Oil and gas is the one of the industry that contribute a lot to the nation in meeting its energy related needs. There are number of firms that are operating in relevant field. It can be observed that in past couple of years many incidents of oil spill happened which negatively affect natural environment to great extent. There are number of reasons due to which cases of oil spill comes in existence. In the current report, different cases of oil spill are identified and analyzed and it is identified whether it is possible to manage and eliminate probability of happening of accidents of oil spill in ocean (Fingas, 2016). Detailed analysis of multiple cases is done and it is identified that it is the human negligence that lead to origination of such kind of incidents. Hence, it can be said that firms must follow detailed procedures when they are carrying out specific procedures. In the report, risks that BP, Exxon and fracking industry face in providing adequate supply of energy is also identified. At end of the report, role that ethical leadership play in helping oil and gas industry to manage risk is also discussed in the report. At end conclusion is formed on the basis of overall discussion.
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1. Relationship between managing ethical risk in oil and gas industry and reduction in accidents
In past couple of years many accidents takes place due to oil spill. It is observed that oil and gas are explored from sea surface level and many times mistakes are made in oil extraction due to which oil spill happened and sea water get contaminated. Due to contamination of oil thousands of sea water species get affected and died (Kostka and et.al., 2011). Apart from this aesthetic nature of under sea water area heavily get affected. Thus, it is very important to ensure that proper precautions and safety measures are adopted by the business firms to ensure that accidents will not take place in the ocean. It is observed that these accidents takes place due to negligence behavior of individual. This is reflected from the case of Exxon which was operating in the oil and gas industry. As per this case operator of ship going to take rest on deck and give its charge to the cousins. These people were not expert in operating ship and does not have license to do so then also they were allowed to operate ship. This was the serious case of the personal negligence. It was responsibility of captain to operate entire ship. By same does not do so and give responsibility to those that were untrained. This was first mistake and second one that was made by the captain of ship is that it was dunked and does not have right to operate ship.
All these evidences clearly reflects that it was negligence of the employees due to which incident happened. Cousins failed to operate ship in proper manner and same get collide with rock. Cousins and captain take one hour to take ship away from that rock after collide happened and within these 1 hrs huge amount of oil spread in the sea water. There were no equipment’s that can be used instantly to solve the problem. Contact was established with other firm which is known by name Alyeska pipeline services co. But then also they failed to control oil spill. This is the second mistake that was done by the firms (Reddy and et.al., 2012). Both operate in oil and gas exploration filed but does not equipment’s in sufficient number that can be used to control the situation. It shows that both firms does not behave ethically in relevant field.
There were lots of things that can be done to manage ethical risk and by doing so chances of occurrence of happening of unfortunate event can be reduced to some extent. Under this rules and regulations can be prepared about operations that can be performed by the relevant employees. By doing so it can be ensured that individual that is eligible to work is only performing relevant operations. As part of managing ethical risk appropriate risk management strategy must be prepared by the firm and under this firms must in advance must have sufficient number of safety equipment’s and strategies that can be followed to handle such kind of situations. If all these things will be done then in that case to large extent probability of happening of event can be reduced or eliminated completely. It can be said that there is very close association between managing ethical risks and reduction in accidents.
Second is the case of British Petroleum and in respect to mentioned firm it is observed that many serious cases of oil spill happened in the past time period. In the Texas refinery explosion happened under which 15 employees killed. Oil rig was taken on subcontract by the firm from the firm which is known by name Transocean Ltd. In the oil rig explosion happened and due to this reason 11 employees were died. Thousands of gallons of oil was released in the Gulf of Mexico and due to this reason environmental issues comes in existence (Valentine and et.al., 2010). In order to handle this situation firm dig many other holes in nearby area but situation does not come in control. Oils was observed at the coast of the Texas, Alabama and Florida etc.
However, safety systems were used in the operation but same were not sufficient. There was no remote control gate shut down system in Riggs and due to this reason oil spill does not comes in control. In research it was identified that there were number of loopholes in the contingency plan that was prepared in respect to handling contingent situation. In this case number of mistakes were made by the BP on its own part. It does not do quality testing of pipe in proper manner. Apart from this, cementing of pipe was also not done in proper manner. Quantity of cement that was used was not sufficient to hold back surging oil and gas. Along with this, less costly well design was used which lead to reduction in cost but is not effective overall. Main advantage of this structure is that it provide better path for gas to rise outside the pipe. Blowout preventer was not prepared in proper manner by the manufacturing firm (Fingas, 2012). Due to this reason also disaster comes in existence.
British petroleum can take number of steps to manage risk ethically and under this it can dig well in proper manner. Items can be purchased after proper testing. Appropriate control measures can also be adopted by the firm and by doing so it can ensure that no accidents will take place. On this basis it can be said that by managing risk ethically chances of mishap can be reduced to great extent.
2. Compare the risks that BP, Exxon, and the fracking industry continue to face in providing an adequate supply of energy?
BP, Exxon, and the fracking industry are facing the same consequences as their operation are held to the same space of business. The main risk may include oil leakage, spills, explosion. Such hazards are continuously making the headlines and shows the ill impact of hydraulic fracturing. As there are consequences of hydraulic fracturing which is causing damage to environment so companies owners are also unable to influence the shareholder and public regarding the steps taken by them to protect the community and environment (Redmond and Valentine, 2012).
Due to extraction of oil and natural gases hydraulic fracturing operation plays great importance. Due to such impacts this are under the survey for potential harm to the society and environment. Moreover, they are affecting the aquatic life by creating the water pollution, noise pollution and crime. The established companies are unable to assure the investors, shareholder and community regarding the proper regulation and protection steps taken by them. As companies are unable to share the details regarding the problems and issues, investors and shareholder have to believe on the headlines. This the only way through which they can know about the environmental impact which companies are making and not the protective action taken by them. Due to such problems investors are unable to make meaningful investments on companies in order to adopt new technological practises and mitigate the issue from the community and environment.
There are steps and methods adopted by the companies in order to protect the environment and risk associated with the oil spoilage. However, the Exxon- Valdez spill which gained main attention due to the oil spill in US. Furthermore, BP company after two decades had the oil spill which came to be worst for US history (Zhu and et.al., 2011). Such activities resulted great harm to environment as companies were not focused towards their ethical risk and taking those risks which could harm the environment and company reputation. Starting with the case of Exxon-Valdez the oil spoil was due to negligence which caused harms to sea birds, otters and natural ecosystem. The cleaning process also took time which made the company reputation down and due to this reason the shareholder were not interested in investing to such company. Company had to invest large amount of money for clean-up process which could be used for other purpose. Such mistakes and large investment on cleaning process avoid the investors to make investment in such companies. For the BP company, main consideration was sustainability development and safety as primary aspects. But then also company lack in their technological aspect which lead to death of 11 people and 1000 of gallons of oil leakage. The methods adopted them too failed which cause more oil spoil. The oil spoilage and the consequence which were generated were due to the technical issues but made great loss to the company and harmed the environment. Another, issue is the reputation of the company which gets damaged due to unfortunate issues created. If the company is having the negative impact, the customer too shifts to other companies. Emission of carbon and sulphur products also affect the companies as if they are making more loss to the environment.
Fracking industry is also needs great investment in pumping water, sand and chemicals in order to extract natural gases. Huge amount of chemicals are supplied underground which causes the emission of harmful gases.
In order to provide adequate amount of energy the companies needs to make the approach through sustainability development. Moreover, they need to show that they are well focused on the safety and protection towards environment. Also, steps can be taken in order to make positive headlines which shows that company are making efforts in preserving the environment and had taken all the safety measures for the production of the oil and gases. Due to harmful impact of oil and gases along with the depletion of same, community are more focused towards renewable sources of energy. Investment in the renewable energy can help the industry to generate the energy. For eg. BP has invested in low carbon emission business starting from 2006, which shows that they are ready to protect the environment. If further details like research and technologies implementations are given more stakeholder will be interested in investing in the company ( Graham and et.al., 2010).
Exxon to started making investment in the environmental protection which leads to decrease in the carbon emission and more storage of the oil.
As the companies are making the investment in the sustainability development more shareholder are getting attracted towards the company and are making financial investment. Reporting of the company details to the news editor can also increase the energy supply. Though the company business decreases financially but their customer and stakeholder increases. The amount which company invested due to small faults and carelessness could have been used for the development and using new technologies in the extraction. Companies also needs to deal with the political parties and had to face other financial risk if they made such mistakes. Various communities and societies also puts pressure on the company if such activities happens. The energy development through the these companies can be great deal as little mistakes are making great investment which needs to be sorted out. Companies need to make effective decision in order to generate energy which protects environment and doesn't affect community ethics.
3. How can ethical leadership help the oil and gas industry to manage risk?
Ethical leadership refers to the leadership under which all decisions taken by the business firm ethically without considering multiple factors like profitability. It is very important to ensure that leadership is working ethically (Mason. and et.al., 2012). This is because if same will be done then in that case it will be possible for top managers to ensure that all employees that are working below them are behaving in ethical manner. It can be observed that in past time period serious cases comes in existence just because of negligent behavior of people and time saving as well as profit making objectives.
Ethical leadership and risk management can help in preserving the environment as follows:
- Company needs to adopt culture responsibilities and maintain transparency with stakeholder and community.
- Moreover, they must assess environmental risk management by using sustainability development.
- Other than this company needs to focus on the safety and quality management.
Through the above ways the risk management and ethical leadership company can reduce the ill impact of extracting oil and gases from deep oceans. Making efforts in political, social and technical part can support the company to extract oil effectively. There are various cases which are mentioned above which supports the that companies are making in the sustainability development. Sustainability development refers to the development made without impacting much on the environment and reducing the same. In terms of the ethical concept companies are also focusing on the beneficial provided to the society and by showing their data they are making aware about the development made by them. Moreover, companies need to train the employees so that they can take effective decision while such conditions arise. The main issue in both the organization are raised due to negligence made by the employees (McNutt and et.al., 2012). Also, company needs to focus on the factors that if such cases occur mis-fortunately happen then what methods must be adopted so that its impact is less. Technology such as new bacteria which survive on the oil can be helpful in reducing he oil spill. More such technology must be adopted while extracting and supplying the oil and gases to other areas. Promoting more renewable energy sources can be an effective decision of the organization. Investment of the company should be made on the technical aspects which can let the employees understand about the working of the company structure. BP and Exxon both are making their efforts in generating the energy sustainably for they are making efforts in reducing the CO2 emission and other gases emission which are harming the environment and creating global warming.
Citizens wants that companies should be loyal to them, if companies are not loyal to their customer and stakeholder the product produced by company will not be purchased by customer. Both the companies must adopt the ethical leadership in order to remove the stigma on the company. Responsibilities must be taken by the organisation and organisation members at every level of the issues. Morale values and ethics must be considered while making the decision. They must consider the environment impact, cultural, and opinion of others to make the development. In case clearly it is clearly shown that due to the ethical failure huge damage to company's finance, their reputation, aquatic animals and to the environment was found. Due to the negligence and ethical failure both the companies have to invest billions for cleaning the environment and other legal processes. For the companies who adopted ethical concept in their company are supported by the citizen. They must also maintain the relationship with the government as all the legal issue can be resolved by them only ( Krohling and Campanharo, 2011). If ethical leadership and risk management was done by the companies they must have preserved their billions of money which they invested on the clearing the oil spoils. Moreover they could have protected millions of life of animals, birds along with the ecosystem. Such things will show the responsibility of company towards better future and sustainability development.
On the basis of above discussion it is concluded that in past couple of years number of incidents takes place. There are number of reasons due to which incidents takes place in respect to oil spill. In the report on analysis of cases it is identified that it is the negligence behaviour of individuals due to which such kind of incidents comes in existence. In case of British petroleum merely in order to earn huge amount of profit in the business firm adopt short term approach and take varied things lightly. Due to this reason oil spill over takes place in case of the relevant firms. It is concluded that project managers and top managers of the business firm needs to perform their roles and responsibilities in proper manner. If same will do work in proper manner then in that case chances of happening of such kind of unfortunate event can be reduced to great extent. If ethical leadership and risk management are adopted by the companies they may gain their reputation back and can effectively generate energy.
- Fingas, M., 2012. The basics of oil spill cleanup. CRC press.
- Fingas, M., 2016. Oil spill science and technology. Gulf professional publishing.
- Graham, W.M. and et.al., 2010. Oil carbon entered the coastal planktonic food web during the Deepwater Horizon oilspill. Environmental Research Letters. 5(4). p. 045301.
- Kostka, J.E. and et.al., 2011. Hydrocarbon-degrading bacteria and the bacterial community response in Gulf of Mexico beach sands impacted by the Deepwater Horizon oil spill. Applied and environmental microbiology. 77(22). pp. 7962-7974.
- Krohling, R.A. and Campanharo, V.C., 2011. Fuzzy TOPSIS for group decision making: A case study for accidents with oil spill in the sea. Expert Systems with applications. 38(4). pp. 4190-4197.
- Mason, O.U. and et.al., 2012. Metagenome, metatranscriptome and single-cell sequencing reveal microbial response to Deepwater Horizon oil spill. The ISME journal. 6(9). pp. 1715-1727.
- McNutt, M.K. and et.al., 2012. Review of flow rate estimates of the Deepwater Horizon oil spill. Proceedings of the National Academy of Sciences. 109(50). pp. 20260-20267.