HC2121 Comparative Business Ethics: Gas and Oil Industry

Case: Sustainability Challenges in the Gas and Oil Industry 

1. How does managing ethical risk in the oil and gas industry relate to reducing accidents? 
2. Compare, the risks that BR Exxon, and the fracking industry continue to face in providing an adequate supply of energy? 
3. How can ethical leadership help the oil and gas industry to manage risk? 

Answer:

Introduction

The drilling of gas and oil had adversely affected the environment even though the world is almost entirely dependent on them (Odell, 1975). The current demand for these commodities on a daily basis is alarming. This is because most of the petroleum products are universally used across all industries including the manufacture of insecticides, plastics, and sparingly in the medical world. Due to the heavy dependence of oil products, there is fear of depletion of the natural resources even though the particular time frame for the same has not been determined (Kruyt et. al, 2009). The fear has led to research and the use of alternative sources of energy to cure the total dependence on oil and gas as the primary source of energy. Also, the risks associated with the oil and gas industry has fuelled the desire for alternative energy sources.

The proper management of ethical risks could have helped to control the Deepwater Horizon oil spill which greatly caused the loss of human life and wildlife. The absence of a shut-off switch remotely controlled could have stopped in alleviating the effect of the discharge even though such a feature is not a legal requirement. The precautionary measures of BP in the contingency plan contained a lot of errors. For instance, the death of the emergency responder before the accident had not been replaced. The safety measures of BP in place before the crash proved to be helpless because BP took months to at least contain the leak. All these moral inconsistencies served to show how unprepared BP was to handle emergencies regardless of their assurance. According to investigators, BP contributed to the explosion. For instance, actions by BP caused the weak points in the well. The necessary procedures intended to detect gas in the well were not followed such as testing the quality of the pipes. To avoid the explosion, The company should have used a more durable material which could hold back the pressurized oil and gas during the installation of the pipe at the final stage. Also, the less expensive well design adopted by BP was riskier. The design was inexpensive and easy to install but easily gave way for the gas to escape the pipe (Brown, 1976). Such a move though not illegal side-lined safety precautionary measures that could have prevented the accident. Cameron International Corporation was contracted to design and manufacture the blowout preventer which was discovered to be faulty during investigations. Had the contractor of the blowout preventer considered ethical management risks while constructing it perhaps the accident could not have occurred because the blades of the blowout preventer stuck in the pipe instead of completely sealing the pipe thus creating space for oil spillage. Moreover, if the BP engineers had not overlooked the warning signs generated from safety tests the accident could have been detected before the occurrence. The engineers went ahead with drilling even with confusing test results from two of their colleagues.

BP, Exxon and the Fracking industry operate in the oil industry but with different technologies. There exist risks that cut across these companies and which they continue to undergo as they endeavor to provide an adequate supply of energy. BP and Exxon release poisonous gases such as sulfur dioxide and mercury to the atmosphere whereas fracking releases natural gas which is thought to be friendlier. All the companies are known to release dangerous chemicals into the water body during drilling, and this affects both the aquatic life and the life of people dependent on economic activities surrounding the water body. The banning of fracking and drilling activities by countries and specific regions as a result of the complaints from individuals due to the environmental damage has continuously marred the image of the companies and thus causing a high risk of investment. Health and safety concerns are also risks experienced across the three companies. The workers in the drilling and freckling fields end up suffering from various complications due to the exposure of toxic and radioactive chemicals and are paid for the complications which will sometimes remain permanent (Henderson, 1983).

Therefore the restoration of the reputation of the gas and oil industry demands ethical leadership and well outlined ethical programs so as to avert the present reckless risk taking (Ortiz & Crowther, 2008). All the workers need to be held accountable for any action while at work and this education need to be conducted so as to avoid the avoidable accidents. As already discussed, the crises above are mainly as a result of neglect of observing the professional ethical policies that already exist. The industry has a daunting task of providing governance in safety and sustainability. This calls for the organizational will and the administrative expertise to convert commitments into actionable operations.

Peer reviews evaluation

This report does an excellent job of demonstrating the significance of ethical leadership in sustainability and safety leadership. Because each company in the report experienced a different disaster and the point of weakness are clearly outlined. This is a good work and serves as a reminder to the oil and gas industry on the effect of leadership on the success or failure of the company. I was very pleased to see the historical background of the disasters and the extent of damage caused. The writer further argues that all the affected companies did not learn from the previous accidents but instead ventured to work on projects with casual risk-taking attitude. I believe this is a very reasonable and balanced report for it concludes by offering the way forward in regaining the lost reputation in the oil and gas industry.

References

Tran, B., 2014. The origin of servant leadership: The foundation of leadership. Servant leadership: Research and practice, pp.262-294.

Nyberg, D. and Sveningsson, S., 2014. Paradoxes of authentic leadership: Leader identity struggles. Leadership, 10(4), pp.437-455.

O'Rourke, D. and Connolly, S., 2003. Just oil? The distribution of environmental and social impacts of oil production and consumption. Annual Review of Environment and Resources, 28(1), pp.587-617.

Berry, M.A. and Rondinelli, D.A., 1998. Proactive corporate environmental management: A new industrial revolution. The Academy of Management Executive, 12(2), pp.38-50.

Conner, H., 2015. Managing Environmental Risk in the Oil and Gas Industry.

Kaplan, R.S. and Mikes, A., 2012. Managing risks: a new framework..

Henderson, J., 1983. What should be done about occupational accidents and diseases?. International journal of epidemiology, 12(1), pp.77-83.

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