The Deepwater Horizon Oil Spill in the Gulf of Mexico (full documentary) — FRONTLINE

[00:00:00] Speaker 1: "Safety remains our number one priority." [00:00:10] Speaker 2: "BP can talk about safety all they want, but they're not going to become a safer company." [00:00:15] Speaker 3: "They base everything on a risk. How many lives can we afford to lose before we need to deal with this?" [00:00:19] Speaker 4: "Number one, yes, this place just blew up!" [00:00:22] Speaker 5: From Texas and Alaska to the Gulf of Mexico. [00:00:25] Speaker 4: "BP apologized again this morning." [00:00:27] Speaker 6: Apology after apology. "They pledge repeatedly to run a safer operation, yet they continue to cut costs." [00:00:34] Speaker 7: "We have a facility here that could produce a cloud of gas that would make this place look like Hiroshima." [00:00:40] Speaker 5: What went wrong at BP? [00:00:42] Speaker 8: "The culture of BP management has to change. They refuse to change." [00:00:47] Speaker 5: Tonight on Frontline, correspondent Martin Smith joins forces with ProPublica to investigate the spill. [00:00:59] Speaker 9: "The oil rig Deepwater Horizon exploded." [00:01:04] Speaker 10: "There was growing desperation along the U.S. Gulf Coast today." [00:01:08] Speaker 5: It's been called the worst environmental disaster in U.S. history. [00:01:12] Speaker 11: 42,000 gallons of oil. "210,000 gallons of oil." "2.1 million gallons a day." [00:01:15] Speaker 5: A geyser of oil that caught the government off guard. "No one wants to oppress BP!" And threw a spotlight on a company that Americans knew little about. [00:01:26] Speaker 12: "In Washington today, protesters called for the U.S. government to get hostile with BP." [00:01:31] Speaker 13: "Mr. Hayward, Mr. Hayward!" [00:01:34] Speaker 5: When two months after the blowout, BP's CEO, Tony Hayward, came to Capitol Hill... [00:01:39] Speaker 13: "The testimony you're about to give to be the truth to the whole." [00:01:42] Speaker 5: He was there to explain what happened, and why. [00:01:46] Speaker 1: "Begin your opening statement, and let me again on behalf..." [00:01:50] Speaker 5: From the start, it didn't go well. [00:01:52] Speaker 1: "Chairman Wexman, Chenin's student..." "Chairman Wexman, Chenin's student, Chenin's student..." [00:01:57] Speaker ?: "This is what it looks like for the fisherman down there, [00:02:00] Speaker 14: and I think you need to be charged with a crime. You need to go to death. [00:02:05] Speaker ?: As a matter of fact, I've got some change and effort. You need to be charged with crime." [00:02:13] Speaker 1: "Can you tell us under oath that the decision to use six centralizers..." [00:02:17] Speaker 5: Amidst the technical questions, there were deeper concerns. [00:02:20] Speaker 15: "You're the CEO of the company." [00:02:22] Speaker 1: "With respect, sir, we drill hundreds of wells a year all around the world." [00:02:25] Speaker 16: "Yeah, I know, that's what's scaring me right now." [00:02:27] Speaker 5: About whether this was a company that could be trusted. [00:02:29] Speaker 16: "Mr. Hayward, when you became CEO three years ago, you said that safety was going to be your top priority." [00:02:36] Speaker 5: The interrogation produced few new answers. [00:02:39] Speaker 1: "One of the reasons that I am so distraught." [00:02:41] Speaker 16: "I don't want to know whether you're distraught." [00:02:43] Speaker 5: It was mostly political theater. [00:02:45] Speaker 16: "You're going to have a hard time reaching conclusions if you stonewall them." [00:02:49] Speaker 5: "I'm not stonewalling." It was also not the first time the company had been in trouble. In London, the board has been in crisis mode for much of the last five years. They've encountered disasters on all fronts, at their refineries, in their oil fields. The blowout in the Gulf is just the latest. [00:03:14] Speaker 17: "This is a company that has brought us the worst environmental disaster in U.S. history. That's not an accident." [00:03:20] Speaker 5: Critics say BP has a very bad record. It's a company that has grown too fast and taken on too many risks. This is a story about ambition and its consequences. To investigate BP's corporate history, we started here in Texas City, the site of the company's largest and one of its most troubled refineries. [00:03:50] Speaker 6: "Hi, Don. My name is Abram Lustgarten. I'm a reporter with ProPublica. I'm calling you because I'm working on an in-depth piece about the history of BP and its management culture." [00:04:03] Speaker 5: BP had an accident here in 2005 where 15 people died in an explosion and fire. 170 more were injured. Afterwards, there were charges that BP's management valued profits more than safety. We came to the refinery hoping to talk to managers. [00:04:25] Speaker 17: "So this is all BP, right?" [00:04:27] Speaker 6: "Yeah." [00:04:28] Speaker 5: BP declined. [00:04:30] Speaker 6: "And the explosion would happen then on the far side of all this big equipment?" "Right." [00:04:35] Speaker 5: The 1,200-acre refinery was acquired by BP in 1999 as part of a $61 billion takeover of the American oil company, Amoco. But built in 1934, the refinery was in bad shape. Workers and contractors were wary of the place. [00:05:01] Speaker 18: The refinery was not in prime shape, put it that way. Rotted out columns. Things that were rusted, not protected from corrosion. Fire hazards everywhere. [00:05:14] Speaker 19: It was typical for them to experience a fire every week on average. A fire every week is a warning sign that something is critically wrong at the facility. It was the worst refinery around this area, for sure. [00:05:34] Speaker 5: When the refinery was under Amoco's management, major upgrades had been postponed. For example, in 1991, Amoco considered replacing its antiquated blow-down drums used to collect volatile liquids and gases in an emergency with safer, modern flares. They decided against it. [00:05:55] Speaker 20: A flare is more efficient and safer than a blow-down stack. And there were several blow-down stacks within the refinery that were old technology. Long after a lot of other folks said, "We're not using those anymore," BP still was using them. [00:06:14] Speaker 5: It was a question of saving money. These emails from 2002 revealed that BP had also considered updating the blow-down drums. "We need to decide if we want to invest $150,000 now to save more money later on," wrote one employee. A senior manager responded, "Capital expenditure is very tight. Bank the $150,000 in savings now." [00:06:41] Speaker 2: And at that point, BP culture was, "Show me the money." And refining was not showing them the money. [00:06:47] Speaker 21: "You can only spend a penny once. Should we do it fixing up this refinery?" You're choosing among priorities. And they did not give this deferred maintenance priority in Texas City Refinery the attention, the priority it should have gotten. [00:07:04] Speaker 5: The pressure to cut costs came from the very top of BP. After the buyout of Amoco, Tony Hayward's predecessor, Lord John Brown, ordered a 25% cost cut across the company. The message was relayed down through the ranks. [00:07:22] Speaker 22: I don't know if they realized just how devastating the cost-cutting ethos was when it actually played out in the field. When there's a whisper at the top of the company, it becomes like a shout at the bottom. [00:07:40] Speaker 20: You were starting to hear a little bit more about, "Make do with what you got and try to make it more efficient." So you were taking older equipment and pushed it to a hilt. Hey, if something didn't blow up, it was a good day. [00:07:56] Speaker 5: In March 2004, there was a major fire. Fortunately, it was in an unmanned part of the refinery. Nobody was hurt, but problems continued. Don Paris, a safety-conscious engineer, took over the refinery a few months later and was trying to turn things around. [00:08:17] Speaker 20: Don was the refinery manager, or as locals like to say, he was the second mayor of the town. The workforce tended to trust in him because I think for the first time they were having a refinery manager who was harping a little bit more about safety. [00:08:37] Speaker 5: One of the first things Paris did was commission an employee survey. In it, workers talked about their exceptional degree of fear. They worried about dying. [00:08:49] Speaker 23: There was a fatality once approximately every 18 months or so. The feeling of the workforce was that there was an imminent catastrophic accident that could happen in the near future. [00:09:04] Speaker 5: Paris alerted his boss in London, John Manzoni, BP's chief of refining, about the severity of safety issues. [00:09:11] Speaker 6: Don Paris had held several meetings with John Manzoni, the head of refining. In each, he expressed grave concerns about the safety of working at the Texas City refinery. [00:09:21] Speaker 5: Paris even went to BP headquarters in London and showed Manzoni a PowerPoint presentation. In it, a list of dead workers, details on two recent fatal accidents, a tally of more than 20 fatalities in 30 years. [00:09:41] Speaker 20: The basic response Don Paris got was, "Well, that's your job to make sure this stuff doesn't happen." And he was pleading for, "Well, let me have the materials to do my job that way." London saw it a different way, and that's part of that culture that BP didn't get. [00:10:05] Speaker 21: We know we have to beat the others to win you over. Can we do it? [00:10:11] Speaker 24: You bet your BP we can. [00:10:14] Speaker 5: Twenty years ago, BP was nothing like the powerful multinational corporation it is today. The years of the once great Anglo-Persian oil company were long past. A revolution in Iran had crippled the company. [00:10:30] Speaker 2: Among its peers, it was a company to be pitied rather than emulated. It had had to cut its dividends, its share price was at a low. BP was in a very dark place in the late '80s, early '90s. [00:10:43] Speaker 5: It was then that a new group of managers came along and attempted to rescue the company from mediocrity. [00:10:51] Speaker 24: It was a good year for BP in very challenging times. [00:10:55] Speaker 21: They had not found a way to replace the Iranian reserves. They were not going to do so, remaining hierarchical and stuffy. They had to get out there and they had to compete. [00:11:05] Speaker 5: A young engineer, John Brown, was one of the new managers. From early on, he had a reputation as an aggressive cost cutter. [00:11:16] Speaker 25: Jobs can be made wider without necessarily moving people. [00:11:19] Speaker 5: He was a math whiz, a numbers man, and the board liked him. In 1995, he was made CEO. But he was a different kind of oil man. [00:11:33] Speaker 2: In many ways, yes, he wasn't a Texas oil man, but he was also not even a European oil man. He had very refined taste. He enjoyed, obviously, fine wine and he enjoyed his cigars. He was a very big opera-goer and opera buff. [00:11:50] Speaker 5: He never married and lived with his mother, who often accompanied him to BP functions. [00:11:56] Speaker 22: He doesn't have that larger-than-life J.R. Ewing kind of thing going on at all. But he was definitely willing to take big risks and make big, big bets. [00:12:06] Speaker 5: Brown surrounded himself with a small group of executives, including Bob Dudley, Tony Hayward, and John Manzoni, known inside the company as his Turtles. [00:12:17] Speaker 6: As in Ninja Turtles. Rising stars in the BP corporate structure, who he thought one day had the ability or the potential to lead the company. [00:12:26] Speaker 5: Until then, Brown set the agenda. It was Brown who took the company on a gigantic buying spree. [00:12:35] Speaker 21: John wanted to be the biggest. He was competing with Mobil, competing with Exxon, competing with Chevron. And he was bound and determined to use mergers and acquisitions as the lever to propel BP into the big leagues. [00:12:49] Speaker 25: By merging our assets and our prospects with those of Amoco. [00:12:53] Speaker 5: Brown began by purchasing Amoco. [00:12:55] Speaker 25: If you put the two together, you have a world-class set of complementary assets. [00:13:00] Speaker 5: Then, quickly, Brown would buy six other companies, including Arco, with its large Alaskan holdings. [00:13:07] Speaker 25: Putting the two companies together... [00:13:09] Speaker 5: In just five years, he quadrupled the company's value. [00:13:13] Speaker 25: We'll be the largest producer of oil in the non-OPEC world. [00:13:17] Speaker 6: It's a remarkable feat. Almost overnight, BP became a world player. [00:13:22] Speaker 26: Time to go beyond. Beyond. [00:13:24] Speaker 6: Beyond. Beyond. They went from a struggling also ran into a company that was fast on the heels of Exxon, the largest company in the world. [00:13:30] Speaker 19: The people of BP believe it's time to go beyond what the world expects from an energy company. [00:13:37] Speaker 5: But by the end of his buying spree, Brown was under pressure both to cut costs and to reinvent his company. [00:13:45] Speaker 25: One of the problems with building a company up in bits... [00:13:49] Speaker 5: Brown spoke of the challenge at this management retreat in 2003. [00:13:53] Speaker 25: Here's the practical real danger. A complex organization cannot be specified in rules. [00:14:01] Speaker 21: Growth creates challenges to management. There's no question about that. I've worked with small companies. I've worked with big companies. Big companies are harder to manage. [00:14:09] Speaker 25: So, Enron melted down. WorldCom had an accounting scandal. Adelphia, you know, the CEO's gone to jail, I think. [00:14:18] Speaker 21: BP, in this case, just grows beyond his management ability to watch everything they need to watch when they need to watch. [00:14:23] Speaker 25: Delegation, of course, comes with limits. [00:14:27] Speaker 27: Brown has shown himself as having an ability to get deals done, understanding how to negotiate complex deals. [00:14:35] Speaker 25: It's about integration, too, and I'll come back to that. [00:14:39] Speaker 27: But while they were successful in expanding commercially, they were less successful in instituting a sense of operational excellence within the organization. [00:14:48] Speaker 25: You must be very clear, as a leader, who it is you are delegating authority to. [00:14:55] Speaker 5: In an interview that year, Brown acknowledged that the real measure of his new company lay ahead. [00:15:00] Speaker 25: And the real quality of a company is, of course, the test on how well things are going when things go well. But the real test is, how do we respond when things go wrong? And that's a test which is applied, I think... [00:15:17] Speaker 5: Things went wrong on March 23rd, 2005, as workers at the Texas City plant were starting up the isomerization unit. The isom unit, used to boost the octane level of gasoline, had been down for maintenance, a so-called turnaround. [00:15:39] Speaker 18: The most dangerous time of a refinery unit is when it's being started up and when it's being decommissioned and taking the product out of it and turning it off, so to speak. [00:15:50] Speaker 5: Dave Senko, a supervisor with Jacobs Engineering, a BP contractor, was off-site at the time. But his team, unaware of any danger, had gathered inside a trailer near the adjacent isom unit. [00:16:04] Speaker 18: We were not told that that unit was in a turnaround mode. None of my people were aware. [00:16:10] Speaker 28: We were never told. We have a morning meeting before we start the day... [00:16:15] Speaker 5: Dave Lenning of BP was meeting with Senko's team. He was also unaware of the start-up. Nobody said a word to us about the isom starting up. By midday, workers had unknowingly overfilled the isom tower with flammable liquids. [00:16:33] Speaker 26: The tower steadily filled with liquid, more than 15 times the normal level. [00:16:38] Speaker 5: A gauge that was supposed to measure the amount of liquid in the tower failed. Some alarms that should have sounded didn't. Other alarms were simply ignored. In an emergency, excess gas and liquid can be rerouted to the blow-down drum. But there was too much. [00:16:57] Speaker 26: As flammable hydrocarbons overfilled the blow-down drum, operators nearby saw a geyser of liquid and vapor erupt from the top of the stack. [00:17:06] Speaker 5: The antiquated blow-down drum had no flair to handle the emergency. [00:17:11] Speaker 20: The actual flammable liquid is flying out the top of this thing like Old Faithful. [00:17:17] Speaker 28: The trailer started shaking real violently, and as I got up and turned sideways, that's when the explosion happened. And then just the force of the blast knocked me down to the ground, and then you could see a big ball of fire just roll over our heads right over the trailer. They just got real quiet. It got real dark. I figured, you know, that's the end. 9-1-1. [00:17:40] Speaker 26: A plant just blew up. Oh, my God! Tech City 9-1-1 said your emergency. Yes! These plants just blew up! It's the ice off! The ice off! [00:17:48] Speaker 5: It was the biggest industrial accident in decades. [00:17:53] Speaker 13: Get me at least half a dozen available firemen. We got people trapped in this trailer trying to get to them. [00:18:00] Speaker 14: It's been a sad day for BP Texas City. A really sad day for me personally as well. At this time, regretfully and with shock, I have to report to you that there have been some fatalities. [00:18:16] Speaker 29: Mr. Brown has spent the morning visiting our site. He's now agreed to spend a few minutes with you. This is John Brown, our group chief executive. [00:18:25] Speaker 25: Thank you. Ladies and gentlemen, good morning and thank you for joining us. Yesterday was a dark day in BP's history. All of us at BP are very deeply saddened by the loss of life and injuries suffered by so many people. [00:18:43] Speaker 5: Lawsuits ensued. [00:18:45] Speaker 30: My name is John Manzoni. I live in London and I'm with BP. [00:18:49] Speaker 5: In a taped deposition, John Manzoni, head of refining, was asked about his visits to Texas City. [00:18:55] Speaker 15: When was the first time you learned there were serious safety concerns at BP, Texas City? [00:19:00] Speaker 5: Manzoni claimed he'd never been made aware of serious safety issues at the plant. 23rd of March, 2005. [00:19:07] Speaker 15: Before that, you had no idea that there was a risk of catastrophic injury. [00:19:13] Speaker 30: No, I think had I been aware that we could have had a catastrophic failure, we would have taken action earlier. [00:19:25] Speaker 15: When Mr. Manzoni was asked directly, were you aware of all of the multiple safety concerns being raised, his response was no. And I just, I couldn't believe that that was true. [00:19:36] Speaker 5: Manzoni also denied knowing about the cost cutting in Texas City. [00:19:40] Speaker 31: After the merger, there was apparently a decision made to advise the various business unit leaders at the various refineries to cut their fixed operational budgets another 25%. Do you know anything about that? No, not specifically. [00:20:00] Speaker 5: Eventually, BP paid victims and their families over a billion dollars in exchange for their agreeing never publicly to criticize the company. Everyone signed except for this woman, Eva Rowe, who lost both her mother and father. [00:20:18] Speaker 32: BP wanted to meet and talk about a settlement. In my mind, I was thinking, you people are crazy, that I'm just going to sign this and go away, and you guys are going to get away with what you've done. [00:20:29] Speaker 17: What did you say to them? [00:20:31] Speaker 32: I specifically told them that, that sucks. This was not an accident. This was profits over people. I mean, there were like small repairs that would have cost their company like $100,000 for like a flare system. That would have prevented the explosion also. And they didn't do that. [00:20:50] Speaker 5: Rowe says that BP did not get in touch with her until a month after the blast, when they sent her $25,000 and this letter. [00:20:59] Speaker 32: I got a form letter, "Dear Miss Rowe, we're sorry for the loss of your father, James Rowe." [00:21:04] Speaker 5: But it was the only letter she received. [00:21:06] Speaker 32: I never received one that apologized for the loss of my mother. So it was kind of upsetting. [00:21:18] Speaker 5: A year and a half after the accident, BP finally settled with Rowe for an undisclosed amount of money and $32 million in donations to charities of her choice. She also insisted that BP be forced to release 7 million internal documents. [00:21:34] Speaker 32: That's all I wanted in the first place, was for the world to be able to, you know, have the information. from BP on what happened there. [00:21:44] Speaker 5: Those documents contributed substantially to government investigations into what happened at Texas City. Another investigation, commissioned by BP, was led by former Secretary of State James Baker. [00:21:57] Speaker 33: BP is going to approach process safety... [00:22:00] Speaker 5: The reports concurred. [00:22:01] Speaker 33: BP has not adequately established process safety as a core value... [00:22:07] Speaker 5: At the end of Baker's press conference, Brown apologized via satellite from London. [00:22:12] Speaker 25: BP gets it, and I get it too. This has happened on my watch, and as chief executive, I have a responsibility to learn from what has occurred. [00:22:22] Speaker 5: 71 million in federal fines were paid, but no BP official was ever charged with a crime. [00:22:29] Speaker 18: What bothers me most is that here we are five-plus years after that blast, and not a single person has been blamed for the incident or the conditions that caused it. [00:22:46] Speaker 5: Today, the refinery continues to be one of BP's most troubled and dangerous. Four people have died here since the 2005 accident. And in June 2010, T.J. Aulds of the Galveston Daily News reported that BP Texas City released toxic gases over a 40-day period this last spring. It resulted in more than a half a million pounds of pollution. BP reported the release to regulators. The EPA is investigating. [00:23:18] Speaker 32: You know, it's their history. Bad things have happened everywhere BP operates. Everywhere they operate, something bad happens. [00:23:28] Speaker 4: BP is in crisis mode after severe pipeline corrosion... [00:23:33] Speaker 34: The conditions at the spill site, nothing less than brutal. [00:23:36] Speaker 4: There are calls now for investigative hearings into why the company had to shut down... [00:23:40] Speaker 5: A year after the explosion in Texas City, there were problems on another front: Alaska. This is BP's giant Prudhoe Bay oil field on Alaska's North Slope. It represents 8% of America's domestic oil production. But opened more than 30 years ago, inadequate or deferred maintenance here, too, has workers worried. [00:24:12] Speaker 8: The pipelines are rusted where insulation has fallen off... [00:24:16] Speaker 5: Managers won't talk. But workers like Mark Kovach, protected by their union, explained how back in the '60s, everyone thought the field would last 20 years. They were wrong. [00:24:30] Speaker 8: All of the modules were designed in 1966 and put in place in the '70s. And the expected lifespan of the field and that equipment was designed to last till 1987. And then it was supposed to be pulled out. After they started drilling, they knew that the pay zone was a lot deeper. But we're still using a lot of the infrastructure that was supposed to be pulled out in '87. They're going to run everything to failure. Which means that everything here is going to be worn out completely by the time they decide to leave. [00:25:04] Speaker 7: There is so much money here and still so much oil to be made that they're kind of in the quandary of having all this aging infrastructure, but they have to stay here to make the big money that they're making off of here. [00:25:23] Speaker 5: As in Texas City, the workers say BP has focused on cost cutting. [00:25:29] Speaker 22: When I was doing reporting on Alaska, that's when I really began to hear about this incredible focus on cost cuts, and that there was just tremendous pressure. It was just shocking to me that a company would be flying so close to the edge on something, you know, where the downside is so huge. [00:25:48] Speaker 5: BP employs nearly 300 contractors to inspect the pipes and wells. But it's a huge challenge. [00:25:59] Speaker 3: Hey, you are set. Our plan would say this line, this line, and this line, you're going to do five inspections on it this year. And it might be miles and miles long. It's kind of like a crapshoot as far as are you going to find some damage or not. We're inspecting as much as we have time to inspect, but BPs, they base everything on a risk. You know, what's the risk? How far can we go with this before we're going to lose a life, or how many lives can we afford to lose before we need to deal with this? [00:26:31] Speaker 5: In 2002, oil worker Don Shugak was about to inspect well A-22. [00:26:37] Speaker 8: He did not know and was not told that that well had a leak and had a problem. The well blew up. He was smashed against his truck. And he had broken bones and was burned. [00:26:48] Speaker 5: Don Shugak lay in a coma for six weeks. These pictures were taken after he awoke. He settled with BP for an undisclosed sum. In exchange, he agreed not to speak to the media. [00:27:03] Speaker 6: It's essentially a gag order. There are many people who would say that BP devotes more effort and attention to making that a priority than they do to keeping their facilities safe in the first place. [00:27:15] Speaker 5: But far from quieting concerns, Shugak's accident spurred workers once again to bring safety problems to the attention of management. [00:27:24] Speaker 8: And we would send a letter to London. Normally, we get a nice answer back, but no action. [00:27:31] Speaker 35: Information had been brought forward by the corrosion technicians and other employees to management, had been summarily ignored. People had been told to shut up about it. And the potential for a corrosion-related rupture was significant. And lo and behold, in March of '06, it proved to be true. [00:27:52] Speaker 5: In March '06, 260,000 gallons of oil leaked from a pipeline. It was the worst spill ever on the North Slope. [00:28:02] Speaker 8: We told management there was going to be spills and that these lines were going to break. And we had a lake of oil out there that was over three foot deep and rippling in 40 below weather. [00:28:14] Speaker 35: 200,000 gallons is nothing to be sneezed at. However, being that it was wintertime, it made the response possible to basically get most, if not all, of the hydrocarbons up out of the environment. Had it been mid-summer and the sheet flow of water across the North Slope and into the Beaufort Sea, 200,000 gallons would have been an environmental ecological disaster. [00:28:39] Speaker 22: As it turned out, they weren't doing enough what they call pigging, which is putting through a metal thing, they call it a pig, that clears the sediment from the pipes. This was an actual cost cut. They figured they didn't need to do it as often and they'd be just fine. [00:28:57] Speaker 7: We had not pigged and cleaned the line for a long, long time. [00:29:06] Speaker 5: The pipe had not been pigged for nearly a decade. BP managers had concluded that pigging wasn't necessary. [00:29:15] Speaker 7: Several years previous to this, they had wanted to do away with the pigging crew entirely in union negotiations. They didn't want them, they wanted to lay them off. What, not pig at all? Right. They actually made that proposal across the bargaining table. And we said absolutely not. [00:29:35] Speaker 5: Five months after the spill, Lord Brown arrived to personally inspect the pipelines. He was assured by his chief corrosion expert that the leak was an isolated incident. [00:29:45] Speaker 12: The other lines that we still have in operation today aren't showing this problem at all. So we believe right now that the problem was located to this specific segment of the line. [00:29:56] Speaker 25: This is the only time that something's happened, but one, one time is too many. [00:30:02] Speaker 5: Two days later, there was another spill. [00:30:05] Speaker 4: BP is in crisis mode after severe pipeline corrosion forced the company to shut down its Prudhoe Bay field in Alaska. [00:30:11] Speaker 5: BP was forced to shut down its operations. It caused a major disruption in oil supplies, and in the lower 48, a spike in prices at the pump. [00:30:23] Speaker 4: BP apologized again this morning for their failure to keep the crucial commodity flowing. But some numbers... [00:30:29] Speaker 5: In the wake of the shutdown, a senior BP official was reassigned. [00:30:33] Speaker 4: Is the pipeline corrosion in Alaska just the latest example of bad luck for the company? Or are there serious management issues for BP? [00:30:41] Speaker 5: Meanwhile, the subcontractor responsible for pipe inspections, Acuron, had hired a new supervisor. [00:30:48] Speaker 36: Welcome to BP's Prudhoe Bay operation. [00:30:50] Speaker 5: His name was Martin Anderson. [00:30:52] Speaker 36: My name is Marty Anderson. The quality assurance of radiation... I had received a phone call from North Slope project manager with Acuron at the time, who were responsible for providing non-destructive testing for the corrosion inspection chemicals group for BP. He asked me if I'd be interested in a supervisor's position. What do you begin to find? What do you uncover? As you know, I'm not at liberty to discuss too many details. [00:31:14] Speaker 17: You're saying you can't talk freely because you signed a non-disclosure agreement? That's correct. [00:31:21] Speaker 5: Anderson can't say anything that criticizes the company. [00:31:25] Speaker 36: I'm not at liberty to... [00:31:26] Speaker 5: And has never spoken to the media before. But independently, ProPublica and Frontline have learned that some pipe inspectors were not certified or trained properly. [00:31:39] Speaker 17: I've shown you this letter, this e-mail previously, and you had a chance to look through that and read it, right? Yes. [00:31:47] Speaker 5: Anderson's findings are cited in this e-mail sent to BP officials from an attorney who deals with worker complaints. The concerns are described as "serious," revealing a significant quality control breakdown, with inspectors in the field performing inspections for which they were not qualified. [00:32:07] Speaker 17: Is there anything in there that is inaccurate? No, that's a very factual document. You found that inspectors were unqualified? [00:32:17] Speaker 36: Yes, everything in that letter is factual. [00:32:19] Speaker 17: Have you ever suspected that what you were seeing was actually intentional and therefore criminal? [00:32:25] Speaker 36: I've had concerns not being an attorney, knowing what is breaking the law and what is not breaking the law, but I can tell you that I was very uncomfortable with the situation that they had. [00:32:40] Speaker 5: BP has since acknowledged that more than 19 inspectors responsible for 13,000 inspection points were unqualified. They say they've corrected the problem and that at least 10,000 inspection points have been re-examined. By 2006, BP's most promising oil fields were here in the Gulf of Mexico. They had bet their future on it. [00:33:22] Speaker 27: If you want to continue to grow as an oil company, you have to keep extracting more oil. It's simple. So, deep water was the next frontier. [00:33:32] Speaker 5: The U.S. government, worried about dependence on Middle East oil, encouraged it. [00:33:37] Speaker 2: They wanted the deep waters of the Gulf of Mexico to be explored. And BP was the kid in the front of the class putting up its hand before it even had an answer, basically. They liked to be pushing into ever deeper territory. It's how you get kudos in the industry, and it's hugely impressive what they were doing. [00:33:56] Speaker 22: They were very confident. They actually believed they were going to overtake Exxon in terms of production. They had found a lot of oil in the Gulf, and they were feeling like on top of the world. [00:34:07] Speaker 5: BP is the leading operator here, producing 25% of all Gulf oil from some of the deepest waters in the world. [00:34:15] Speaker 2: In fact, it was BP who had found the deepest ever. So everybody was actually pretty excited about this, and people were just losing sight of the risks. [00:34:25] Speaker 21: The deep Gulf was regarded as a very difficult place to drill. Storms, hurricanes, just putting a deep well down through a lot of water. It's geologically a difficult place in which to operate. [00:34:43] Speaker 5: Thunder Horse, which towers 43 stories above water, was BP's showcase platform, a symbol of the oil giant's ability to innovate, to push technology to the limit. In July 2005, Hurricane Dennis swirled over the Gulf of Mexico. The rig's celebrity would be short-lived. Thunder Horse toppled over. [00:35:11] Speaker 21: This was a state-of-the-art rig, which would cost BP billions of dollars to design and build, and it looked like it was going to sink. It was very embarrassing. [00:35:20] Speaker 5: After an investigation, BP discovered that the storm wasn't the problem. [00:35:26] Speaker 6: That in itself shouldn't have been disastrous. It turns out that BP engineers had incorrectly installed a number of valves that are meant to control the flow of water in the supports that keep the rig afloat. And the rig, as a result, took on water instead of shedding it. [00:35:43] Speaker 5: A senior engineer on the Thunder Horse project agrees it was human error. [00:35:49] Speaker 34: The storm is not really the cause of why that thing almost flipped. It's because the check valve was installed backwards, okay? And all that was probably caused by being in a hurry and not dotting their I's and crossing their T's in this case. [00:36:04] Speaker 5: The platform became one more big black eye for BP. [00:36:08] Speaker 22: You had Texas City, you had Alaska, you had the problems with Thunder Horse. I think the first one or two incidents, people were able to say, well, you know, everybody's had these accidents. But after a while, so many things mount up that you've got to wonder, is there a deeper systemic problem? [00:36:28] Speaker 5: Back in London, BP's board had seen enough of Brown. [00:36:33] Speaker 21: He had Texas City, he had the leak of the pipeline. These were a series of closely spaced accidents, which caused the board to lose confidence in John. And then the embarrassment of his personal life, terrible. And that was the end. [00:36:50] Speaker 24: Lie over gay partner ends BP chief's career. The surprise resignation of Lord John Brown. [00:36:57] Speaker 5: A newspaper had pursued a story of Brown's private life. While trying to contain the scandal, Brown lied to a judge about how he met his gay partner. Brown's departure was expedited. The board had already been considering three of his top turtles to replace him. Two of them had strikes against them. Bob Dudley, then head of a big BP venture in Russia, was viewed as an outsider. [00:37:24] Speaker 2: He is the only guy who was actually a possible candidate to succeed John Brown, who had run a company. He came from Amaco. He's an American. [00:37:35] Speaker 5: And then there was John Manzoni, who had been groomed to take over. But he was marked by the accident at Texas City. That left Tony Hayward, an engineer who had headed oil exploration worldwide. He took over in 2007. [00:37:51] Speaker 21: Tony Hayward was well-regarded BP guy, engineer, extremely capable, an oil man through and through. And someone considered a very worthy successor for John. [00:38:03] Speaker 1: I guess I should start by saying this has been one hell of a year. I mean, it really has. It started with a tsunami. It continued with Texas City. [00:38:12] Speaker 5: When Hayward took over, he spoke candidly about BP's problems. [00:38:16] Speaker 1: We then nearly sunk our flagship project in the Deepwater Gulf of Mexico. And I think the only good thing I would say about all of this is, A, it's good to have it all behind you. [00:38:25] Speaker 2: The message he was sending was not only that things had been bad, but that he was splitting away from John Brown. [00:38:35] Speaker 1: This is about a fundamental lack of leadership and management in the area of safety, period. [00:38:42] Speaker 6: Tony Hayward came into BP's CEO role on a mission to fix the problems that the company had. In his view, he thought that Brown had been too aloof and too focused on growing the company and had lost sight of what it took to mine those resources. [00:38:58] Speaker 1: We had a major, major oil spill in Alaska. [00:39:01] Speaker 5: Hayward gave this blunt analysis of what had gone wrong at BP to a group of business students at Stanford University. [00:39:08] Speaker 1: Heyward set out to refocus BP. Heyward set out to refocus BP. [00:39:30] Speaker 5: He allocated $14 billion to upgrade operations and established a new safety group. The changes were well received internally. [00:39:48] Speaker 2: BP folks had been through the wringer. They had not felt proud of the company they worked for. And I think, in general, they sighed a great sigh of relief when a new management came in. [00:40:01] Speaker 5: But London's bankers weren't happy. BP's stock price was slumping. Hayward came under renewed pressure to keep cutting costs. [00:40:11] Speaker 37: Now, BP has announced a bid to cut costs, boost revenues, and improve the oil giant's lagging performance. [00:40:18] Speaker 6: It just doesn't make sense. It's not clear how the company can continue to shave its expenses while supposedly reinvesting in the procedures and the equipment and the operations that have placed it at such great risk over so many years. [00:40:35] Speaker 1: Safety remains our number one priority, and I'm pleased to report we can see clear progress. [00:40:42] Speaker 5: If BP was going to reform BP's safety culture, he would be doing it while taking bigger and bigger risks in deeper and deeper water. By 2010, BP had over 100 wells in the Gulf, under rigs like the Atlantis, Mad Dog, and the Deepwater Horizon. [00:41:02] Speaker 2: The U.S. government made it very easy and very attractive for them to move quickly. [00:41:06] Speaker 5: They were encouraged with generous subsidies and limited penalties if something went wrong. [00:41:12] Speaker 2: For example, their liability cap, if there was a spill, was $75 million, which is basically five cents to you and me. So why would you go drill somewhere else where politically it's more difficult and perhaps the geology isn't as great and your liability is going to be really high? It made sense for BP to be there. [00:41:32] Speaker 38: Today we're announcing the expansion of offshore oil and gas exploration. [00:41:37] Speaker 5: As the Deepwater Horizon was drilling the Macondo well, President Obama announced a major expansion of offshore drilling. [00:41:45] Speaker 38: There will be those who strongly disagree with this decision. [00:41:48] Speaker 5: He delivered his speech at Andrews Air Force Base to underscore that oil was an urgent strategic issue. BP could only be pleased. [00:41:58] Speaker 6: But clearly, the company that will do most of that drilling in the Gulf of Mexico is BP. They own the vast majority of the leases for new and promising areas that would be explored. Yet at exactly the same time, multiple agencies in the Obama administration are actively investigating BP on several fronts. [00:42:18] Speaker 5: At the EPA, lawyers representing several agencies, including the Departments of Interior and Defense, were considering disqualifying BP from getting any more government contracts. At the Department of Labor, attorneys were evaluating a series of ongoing violations at several BP refineries. And at the Chemical Safety Board, investigators were demanding that BP act on promises made in 2005 to address safety issues in Texas City. But in the White House, Carol Browner, Obama's chief environmental advisor, said that in the policy discussions over drilling, BP's safety record never came up. But it depends on the issues of safety and environmental issues. It depends. On the industry's overall 30-year offshore drilling record. [00:43:07] Speaker 9: If you have a 30-year record, that speaks volumes. I think most of us, if making decisions in our own lives had 30 years of information that suggested something was safe, we would pay attention to that. [00:43:21] Speaker 17: But at what point does the safety and environmental record of a company rise to an issue of concern for you in the White House? [00:43:33] Speaker 9: The White House is not involved in individual leasing decisions or permitting decisions. Those are handled, you know, outside of the political system, and appropriately so. They're factual decisions made by the Department of Interior. That's their responsibility. It's not part of the broader policy decision, which is should we enhance and increase the amount of domestic oil production. [00:43:55] Speaker 5: At Interior, Secretary Ken Salazar's chief deputy is David Hayes. But here, too, BP's track record failed to alarm anyone. [00:44:05] Speaker 17: Would an application from BP receive any special attention given BP's troubled track record? [00:44:14] Speaker 39: I don't believe so. The track record for BP as a company, in terms of deep water performance, I'm not aware that BP would be singled out for special attention. [00:44:30] Speaker 17: The Thunder Horse rig, almost completely destroyed. They had the Texas City disaster. They had the problems on the North Slope of Alaska. At what point does the company performance start to raise red flags? [00:44:47] Speaker 39: The enforcement philosophy that we have, and the permitting philosophy that we have, is we expect every applicant to come in and provide the demonstration required to show that they can do something. We expect our permit reviewers and our enforcers to be tough on everybody. [00:45:12] Speaker 5: That would mean lawyers at the Department of the Interior, the EPA, or the Justice Department. The Chief of the Environmental Crime Section at Justice, David Ullman, says that the laws have no teeth. [00:45:24] Speaker 17: How do you explain that a company with an egregious record is allowed to participate in the most challenging kind of drilling in a sensitive environment? That's a great question. And the answer is that our laws don't, today, create any barriers, any limits on their ability to continue operating. As soon as they've cleaned up whatever mess they've made, they're off the hook. And if you're a repeat offender? The law's no different. The law's no different. So you can get another contract. You can drill again. You can operate a refinery. That's correct. Simple as that. [00:46:01] Speaker ?: Simple as that. [00:46:02] Speaker 6: The explosion came just 20 days after Obama's speech at Andrews Air Force Base. [00:46:21] Speaker 5: Eleven workers killed. Seventeen more injured. Things had gone wrong here from the beginning. A worker had called the project a nightmare, the well from hell. Internal documents show that BP engineers were debating how to cut costs on a project that was already way over budget. [00:46:43] Speaker 34: Every indication was that the well that blew out, it was already $10 million over. And to get caught doing a remedial cement job and going back in there and doing all this work was another $10 million. And it was going to impact them. So they were cutting corners on an operation side, trying to get by with less. [00:47:03] Speaker 5: BP bypassed a key test called a cement bond log. BP saved more than $100,000. BP cut the number of centralizers used to secure and plug the well. this saved over a million. BP also chose to remove heavy drilling mud that was helping to keep gas underground, instead replacing it with lighter seawater, saving millions more. And in a congressional hearing after the spill, executives of four of the world's largest oil companies all testified that in the case of Deepwater, BP did not operate to industry standards. [00:47:57] Speaker 16: I sent a letter to Tony Hayward, the CEO of BP. And the letter describes a series of decisions that BP made that seemed to increase the risk of catastrophic blowout. I'd like to ask each of you whether you think mistakes were made by BP. [00:48:14] Speaker 13: Well, in reviewing the letter that you sent, it appears clear to me that a number of design standards were -- that I would consider to be the industry norm were not followed. [00:48:25] Speaker 34: It's not a well that we would have drilled and put that mechanical setup in there are operational concerns. [00:48:30] Speaker 15: Not all standards that we would recommend or that we would employ were in place. [00:48:35] Speaker 5: Two days later, Tony Hayward was summoned. [00:48:41] Speaker 16: Mr. Hayward, we had a hearing earlier this week with CEOs from the other oil companies. They were unanimous in their view that you made risky decisions that their companies would not have made. And the conclusion I draw is that BP used a more dangerous well designed to save $7 million. Don't you feel any sense of responsibility for these decisions? [00:49:04] Speaker 1: In the three years that I've been CEO, I've focused on improving dramatically our safety and environmental performance. Prior to this accident, that had indeed been the case. And that is why, amongst all the other reasons, I am so devastated by this accident. [00:49:20] Speaker 21: His testimony before the Congress on Macondo well was really embarrassing. I'm not a cement engineer, I'm afraid. I didn't know anything about the centering. I'm not a cementing expert. That was really -- [00:49:31] Speaker 17: He said he wasn't part of the decision-making process. Outlandish. You're supposed to know. [00:49:37] Speaker 5: In the weeks and months following this bill, BP's board lost faith in Tony Hayward. He was replaced with Bob Dudley. Dudley would be the third CEO in four years. No questions, guys, please. [00:49:59] Speaker 33: No questions at all, please. [00:50:01] Speaker 5: For months, we asked BP to grant an interview. They declined. [00:50:05] Speaker 37: Well, there's no question we're gonna learn a lot from this accident in the Gulf Coast. [00:50:12] Speaker 5: They agreed to consider written questions. We sent more than 40. They gave us a three-paragraph response. In it, they pledged to restructure and improve safety in all their operations. [00:50:26] Speaker 6: Several oil executives that I spoke with described this process of reforming a company culture as a monumental task. [00:50:33] Speaker 37: Tony and I are gonna work through a transition between now and -- [00:50:36] Speaker 6: And it's something that will occupy a chief executive's focus and attention every single day, every day of the week, every week of the year in perpetuity. [00:50:46] Speaker 33: Thanks, guys. Thanks so much. Thank you. [00:50:49] Speaker 5: Thank you. The bill now faces the largest liabilities in corporate history. In July 2010, a bill passed the House of Representatives that would ban BP from drilling new deepwater wells for seven years. The bill is pending in the Senate. In Texas City, the Department of Labor just levied $50 million in new fines for BP's failure to address safety issues they had promised to correct after the 2005 explosion. And in Alaska, maintenance documents from October 2010 show that the pipelines here remain seriously corroded. [00:51:32] Speaker 10: Frontline is made possible by contributions to your PBS station from viewers like you -- thank you -- and by the Corporation for Public Broadcasting. Major funding is provided by the John Dee and Catherine T. MacArthur Foundation, committed to building a more just, verdant, and peaceful world. And by Reva and David Logan, committed to investigative journalism as the guardian of the public interest. Additional funding is provided by the Park Foundation, committed to raising public awareness. And by the Frontline Journalism Fund, with a grant from Bill and Seal Hicks. [00:52:33] Speaker 11: Learn more about this and other Frontline programs at pbs.org. Frontline's The Spill is available on DVD. To order, visit shoppbs.org. Or call 1-800-PLAY-PBS. [00:53:03] Speaker ?: The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD. The Spill is available on DVD.