Deepwater Horizon raises ‘licence to operate’ issues

Deepwater Horizon.pngThe chemical industry can be very proud of what it has achieved with the Responsible Care programme since 1985. But it may need to consider how this develops, in the light of the Deepwater Horizon disaster.

One key question emerged from this week’s US Congressional hearing with the heads of ExxonMobil, Chevron and Shell. It seems they all disagreed with BP’s drilling practices:

• EM’s CEO Rex Tillerson said “We would not have drilled the well the way they did“.
• Chevron chairman John Watson noted “It certainly appears that not all the standards that we would recommend or that we would employ were in place“.
• Shell’s president Marvin Odum added that “It’s not a well that we would have drilled in that mechanical setup“.

And according to the New York Times, “The executives of the other companies asserted Tuesday that they believed BP was an outlier, cutting corners to save time and money in ways that they would not tolerate“.

As far as the blog knows, there is no equivalent of Responsible Care in the oil industry. But this does not mean that the chemical industry couldn’t find itself in a similar position. Compliance with the Global Charter has always, for very understandable reasons, been mainly based on a company’s own interpretation of the programme.

So what would happen if a serious incident were to occur, on the scale of Deepwater Horizon, and it became clear that this was due to poor practice at a company signed up to Responsible Care? Could we see the same process taking place in Congress, with other companies blaming the supposed “outlier” for not using best practices?

But by this stage, as with deepwater drilling today, the issue might well have already become one of ‘licence to operate’ for all those involved, not just the offending company.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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One Response to Deepwater Horizon raises ‘licence to operate’ issues

  1. Hemant Rajan Naidu 21 June, 2010 at 5:13 am #

    Dear Paul,

    Could not agree more.

    The safety and environment aspect becomes even important in developing countries where it has been seen that many corporations had double standards on EHS.

    In the Indian setting where multinationals like Dow purchased Union Carbide, the EHS issue is even more important since any other occurance like Bhopal would leave the political leadership with no choice but to come down heavily on Chemical Industry.

    Regards,
    Hemant Rajan Naidu.

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