When Tony Hayward took over BP in 2007 - after the oil giant had experienced a series of calamitous accidents - he vowed that safety would be his top priority. So how did he come to preside over one of the worst industrial disasters in history? A Fortune investigation reveals a saga of hubris, ambition, and a safety philosophy that focused too much on spilled coffee and not enough on drilling disasters.
By Peter Elkind and David Whitford with Doris Burke
April 20 People are jumping
"I allowed myself to become the lightning rod for hatred and anger," says former BP CEO Tony Hayward.
It was a Tuesday evening in April, two hours past sunset. A half-lit moon hung overhead, its image perfectly reflected in the untroubled waters of the Gulf of Mexico. Alwin Landry, the 41-year-old Cajun captain of the Damon B. Bankston, was at his desk in the wheelhouse, writing in his log. Chief mate Paul Erickson, an old salt with twin hoops in his left ear, was at the helm, keeping watch.
The Bankston, a stout, blue-hulled supply ship with a 150-foot flatbed cargo deck in back, was nestled port to port with the Deepwater Horizon, a drilling rig the size of a sports arena. The Bankston's mission was to ferry supplies back and forth from the shore, serving at the Horizon's beck and call.
At this hour, on the night of April 20, neither vessel should have been here. The Horizon had been due at its next drilling site a month before. The Bankston, in turn, was supposed to be on its way to Port Fourchon, La., for a midnight crew change. But when Landry was asked to take on 4,500 gallons of used drilling mud, he postponed his departure. The crews ran a heavy hose from the rig to the Bankston's storage tanks, and the flow commenced in the early afternoon. Before they were done, though, the Horizon suspended the transfer. Landry was told to stand by; no need to disconnect the hose. All was calm -- until the moment when it wasn't.
Erickson saw it first: "a cascade of liquid," as he would later describe it, pouring down from the rig in awful quantity, pelting the Bankston like a black rain. Landry's first thought was that the hose had ruptured, and his first feeling, even as he rushed to secure the two steel hatches on the bridge, was annoyance. Cleaning up this mess will take days! Then Landry looked up. "When I seen the top of the derrick," he would later tell Fortune, "I realized they got a problem."
Unfolding before his eyes was an almost biblical scene of destruction. Twenty stories above the main deck of the Horizon, a volcano was erupting: part seawater and part mud, borne upward from the depths by a violent surge of natural gas. Birds were falling out of the sky.
Landry radioed the bridge of the Horizon: "What's going on?"
"We're having trouble with the well right now."
Landry didn't recognize the voice, but it sounded worried -- he could hear that. Then someone else was speaking. Later Landry would learn that it was Curt Kuchta, the 34-year-old captain of the Horizon. Kuchta told Landry to back off 500 meters -- immediately.
Easier said than done. "We have a hose on board," he reminded Kuchta. It was a big hose, four inches in diameter -- the coupling alone weighed 150 pounds. Disengaging usually involved a crane.
"Uh ..." Kuchta paused two beats. And that's when the first explosion hit. Landry perceived it as a green flash emanating from the main deck of the rig, behind the derrick, followed by a percussive jolt, a massive fireball, and a hailstorm of debris. It knocked out all the lights, plunging the rig into darkness.
Anthony Gervasio, the Bankston's engineer, was in the engine room when he heard what sounded like a "blown tire, times 100," and rushed upstairs to investigate. He saw the mud. He saw the Horizon go dark. "Oh," he said to himself, and before he could get to "crap, that's not good," the second explosion hit, much bigger than the first.
"Rig just blew up, we gotta go!" screamed deckhand Louis Langlois, a 340-pound Mutt to Gervasio's 160-pound Jeff. "Disconnect the hose!" They took off, dashing the length of the cargo deck through a maze of crates and spools, slipping and sliding on an inch of mud. Gervasio, an all-state defensive back during his high school football days in Rhode Island, got there first; he slapped a wrench on the joint and pulled.
Captain Landry was still in the wheelhouse. He had just given the order to disconnect the hose, but now he wasn't sure he could wait. Forty feet from where he stood, the rig was in full flame. Barrels filled with volatile compounds were rocketing into the sky like missiles. He considered gunning the throttle and going -- just ripping the hose. He knew he had enough horsepower. But not until he heard from his guys. "I already sent 'em out there," he was thinking. "I don't want to pinch 'em in a hose."
Then he saw them: Gervasio and Langlois at the back of the boat, arms raised, thumbs up, and he saw the hose in the water, and now he was pulling back, finally putting distance between himself and the inferno. With the fire growing and the Bankston's mercury-vapor lamps full on, the scene was strangely bright, surreal, all lit up like a movie set.
Nevertheless, when the first flash of reflective material cut through Landry's line of sight, he told himself: "That can't be!"
He looked at Erickson, who was looking at him. Another flash. People are jumping, they both realized. Horizon crew members were abandoning ship -- leaping from the main deck, plummeting 70 feet into the sea.
At 10:04 p.m., Landry banged out an e-mail to the BP control room in Houston: "Horizon is on FIRE Well Blowout send out help!!!!!!!"
The graveyard
The giant rig would burn for two days, listing more and more until finally it tipped and sank, snapping the mile-long pipe that ran between the derrick on the surface and the wellhead at the bottom of the sea and unleashing a red-brown gusher of Middle Miocene sludge. Some 206 million gallons of oil would pour into the gulf before BP finally stanched the flow.
Today the Macondo well, named for a cursed town in a Gabriel García Márquez novel, is sealed and abandoned. It's a graveyard for 11 men, a dump for what remains of the Deepwater Horizon, and a haunting symbol of excessive faith in the safety of deepwater drilling. It's also an enduring mystery.
It's not easy to blow up an offshore oil rig. It requires an astonishing collection of failures big and small, human and mechanical, by individuals and by organizations. In the industrial-accident investigation business, the classic metaphor is Swiss cheese. Each mistake is a hole in a single slice, and it's only when the errors stack up, with the holes aligning perfectly, that a disaster results.
Experts will debate the precise cause for years. Already the explosion at Macondo qualifies as one of the most intensely dissected industrial accidents in U.S. history, with at least nine separate investigations by government agencies, the National Academy of Engineering, three of the corporations involved, and a special presidential commission, which issued a 380-page report on Jan. 11. The Justice Department, which is weighing criminal charges, has already brought a civil case against BP, rig operator Transocean, and other companies. Plaintiffs lawyers, representing everyone from the families of the Horizon's dead to half-empty motels in Florida, have filed more than 350 lawsuits. At stake are billions in fines and damages.
But knowing who's to blame isn't nearly so important as understanding why this catastrophe happened -- and making sure it never happens again. A Fortune investigation reveals that the disaster was a long time in the making, the product of a corporate culture that venerated risk taking even as years of merger-driven growth and successive rounds of cost cutting consumed its leaders' focus.
In the decade before the Deepwater Horizon, BP (BP) had a history of serious accidents. Each time its CEO vowed to avoid a future disaster. In 2000, after a string of fires and equipment failures, CEO John Browne announced plans to "renew our commitment to safety." In 2005, after a horrific explosion killed 15 people at BP's Texas City refinery, he swore there'd be "no stone left unturned" to investigate what happened and correct any safety issues. In 2007, after being named Browne's successor in the aftermath of more problems, Tony Hayward promised to focus "like a laser" on safety -- only to oversee the worst oil spill in history.
Fortune's investigation shows how Hayward, a fast-rising geologist once known as "Teflon Tony," fell tragically short of his goal. Despite efforts to change, BP never corrected the underlying weakness in its safety approach, which allowed earlier calamities, such as the Texas City refinery explosion. Perhaps the most crucial culprit: an emphasis on personal safety (such as reducing slips and falls) rather than process safety (avoiding a deadly explosion). That might seem like a semantic distinction at first glance, but it had profound consequences.
Consider this: BP had strict guidelines barring employees from carrying a cup of coffee without a lid -- but no standard procedure for how to conduct a "negative-pressure test," a critical last step in avoiding a well blowout. If done properly, that test might have saved the Deepwater Horizon.
Indeed, BP executives warned of serious process-safety "gaps" in the Gulf of Mexico, Fortune has learned, in a never-before-reported strategy document dated December 2008. "It's become apparent," the BP document stated, "that process-safety major hazards and risks are not fully understood by engineering or line operating personnel. Insufficient awareness is leading to missed signals that precede incidents and response after incidents, both of which increases the potential for and severity of process-safety related incidents." The document called for stronger "major hazard awareness."
But BP failed. "They just did safety wrong," says Nancy Leveson, an industrial safety expert at MIT who served on a panel that investigated BP's safety practices after its refinery explosion; she has since taught safety classes to BP executives and also advised the presidential panel that investigated the Deepwater Horizon disaster. "They were producing a lot of standards," she says, "but many were not very good, and many were irrelevant." Leveson says that she was so troubled by BP's approach that in January 2010 she told colleagues, "They are an accident waiting to happen."
The world of the Horizon
Standing on the steel deck of the Deepwater Horizon, it was easy to forget that it was a ship -- even in stormy seas, its computerized positioning system kept it almost motionless. The Horizon was many things: a drilling rig, of course, a heliport, and a floating hotel. But fundamentally it was a very big ship.
Nine years old when it sank, the Horizon was born halfway around the world, at a Hyundai shipyard in South Korea. At the time it was state-of-the-art. The rig cost R&B Falcon, its original owner, $365 million and featured four squat legs standing on a pair of submerged pontoons. This underbody supported a 28,000-ton "drilling package." Raising that massive pile of steel onto the rig's legs -- a feat performed at the Korean shipyard by an Italian company, Fagioli -- established a world record for the heaviest object ever lifted.
Compared with its peers, the Horizon was a floating palace. With accommodations for 160, it had a movie room, a gym, a sauna, a cave for smokers, even maid service. Its berths came complete with carpeting, in-room Internet, and satellite TV. The mess hall was open 24 hours. Not a bad place to be on Super Bowl Sunday, when they'd all gather to watch the game and the cook would put out nachos and hot wings.
On its maiden voyage from Korea, the Horizon sailed southwest at three to four knots -- the equivalent of a slow walk -- put in for a crew change at Cape Town in South Africa, then pushed northwest across the Atlantic, finally arriving in July 2001 at Freeport, Texas, on the Gulf of Mexico. Once the Horizon left Freeport, it would never again return to port, nor would it ever leave the gulf. By then R&B Falcon was no more, having been swallowed by the Horizon's new owner, a deepwater pioneer called Transocean (RIG), with nominal headquarters in Switzerland. And Vastar Resources, the Houston-based exploration company that had contracted to use the Horizon? It had been bought by BP.
The lightning rod
"I've got lots of time on my hands," says Tony Hayward, offering a bit of gallows humor. It's Sept. 29 -- a rainy morning in London, and two days before the CEO turns over the reins to his deputy, Bob Dudley. Hayward meets a Fortune writer at BP's starkly contemporary headquarters on St. James's Square before leading the way, beneath a shared umbrella, to a sidewalk café a few blocks away, on Haymarket Street. As double-decker buses roar by, he sits down with a bottle of San Benedetto water for the first in a series of in-depth conversations with Fortune.
The BP spill, he maintains, has turned out to be much less dire than initially believed. "The story of the environmental apocalypse is being rewritten as we speak," Hayward says. "The last thing the media needed was a success story. What the media wanted was a holy disaster. One of my biggest mistakes was that I allowed myself to become the lightning rod for hatred and anger." Face to face, Tony Hayward is a bit of a surprise: personable, direct, wryly self-mocking, sarcastic, and sometimes profane. He's also the Hayward that Americans have come to know and scorn: wounded, defensive, and tone-deaf.
"I genuinely feel this could have happened to anyone," Hayward continues. "This isn't BP. It's an industry accident." As he sees it, BP's reaction constituted "the most extraordinary corporate response in history." He defends his safety record, asserting that "BP has enormously more focus on process safety than it used to," though the company is still "on its journey." Hayward concedes that some of his comments about the environmental impacts of the spill, "taken out of context," were "deeply unhelpful," but quickly adds, "I don't want to sound defensive, but much of it's turning out to be true."
For now Hayward is happy to be back in England, where he says his countrymen have been supportive, buying him drinks. Not so in the U.S. Before the Macondo well was capped, Hayward, who'd been staying with the expatriate BP team at Houston's four-star Hotel Sorella, had to take refuge in an undisclosed location -- only his driver knew where he spent the night. "I was really being followed by the paparazzi," he says. "Not only had I become the most hated and clueless man in America, I'd become the most hunted."
BP's three most recent CEOs: John Browne (left) swelled the company in an acquisition spree; Tony Hayward (center) promised an era of "silent running" before giving way to Bob Dudley after the Deepwater Horizon catastrophe.
The geologist and the tray men
When he launched his career in the oil business, Anthony Bryan Hayward seemed destined for a life in peaceful obscurity. He was completing his Ph.D. in geology at the University of Edinburgh with a dissertation titled "Tertiary Ophiolite-Related Sedimentation in S.W. Turkey." The 420-page paper reconstructs the formation of an ancient sedimentary basin -- a hot topic for someone interested in hunting for hydrocarbons. (The future CEO's thesis quoted lyrics from Bob Dylan's protest anthem "Blowin' in the Wind," including the line, "How many years can a mountain exist before it's washed to the sea?")
The eldest of seven children, Hayward was raised in the industrial town of Slough, 20 miles west of London. His dad was a midlevel manager at a small textile company, his mother an administrator in the government health service. After getting his Ph.D., Hayward signed an employment contract with Mobil Oil, then reneged after British Petroleum's chief geologist recruited him personally. And he broke off an engagement in favor of his future wife, Maureen, whom he'd met at the University of Edinburgh.
BP's first century in the oil business
When Hayward joined BP in 1982, the company was at a critical moment. Since its founding in 1909 as the Anglo-Persian Oil Co., it had operated like an arm of the British Empire. The government became its biggest shareholder, and the Middle East provided virtually all its oil. But by the time Hayward signed on, the Arab countries had given BP the boot. The days of easy access to bottomless reserves were over.
BP found two new sources of crude to replace a fraction of what it had lost, but in far riskier environments: Alaska's Prudhoe Bay and the North Sea. Hayward was dispatched to a rig exploring the Miller Field, 165 miles off the Scottish coast, in 330 feet of water. He reveled in the adventure of offshore exploration -- and he enjoyed a healthy dose of good luck. In interviews years later he giddily recalled the thrill of striking oil at 4 a.m. on Christmas Day, just months after he'd started work.
Hayward happily spent his first eight years as a globetrotting field geologist, working in such far-flung locales as Mongolia and Papua New Guinea. BP prided itself on finding oil -- the British explorer spirit ran deep. But it kept losing ground. Competitors derided it as a "two-pipeline company," too dependent on Alaska and the North Sea.
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