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7062QCA Dissertation Project

tag 1 Download 0 Pages / 0 Words tag 18-06-2022
  • Course Code: 7062QCA
  • University: Griffith University
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  • Country: Australia

Answer:

Introduction:

British Petroleum PLC is one of the most recognized and the largest company engaged in the business of oil and natural gas acquisition that is headquartered in London. Operating in more than eighty countries across the world, BP PLC had also been successful in emerging as the fourth largest company in terms of revenue in the entire world. However, the inability of the company to identify and assess the possible risks associated with its daily operational activity led to the blowout. In fact, the explosion fire at the offshore ended up killing 11 people besides injuring many people. Apart from the loss of human life, the Macondo blowout also led to the accident of 5 million barrels of oil pouring into the Gulf of Mexico before the well was capped on July 15, 2010 (Lauritsen et al. 2017). The Macondo blowout not only led to the loss of human lives and caused serious damage to the environment, but it also ended up maligning the reputation of the company, bringing in a huge financial loss for the company ($20 billion fund to settle claims arising from the Deepwater Horizon spill).

The massive spill in the Gulf of Mexico  helped in highlighting the fact that the company has always maintained a toxic corporate culture where lack of effective communicate amongst the employees, the tendency to prioritize cost over quality as well as minimum independent oversight of operations had led to the accident. Instead of proactively identifying and managing the risks, the BP PLC had initially taken up a complacent attitude and had accepted the risk events merely as standard operating procedures (Eliott 2014). Apart from the notorious Macondo Blowout, history shows that BP PLC had also contributed to other accidents in the past including refinery explosion that took place in the year of 2005 and the accident of the ruptured pipeline in the year of 2006 (Kleinnijenhuis et al. 2015). The then CEO of BP PLC Tony Hayward had himself admitted that the inability of the company to meet the standards of risk management and lack of scenario planning that had led to the series of accidents. There is no gain stating the fact that the tragic incident of Macondo brought significant damage to the reputation of the company, and since the year of 2010, the management of the company has found it hard and extremely challenging to restore its reputation.

            The tragic incident of the BP Macondo clearly establishes the importance of assessing risks in the oil and gas industry where the probability of risk may be extremely low and yet its consequence, if happens, can be extremely significant. The present report intends to explore and analyse how the ineffective risk management policy led to the potential bankruptcy of BP PLC and how and to what extent has the company been able to strengthen and reinforce its risk management strategy to curb the same in future (Harrell 2016). Most of the companies including the BP PLC have been adopting a reactive approach to risk management whereby an accident is being allowed to take place prior to responding and taking actions against the same. However, at present, BP PLC has adopted a proactive and stringent risk assessment policy that will hopefully be able to prevent or at least mitigate the risks of the company (Yemen et al. 2017). Recently, the company has introduced its 3 line defence system that can be explained:

  1. Operating Business Team responsible for training employees to handle and manage risks.
  2. Safety and Operational Team is responsible for keeping an overview of the business activities and recommending strategies to avert risks if necessary.
  3. Audit team that is entrusted with the duty of visiting sites on a risk-prioritized basis and to see how far the potential risks are being managed (Paulson et al. 2016).

Thus, it is clearly evident from the above discussion that the management authority of BP PLC has become doubly aware of the importance of ensuring social responsibility and operational reliability while carrying out its activities. It is interesting in this connection to understand how in the post-oil spill period, BP PLC adopts necessary recommendations in order to ensure its business continuity and crisis response planning in future.

The research objectives of the following research are as follows:

  • To critically investigate and identify major risks threatening the survival of British Petroleum Plc in United Kingdom.
  • To investigate how the Oil and Gas Company in U.K (British Petroleum Plc) implements risk management strategic plan.
  • To analyse the impacts of risk management to British Petroleum Plc.
  • To recommend ways to improve the risk management of British Petroleum Plc.

Accordingly, the research intends to explore the following research questions:

  1. What are the potential risks that can threaten the survival of BP PLC in UK?
  2. How can each of the risks affect the reputation and profitability of the company?
  3. What are the immediate strategies undertaken by BP PLC to combat the operational risks it is confronted with?
  4. What could be the recommended strategies that can help in mitigating the risks in future?
  5. Why the risk management strategies are vital for an oil and gas company like BP PLC?
  6. What is exactly the impact of the present risk management strategies of BP PLC on the profitability of the company?
  7. What are the recommendations for British Plc. For improving risk management?

Ineffective management and poor operational techniques have been regarded as the ulterior reasons behind the oil spill explosion that had occurred in the fateful year of 2010. According to a research study conducted by the US Chemical Safety Board, BP PLC as a company has always tried to compromise with the quality for the sake of profit maximization. In fact, owing to the faulty wiring in more than one place, dead battery as well as the bent pipe in the hulking device the deadly incident took place. As a result, the worst ever offshore disaster occurred that ended up ruining the reputation of the company. Usually, the inability to foresee and predicts the associated risks and disasters has also led to the problem. BP PLC had heavily invested in exploration technologies and yet it was not able to implement any realistic technology that could prevent the spills.

The callousness of the management has not only led to the loss of reputation but has also contributed to an enormous amount of financial loss. In fact, BP PLC has lost over a third of market value that is worth around $70 billion (Bayram et al. 2015). Earlier, prior to the occurrence of the oil spill accident, the company was known as a green leader and owing to its sustainability initiatives, it had been successful in hiring some of the best engineers of the world. However, despite the reputation as a sustainable company, BP PLC started withdrawing itself from sustainability initiatives such as investment in renewable energy and putting more emphasis on the cost-cutting strategies. The sustainability of the company was instantly challenged after the occurrence of the oil spill incident as it faced more than 225 lawsuits on ground of negligence of over the oil spill in Gulf of Mexico (Ragas et al. 2014). While its market share dropped by 34%, its expenditure on clean-up, compensation as well as fines have ended up settling it in great economic downturn (Ustin et al. 2015). The London-based energy company found their “clean” image at risk as soon as the incident occurred and in order to regain its reputation, the company had to introduce a series of initiatives. For example, it had to hire Anne Womack-Kolton, once press secretary to former US vice president Dick Cheney, to improve its public relations efforts in the US. Thus, the magnitude of the disaster underlines the importance of effective risk management strategy in an oil and gas company (Wickman 2014). There is no point stating the fact that quality assurance has always been subordinated to the achievement of cost and schedule goals.

Importance of Risk Management in Oil and Gas Companies:

The importance of risk management strategies in an organization can never be overstated. By implementing the most effective risk management strategies, a company can easily increase the value of its firm and mitigate any possible financial distress. Risk is the likelihood of specific consequence happening and hence it is imperative for any company operating in any field to identify and analyse and adopt necessary recommendations, much before the risks turn into reality.

Amongst all the risks currently the oil and gas industry is confronted with, the most crucial one that merits the immediate attention of the management authority is the oil spill risk. The safety and preparedness measures must be undertaken by the oil and gas companies to ensure that it does not cause any form on environmental damage that can land it up in serious financial trouble as well as an irreparable loss of reputation. The accident of oil spill on the Gulf of Mexico not only killed eleven and injured at least 17 workers of BP PLC but also incurred a huge expense in order to pay for its indifference towards risk management strategies. The company mounted a massive clean-up operation (the total cost after five years now stands at $28 billion) and set up a $20 billion compensation fund but that did little to allay the fury (Bergh et al. 2014). The damage to the organizational reputation is irreparable as well. Hence, it becomes clearly evident that the oil and gas companies must map the environmental risks of potential oil spills and identify the preparedness and response options in order to combat the same.

Although the oil spill is a major risk associated with the oil and gas companies, some of the other risks must also be taken care of. The next risk involved is the geological risk. Often the oil and gas companies drill oil from less friendly environments, the example of which may be an undulating ocean (Mejri and De Wolf 2013). Now, the price risk emerges from this geological risk only. The higher is the geological barrier to easy extraction, the greater is the price risk an oil project is likely to face. Besides, it is also a well-known fact that the oil and gas companies are most likely to face the problems resulting from uncertainty of production. The uneven nature of production is known for making the price of the oil and gas largely volatile (Bergh et al. 2014)).

Besides, the financial crises and the macroeconomic factors can also largely affect the industry with or without the price risks. The natural disaster can also pose a serious threat to an organization and disasters such as Typhoon can lead to the destruction of various off-shore platforms of the company and can also cause serious disruption in the production process. Hence, considering the problem of disasters, it is imperative for the oil and gas companies to review the earthquake risks as well as to purchase the insurance necessary for protecting the damage of the assets as well as overcoming the loss caused due to disruption of operational activities (Lam 2014). At the same time, it is also equally important to see that whether it is the natural disaster or the oil spill accidents, the company is likely to encounter financial expense in the end.

A major well blowout or fire explosion within the company can result in the loss of equipment and production, damage of properties as well as injury and death of the employees. This would not only imply a huge financial loss for the concerned company, but will also have a negative reputational impact. Hence, it is highly important for these companies to manage and reduce the risks of industrial accidents as well, by increased focus on the health and safety of individual worker, initiating effective emergency response preparation as well as conducting necessary communication assessments within the organization. The risk of political instability also needs attention as far as the oil and gas companies are concerned. The regulation and intervention of the government ruling a specific country will also largely determine the sustainability of the company (Bakke 2016). The government of the host country will have different regulations regarding the implementation of specific oil drilling policies, environmental protection control as well as non-renewal of contract rights. Lest the operation is disrupted owing to a climate of political instability, the oil and gas companies have to take care of the political risks as well.

Operational Risk Management in Oil and Gas Companies:

The oil and gas industry is regarded as the riskiest industry when it comes to the issues of employee health and safety. Recent research studies have shown how the production of oil and gas in the refineries lead the employees to harmful chemical and physical agent exposure. This can have a severe impact on the health of the employees. Owing to continuous exposure to harmful chemicals, the employees may suffer from occupational diseases of lungs and skin as well as ears. Hence, many oil and gas companies believe in creating an Exposure Control Plan, whereby the employers identify and assess the risks involved in the exposure of the employees to harmful chemicals like hydrogen sulphide, diesel and mercury, and accordingly monitor the health of the employees (Shuen et al. 2014).

Some of these companies even believe in offering manpower education and training so that the employees can also be made aware of the harmful impact of constant exposure to the harmful chemicals. In case of some other oil and gas companies, the employers implement a hazardous materials survey and risk assessment for mercury at facilities to limit workers' exposure to this occupational health hazard (Yusuf et al. 2014). The employees are the most important resources of any organization, and hence investing in the risk assessment of their activities helps in employee retention and low rate of employee absenteeism.

Ensuring the integrity of process piping systems in the Oil & Gas industry (specifically those related to the ASME Code B31.3) is a key issue with respect to the process, business, safety, and the environment. However, the problem arises when most of the recognized oil and gas companies of the world like BP PLC adopt a very risky strategy for piping systems for the purpose of cost reduction (Lam 2014). With the deliberate reduction of the inspection and maintenance of the pipes, the risk of accidents increases. However, the companies including BP PLC have started employing the use of an important risk assessment model which determines the risk-vulnerability of oil pipe leakage on the basis of the following factors:

Design: There are pipes which are designed in a way that make them less susceptible to the issue of oil leakage. While determining the risk-prone nature of a pipe, the susceptibility of the pipe to leakage is being rated from none (0), low(1), medium (10) and high (100) (Fiksel 2015).

Corrosion: This determines how far the pipe can be considered to be susceptible to the oil leakage owing to corrosion. For the purpose of this risk assessment, different kinds of corrosion mechanisms are evaluated, some of which are atmospheric corrosion, corrosion under insulation (CUI), erosion, microbiologically-induced corrosion (MIC).

Fatigue: The fatigue of the pipe owing to mechanical fatigue or thermal fatigue is also checked so as to determine the vulnerability of the pipe to the oil leakage (Raufflet et al. 2014).

SCC (Stress Corrosion Cracking), the diameter of the pipe, operating frequency are also the other important risk factors that are evaluated and analysed as part of the oil leakage risk assessment plan. This model helps the company gain an insight into the possibility of the industrial accident occurrence in the company, with the help of a simple table as presented below:

Figure 1: Risk Assessment Plan

Source: (Badiru and Osisanya 2016)

It is important to note here that most of the oil and gas companies are confronted with one problem- how to satisfy the expanding energy needs of the world by minimizing the negative externalities associated with such operations. Incidents and oil spills can result in soil and groundwater contamination as well as marine and freshwater discharges, and most importantly can damage the reputation of the company (Epstein and Buhovac 2014). Hence integrating the environmental risks in the risk assessment program of an oil and gas Company has become crucial to its operation. While undertaking a project, it is highly important that the oil and company determines all the possible risks associated with operations at the specific site and determine the probability of each adverse event occurring. Using a cost-benefit analysis, the company can then estimate the total social burden of an event occurring. In order to rule put the risks of oil spill accidents, some companies perform conduct quantitative oil spill risk assessments using state-of-the art 3D oil spill modelling tools combined with up-to-date species and habitat distribution and sensitivity data. Some companies carry out the OSRA analysis by analysing what can go wrong and lead to the release of the oil, how likely is the identified scenario to take place, as a result what will be the key environmental receptors (Ngoasong 2014). Finally, the oil spill risk can be compared and understood in terms of the oil spill risk tolerance criteria with the help of ALARP (as low as reasonably practicable) principle that may be used for evaluating risk reducing measures.

Analysis of the Potential Risks that can threaten the Sustainability of BP PLC:

The largest oil and gas company in the world, BP PLC, is confronted with a series of risks that can reduce profitability of the company in no time and damage its reputation for forever. First of all, the company’s risk is largely dependent on the revenue earned through the sale of oil and gas. However, the price of oil and gas undergoes random fluctuations that are likely to create an uncertainty for BP PLC. This is a serious financial risk that the company is presently exposed to. Recently, the oversupply of oil and weaker demand of the same in UK has led to the fall in the oil prices. This in turn has led to the fall in the profit of BP PLC. In the year of 2016, the fall in the price of the oil has led to the fall in the total revenue earned by the company. Against the soaring revenue of $94.8 billion of the previous year, the revenue of BP PLC fell to $55.9 billion, owing to the fluctuation in the price of oil (Arora and Lodhia 2017).

The adverse weather condition as well as the natural disasters also poses a serious threat to the sustainability of BP PLC in the long run. Operating in more than seventy countries across the globe, the company should adopt necessary risk mitigating strategies to mitigate the risks caused by the natural disasters such as earthquake. The company does have a strong presence in South East Asia where earthquakes and Tsunami are the commonest natural disasters. The hurricanes frequently occur in places where BP PLC conducts its operations and thus Hence, during the hurricane season, it is crucial for BP PLC or any oil and gas company along the Gulf of Mexico coast and in other vulnerable areas to prepare a disaster recovery plan that will protect their IT infrastructure in the event of an unplanned occurrence (Conner 2015). In this connection, it I interesting to mention that the data centers are an important component to consider in any disaster recovery plan, as they serve to house core network and infrastructure operations and provide a secondary space for people to run the organization. As an oil and gas company, BP PLC is doubly susceptible to the damage caused by the adverse weather conditions (Harrell 2016). The storm surges from hurricanes are known to be largely detrimental to the operational activities of the oil and gas companies.

The most vital and catastrophic risk BP PLC is encountering nowadays is the risk of industrial accident. It is needless to state that the company has already encountered the industrial accident in 2010 and several minor accidents before that. This risk needs immediate attention as it threatens the viability of the company and its public reputation may be ruined forever. Everybody is aware of the Deep-water explosion that killed as many as 11 rig workers apart from costing the company a whooping amount of $ 7.8 billion as compensation for the environmental loss caused by the spill (Ahmad et al. 2015). However, this is not the only time when the company has encountered serious consequences owing to the industrial risks.

Owing to the lack of negligence, the company has experienced explosion within the oil refinery in the year of 2005 where leakage of the hydrocarbon liquid ended up killing fifteen employees of the organization. Again, similarly as an oil and gas company, BP PLC is also vulnerable to the risk of pipeline leakage whereby the oil gets leaked and causes serious damage to the environment. In 2009 and 2011 the accident of pipeline leakage at BP’s Lisburne field has caused serious damage to the environment. Resource availability is also an important issue. The political instability of UK can act as a potential threat to the growth of BP PLC in the coming years. It is worthwhile to mention here that the exit of Britain from the European Union will reduce the consumer demand of oil and this can also slow down the growth of the BP PLC (Farley and Voinov 2016). There is potential for the new projects to yield significantly lower production volumes than initially estimated. This risk should also be identified and strategies should be developed to combat the same.

Loss of Reputation Threatening the Sustainability of BP PLC:

It is difficult for a company like BP PLC to retain its reputation that it has lost over the years as a result of the series of accidents that had occurred due to poor management of risks within the organization. It has become clearly evident to the masses that the company is far less focused on the safety of the and emphasizes the need of cost-cutting strategies at the expense of the safety. The research reports claim that in its hard effort to save the money, BP PLC had stopped cleaning as well as testing its pipelines. Between the years of 2008 and 2009, as many as 3 gas pipelines on Alaska’s North Slope have been found to be clogged and ruptured. After the tragic and most catastrophic oil spill of 2010, BP PLC had lost all its reputation, witnessed a huge fall in stock price as well as has been charged with lawsuits that almost irreparably damaged its reputation (Mejri and Wolf 2013). Despite the nascent investments in renewable energy of the company in 2008, the sustainability efforts of the company have been questioned. The company is still subjected to vehement criticism owing to its apathy towards environmental and social well-being. The public issue management has emerged to become a serious and challenging issue for the company. The company still faces criticism after five years of the mishap for its seeming acceptance of the culture of risk that has resulted in the deadly result. In order to rebuild its reputation, the company has to revamp its own brand and the same is possible when it invests in risk assessment strategies (Popescu and Voiculet 2015). 

Research Methodology

Research methodology refers to the methods that have been used in a research study. It is one of the crucial chapters, which determines the success of the research study, while ensuring that the research objects would be met through the findings (Bergh and Ketchen 2011). In this current study, the impact of risk management system upon the UK oil and gas industry has been focuses, with a special consideration of the case study of British Petroleum Plc. In this context, a primary study methodology has been selected in order to identify the risk management strategies by the British Petroleum Plc. after their massive oil spill incident. In this context, the chapter includes the research philosophy, research approach, design, data collection, sampling and analysis methods along with the ethical considerations (Freshwater 2012). 

Research philosophy

There are mainly three types of research philosophy used in different research studies, including the positivism, interpretivism and realism Bernard (2011) argued that the positivism philosophy supports the analysis of pre-existing scientific theories, with the data gathered during the research work, in a logical and systematic way, thereby ensuring the credibility of the research. In contrast, the interpretivism philosophy supports the fact that the human perception can affect the research outcomes significantly and involves the human perception in the research instead of scientific theories (Roger 2011). On the other hand, the realism philosophy supports real aspects in the research only.

In this current research, the positivism philosophy has been selected, as it promotes the analysis of research data with the pre-existing scientific data in a logical and systematic way.

Research approach  

Alike research philosophy, there are two types of research approaches, used in social and business research studies, which include the deductive and inductive approaches (Brannen 2012). In case of inductive approach, peripheral research data are collected initially, from the research resources and then analyzed at the end of the research, which gives rise to new research hypothesis or theory (Creswell 2011). In contrast, the deductive approach supports the development of research hypothesis at the initial stage of research on the basis of primary knowledge of the researcher, from the pre-existing literatures; and then with the research findings, the hypothesis is justified, instead of developing new hypothesis.

In this research, the deductive approach has been used, as this approach support the scientific method of analysis with the help of the pre-existing information. However, the topic also does not have a scope for new hypothesis development.

Research design

Research design helps to improve the quality or the research, by maintaining a systematic flow in the research processes. In this context, there are 3 types of research designs, including “explanatory, exploratory and descriptive design”. The exploratory design helps to develop knowledge base and it is suitable for the new research topics (Crouch and Pearce 2012). In contrast, the explanatory research design is appropriate for those research works, which needs to develop cause-effect association within the research variables. Whereas, the descriptive research design assists to make the research descriptive, while providing the opportunity to address and explore all the research variables (Ellis and Levy 2012).

In this study, the descriptive research design has been selected, as this design supports the consideration of all the research variables in an in-depth manner, while providing the opportunity to use mixed data collection method.

Data collection method

There are 2 types of data collection methods, based on the type and purpose of the research studies; these include the primary and secondary research studies (Harrison and Reilly, 2011). In this context, the primary data collection methods refers to the methods that collect data from the primary resources, which are directly related to the research field; whereas the secondary data collection methods refers to the data collection methods that collect research data from the secondary research resources, which are not directly related to the research field (Crowther and Lancaster 2012).

On the other hand, based on the type of data that is being collected through the research, 2 types of data collection methods are used in research, i.e. quantitative and qualitative data collection methods (Hanson and Grimmer 2012). The quantitative data collection methods help to collect numeric data from a large population size, which are dispersed through a wide range of area (Hooper 2012). The most effective and commonly used quantitative data collection method is the survey method. On the other hand, the qualitative data collection methods help to collect qualitative data from a small sample, dispersed through a small area (Denzin and Lincoln 2011). These methods include meeting, case study, direct observation, focused group discussion etc. Both of the methods have some pros and cons, which should be analyzed prior conducting the study.

In contrast to the primary study, the secondary data collection methods include the search of relevant literatures relevant to the research topic (Cameron 2012). In this context, the appropriate literature is searched from relevant search engine according to the appropriate inclusion criteria, which are then analyzed for interpreting the findings aligning with the research objectives. Appropriate books, journals, articles, newspaper or business reports are the key secondary resources that are being used in research studies (Dul and Hak 2012).

In this study, the qualitative data collection method has been used for collecting data from 4 managers of BP Plc. On the other hand, BP PLc annual reports and other relevant journal articles have been reviewed for collecting secondary data.

Sampling method

There are two types of sampling methods used in primary studies, i.e. random sampling is used for the quantitative samples collected from primary resources, whereas non-random sampling is used for qualitative samples (Gummerson 2012). However, the secondary data are analyzed through data extraction and data synthesis process.

Here in this study, the data collected from 4 managers of BP Plc. UK has been subjected under non-random sampling, whereas the secondary data collected from reviewing literatures have been extracted and synthesized according to secondary analysis method.

Data analysis method

Data analysis methods also vary according to the type of study and the type data collected. For instance, the primary data collected from the managerial interview has been analyzed by the transcript analysis, whereas the data collected from reviewing secondary literatures have been analyzed via thematic analysis (Hesse-Biber 2012). Due to the absence of quantitative data collection method, no statistical analysis has been carried out.

Accessibility issues

Initially, in order to gain access to the managers of BP PLC, many difficulties have been faced by the research team, due to their busy job schedule. In order to eliminate this issue, the telephonic interview of the managers has been conducted (Lancaster 2012). On the other hand, many of the organizational reports had accessibility issues, due to copyright of the organization. This issue was mitigated by getting consent from the organization.

Limitations

The time and financial shortage were the key limitations in the current study. With more time and financial resources, the sample size could be improved, which might improve the overall research findings quality. With enough samples, the research could be developed in an in-depth manner, which might enhance the credibility and rigor of the research study (Onwuegbuzie and Leech 2012).

Ethical consideration

While working with human subjects as well as the organizational data, the ethical considerations should be followed properly. In this context, the Data protection act has been followed to ensure that the data from organizational papers and the managers has been kept confidential (Leavy and Hesse-Biber 2012). In addition, the managers were not forced and were open to share their views. The research data resources were verified for ensuring the credibility of the current research study. In addition, the ethical committee’s approval has been collected, prior starting the research work. All the research related data has been kept confidential and ensured not to be used in any other purpose except this current research, in order to avoid any kind legal or ethical issues (Leedy and Ormrod 2012).

Time frame (Gnatt chart)

Main activities

1st week

2nd- 3rd week

3rd-5th week

6th week

7th- 12th  week

13th – 14th week

15th -16th week

Selection of the topic

v   

 

 

 

 

 

 

Collection of ethical approval

 

v   

 

 

 

 

 

Composition of the literature review

 

 

v   

 

 

 

 

Research methodology

 

 

 

v   

 

 

 

Collection of secondary data

 

 

 

 

v   

 

 

Analysis and interpretation of data

 

 

 

 

v   

 

 

Findings

 

 

 

 

 

v   

 

Conclusion and Recommendation

 

 

 

 

 

 

v   

Final submission

 

 

 

 

 

 

v   

Summary

The current chapter covered all the necessary research methods that have been used in the current research study, in a step by step process. The positivism research philosophy guided the study towards a logical way, whereas the deductive research approach helped the research to be promoted in a way that can justify the research objectives with the help of findings. On the other hand, the descriptive research design helped to address all the research aspects, while allowing the collection of both primary and secondary data, which enhanced the quality of the research. The sampling and data analysis methods have also been selected aligning with the study purpose.

Findings and Discussion

Threats of survival to British Petroleum:

Due to the deep water oil spillage incident that took place because poor management and monitoring strategies of British Petroleum, a number of economic operations were hit hard. It included oil industry, real estate, commercial fishing and tourism industry. On the other hand, due to oil spillage, the investors of the organization experienced significant losses. After this incident the management of the organization cut its dividend payments (Mobus 2012). The investors left the organization and went to alternative organizations such as Royal Dutch Shell that is a close competitor of British Petroleum to gain more profits. When the organization was able to seal the leak, it already lost $61 billion (Michelon 2012).

On the other hand, due to the incident of oil spillage, the environment was also affected severely. Many vulnerable species were affected because of this oil spillage incident including oysters, shrimps, blue crab, blue-fin tuna and dolphins. Pelicans were also affected by oil spill as their feather was coated in oil when they plunged into water (Mejri and De Wolf 2013). On the other hand, sperm whales and Bryde’s whales were affected by their ability to reach the surface for oxygen in oil-infested waters. On the other hand, a huge number of Atlantic tuna at a major spawning site in the Gulf o Mexico fell by 20% as a result of the oil spillage incident.

Therefore, it can be seen that due to oil spillage, a lot of damage was done to the environment and aquatic animals. The animals rights organizations and environment protection related organizations filed number of lawsuits against the organization (Jr 2010). However, as the organization experienced huge losses and investors turned their back, it would be tough for British Petroleum to survive in the oil and gas industry.

British Petroleum’s Risk Management Plan

In terms of risk management plan, the enquiry committee stated that the organization had a very poor risk management plan. The organization had no standard method for running or interpreting the test in either regulations or written industry protocols. On the other hand, the organization also did not have any internal methods for running or interpreting negative pressure tests. Besides, no training programs were implemented by the organization to train the employees to deal with critical conditions (Lüdeke-Freund and Zvezdov 2012). On the other hand, the BP Mocondo team never provided the well site employees or leaders any method for performing negative pressure tests. No policies were in place which was required personnel to call-back to shore for a second opinion about confusing data.

On the other hand, the communication system was poor to. The employees or on site people who were performing and interpreting the test had no idea about the fact of well lack integrity. The report also stated that most of the software did not work appropriately as expected because of drill control display screen were shut down number of times before the explosion. An engineer reported that the screens froze and all the data were locked (Jr 2010). It prevented the on-site employees from reporting the problem that included missed and erroneous alarms that caused several numbers of damages to the rig equipment. From this information it is clear that the organization had zero risk management plans and had no backup plan to deal with the critical issues.

Impacts of Risk Management

After the explosion, British Petroleum management blamed its contractor Transocean for failing to prevent the disaster. On the other hand, the contractor stated that they issued number of warning to the organization but the management of British Petroleum neglected those warnings. It is clear that the organization did not have any risk management strategies. If the organization had any risk management plan, then they could quickly respond to the issues. On the other hand, if the organization had risk management plan then they could easily minimize the effects of explosion (Mejri and De Wolf 2013). All the oil and gas organization has their own risk management strategies to deal with such situations. If anything like explosions happens then those companies can implement those risk management strategies and can start the operation of containing the oil spillage as soon as possible. As BR had no risk management strategy, the operations to contain the oil stated extremely late and as a result the damages increased (Lüdeke-Freund and Zvezdov 2012). If the organization had any risk management plan then they could reduce the amount of damage. British Petroleum could minimize their financial losses through their risk management plan. If they had any risk management plan then they could survive the disaster somehow.

Interview with the managers of British Petroleum

How the oil spillage took place?

Manager 1: While answering the question, the first management stated that there were human errors that failed to understand the warning that the machineries provided before the explosion. He also stated that their risk management plans were flawed and as a result, the onsite employees could not use alternative procedures to stop the explosion.

Manager 2: The second manager also stated that their risk management plan was flawed and had many problems in it. However, he stated that the explosion could have been neglected if the engineers of Transocean send them the warning reports quickly. He stated that the engineers issues the warning late and as a result the management could not do anything.

Manager 3: The third manager again said that the management of the organization never felt the urge to develop a risk management plan. The management thought that the advanced equipment is enough to keep the place risk free. On the other hand, he also stated that after the explosion the management acted late to contain the impact of oil spillage. As a result, the environment was hampered critically.

Manager 4: The fourth manager tried to hide their faults in the risk management plan. He stated that all the equipment was working properly and a good risk management plan was in place. He blamed the contractor organization and stated that the engineer did not act at the right time in spite of getting warnings.

What strategies you had to deal with such incident?

Manager 1: According to the first management the organization never thought this type of incident will happen. He also stated that the company was only focusing to increase its production by drilling more and more oil. All investment was done to get latest equipment and technologies. The management overlooked the importance of risk management plan. Therefore, he mentioned that the organization had nothing to deal with such incident.

Manager 2:The second manager stated that the organization was equipped with all the latest technologies to deal with such incidents. However, the management failed to use those strategies as the communication was poor. He mentioned that before the incident the engineers mentioned about some errors to the management. However, the management failed to understand its importance. After the incident, the communication was poor as a result the management again failed to understand how critical the condition was.

Manager 3:The third manager stated that the organization had every method under their sleeves to deal with such incident. However, as the communication was interrupted, the management failed to understand the significance of the incident. On the other hand, the management of the organization thought that it was just a mere explosion. That is why, they were late to respond and were late to implement the containment strategies that could minimize the damages to the environment.

Manager 4:The fourth manager once again stated that the organization had everything but the poor decision making skill of the contractor company was responsible for all the damages. He again blamed the contractor organization and stated that the management received no warning before the explosion. He also mentioned even after the explosion the contractor organization stated that the incident was not much serious.

What are the effects of this incident on the organization?

Manager 1:According to the first manager, this incident has affected the brand image of the organization. He stated that the organization was working hard to display that it follows sustainable methods for its operations. After the explosion and the damage the explosion did to the environment, it would be tough for the organization to carry on its sustainable symbol.

Manager 2:The second manager stated that after the explosion most of the investors of the organization are not joining hands with Royal Dutch Shell. He stated that it is a major blow for the organization. Already a lot financial resources are lost in the containment process. If the all the investors are gone then would be difficult to save the organization in the future.

Manager 3: The third manager stated that numbers of lawsuits are filed against the organization from human rights commission, from animal rights commission and from environment protection organizations. He stated that the organization will have to provide huge amount for compensation. It would be hard for the organization to survive this disaster.

Manager 4: The fourth manager stated that the organization will survive the disaster. The fourth manager believed that British Petroleum will survive this disaster. He stated that the organization has dominated the oil and gas industry from its beginning days. He also stated that the resources of the organization are enough to deal with this disaster and its affects.

Conclusion

Linking with objectives

To critically investigate and identify major risks threatening the survival of British Petroleum Plc. in United Kingdom

From the literature review and the data analysis part (thematic analysis part) it is found that British Petroleum has lost most of its investors. Therefore, after giving away so much financial resources to stakeholders, it would be difficult for the organization to start the drilling related operations. On the other hand, they will have to spend a lot of money to develop new campaigns and events to win back the trust of the consumers. It is a major threat of the organization as the management does not know whether they will be able to afford all these activities or not. If they cannot afford then the company will be shut down. Therefore, it can be stated that this objective is also fulfilled through the literature review and through the thematic analysis.

To investigate how the Oil and Gas Company in U.K (British Petroleum Plc) implements risk management strategic plan.

From the thematic analysis part, it is found that the organization did not have any type of risk management plan to deal with such type of incidents. The organization joined their hands with a contractor company for maintaining and monitoring oil rigs. However, the management failed to respond to the warning messages of the contractor company which were issued before the incident. Even after the incident, the organization could minimize the damages. However again, the absence of a risk management and risk mitigation plan did not allow the organization to deal with the issue as soon as possible. Therefore, it can be stated that this objective is fulfilled.

To analyse the impacts of risk management to British Petroleum Plc

It is found that if the organization any type of risk management plan, then the engineers on the oil rig could stop the explosion. It is found that the equipment froze before the accident and as a result the engineers could not understand the seriousness of the situation. No backup equipment was there through which the engineers could understand the situation. On the other hand, the communication system was also poor. The engineers of the contractor company stated that they issues warning messages to the organization and the organization is saying that they received nothing. It clearly shows that the communication systems were not working also. If the organization had backup communication systems then they could deal with the problem as soon as possible. Therefore, from the literature review part and from the thematic analysis part this objective is also fulfilled.

Aligning with the fourth objective, the below mentioned recommendations are provided.

Recommendation

Analyzing the BP Plc’s accident, it has been revealed that there was significant lack of risk management procedures in the organization, which led them towards the accident. In order to ensure that the organization is competent enough to eliminate the risk of this kinds of accident in future, it is important to answer three basic questions about how to handle in the future the balance between securing oil through deep-sea drilling and managing the risk of that enterprise. These are how the organization should organize itself, in order to develop transparent responsibility for safety management process and the safety culture for minimizing the risk with potential catastrophic impact along with financial or time constrains; how the organization should share both economic gain and economic risk with its contractors; and what is the proper division of private and public responsibilities. These questions have not been addressed by the recommendations provided in BP’s accident report.

Therefore, from the first questions raised, it is significant that irrespective to the operational issues, BP Plc. needs to focus more on ensuring that all the stakeholders of the business are potentially performing their roles, especially people, who are at the leading position in business. It is certain that ensuring the leader’s accountability towards the organization would certainly motivate the basic level employees to meet their accountability, thereby improving the company culture.

Regarding the second question, it is quite obvious that nowadays the reputed organizations are seeking to reduce the cost through outsourcing complex functions that are crucial for potentially dangerous procedures. However, organizations should not outsource complex functions for escaping from their accountability towards dangerous processes. This is one of the reasons behind BP’s accident, which its senior management understands now. Thus, the organization should reserve the sourcing process and should maintain adequate control, upon bringing those processes or products in the company back, while having a  tight operational and oversight controls on critical contractors considering these as the part of the company. Although the contractors could be accountable for negative intentional acts in their contracts with the company, the leading companies need to ensure that the organizational operations are keeping the risk to an irreducible minimum level.

In response to the third question raised for the company, regarding the proper division of private and public responsibilities, the government needs to mandate some standards respect to the issues raised by the recommendations for BP Plc. Government’s initiatives for some safety monitoring and auditing processes are also crucial. Finally, a regulatory agency can help to ensure the implementations of regulations, which remains at arms-length from industry. Although it is difficult to maintain the correct balance between the government oversight and business discretion related to the complex internal processes, the presidential commission can help to address these issues with some analytic views.

Therefore, it can be interpreted that besides the recommendations provided after BP’s accident, these three fundamental areas should be focused more in order to fix these issues compared to the alarming fight related to the causes that would improve the previous responsibilities from an operational domain and more technically apportion economic damages between BP and the contractors from a legal viewpoint.

Limitation of the study 

The sample size was small and bias responses are prone to cause incorrect results. Due to shortage of time, all the specific domain of research aspects have not been considered. The research questions and qualitative data analysis are prone to interference of researcher bias preferences. The deviation and range of description as well as explanation under descriptive research were not discussed appropriately. The study included only qualitative data collection; however, inclusion of quantitative data might enhance the validity and rigor of the research through the inclusion of statistical analysis. 

Future scope of the study

The research area has significant scope for further research. For instance, the risk management is a crucial area for any business domain, where the organizations need to ensure safety for both the employees as well as the environment. In this context, the findings from the current research work would help to make a knowledge based and provide effective resource of secondary data. The research provides an in depth analysis of the BP Plc’s incident related to the oil spill, while providing recommendations regarding the steps they need to take further for improving their organizational operations, in order to ensure that the organization is free of risk from these kinds of accident. A further analysis of their existing policies and procedures related to risk management and accidental damages along with their contribution towards environmental sustainability needed to be explored, which can be the focus of further research. The current research would be a guide to this further research. 

Reflection

Throughout the study, I have learnt a lot of things, which have strengthen my knowledge base as well as my academic and professional skills. For instance, while starting the research work, initially, it was difficult to find out a suitable research topic that will be worthy for the social work as well as business domain. However, I got help from my peers as well as guide. I attempted to explore such a topic that has a significant impact upon the society and the research findings would have a significant scope to be explored further for the sake of social well being. In this situation, I felt several difficulties, which I have combat with potential knowledge and experience of my guide. In the next phase, while reviewing literatures, it was a significantly hectic phase, as I had to study a lot. Although I got a little help from the library and a lot of help from the online search engines. However, I was unaware about the key search terms, which would give the best articles relevant to the topic. My co-guide helped me a lot in this context. At that position, I got little help from my professors, which made me significantly stressed. However, with time I got enough efficiency for field work.

While selecting the best methodology for the current research, it was also not an easy job. As it is my first research work, I was not sure which would be the right method. To gain knowledge I searched on the online search engine and gained significant knowledge about the research methods. This effort helped me to develop efficiency in research methodology, which I would apply in my future research works. In addition, I revealed that the research work becomes effective and of maximum quality, when we adopt the time management skills, for which I developed a time schedule for the research prior starting the research method in an in-depth manner. It helped me to develop the research work in a systematic way. In the next phase, while conducting the primary data collection method, it was also difficult for me and I was anxious to communicate with the managers of the renowned company BP Plc. However, after interviewing them, I gained significantly knowledge regarding the organization as well as the accident the organization gone through. I learned the professional communication skill from them also. Although not all the participants were good in communication, but most of them co-operated a lot, which led my project towards a significant success. While accessing the organizational reports and other secondary resources, it was also stressful for me, as most of these had an issue of copyright. However, these issues were also mitigated successfully. From my opinion, time was too short for exploring the study elements appropriately, which I would keep on mind in my future research work.  

Reference List

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Arora, M.P. and Lodhia, S., 2017. The BP Gulf of Mexico oil spill: Exploring the link between social and environmental disclosures and reputation risk management. Journal of Cleaner Production, 140, pp.1287-1297.

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Bakke, T.E., Mahmudi, H., Fernando, C.S. and Salas, J.M., 2016. The causal effect of option pay on corporate risk management. Journal of Financial Economics, 120(3), pp.623-643.

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