The Oil and the Glory

Does Exxon deserve the BP treatment?

Montana’s governor says he’s going to ride ExxonMobil "like smell on a skunk," not to mention mete out more conventional unpleasantries like going to court. In case the oil giant has any funny ideas while being subject to these measures, "There ain’t nobody gonna blow smoke up the south side of this north-facing governor." Gov. ...

Ben Stansall  AFP/Getty Images
Ben Stansall AFP/Getty Images

Montana’s governor says he’s going to ride ExxonMobil "like smell on a skunk," not to mention mete out more conventional unpleasantries like going to court. In case the oil giant has any funny ideas while being subject to these measures, "There ain’t nobody gonna blow smoke up the south side of this north-facing governor." Gov. Brian Schweitzer, who is a soil scientist, has been driven to this display of trash-talking by the July 1 spill of some 1,000 barrels of crude oil into the pristine Yellowstone River, about 100 miles downriver from Yellowstone National Park.

Does Exxon deserve this scale of rudeness? After all, when BP suffered this treatment last year, it had spilled 5,000 times that volume into the Gulf of Mexico. Unlike the 56 minutes it took Exxon to sever the flow of oil, BP took five days short of three months to shut off the Macondo oil well. In addition, as far as I know, nobody at Exxon has asked to get his life back, the innocently delivered but unfortunately received remark that then-BP CEO Tony Hayward will rue for the rest of his days.

 

The answer is yes. The main reason is that Exxon has all but danced on BP’s grave since the Macondo spill. For example, back in March, BP’s new CEO, Bob Dudley, delivered his first full-blown speech since the spill, sort of a coming-out address at Dan Yergin’s annual oil show in Houston. Dudley’s main message was that what happened to BP could happen to anyone and that all oil companies would have to change their procedures. It is "unrealistic" to dismiss Macondo as a "’black swan’, a one-in-a-million occurrence that carries no wider application for our industry as a whole," Dudley said.

Them was fighting words, suggested Exxon CEO Rex Tillerson, who objected to Dudley’s debasement of Nassim Taleb’s theory of ultra-rare events that, when they occur, have huge implications for all of us. "His conclusion that this is a bigger problem for the industry is just wrong. It flies in the face of the facts," Tillerson was quoted in a Financial Times account at the time. "When you do things the proper way, these types of tragedy do not happen. So this might very well have been a ‘black swan’ event." The cause of the accident, Tillerson said, was:

a breakdown of management oversight of that well. And that breakdown of management oversight rests in the lap of one company, principally.

Let BP’s dancing begin. In short, Tillerson was suggesting that Exxon could never face such a problem because, unlike the incompetent and reckless BP, it conducted its business "the proper way." When you elect to stick your neck out, you suggest you are bullet-proof.

The reverberation of Exxon’s possible comeuppance could be far. It is further ammunition for governments elsewhere to second-guess Western oil companies that claim special knowledge of how to drill highly complex reservoirs in a completely safe and efficient manner. To the degree that company claims are discredited by association with BP and now Exxon, we could see a further empowering of state oil companies.

Exxon’s hubris is rooted in its extraordinary turnaround over the last two decades. In 1989, Exxon was badly mauled when the Valdez, an Exxon supertanker, went aground in Alaska, spilling more than 250,000 barrels of oil into Prince William Sound. The company responded by entirely overhauling its culture and becoming the world’s safest Big Oil company. The BP spill appeared to complete Exxon’s stunning resurrection — this blog for instance ran out the headline, "Exxon Good, BP Bad." Exxon is never going to be loved, but it became so good at what it called "best practices," it believed it had transcended the oil accident.

Exxon was mistaken. It is encountering the same minute-by-minute scrutiny of its statements, in which it has been excoriated for a changing account of just when it knew about the spill and when it acted, report Matthew Brown and Garance Burke at the Great Falls Tribune. It is being skewered for first telling authorities that the pipeline was safe, just before it wasn’t. The U.S. Environmental Protection Agency is refusing to accept Exxon’s spill plans at face value and asking for a different approach to capturing the oil and restoring the wilderness to its prior condition, writes Laura Zuckerman at Reuters.

This black eye could also embolden those behind other challenges to the company that arose last week — a $1.5 billion jury award in Maryland for spilled gasoline from an Exxon pumping station and a federal appeals court ruling that residents of the Indonesian province of Aceh can in fact sue the company for aiding and abetting murder, torture, and sexual assault.

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