Crisis Management in the Oil and Gas Industry - Dissertation Example

The oil industry, unfortunately, did not see the Exxon Valdez as sufficient precedent to have prompted the development of a standard crisis prevention and mitigation protocol to apply in the future.
Taken together, oil and natural gas pipeline accidents have occurred over decades, often resulting in a significant number of fatalities.  In 2011, a pipeline fire killed 100 people and seriously injured 120 in Nairobi. In 2010, a Pemex (Petroleos Mexicanos) pumping station in Central Mexico exploded, killing 27 and injuring 50 (Ellingwood, 2010). In 2006, a pipeline explosion in Nigeria killed up to 500 people (BBC News, 2006), but the fatalities in this incident are only second to the Ufa train disaster in Russia in 1989, where train sparks set off a gas leak from an LPG pipeline and killed 645 people (Observer-Reporter, 1989).
Oil and gas accidents can have catastrophic results, all the more underscoring the importance of assessing the crisis management systems in this industry, and ascertaining whether or not these are within acceptable standards to ensure the protection of the public.
One of the more comprehensive and meticulous definitions of “crisis,” as it is conceived in business crisis management, is that of Fink (1986, quoted in Reid, 2000, p. 2), who states that “A crisis is any situation that runs the risk of:
- Escalating in intensity.
- Falling under close media or government scrutiny.
- Interfering with the normal operations of the business.
- Jeopardizing the positive public image presently enjoyed by a company or its officers.
- Damaging a company’s bottom line in any way”.
Fink’s well-crafted enumeration of the attributes of a crisis noticeable lacks one element:  that of being “unforeseen” or “unexpected.” This is a defining trait of a crisis for other authors (Hoff, 2001; Boi, 2005; Laws, Prideaux & Chon, 2007), but apparently not for Fink, whose definition focuses on the impacts rather than the causes of the crisis. In many instances, crises are so characterized not because they are unforeseen.  Rather, they are foreseen (or at least foreseeable), but are historically and statistically deemed so unlikely to happen that precautionary and preventive measures against them are overlooked (Loveridge, 2009; Daft & Marcic, 2011).
Warranting the necessity for the enhancement of crisis planning, prevention, assessment, and mitigation for the oil and gas industry are the deleterious effects of the 2010 BP oil spill in the Gulf of Mexico (Casale, 2010). Despite the serious harm to the environment and livelihoods in the affected area, the potential closure of large oil and gas companies or the shutdown of their pipelines is a risk which major oil producers could not be taken because of their critical role in the world economy (Omolara & Olayide, 2011; Kamal, 2012). The matter of oil and gas crisis management to ensure continuity, therefore, becomes an important area of study.
Unfortunately, few academic studies have addressed this area. Lee Clarke of Rutgers University underscored the fact that all most oil and gas companies have to rely on currently are what he calls “symbolic planning” and “fantasy documents” upon which crisis strategies are built (Morse, 2004).
The specific problem is the lack of empirical research regarding adequate systematic crisis management programs or policies for the oil and gas companies and the industry in general.