When the Pursuit of Petrol Gets out of Control: BP and the Deepwater Horizon Disaster

By Danilo Dovgoborets and Weibin Han

This blog post was written for the course "Current Issues in Global and EU Affairs", which took place from February 12-April 30, 2018.

NASA image of Deepwater Horizon oil spill

In 1859, Edwin Drake’s oil wells in Pennsylvania opened a new chapter in history of energy consumption, as the industrial scale petroleum production took over the roles of other fuels and  replaced the previously prosperous American whale oil industry.

BP (British Petroleum) represents one of the most entrenched transatlantic business relations with its largest division located in America. The company started in 1908, when William D’Arcy gambled all his fortunes on an oil rig in Persia. BP gradually became a multinational company as it acquired projects from India to Egypt to Trinidad. For a long time the company seemed invincible, until in April 2010 the Deepwater Horizon explosion struck the Gulf of Mexico off the coast of Louisiana. The disaster caused sinking of the oil rig and the worst oil spill in U.S. history. Eleven workers died in the explosion and more than 4 million barrels of oil were released into the sensitive marine environment. Scientists have estimated that the spill caused more than US$17 billion in damages to natural resources.

US Coast Guard image of Deepwater Horizon rig fire

The incident highlighted the intricacies of globalization, as BP leased an oil platform from Switzerland-based Transocean and enlisted Houston-based Halliburton as contractor to work on Deepwater Horizon. It was a tall order to untangle and clarify each party’s roles and responsibilities when the disaster happened, but eventually BP took the largest hit as total cost for compensations, penalties, clean-up efforts and legal claims amounted to USD 65 billion as of January 2018.

The disastrous environmental impact resulted in the Obama administration’s decision to pass new bills on offshore drilling regulations. However, things are starting to change as a pro-business administration took over from Obama in early 2017. The Trump administration wants to increase domestic production by “reducing the regulatory burden on industry”, and proposed opening virtually all U.S. waters to offshore drilling. However, according to Donald Boesch who served on the bipartisan National Commission that investigated the causes of the blowout, such a shift will put workers and the environment at risk, and ignores the painful lessons of the Deepwater Horizon disaster.

With a conservative and populist view, Trump may bring a radical change to the U.S. energy policy, as was already indicated with his announcement to withdraw from the Paris climate agreement signed by the Obama administration. Will the resumption of offshore drilling squeeze the renewable and clean energy sector in the U.S.? If lessons from the BP disaster are to be learned, Europe and the U.S. have to work on joint initiatives to increase the proportion of renewable energy from an industry and business perspective. This question requires a thorough discussion and consensus-building for a closer partnership in the renewable energy sector on both sides of the Atlantic. Both business interests and environmental protection would be best advanced by a clear, transparent and thoroughly considered regulatory framework.