many residents who were dependent on the sea foods
and death of large amount of aquatic animals rose problems for them.
 Employees: There were many employees who were affected by the disaster. There
were around 11 people who died in the incident. Many crew members faced fatal
injuries. The biggest issue to the ethical leadership of the employee of BP is to
maintain the environment and culture within the company in more positive manner
(Oyejide and Adewuyi, 2011). Employees are the units that work on the ground levels
and hence they need to act as whistle blower when they see any illegal practices being
followed inside the firm. Employee must support the company leadership so as to
strengthen the ethical policies of the British petroleum.
Deepwater horizon Oil Spill was a disaster of strategy and leadership
It is the role of the leadership to make strategy and it is important for them to manage
the ethical practices that are being followed within the organisation. Deepwater horizon Oil
Spill was one of the best examples that how the bad approach in the management of ethical
concerns related to business can result in failure and can cause serious disasters.
I believe that since the company was facing huge financial problems hence the leadership of
British petroleum decided to adopt many cost cut measures. In the investigation done by the
US government suggested that due to the cost saving approach of the company they
constructed well with cement that did not touch the industry standards (Bourque, 2018). In
my view the strategy of making cost cut in various fields like staffing, management of
resources as well as adopting new safety measures resulted in such a huge loss to the
stakeholders.

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Fault in the leadership style of the company resulted in huge amount of loss to the firm. The
leadership was slow in taking decisions. It was the top management of the company that
decided to cut of the cost that is required in updating of the communication mediums
(Spencer and Fitzgerald, 2013). This resulted in disruption of work process and also
information was not delivered on time.
Leadership had to make sure that all the safety measures are taken. This would have reduced
the chances of system failure which would have saved the whole rig and life of the employees
working there (Yang and Wang, 2014). It is always the role of the management to set up
monitoring standards that is capable of checking all the work procedure. This was not present
at the oil rig which has led to incident. According to the report that was given by US
government it was identified that the earlier signs of system failure was not taken seriously
by the leaders present at the work station.
BP executives were present there on a mission that they have to make the drilling before the
storm season. Fast drilling was done to get troublesome well completed and capped before
storms were coming. Even after the company had the best of drilling records due to fast
drilling the risk got enhanced (Page Centric Training, 2018). Transocean people had no
powers to tell anything to the petroleum giants that they are making the operations unsafe as
in the investigation also they said that BP officials worked with only one bottom-line i.e. to
save money.
On the larger note BP people have not enforced ideas of proceedings more cautiously in the
face of an unsatisfactory test as to whether there was a gas leakage from the well. The
transocean people were under the business and financial pressure to get things done.
Leadership of both the company focused on approach based on business issues and not the
safety of the whole system. Even when the transocean people detected the foul they did not
had the veto so that they can report to the leadership of BP. There were so many indications
that there was gas leakage as well as the mud was flowing to the surface but everything was
neglected and the crew was busy in showing off the Horizon’s impressive capabilities to the
important people.
Training of the safety measures was necessary and the crew members present at that place
was not able to detect the initial signs of disasters (Valvi, and Fragkos, 2013). Since there
was lot of alarms snoozing at the same time hence the managers present in the control room
were unable to understand he actual cause which led them to temporarily setting of the

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alarms. General Master Alarm was set off which did not automatically activated at the time
when gas was leaking in higher amount. It was the role of the leadership to provide the
training regarding such riskier situations. Ms Fleytas who was the in charge and one of the
first crew members who checked that all alarms were blinking said that she had not been
provided with the training regarding how to set down the whole system in case of any similar
situation occurs and hence she was unable to shut down the system when such faults arise.
Apart from this she was under the pressure as the VIP inspection was going on and hence she
was unable to take big decision (Smith, Smith and Ashcroft, 2011). Top management at the
rig was also busy in the inspection and they were unavailable for taking major and immediate
decisions.
In strategic sense there were no particular people who could be blamed for occurrence of
such incidents. Lack of in charge of various activities were absent as well as there was no
clear command structure, creating ripe conditions for manipulating safety protocols (Pranesh,
Palanichamy, Saidat and Peter, 2017). There was no particular strategy of how to respond to
similar situations. Even the leadership did not wanted to have a second round of test when
first test gave positive results.
In my view when the management started to feel that everything was alright and started to
make superficial decisions problem got worsen. In the investigation it was also got surfaced
that there was no structural decision making at the lower levels so that immediate decisions
can be done with ease. There was no training provided to the employees regarding the
immediate action that has to be taken when such incidents happen.
Leadership lessons from the incidents
As in the above section of the report the strategic and leadership failures have been
illustrated. There were many leadership lessons that could be learned from the accident.
 There must not be any strategy that could produce initial benefit to the company and
are capable of bringing chaos to your subordinate’s efforts.
 When a leader arrives at any pace they must do not add chaos to the place rather they
should make things better as in this incident inspection of the VIPs created the mess
(EPA, 2018).