BP

Starting about 2000, BP attempted the difficult feat of depicting itself as an environmentally friendly oil company. Some of its initiatives were merely symbolic—adopting a sunburst logo and claiming that its initials now stood for “Beyond Petroleum”—while others were concrete steps, such as (modest) investments in solar power. BP’s campaign was all the more difficult because of its involvement in controversial Alaskan oil and gas production, and because its environmental compliance record was far from unblemished.

For example, in 1990 BP agreed to pay a $2.3 million fine as part of a settlement of an $11 million suit that the U.S. Environmental Protection Agency (EPA) brought against the company in connection with illegal discharges from BP's Marcus Hook refinery into the Delaware River. Several months later the state of California sued the company over a 400,000-gallon spill of crude oil that occurred in February 1990 near Huntington Beach.

In July 1991 BP was one of ten major oil companies the EPA cited for discharging contaminated fluids from service stations into or directly above underground sources of drinking water. BP agreed to pay a fine of $74,000, and to clean up the contaminated water sources by the end of 1993.

In 1992 the EPA charged BP Chemicals with violating hazardous waste laws at its plant in Lima, Ohio, and sought almost $600,000 in penalties.

In 2000 a federal judge imposed a $500,000 criminal fine on BP for failing to report the illegal disposal of hazardous waste on Alaska’s North Slope. The company was also ordered to establish a national environmental management system to prevent future violations. The total cost to the company from this and a related civil matter was said to be more than $20 million.

In 2002 BP was fined £1 million by UK authorities for violating safety regulations in connection with several accidents at a refinery in Grangemouth, Scotland (later sold by BP).

In 2003 California’s South Coast Air Quality Management District filed an omnibus complaint against BP, seeking $319 million in penalties for thousands of air pollution violations over an 8-year period at the company’s refinery in Carson. BP acquired that facility through its purchase of Atlantic Richfield in 2000. The agency later filed another suit against BP for $183 million. In 2005 the parties reached a settlement under which BP agreed to pay $25 million in cash penalties and $6 million in past emissions fees while spending $20 million on environmental improvements at the refinery and $30 million on community programs focused on asthma diagnosis and treatment.

In 2005 BP was accused of trying to cover up deficiencies in the anti-corrosion coating on the 1,000-mile-long Baku-Tbilisi-Ceyhan pipeline that carries oil from Azerbaijan to the Mediterranean. BP is the lead participant in the joint venture that operates the pipeline, the largest shareholder in the consortium that owns it, and the operator of the oil fields that supply it.

In March 2006 more than 250,000 gallons of crude oil spilled at BP’s Prudhoe Bay operations in the Alaskan tundra. Several month later, the company shut down the huge Prudhoe Bay oil field because of additional leakage caused by corrosion in the transit line that carried crude oil to the Trans-Alaska Pipeline. There were press reports that BP had been warned of the problem more than two years earlier. In May 2007 the House Energy Committee released documents suggesting that cost-cutting pressures weakened preventive maintenance and other safety practices in the period leading up to the leaks.

In October 2007 BP agreed to pay a total of $60 million in fines to the EPA. The amount included $50 million for violations of the Clean Air Act in connection with the 2005 explosion at the Texas City, Texas refinery in which 15 workers were killed. The company also pleaded guilty to a felony violation of the act and was to serve three years of probation. Apart from the fine, BP agreed to spend $265 million for a facility-wide study of its safety valves and a renovation of its flare system to prevent excess emissions.

At the same time, BP agreed to pay the EPA a $12 million fine in connection with the March 2006 oil spill in Alaska, pleaded guilty to one misdemeanor violation of the Clean Water Act, and was ordered to serve three years probation on this offense as well. The company was also required to replace 16 miles of pipeline at a cost of $1.56 billion.

In 2008 BP and several other oil majors agreed to pay $422 million to settle suits that had been brought by public water systems in 20 states and consolidated in federal court relating to the contamination of groundwater supplies by the carcinogenic gasoline additive MTBE.

At its annual meeting in mid-April 2010, BP faced a barrage of criticism over its involvement in controversial tar sands oil production in Canada.

Only days after that meeting, BP faced a much bigger problem. The company was singled out for criticism by the Obama Administration in connection with the April 20 explosion at the Deepwater Horizon oil platform in the Gulf of Mexico that killed 11 workers and opened a massive underwater oil leak. While the disaster continued, government investigators were looking into indications that BP pushed for work on the well to move ahead despite evidence of unsafe conditions. At the same time, concerns were raised about the safety of another BP rig in the Gulf of Mexico.

BP also faced criticism over its massive use of chemical dispersants to treat the contaminated waters. Some critics have charged that the company was relying on the product known as Corexit (produced by Nalco) to mask the full extent of the damage, while others have pointed out that BP rejected the use of less toxic and more effective alternatives. Corexit is prohibited by the United Kingdom for use in oil spills. The last controversy over the use of Corexit occurred two decades ago, when Exxon made heavy use of it during the cleanup of its tanker spill off the coast of Alaska. The oil involved in that 1989 disaster had passed through a pipeline operated by the Alyeska consortium, controlled by BP.

As oil continued to gush into the Gulf of Mexico, more information surfaced suggesting that negligence on BP’s part contributed to the explosion that trigged the disaster. The New Orleans Times-Picayune reported on May 19 that only hours before the accident BP had told workers from the oil services firm Schlumberger to leave the Deepwater Horizon without performing a crucial test of the strength of the concrete that had been pumped into the well to seal it. On May 25 the House Energy Committee reported that its preliminary review of internal BP documents showed that there were strong warning signs of a serious problem in the final hours before the explosion.

On May 27 the New York Times reported that several days before the explosion BP chose, partly for financial reasons, to use a type of casing for the well that it knew was the riskier of two options.

Also on May 27 the U.S. Geological Survey announced new estimates that put the flow rate of the BP spill at 12,000 to 19,000 barrels per day—far higher than the figure of 5,000 that had been used for the previous month. That rate suggests that the total release had reached 30 million gallons, making it about three times the size of the Exxon Valdez spill and the largest in U.S. history.

In the following days more evidence came to light suggesting that BP was aware of safety hazards in the drilling operation well before the explosion. It was also reported that BP got permission from federal regulators to change the design of the well three times in a single day a week before the accident.

At the same time, groups such as Food & Water Watch warned that another BP offshore drillng platform, the Atlantis, might be even more hazardous than the Deepwater Horizon.

On June 1 the Obama Administration announced that it had begun civil and criminal investigations of the situation, with Attorney General Eric Holder vowing to "prosecute to the fullest extent of the law." Soon the administration was also criticizing BP's plan to pay a dividend to shareholders amid the crisis and later stated that the company's obligations should include paying the salaries of workers throughout the oil industry who had been laid off because of the moratorium on deepwater drilling imposed by the federal government. Given the growing liabilities, a movement called Seize BP emerged to demand that the federal government take control of BP assets to be sure those obligations can be met.

These events increased the anxiety of investors, who pushed BP's stock price low enough to generate widespread speculation that the company might be taken over by another oil giant. The New York Times reported that investment bankers were also drawing up scenarios for a bankruptcy filing for BP as a way to limit its liabilities. The fact that BP finally had some success in capturing a portion of the oil spewing out of the damaged well did little to restore confidence in the company.

In fact, doubts about BP continued to be heightened by investigative reports such as one prepared by ProPublica revealing that senior BP managers apparently disregarded a series of internal reports about safety and environmental hazards in the company's operations produced over the past decade. And on June 10 a federal panel announced new estimates indicating that the flow of oil from the damaged well was much higher than BP had been claiming.

As the pressure mounted, BP gave in to demands from the Obama Administration that it put $20 billion in escrow to guarantee the economic compensation payments the company consented to make to Gulf Coast residents affected by the disaster. It also agreed to put $100 million into a fund to assist oil industry workers laid off as a result of the drilling moratorium imposed by the Obama Administration in the wake of the gulf accident. To help finance these measures, BP agreed to suspend paying dividends to its shareholders.

On June 17 BP CEO Tony Hayward was grilled at a Congressional hearing and was repeatedly criticized for being evasive in his responses. Yet his performance was overshadowed by the remarkable apology to BP (later retracted) by Texas Republican Joe Barton for what he called a "shakedown" by the Obama Administration in pushing the escrow fund.