Mishap Strikes BP Again

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Mishap Strikes BP Again

LONDON -- A raincloud has been hanging over BP's head lately, and it just got larger when the company discovered another leak, this time in a 12-inch pipeline in the Port of Long Beach, Calif. Instead of crude oil, the pipeline supplied refined gasoil -- an ingredient in the production of transportation fuels -- from the Port of Long Beach to its Carson refinery.

According to BP, 1,000 barrels spilled from the underground pipeline but it did not reach the ocean and no significant impact on the environment has been found. To date, BP has cleaned up 900 barrels and possible locations where the gasoil was released into the environment are being actively investigated.

"BP has taken full responsibility for this release and its clean up," said Tim Hawkins, BP Pipelines' district manager. "On behalf of BP I want to say to the people and businesses of Long Beach that we deeply regret any inconvenience created by this incident."

At the time of the leak, the pipeline was in compliance with federal and state regulations, according to BP. The company is working with authorities to conduct a complete investigation into the spill in California. In addition, BP does not expect to have any impact on the ability to supply motor fuels.

BP has become an "industrial accident zone" over the past two years, reported BusinessWeek. The announcement of this additional leak in California is only one mishap in a growing timeline of misfortune, including a refinery explosion, two pipeline leaks in Alaska, and possible investigations into its trading practices.

The series of unfortunate events have not only marred the company's façade, but also that of its head, CEO John Browne. Browne is considered a top business leader in his generation, and also serves on the board for Intel and Goldman Sachs, BusinessWeek reported.

Browne became CEO in 1995 and turned the underperforming company into a top player. He did this by purchasing Amoco in 1998 for $62 billion and the following year, purchased Arco for $32 billion, BusinessWeek reported. Although BP profited from these acquisitions, analysts are now questioning whether it has stretched its management too thin. "The downside when they bulked up was they made it much more complex than it was within the capability of the BP management team," Bernard Picchi, veteran analyst at Wall Street Access told BusinessWeek.

In addition, Browne has been criticized that his cost cutting strategies to produce financial results have prevented an adequate amount of money to be spent on maintenance and oversight of their facilities. However, BP denies that its spending tactics had any relation to the accidents it has suffered. "All of these incidents are unrelated. They have occurred in different parts of the business and in different time frames," a BP spokesman told BusinessWeek.

The events -- all occurring within the United States -- have impacted BP business with countries outside the nation as well. In the past, the company has coerced governments such as Russia, to allow it to do business in the country and develop reserves. With the string of negative incidents that have plagued the company, such offers could be closed to BP and offered to competitors instead, BusinessWeek reported.

There are also reports that BP will go outside the company for its next CEO. Candidates are currently being selected for when current head, Browne, retires in 2008. A likely candidate is Tony Hayward, the exploration & production chief, however his image may have been impacted by the Prudhoe Bay spill. Other options include John Manzoni, the head of marketing and refining, however his responsibility for the explosion that killed 15 at its refinery in March also affected his chances at chief executive.

To address these and other issues, BP has appointed the president of BP America, Robert Malone, and former federal judge, Stanley Sporkin, to receive confidential whistleblower calls. But the repair of its reputation will take some time, according to the BusinessWeek report.