BP Tackles Crisis Amid Political Challenges


Inside Houston Response Center, Executives Juggle Work at Seafloor and on the Coast With Government Demands.

HOUSTON—After agreeing to pay $360 million to construct sand barriers along the Louisiana coast, BP PLC executives wanted to show how they were doing their part.

So they decided to attend a press conference organized by Louisiana officials announcing the funds. What followed for one company executive was a very public close encounter with some of BP’s oil.

BP CEO Tony Hayward, standing in the BP command center in Houston this month, updates reporters on efforts to clean up the Gulf oil spill.

The head of BP’s Gulf Coast operations, Bob Dudley, was led by Louisiana Gov. Bobby Jindal through an oil-covered beach with TV cameras rolling. Following the governor, Mr. Dudley bent down and ran his fingers through the oil.

He arrived for the press conference with oil on his boots and pants. “What I saw was painful and emotional and shocking,” Mr. Dudley said to the cameras.

“The governor felt to understand the impact of the spill, you need to see the oil, smell it and touch it for yourself,” said Kyle Plotkin, Mr. Jindal’s press secretary.

This is life under siege for one of the world’s largest oil companies as it tries to clean up the mess—environmental, financial and political—left by its relentless Gulf of Mexico oil spill.

An exclusive look last week inside BP’s Houston operation shows executives dealing with multiple government agencies, conflicting agendas and ever-changing demands as they work around the clock to capture more oil at the seafloor and reduce damage to the coastline. The volatile public battle between BP and the Obama administration has added to the complexity.

Cooperation between BP and the government is critical. Under the law and for all practical purposes, they are joined at the hip in trying to contain the spill and its consequences, and their reputations could rise and fall together. The president and top BP executives are expected to meet this week for the first time.

Since the beginning, BP Chief Executive Tony Hayward and President Barack Obama’s point person on the recovery, Coast Guard Admiral Thad Allen, have chatted by cellphone several times a day. Yet, once the Democratic president and Gulf state Republican governors started criticizing BP’s response, the public stance taken by government officials became more abrasive. Now, with the government unhappy with BP’s efforts, Mr. Allen issues orders with deadlines, evidenced by near daily federal press releases.

On Friday, U.S. authorities gave BP 48 hours to deliver a more aggressive response plan including “additional leak containment capacity…to avoid the continued discharge of oil.”

BP consults with the federal government before any press releases and public statements about its progress. Decisions on cleanup efforts must be “approved and prioritized” by Adm. Allen on the president’s behalf, one crisis official said. Federal workers scan their identification cards to clock in and out of BP’s facility, measuring their time worked so BP can compensate the government for their wages.

Mr. Hayward, 53 years old, had focused his leadership at BP on improving the company’s safety record and financial performance. He is the first to say BP takes responsibility for the tragedy and will pay for damage claims and economic losses caused by the spill on top of the containment and cleanup.

But he hasn’t always said the right thing at the right time, notably causing a flap with his recent aside: “I want my life back.”

“I’m not a politician,” said Mr. Hayward in an interview. He’s also not an American, so he has assigned Mr. Dudley, a Mississippi native who says “y’all,” to run the Gulf Coast operation.

At the crisis center in Houston, security is tight as BP officials work long shifts in the “simops,” or simultaneous- operations room where 27 vessels are monitored, or the “hive,” where underwater robots are manipulated. In between is a hallway where fresh food is brought in every four hours, massages are provided and artwork from children encouraging them to clean up their beaches is displayed.

BP and the Coast Guard hold shift-handover briefings at 6 a.m. and 6 p.m. BP managers wear cotton vests with titles such as “Incident Commander” “Engineer” or “Statistician.”

Mr. Hayward, in Houston much of the time now, holds daily calls with department heads from around the world. From Houston, Mr. Dudley holds a daily roundup briefing with BP officials in the Louisiana response center, Washington and London. Their original agenda was broken down by “Sub-sea”—action to stop the gushing well—and “Surface.” Along with cleanup and resources on the ground, the surface category now includes “Washington politics” and “Advertising/P.R.”

Two days after the “oil walk,” Mr. Dudley informed his CEO, who had just returned from London, that Alabama wanted its own sand barriers, known as berms, at BP’s expense.

“In my view, we should do it,” Mr. Hayward said.

“We may be ordered to,” Mr. Dudley said.

“Let the White House have the victory of announcing it, but it’s the right thing for us to do,” the chief executive responded.

On a conference call with his executives at London headquarters, Mr. Hayward told the group that another vessel, the Q4000, should be online at the spill over the weekend to capture as much as 10,000 more barrels a day.

“Can I make that public?” said Fergus MacLeod, head of BP investor relations, searching for facts to help stem the plummeting share price last week.

“We have to get Coast Guard approval before we say anything, and probably it will want to disclose that,” Mr. Hayward said.

Much of BP’s job is to have its checkbook out. When Florida, Louisiana, Mississippi and Alabama complained about a decline in tourism bookings because of the media coverage, BP gave the states $70 million to advertise how the oil hadn’t affected most of their beaches. When Alabama’s Republican Gov. Bob Riley brought four mayors to BP who wanted additional beach-cleaning machines, BP ordered 10.

BP is also learning that all politics is local. “We’re making lots of gifts but getting no credit,” said one manager at an internal meeting here. They decide to involve local politicians in gift announcements.

Next strategy: presenting more red, white and blue.

For BP’s meeting this week with Mr. Obama, Mr. Hayward and his Swedish chairman will likely bring with them company executives who are U.S. citizens, including Mr. Dudley. It will also show that 40% of BP’s assets and shareholders are based in the U.S., and that BP is America’s leading producer of oil and gas. In a big concession, BP’s board is expected to delay or reduce its coming dividend, and to set up a third-party arbitration system for claims.

As the heat index topped 110 degrees along the Gulf Coast, BP’s chief operating officer of exploration and production, Doug Suttles, called into warn of more possible negative publicity.

“For safety of our workers, I’m ordering them to take off every 20 minutes to seek shade,” Mr. Suttles said. “I just hope people don’t think they’re hanging out instead of cleaning the beaches.”

Inside Houston Response Center, Executives Juggle Work at Seafloor and on the Coast With Government Demands

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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