SPE-183620-MS

Business Continuity Management in a Dynamic Environment Lessons

From Macondo
Tayo Ajimoko, Rhetort
Copyright 2016, Society of Petroleum Engineers
This paper was prepared for presentation at the SPE African Health, Safety, Security, Environment, and Social Responsibility Conference and Exhibition held in Accra,
Ghana, 4-6 October 2016.
This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
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Abstract
Business Continuity (BC) is defined as the capability of the organization to continue delivery of products
or services at acceptable predefined levels following a disruptive incident. (Source: ISO 22301:2012)
Business continuity management (BCM) is a framework for identifying an organization's risk of exposure
to internal and external threats. The goal of BCM is to provide the organization with the ability to effectively
respond to threats such as natural disasters or data breaches and protect the business interests of the
organization.
The April 2010 Deepwater Horizon (DWH) Macondo blowout resulted in death of 11 people and the US
government estimated that approximately 5 million barrels of crude oil was discharged into the ocean. The
well was declared officially sealed about 5 months after the blowout. In July 2015, British Petroleum (BP)
agreed to pay $18.7 Billion in fines, the largest corporate settlement in US history. This paper will catalogue
the major BCM lessons learnt from the incident.
BCM includes disaster recovery, business recovery, crisis management, incident management,
emergency management and contingency planning. It is aimed at identifying risk, threats and vulnerabilities
that could impact an entity's continued operations and provides a framework for building organizational
resilience and the capability for an effective response.
This paper will concentrate on the efficiency and effectiveness of BP's crisis management, disaster
recovery and contingency planning in a flux environment in the wake of the disaster. The theatre of the
Macondo blowout was set against a backdrop of transitioning internal environment and a changing external
environment. Transcripts of media communications, results of emergency response and intervention plans
and rationale will serve as pointers for deconstructing BCM plan outcomes.
Observations, conclusions and recommendations from copious volumes of investigation reports reviews
and published reports as well as accounts of successful BCM from other landmark blowouts and oil spills
in the industry will be employed in distilling the keys lessons that will give any other operator facing such
a disaster a head start in future.

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Overview
The objective of BCM is to make the organization more resilient to potential threats and allow the entity
to resume or continue operations under adverse or abnormal conditions. This is accomplished by the
introduction of appropriate resilience strategies to reduce the likelihood and impact of a threat and the
development of plans to respond and recover from threats that cannot be controlled or mitigated as quickly
as possible. Crisis management is an integral part of BCM especially in complex systems like the systems
obtainable in the oil and gas industry. The systemic nature of crisis management means that it must be
integrated with other programs and plans in the company such as Emergency Response Plan and Quality
Assurance Plan. A major crisis is one that has the potential to affect every aspect of an organization and
exacts a major toll on human life, property, financial earnings, and the reputation and or general health and
wellbeing of the company. BP faced a major crisis on the DWH rig drilling Macondo-1 well in the Gulf
of Mexico.
On 6 Feb 2010, Deepwater Horizon (DWH) resumed drilling months late and well over budget with about
40% non-productive time (NPT). There was therefore pressure to reduce NPT and speed up operations to
stem the series of schedule slippages threatening the corporate strategy of "bringing in an elephant". Well and
operational problems however persisted with gas kicks, drilling fluid losses as well as personality clashes
between parties. Staffers referred to Macondo-1 as "the Well from Hell". There were few problems with
MMS the regulator who gave speedy approvals and exemption from some regulations few inspections
unannounced. As the well proceeded, there were many changes in plans without formal risk assessment
of the changes.
On 20 April 2010, while preparing for a temporary abandonment of the well for re-entry at a later date (the
rig was scheduled to mobilize away from the GOM to Nile Basin for strategic reasons), the mandatory inflow
test for confirming the integrity of the well barriers (mechanical and cement) was incorrectly interpreted.
There were other issues associated with the wrong interpretation which culminated in the well kicking.
These issues includes amongst others; cement slurry stability and integrity potentially due to contamination
because of the failure to properly condition the mud and the hole especially around the shoetrack, poor standoff and centralization across critical zone(s) and inconclusive pressure test of the casing and float equipment
after primary cementation due to the failure of the float collar to convert to activate its check valves.
The crew therefore assumed the integrity of all the well barriers were intact, while all the time they either
missed or ignored critical signals that the well was live and kicking till the blow out occurred at 7 p.m.
same day. This happened after gas entered the BOPs at the wellhead on the seabed through the riser and
exited through the rig derrick.
The bridge was oblivious of the loss of well control and only became aware when gas exited the crown
and that explains why they diverted the gas instead of venting it overboard. The gas alarm which could have
given them key information was disconnected to speed up operations. The gas spread quickly to the engine
room where it was ignited by a spark and created an explosion that left 11 crew members dead and many
more injured. An abandon ship order was given afterwards to the rig after the central power and hydraulic
systems packed up and the crew were unable to power the secondary systems to activate the BOPs and and
the hallways and passageways were filled with smoke.
On 21 April 2010, the day after the blowout, fire boats and rescue vessels arrived but were overwhelmed
by the scale and intensity of the raging inferno and 36 hours after the blowout, further explosions erupted
keeling over and sinking the rig in 5,000 feet of water. The containment effort would take 3 months to topkill the well and cap the BOP and a further 2 months for the bottom kill by drilling of a relief well.

Risk Management and Crisis Management

There is a significant difference between risk analysis and Crisis Management. According to online
encyclopedia, Wikipedia, risk is an uncertain event or condition that, if it occurs, has an effect on at least one

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project objective. Described mathematically, it is the probability of occurrence of a situation or something

multiplied by the resulting cost or benefit if it does and this is known as the expectation value or risk factor
and is used to compare and rank different levels of risks.
The oil industry is very efficient at performing risk assessment and subsequently ranking them. The risks
with the highest probability of occurrence and with higher risk factor are paid the most attention and efforts
are made to eliminate them and when not feasible or possible, mitigation measures are put in place. A sample
risk assessment matrix (RAM) is highlighted in Figure 1 below where risks with potential consequence of
at least one fatality is considered tolerable and this is based on the probability and frequency of occurrence
and these information are derived from historical data.

Figure 1Risk Assessment Matrix. Source: SPE

While the analysis in Figure 1 is valuable for process safety, it is counter-productive and dangerous for
crisis planning and management. Crisis planning and management is counterintuitive to risk analysis and
management because they have diametrically opposite focus. The former is concerned with major events
that have never occurred in order to adequately plan and prepare for them, the latter is focused on justifying
the deployment of minimal resources and efforts to those events.
The RAM in Figure 1 can be applied to the BP situation in an attempt to recreate the puzzles that
complete the Macondo mosaic. Historically, there has been no major blowouts in the Gulf of Mexico since
the Mexican Pemex IXTOC well in 1979 which blew out for 10 months and required the drilling of 3
relief wells to kill and bridge the flow. Generally in continuos depositional basins like the Gulf of Mexico,
reservoir pore pressure increases with depth in exploration wells. BP were well aware there was a risk of a
blowout but based on history, it considered to be remote or a rare failure and it was not taken seriously. And
there was absolute confidence in the pore pressure prognosis and ability of available technology to handle
any situation. Containment and cleanup plans were therefore not completed and resourced.
Emergency and risk management deal with natural disasters, crisis management is concerned with
human-caused disasters. The general public is extremely critical of companies held responsible for causing
crisis because unlike natural disasters like Tsunami, Hurricanes, Wild fires, human-caused disasters are not
inevitable. With proper crisis plan, the scale and impact of crisis can be significantly curtailed.
There are are several models for describing crisis and understanding crisis management. The notion that
crises have a recognizable life cycle is a constant theme that is quite common in crisis management literature

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(Coombs 2010) and the process and practice of BCM is built around these models. Also, there are different
typologies of crisis, Seymour and Moore (2005) suggest that there are two types of crises: the Cobra crisis
and the Python Crisis. The Cobra crisis is a crisis that occurs suddenly and that the company has no chance
to foresee it.
The Python, also known as the slow-burning crisis, on the other hand, is a crisis that develops over longer
periods (Seymour and Moore, 2005). It is also known as crisis creep which is a collection of issues that
steal up on the organization. BP's Macondo blowout can be described as a Python crisis because it is the
cresendo of a series of systemic failures both at the management and process levels and BP's initial response
to the disaster has been widely criticized because of this fact.
Coombs (2007b) divided crisis management into three main work categories: First, pre-crisis stage which
is concerned with prevention/preparation and aims to know what can be said or done to reduce the chance
of crisis and moderate its harm if it occurs; second, the crisis stage as the actual response to a crisis; and
third, the post-crisis stage concerned with the revision, the follow-up information, the lessons learned, and
the preparation for next crisis.

Discussions and Lessons

Fractal Organization
A fractal organization is one typically characterized by command-and-control systems of authority that
creates harmful stress and internal competition for advancement. It is top-heavy with a pervading perception
of limited room at the top. Simplistically, it is an organization with more chiefs and less Indians. It is
characterized by members withholding or hoarding information by focusing competition energy intern ally
rather than externally, creating silos of information amongst others. Internal symptoms of imminent failure
include low employee morale, low employee retention rates, managerial misconduct, hubris, a culture of
arrogance, bullying and sexual harassment, unreasonable demands for loyalty and profit-making, lack of
transparency, a steep vertical hierarchy of decision-making, a disregard for risk and harm, indifference to
less powerful stakeholders' needs and above all, an erosion of the values and ethical purposes which define
its key responsibilities (McKay, Huberman Arnold, Fratzl, & Thomas, 2008, and Crane and Matten, 2010).
Leading up to the Macondo accident, BP had ticked all the fractal organizational boxes and its situation
was further complicated by the 2005 Texas City Refinery accident where BP's reputation suffered a major
dent. Upon the retirement of Lord John brown in May 2007, his successor, Tony Hayward was burdened
with reversing the company's fortunes and charting a new course. He therefore proceeded on a major costcutting measure which made the organization more fractal.
Those who dont learn from history are condemned to repeat it. The Baker report which detailed the
organizational dysfunctions culminating in the Texas City refinery accident highlighted process safety as
a major failing. No sooner had the dust of that incident settled than BP commenced an ambitious project
while being heavily under-resourced. There was no evidence of proper planning or anticipation of crisis.
The quality of BP's response during the mishap also underpins this observation.
Meta-leadership. The concept of meta-leadership involves leadership that reaches beyond the confines
of an individual's particular role or position (Marcus & McNulty, 2014). Marcus and McNulty said that,
during times of crisis, the instinctual responses of freeze, flight or fight compels people's brains to respond
by going to the "basement", a term which describes the state where the brain is focused on survival and the
individual is incapable of any complex problem solving. The crisis manager is therefore very ineffective in
terms of getting a big picture and figuring out what is going on. They identify getting out of the basement
as quickly as possible in order to make sound decisions as a successful crisis management factor.
Based on available reports and reviews, there was no evidence of Meta-leadership during the crisis. At
crucial points, leadership was absent in the case for BP, for starters the company favours the single point

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accountability model for the control of work, an approach that has worked successfully with other operators.
The limiting factor for BP was the inverted pyramid organizational structure from numerous downsizing
and consolidations. It did not help matters that the staffers were bogged down with numerous layers of
process safety requirements. Essentially, the company had lots of documents but they were not workable,
functional or practical. The fact that this concept was not embraced at BP meant there was widespread
co-dependencies and the company was therefore sluggish in effectively responding to the fall-out of the
Macondo blowout. One of the volumes of reports made the damning conclusion that "Most, if not all, of
the failures at Macondo can be traced back to underlying failures of management and communication"
Swarm Intelligence. Marcus and McNulty (2014) also identified a phenomenon known as swarm
intelligence from their studies of the response to the Boston Marathon bombings. Immediately after the
bombing, they began studying the leadership responses by asking various responding agencies who was in
charge. Their research concluded that nobody was in charge and yet the agencies worked very well together
with extraordinary cooperation. The success of the response was attributed to Swarm Intelligence patterned
after the ability of termites to create huge structures without central leadership or commander telling other
termites what to do.
A company like BP can dopt swarm intelligence by first empowering its people and trusting them to each
solve problems at their own levels by ensuring supervisors earn the trust of their surbodinates from top to
bottom. An organizational culture that openly encourages and welcomes new ideas and initiatives and is
not afraid of failure is the foundation. The authors also identified 5 aspects of achieving swarm intelligence
as follows: unity of mission; generosity of spirit; staying in your lane, or doing your job and trusting that
others are doing theirs; no ego, no blame; and a foundation of relationships.
Miscues and Miscommunication
A company with a good corporate social responsibility (CSR) credential and cordial relationship
with its immediate external stakeholders (host communities, contractors) will succeed in developing a
commensurate level of social capital it can leverage to build and improve its reputation. Perception is always
reality, both in life and in business.
Leading to the Macondo accident, BP has had a long history of major accidents, regulatory noncompliance and corporate infractions, all of which shaped the public's perception of the company especially
in the US. One of the rules and best practices of crisis communication is full, voluntary and timely disclosure
of the crisis situation. Every major disaster has a historical component with previous events which serve as
a precursor to the event in focus and these events can be regarded as signals.
It follows therefore, that a management needs to keep its ears glued to the ground to hear the internal
and external signals or footfalls. This can only be achieved by being in touch with the people and by being
sensitive to its external environment. Pearson and Mitroff (1993) divided crisis management into five phases
namely signal detection, preparation and prevention, containment and damage limitation, recovery, and
learning. BP obtained a failing grade in the signal detection due to issues earlier discussed. Pearson and
Mitroff elaborate further on the importance of truthfulness and empathy during crisis communication as key
tools for getting the key stakeholders on the company's side. The more the stakeholders pulling in the same
direction with the company and supporting it, the easier and faster the recovery will be. BP's poor crisis
communication and tone-deafness are exemplified by the following:
Total Tone-deafness.
Accepting total responsibility with an open, apologetic and cordial spirit is a key factor in swinging
public opinion in a crisis situation. The company also needs to evoke a perception of empathy to
garner public support. At the beginning of any disaster effort, emotions run riot. It is therefore critical
to seek emotional connection with the public and the victims at every opportunity.

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BP's spokesperson, former CEO Tony Hayward did not do justice to BP's communication strategy.
There was a clear lack of agenda, strategy and experience at the start on his part, neither did he make
any efforts at building any emotional bridges. For starters he denied BP's culpability or involvement
in the disaster consistently shifting balme to one contractor after the other. He also did everything to
downplay the scale and extent of the disaster at the beginning. BP and its CEO were described in the
press and the court of public opinion as arrogant. His attitude to the press was also less than cordial
with several press outlets complaining of stonewalling. His decision to go on a vacation to watch his
private yatch race claiming that he wanted his life back was ill-advised and underscored how much
out of touch and disconnected BP and its leader were.
BP was so tone-deaf to the sensitivity of the situation to the extent that they used Corexit, a dispersant
which is banned in the UK due to concerns about possible adverse health effects on people. The
manufacturer's safety data sheets also provides a disclaimer stating that no toxicity studies have
been conducted on the product but later conludes that it has a low potential human hazard. The
controversy that trailed the deployment of Corexit on Macondo further eroded public trust and support
in the motives and clean-up efforts of BP. It cast a dark cloud of suspicion which further eroded
stakeholder's confidence and served as an anchor that dragged BP's reputation further south. The
debacle aggravated an already testy situation and almost derailed the clean-up effort.
Hiding Behind a Finger.
The efforts by BP to limit or delay the flow of information to the public was the biggest slip in its
miscues and miscommunications. There was a deliberate effort to prevent access to planes carrying
media and many media reporters were prevented from covering and reporting the recovery efforts
and the few reporters that were allowed had to be accompanied by a BP representative.
Mistaking Planning for Preparation - Be Prepared (BP)
Planning is not a substitute for preparation. While failure to plan equates to planning to fail, planning
without preparation is like learning to ride a bicycle by reading an instructional booklet - the perfect recipe
for disaster. Because it lulls the person, organization or team into a false sense of security. Preparation
includes simulating worst case and what-if scenarios and role-playing to ensure that in the go-zone every
team member can play their roles to perfection. The lack of agility demonstrated in responding to the crisis
demonstrated a lack of preparation.
The Golden Hour.
In medical science, the term "golden hour" is used to describe the critical minutes at the beginning of
a traumatic event in which swift actions based on training, practice and experience will significantly
reduce the extent of damage and increase the chance of saving a life. In all crisis, there is the
golden hour which needs to be determined before hand and a play-book developed to guide all first
responders and on-scene commanders. This will ensure there will be no duplication of efforts and it
will guaranty that all the relevant parties work in parallel at the beginning to give the recovery effort
sufficient mileage and depth to minimize loss both in terms of life, property and reputation.
BP failed to effectively and efficiently utilize the golden hours of crisis management. It grossly
underestimated the scale of the crisis because it over-estimated its capacity to respond and contain the
disaster. This was based on volumes of process documents and manuals on its shelf many of which
were discovered to be incorrect and cosmetic as the crisis increased in intensity.
Ineffective Knowledge Management
Based on its precedents, BP is a company with a chequered history of crisis. Tony Hayward's predecessor,
Lord John Browne left due to personal crisis of his own making which tethered the company on the brink

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of collapse and hostile takeover. In his memoir titled Beyond Business (2010) he reflected on Macondo-1
disaster in the introduction to the 2011 edition of the book and said:
"In the face of a crisis I was taught to do three things. The first is to overreact not just operationally
but also on the political and human side. It is very difficult to gauge the scale of a catastrophe at the
beginning and it iis, in any event, generally easier to stand down a response rather than to gear iit
up after a slow start".
BP failed to overreact to the crisis, seemingly they over-estimated their ability to respond, contain and
manage the situation. The absence of an initial burst of action resembling crisis management is proof they
under-estimated the scale of the disaster. It is noteworthy that two days after the explosion BP had mobilized
32 vessels and 4 aircrafts, and three days later the number of aircraft had increased by one with the number
of vessels unchanged. Ultimately 205 times the number of vessels and 32 times the number of aircrafts
initially deployed was required to contain the crisis. The scale of the final response relative to the initial
was massive, it went from 32 vessels initially and ultimately required 24 times the number of vessels in
the entire US Navy.
Because the magnitude of the crisis was under-estimated, there was no clear evidence of multiple
scenarios and contingency planning. This is based on the apparent focus on repairing the failed BOP for
the first 10 days after the explosion which delayed innovative ideas for a back-up solution. Alternative
solutions also appear to have been explored sequentially, rather than in parallel which caused further delay,
the exception to this was the drilling of the relief well whose location and relevant coordinates are part of
the drilling program and would be readily available.
He further remarks as follows:"Second, I was taught to ask for as much help as possible, since no company
can have at its immediate call all the resources it needs to respond effectively. And no company can have
all the right responses to such a rare and unusual event."
BP failed or refused to ask for help either from fellow operators in the oil industry or from specialist
consultants and contractors. The understated reaction appears to be driven by the belief that the well was
leaking 5,000 barrels a day, when the reality was that the leak was 10 times that. Estimation of oil spill is
hard at the best of times, but a public underwater feed and panel of experts to analyze the flow rate was not
in place until day 31 and it was based on the action of the government rather than BP.
Finally he commented as follows:"And third, I learnt that in an emotionally charged atmosphere you
must be judicious in your use of language. BP's situation was not helped by Tony Hayward's infelicitous
comments during the crisis."
Tony Hayward understudied Lord Browne for 12 years after starting as one of the latter's 18 executive
assistants known as "Turtles" in 1995. The list was drawn from a pool of staffs considered very high potential
and they kept their "Turtle Bible" a list of their accumulated wisdom and advice for their successors. Lord
Browne also personally coached and groomed his Turtles including Tony Hayward. The failure of BP under
Hayward to apply any of the top 3 nuggets of wisdom from Lord Browne speaks to the fractal nature of the
organization and the ineffectiveness of BP's knowledge management and BCM plans.

Conclusions
This paper reviews the applicable lessons from BP's Macondo-1 well blowout in terms of crisis and business
continuity management. Based on its past major accidents, especially the 2005 Texas City refinery disaster,
BP had a negative social capital and less than favourable reputation. The enormity of the crisis was further
enlarged by the poor handling of its crisis communicatons strategy. The most important lessons drawn
from this review are the failure or weakness of BP's knowledge management and mistaking planning for
preparation. The points discussed above are applicable for developing a robust business BCM plans.

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