One of the most stunning outcomes of the now month-long oil spill in the Gulf of Mexico is the utter reversal of corporate images it has generated. At once, Exxon — for two decades tarred as the callous, greedy and dirty culprit in the Valdez oil spill in Alaska — is regarded in expert circles as the squeaky clean, state-of-the-art, cutting-edge model of safe, environmentally friendly oil drilling. And BP — which spent tens of millions of dollars under former CEO John Brown successfully branding itself as the green, publicly interested conscience of the industry — is now the poster child of the devil-may-care, dollar-grubbing, environmentally and labor unfriendly oil company.
This turnaround has implications around the world. As they battle the rise of state-owned energy companies such as Gazprom, Sinopec and Petronas, western Big Oil companies have based their presumption of an entitled industry position on a single assertion — their ostensibly superior technological capability, and in particular their ability to plan and execute highly technical projects. If doubt is cast on that claimed skill, the petrostate wave may simply wash over Big Oil, including Exxon despite its new image.
The latest detail that struck me came in a piece by Russell Gold of The Wall Street Journal that describes a disagreement in the hours before the April 20 explosion between a BP official assigned to the rig and the drilling manager for Transocean, which was carrying out the drilling on BP’s behalf. In Gold’s account, BP’s Donald Vidrine disagreed with how Transocean’s Jimmy Wayne Harrell intended to carry out the next step of the drilling process. Read the story for the rest of what happened. But the point in this case is that this account wholly contradicts the much-repeated, absolute assertions of BP CEO Tony Hayward. As I wrote recently in The New Republic, Hayward has said again and again on television and before audiences, “This is not our accident.” Instead, as we now know, his men were in lockstep supervising and commenting on every major step carried out on the rig.
No doubt such a spill could have happened to any of the companies, none of whom we can see had the foresight to organize a spill response up to the task of a deepwater Gulf catastrophe; if they had, they would be unleashing it in order to contain their own, knock-on problems. But it’s notable that BP in particular had no such capability despite its history of accidents since the Texas City refinery explosion in 2005.
Exxon, meanwhile, has become the “gold standard” for safety since the 1989 Valdez accident, according to Tom Bower, whose book Oil: Money, Politics and Power in the 21st Century has just come out. “After 1989, ExxonMobil’s strait-laced executives have imposed excruciating requirements, not least on all contracted oil rigs,” Bowers wrote in an op-ed in the Wall Street Journal. “Around the clock, ExxonMobil’s engineers, based on the rigs, second-guess every plan and deed undertaken by its sub-contractors, especially related to safety.”
More may be coming. At ProPublica, Abrahm Lustgarten writes about a BP whistleblower who says that BP may have cut corners with another of its rigs in the Gulf, the Atlantis.
The fallout of the spill affects the Gulf environment of course. But it also is having enormous ramifications for the industry. Over at footnoted.org, Sonya Hubbard notes the flood of reports that BP and other companies involved in the Gulf are having to file with the Securities and Exchange Commission because of the spill’s potential impact on their financial health.
Yet for no company is the spill more consequential than for BP, whose fortunes have been wholly reversed in a single month. Astonishingly, Exxon’s fortunes are also contrary to the past, but CEO Rex Tillerson will sleep well.