Interview Abrahm Lustgarten

Lustgarten is a reporter for ProPublica and a former staff writer and contributor at Fortune. He is also a co-reporter for The Spill. This is the edited transcript of an interview conducted on Sept. 28, 2010.

• HIGHLIGHTS
• How BP compares to its peers on safety
• BP's ups and downs over the last 40 years
• The difficulties reporting on the Texas City refinery explosion
• Uncovering the warning signs in the 2006 Alaska oil spill
• Contradictions in the Obama administration's approach to gulf drilling

We get this huge spill in the gulf, biggest environmental disaster in U.S. history. How did BP get to this point? Should we have been surprised?

If you're paying close attention, what happened in the gulf should not come as a complete surprise. There are people in various facets of the United States government who had growing concerns about how BP runs its various operation for a decade before the spill in the gulf happened, and some of those concerns were being expressed right up to the weeks before the Deepwater Horizon accident. ...

If you look at the pattern of how BP manages its projects, how it manages its budgets and the pressures that it puts on its management in the field to cut costs and to make things happen despite limited resources, you can see the causes of other accidents they've had in the past. ...

... [Can you] talk about the reporting project that you undertook to connect the dots? ...

When we heard about the spill in the Gulf of Mexico in April, the first thing that came to mind was the accidents that I remember hearing about that BP had been involved with in the past. [We] set out quickly to understand whether there was a pattern, what these accidents had in common, and quickly began to learn that there were commonalities: that they cut costs in each of the cases where BP had gone wrong; that workers did not feel safe doing what they do for the company; that they did not feel like they had the resources to produce or refine or transmit oil safely. And we just dove deeper and deeper, trying to get to the heart of BP's culture. ...

Are they just more accident-prone, or are we seeing more just because we're looking harder at them? How do they compare to their peers in terms of serious violations and accidents?

It's really hard to tell whether BP just has worse luck than its peers or if it actually acts differently, if it manages its projects differently. And that's part of what we set out to discover early on. To the extent that statistics can paint a picture, BP doesn't look good. They have more [oil] spills in Alaska than any of their peers, even proportional to the amount of oil that they produce there. They have far more spills in the Gulf of Mexico than any other company drilling there proportional to the amount of work that they do.

They've paid more fines to the Department of Labor and the Occupational Safety and Health Administration [OSHA], and they've been cited for more violations than any other company. If those are the best measures that we have, then statistically, BP looks like an egregious offender.

What do other executives in the industry think of BP?

Other industry executives have been really quiet. I don't think they want to come out and kick BP while it's down right now. So the best thing we have to go on is what some of those executives told Congress this spring. They said that they wouldn't have made the same mistakes that BP made in the Gulf of Mexico; that they wouldn't have designed or built a well in the same way.

And in off-the-record conversations, I hear from executives at a number of companies that BP has often been thought of as a company that does not pay as close attention to its operational integrity, to how it actually runs its business, as it should; that they have a reputation for running a little fast and loose. ...

How would you describe the oil business itself, what they're engaged in?

The oil business is an incredibly complicated business. It requires a mastery of engineering, of geological knowledge, a great stomach for risk. ... It involves tens of thousands of employees and some of the most sophisticated science and machinery that exists on the planet.

I want to understand what happened to BP. BP has this rich past ... This was a great company. What happened to it?

The Iranian Revolution and the OPEC [Organization of the Petroleum Exporting Countries] embargo of the '70s knocked BP off balance. Its rise to greatness came from discoveries in Iran. It lost access to most of those assets, to its great base of reserves, and to most of its ability to produce new oil in the future, so it went out scouring for new resources and new ways to catch up. ...

Who's this guy John Browne?

John Browne was a young engineer who came up through the ranks at BP over the decades leading up to the mid-90s. ... [He] became CEO of BP, and he wasn't your typical oilman. He had a more cosmopolitan flair to him, and he had a bigger vision for what he thought BP as an oil company should be. He tried to tackle the issue of global warming. He tried to grow his shareholder value. He tried to become a prestigious, large company rather than focus on the processes that would make BP a prestigious, large company. In other words, he focused less on drilling for oil and more on building a reputation and building size.

How did John Browne build?

John Browne tried to grow quickly, and he grew through acquiring other companies. Rather than growing organically, he went out and sought employees and staff and oil reserves where other companies already owned them. He acquired Amoco; he acquired Arco. He acquired [some parts of] Gulf. ...

What's wrong with that?

There's nothing wrong with growing through acquisition as long as you carefully manage the challenge of piecing together the puzzle. You acquire a company, and you have another culture. You have thousands of employees who are used to working in a different style under different management in a different part of the world. You can't just glom them on to what you have and expect to keep running forward. An acquisition often [takes] years of devoted effort. ...

John Browne didn't slow down enough to do that with his acquisitions. He would pick up one company, throw them right into his operations, and keep on moving -- and make another major acquisition a couple months or a year down the road. ...

It's quite a remarkable feat, though, isn't it, what he did, [being] able to take this company so far, so fast?

It's a remarkable feat in many ways. ... Almost overnight, BP became a world player. They went from a struggling [company to] ... a company that was fast on the heels of Exxon, the largest company in the world. ...

John Browne became a star. He was the guy that we wanted to get interviews with at Fortune magazine. He was the sought-after speaker at conventions around the world. He became Lord John Browne of Madingley. He became an enigmatic figure of British business ascension in the oil business. ...

In 2003, he signs the deal with the Russians, and all seems well. True? ...

On the face of it, everything seemed like it was going great. By the early 2000s, BP was having some trouble, but those problems hadn't exploded into any major concerns. John Browne was riding fast and furious and having successes that were the envy of his peers.

But? ...

Things were about to unravel, and there were signs that it had already begun. John Browne had assembled this enormous company. He had made these fantastic deals happen, and he had positioned BP exactly where he always wanted it to be. It began to seem like he had lost sight of what it takes to run each of these business segments, to maintain what they call operational integrity, operational excellence. ...

Give me some quick examples of where in the world they were starting to have problems.

BP had a number of close calls at its large refinery in Scotland. In Alaska, it had extraordinary budget pressures that had led it to cut back on the maintenance of its pipelines, and then it had a criminal conviction for a contractor that illegally dumped waste there. One of its flagship development projects in the Gulf of Mexico nearly sank.

But nobody was connecting these dots?

At that time, nobody was connecting the dots. I wrote a story recommending BP stock in late 2004. [I] wrote in that story that this was the kind of company that knew what it was doing and knew how to manage the intense challenges before it. I think that everybody thought, at that time, that BP was just a rising star.

Why weren't you connecting the dots at that time?

The things that had gone wrong hadn't been bad enough to attract headlines. Nobody died; there were no major environmental catastrophes. I suppose if you dug very carefully and deeply into the public records of Alaska state regulators, you might have found a few spills or cracks too many. But nobody was looking that deeply.

But isn't this just sort of the white noise of the oil industry -- a spill here, a slip and fall here, a violation of one type or another? ... Looking back, was it really something that should have been paid more attention to?

It's hard to say. I mean, hindsight is 20/20. And no doubt the oil industry is a messy industry, ... and every single oil company has its spills and has its occasional accidents.

But what you see is that other companies have learned their lesson, or at least had their major turning point. ... After the Exxon Valdez spill in 1989, Exxon had a rough patch, and they seized that opportunity to refine their operational performance and to make sure that they would run a tight ship at every single one of their operations. That became so institutional that it defines Exxon's reputation in the industry now.

BP passed a number of those milestones. At each point along the way, it acknowledged the need to do something very similar. It acknowledged the need to refine their culture, to rework their management structure, to place renewed emphasis on health, safety or environmental issues. And in each step along the way, it seems to have failed to execute that plan.

So it brings us to Texas City, [Texas]. ... What can you tell me about what happened in Texas City and its significance? ...

BP acquired Amoco in this huge merger [in 1998], and it was an amazing accomplishment at the time. Amoco was one of the very largest American oil companies, with a very large downstream business, refining business. It brought BP a lot of assets, and analysts at the time thought it was a brilliant move by John Browne.

But along with many of these assets came the Texas City refinery, a refinery that had been known in the last decade before the merger to have significant problems: failing, aged equipment; known to be an extraordinarily dangerous place to work; and essentially a refinery that's falling apart.

BP acquired the refinery; [it] should have known full well at that time that the Texas City refinery was in dire straits. The whole industry knew it. The question is, did they have a plan for what they would do with it?

You went down to Texas City to see the refinery. ... What were you trying to accomplish? ...

A lot has been written about what happened in Texas City. Those reports' conclusions have been well publicized. But we wanted to understand how what happened in Texas City fit into the bigger picture of BP and the other things that we had been learning about BP across the continent.

We went down to Texas City to ask the people who were involved in the accident there [on March 23, 2005,] about the operational conditions that they worked in before the spill to see whether the concerns that they had mirrored some of the concerns that we were hearing about in Alaska and that we had heard about elsewhere -- trying to connect the dots, trying to understand whether the Texas City refinery explosion was part of the same pattern that the Deepwater Horizon accident might be part of, or was a stand-alone incident that might well be Amoco's fault, or the result of decades of negligence that isn't necessarily BP's responsibility.

What kind of response did you get from BP? ...

BP locked us out. They gave us permission to drive around the perimeter fence of their facility. They wouldn't let us inside. They wouldn't offer up an executive for an interview or anybody else who could explain the substantial and major decisions and turning points in their management of that facility.

Did you call headquarters?

We called headquarters of both BP America, BP in London. At all levels they reached a coordinated decision not to participate in our investigation.

Did they tell you why?

They did not tell us why. ... They never explained why. We would write these long e-mails explaining our approach to the investigation, and as time went on, also offering a lot of details about what we had uncovered and some very specific questions. We would receive terse, often dismissive responses: "We choose not to participate in your report at this time." ...

Vis-à-vis Texas City, what kinds of things would you want to know from them?

In Texas City, we still want to know why the company did not upgrade its blowdown drums. This is a piece of equipment that had been identified more than a decade earlier as in dire need of replacement. It was technologically outdated.

In all of the reports and investigations that have followed what happened in Texas City, the company has never come forward and just explained that simple decision, ... that they did it to save $150,000 of investment [PDF]. ...

From your off-the-record conversations with BP executives, do you have an insight into, here was a company that preached safety on the one hand; ... at the same time, they were under some significant pressure to cut costs. How do you square the two?

BP workers felt like they were locked in a paradox. The importance of safety was beaten into their heads on a daily basis: "Use the handrails"; "Don't rush across a slippery parking lot." But they were given this impossible task again and again and again to do more with less. The resources that they needed were simply not there, and the budgets were continuously cut.

BP employees describe an impossible situation where they're aware of management's desire to meet some operational objective. They have no choice but to find a way to meet it. Their objections or their concerns were not particularly welcome. They felt like their careers would be in jeopardy if they spoke out or raised those concerns. They felt like no matter the apparent policy contradictions in the company, they simply had to figure it out, ... how to keep the plant running with less materials or less investment. ...

Let's go back to Browne. ... Browne surrounded himself with something he called "turtles." …

John Browne surrounded himself with something he called turtles -- as in [Teenage Mutant] Ninja Turtles. … These were rising stars in the BP corporate structure who he thought one day had the ability or the potential to lead the company. They would come in, and they would shadow John Browne in everything about his daily routine, and thereby learn all of the ins and outs and the subtleties and nuances of being the chief executive of BP. ... It's actually a common system across other companies. ...

Who were the turtles?

Among John Browne's turtles were a couple of rising executives. Tony Hayward, [CEO of BP, 2007-2010,] was one. ... Tony Hayward for years, throughout the '90s, was responsible for operations in Alaska. Oversaw drilling in the gulf. He was a geologist and engineer who had the momentum inside the company to become CEO.

John Manzoni was another. John Manzoni was the head of refining worldwide at the time of the Texas City fire and explosion. He also had a stint in Alaska, as most BP executives do. But he was so tarnished after the 2005 disaster in Texas City that he was taken out of eligibility. ...

One thing I found amazing was that there were four meetings between Manzoni and [Texas City plant manager Don] Parus, two in Texas City and two in London. And then he comes forward and says he didn't have any idea that there was a risk of catastrophic accident.

One of the things we've heard in our reporting about BP is that communication between lower levels of management and the upper reaches of the organization have been very strained. In many cases, operations-level management, or even regional management, had never communicated concerns to senior executives in the company. And there's been a real disconnect between the executive level's ability to understand what was happening on the ground, so to speak, and to respond to it. ...

What we saw in Texas City is that even when that communication happened, it wasn't effective. It didn't necessarily make it to the top of the BP organization. Don Parus ... had held four meetings with managers, with John Manzoni, the head the refining. In each, he expressed grave concerns about the safety of working at the Texas City refinery, about the ability to continue operations in that place without having the kind of accident that ultimately did occur. Yet after the accident, when John Manzoni is questioned, he says that he wasn't aware of the issues at Texas City. He says he didn't grasp the severity of the problems that they faced there.

How do we make sense of that? Is he lying or what?

In that case, I think it's impossible to know. Everybody understood that there were problems at Texas City long before BP even acquired the plant. It's very difficult to know in this case whether John Manzoni is telling the truth, or whether he heard one thing and didn't grasp the severity of the situation or whether the details of what actually might happen there were ever conveyed to him. ... Don Parus is on record saying that he brought reports a full year before the accident to John Manzoni and to senior BP management. ...

So the accident happens [in Texas City]. ... Browne shows up, and then they order a bunch of investigations and make a bunch of apologies: "It was just a bad accident." ...

That was BP's Valdez moment. That was their first major headline-grabbing disaster that killed 15 people. And when BP stepped forward and took some responsibility and launched internal and supported external investigations into the cause of that disaster, it appeared that they were taking all the right steps, that they were acting from a position of responsibility. It's what happened after that that raises questions about whether that effort to reform their culture, or that effort to learn from those mistakes, has ever really led to growth in the company or any sort of result.

So they apologize, they investigate, they come out with findings. Is it that they don't take it seriously, or they don't care?

It's hard to know, but it's almost like they're not listening to the results of the reports that they themselves commissioned. They pledge repeatedly to emphasize safety, to run a tighter operation, yet they continue to cut costs, and they continue to pull the kind of funding and support that would make it possible to run a safer, tighter organization. It's almost like the right hand doesn't know exactly what the left is doing when it comes to safety and health and environment issues. ...

It's not part of their business plan.

It's not part of their business plan. They should know -- they do know as well as anyone else -- that safe and consistent and predictable operations are the key to making money. They just seem to have been irresponsible. They have a brash approach to risk, a belief that accidents won't happen to them. Even if they've already happened, they won't happen to them next time, a "lightning only strikes once" kind of mentality. ...

Alaska. How important is Alaska to BP? What did it represent?

Alaska is BP's crown jewel. When BP was struggling in the '70s and '80s, Alaska was their prize asset. It was a place that turned out to have great reserves of oil, and BP was in a unique position to go and explore for that oil. It did so aggressively, and it found one of the largest production resources in the United States. …

Each and every BP executive has done a tour of duty up in Alaska management. It is today a substantial part of the company's reserves and the company's production, representing a major chunk of the company's profits. ...

The problem in Alaska is what then? The basic problem is that it's old, right?

They built Alaska to last 10 years, 15 years. Here we are 35 years on, and they're using the same equipment that they initially installed. They've just been trying to, for years now, eke just a little bit more, process a little bit more production out of these same old aging facilities while investing as little as they possibly could in keeping them running.

We had this conversation with [BP Alaska employee] Mark Kovac about "run to failure" as a policy. Can you illuminate what he's talking about?

Run to failure is an operational management technique that essentially says, we're going to take a piece of equipment, and we're going to maximize what we get out of it by investing as little as possible, letting it work until the very last possible moment. When it does finally break, we'll replace it, or we'll stick a Band-Aid on it. But anything that we do pre-emptively would essentially result in lost revenues. ...

But he says it was actually a policy. Can you say anything about that? ...

One of the things we've heard about in Alaska and elsewhere is this idea of running equipment to failure, of maximizing the performance that you get or the productivity that you can get from any single piece of equipment for as long as possible before investing in replacing it or fixing it. …

If you can get right up to that point where the thing actually breaks, you will have gotten the maximum possible lifespan out of a piece of equipment. ... It seems clear that they might not have called it that, but it seems clear that that was more or less BP's policy, both in Alaska and in Texas City, in the way that they handled maintenance at their facilities. ...

So they have a lot of complaints coming from every direction? ... Is this unusual for a company to have so many worker complaints? ...

What we start to hear out of Alaska is an enormous number of complaints from workers in all aspects of the operation, and over a long period of time, saying that they don't feel safe going to work, that the facilities that they work in or the facilities that they manage haven't been maintained properly; that when they complain about these deficiencies to their management, they're best case ignored or worst case punished, where they lose their jobs. ...

When I talked to federal investigators who police industry in the United States, they say that the number and the pace of complaints coming from workers -- BP and BP contractors in Alaska -- is unlike anything they've ever seen before. ...

But one of the things you find is this nondisclosure agreement. You're an investigative reporter; you've dealt with a lot of companies. Maybe put that in context, this whole use of hush money.

One of the things that BP has done to silence its critics is to pay them off. Every step along the way, people who have either been injured at BP facilities or who have had some other provable, documented confrontation or problem with the company have reached some sort of settlement agreement with the company in an exchange for money and numerous other clauses. ...

It's essentially a gag order. It keeps these workers from ever sharing their stories with reporters or with the public or anyone else, and if they ever do, then they often are obligated to repay whatever financial settlement they got from the company in the first place. Ran into this in dozens of cases in reporting on BP.

Is that standard industry practice?

... It is something I've seen throughout the oil and gas industry, where critics are silenced through settlement agreements. But in my reporting, I have not seen it so aggressively and uniformly applied as I have with BP, and particularly in Alaska. Virtually every single person at the heart of a documented incident that I wanted to report on deeper had an agreement not to speak about their experience. ...

There are many people who would say that BP devotes more effort and attention to making that a priority than they do to keeping their facilities safe in the first place.

So this spill up in Alaska, it doesn't look that bad. How serious is this?

The oil transit line spill in 2006 was the largest spill on Alaska's North Slope, but it wasn't the worst environmental disaster that the country's ever seen or that the world has ever seen by any means.

It stood out because it's a crucial piece of infrastructure to the United States' oil supply and because BP is tasked with running it safely. It also stood out as an indicator what other problems might continue to exist in Alaska. If the transit lines could leak, if those lines hadn't been maintained, then what other lines up there could be poised to leak or spill or explode? And how else might the United States supply of oil from Alaska be at risk as a result of how BP manages those facilities? ...

It attracted a fair amount of public attention. It led to a congressional investigation. It led to a Department of Justice criminal investigation.

The revelations that arose from those investigations all had to do with BP's maintenance of those [oil] lines, whether they had acted properly over a decade to control corrosion in those lines. It was discovered that they hadn't -- that, in fact, the lines over many, many miles were so corroded that they either had leaked or were about to leak at anytime. ...

So Martin Anderson, [the new manager for Acuren, the subcontractor in charge of pipe inspections,] went in and started doing these audits? What did he find?

Anderson found an array of deficiencies as soon as he started work there ranging from minor paperwork issues -- certification for an employee might not have been properly logged in the book or a certification might have lapsed for a small period of time -- to fairly serious infractions, that certain inspectors didn't have certification at all for the jobs which they were performing, had never taken the tests to get that certification, and may not have received the number of hours of training that they would need to even be in a position to take those tests and qualify for certification.

We were able to obtain a document from BP to members of Congress addressing these concerns, and that document shared a little bit more detail about what the audit had found. According to BP, 19 inspectors were not properly certified or had some sort of gap in their certification, as they phrase it.

And as a result, the company launched a multipronged investigation. They had the top executives of their contracting company [Acuren] let go or transferred. And they had to go back and reinspect tens of thousands of points along the pipeline and essentially redo the job that [the contractors] had been hired to do in the first place. ...

At first I had questions about whether the infractions that were implied in the documents that we got were really serious or whether they were in fact minor bookkeeping errors.

The more that I was able to learn from both BP and in several other documents that came to us afterward, the more I could see that there were, in fact, inspectors who were not certified to perform their duties on the North Slope. I think you can tell by the scope of BP's response that there were serious safety and quality concerns raised by Marty Anderson's audit. ...

Has BP cleaned up Alaska?

... We still hear about exactly the same issues in Alaska now that we heard about ... five years ago or even 10 years ago.

Straight up into early 2010, Congress was asking questions of BP executives about a number of very close calls that the company had had on the North Slope. Workers that we interviewed still describe extremely unsafe conditions. They're afraid to report to duty every single day.

They describe a lack of maintenance of fire- and gas-detection systems -- essentially, the alarms that would go off if a plant was so full of stray gas that it was about to explode. They talk about being used as human fire-detection systems, where an individual will be tasked with doing a walkthrough and physically sniff for gas or see if anything looks funny. If they found something wrong, of course, it would be way too late to escape.

We see that BP has continued to cut budgets right up until 2010 on certain North Slope maintenance projects, that their plan to replace a series of valves and also the gas- and fire-detection systems has been drawn out [and] will last another decade or more. ... It's hard to imagine that things are any safer from the level of concern being expressed today than they were in 2006, or in 2001, in Alaska. ... The gulf is also where BP gets the most oil. It used to be Alaska. ...

It's interesting: Browne's demise, and it turns to Hayward, and he comes in and does these rather scathing assessments of what's wrong. Talk me through that.

Tony Hayward came into BP's CEO role on a mission to differentiate himself from John Browne and to fix the problems that the company had. He boldly proclaimed that BP had a problematic culture; that it hadn't paid enough attention to operational integrity, to what its workers actually do in the oil fields to get oil out of the ground, to refine it, and get it off to American consumers. In his view, he thought that Browne had been too aloof and too focused on the top management priorities and growing the company and had lost sight of what it took to mine those resources. ...

We'd been raising questions [at ProPublica] about BP's apparent systemic cultural challenges for a number of months. And then we stumbled upon, on YouTube of all places, a speech that Tony Hayward gave to graduate business students at Stanford University in 2009.

If you want to hear from his mouth directly what the problems were at BP, no one could articulate it better. He describes systemic cultural lapses within the company, a lack of attention to operational detail. He says that the company suffered from a string of disasters that resulted from this lack of attention.

And he rattles off Texas City and the Prudhoe Bay pipeline spill, and then several of the company's other problems. And he says that greater attention to operational integrity, to safety and performance and the people who bring the oil out of the ground is what will make BP strong again.

So what do you think that tells us about what's going on in the upper levels of management inside BP? ...

It tells us that BP executives can see the problems in their organization, that they have identified the challenges that have put them at risk for disasters like what happened in the gulf and what's happened in Texas City and Alaska, but have failed to rectify the problem.

But what's interesting here to me is that we have all this history of them denying that there's any relationship between these things, and then the guy stands up, and not only in that speech, but in memos and other speeches, he connects the dots for us. ...

It's really interesting, because at each step along the way, publicly BP denies that there's any kind of institutional problem; denies that they face any cultural challenges with the organization. But here you have a speech that the chief executive of the company has given in 2009 in which he is explicitly outlining the very cultural problems that we found through our reporting. ...

He's laying it on his predecessor.

Tony Hayward seemed to think that because 24 months went by without an incident after he became CEO, that he had fixed the company's problems. He blamed them on John Browne. He thought that his quick attention to operational detail in the company and his focus on the importance of safety would easily change the company, and may have already fixed the company. He speaks confidently about BP having been reformed.

Was he trying to reform the company? ...

The BP executives and managers that I was able to speak with, and executives from other oil companies, nearly universally think that Tony Hayward was moving in the right direction, that he was correctly focusing more effort and attention on safety and operational issues, and that he was paying attention to the cultural challenges that BP faced.

He probably just ran out of time. When you combine that with his apparent assumption that the problems would be easy to fix or that he had already made great headway, you begin to question whether he underestimated the challenges ahead of him.

How do you square on the one hand, him saying, "We've got these cultural problems; I'm going to refocus the company on safety; I'm going to refocus on safety like a laser," with all that we hear about cost cutting? How do you do both at the same time?

When you look at the things that Tony Hayward said about focusing like a laser on safety and realigning the company to focus on operational detail, combined with his continued effort to cut costs, to let go of 4,000 employees over the last year and a half, it just doesn't make sense. It's not clear how the company can continue to shave its expenses while supposedly reinvesting in the procedures and the equipment and the operations that have placed it at such great risk over so many years.

What did Thunder Horse represent?

Thunder Horse was BP's biggest investment in gulf deepwater drilling at the time. It was a multibillion-dollar rig -- the largest in the gulf, I believe, at the time. The company had placed much of its promises for the future in that rig. They were many, many months late in bringing it online. And when they finally did, it almost sank as a result of an engineering oversight. ...

In 2005, Hurricane Dennis pounded the Thunder Horse rig and many others across the Gulf of Mexico. And that in itself shouldn't have been disastrous. But it turns out that BP engineers had incorrectly installed a number of valves that are meant to control the flow of water in the supports that keep the rig afloat. And the rig, as a result, took on water instead of shedding it and listed to a dangerous degree and almost sank.

It was a preventable accident?

It was absolutely a preventable accident. ...

Tony Hayward presents himself as part of a new breed of management, but he was brought up in John Browne's BP. He was head of exploration and production at a very senior level at the time when key decisions about how to maintain the pipeline facilities in Alaska were made. He was the executive ultimately responsible for what was happening in Alaska. He was the executive ultimately responsible for the Thunder Horse rig endeavor. He oversaw the company's expansion in both Alaska and the Gulf of Mexico in those years. ...

[What's] your analysis of what Obama should have been thinking about when he expanded gulf drilling? ...

At the time that President Obama is considering whether or not to open more offshore drilling in the United States, his administration is actively investigating BP on several fronts. …

A month before the spill in the gulf, President Obama makes a speech broadly expanding offshore drilling in the United States. Clearly, the company that will do most of that drilling in the Gulf of Mexico is BP. They own the vast majority of the leases for new and promising areas that would be explored.

Yet at exactly the same time, multiple agencies in the Obama administration are investigating BP or considering its compliance with previous legal agreements, and essentially evaluating whether this company can be trusted to operate safely in the United States, and whether BP should be allowed to continue to drill for oil in the United States. ...

[The Obama administration] seems to have made this decision without any acknowledgement of the ongoing issues with BP or the current investigations in processes that the Obama administration itself had under way.

The Environmental Protection Agency at the time was considering a move called debarment -- a ban on federal contracts, which essentially could keep BP from operating in the United States. This was in response to a number of problems BP had had over the last decade in the United States, including the Prudhoe Bay pipeline spill and the refinery blast in Texas City. ...

The Department of Labor had just levied a huge fine on BP for failing to comply with an agreement after the Texas City blast in 2005. ...

There seems to be a real disconnect between what the administration expected would happen in the Gulf of Mexico and what other parts of the administration were learning and concluding about the company that is BP. ...

... What happens to BP next?

From a safety standpoint, I think the big questions are all still in Alaska. ...

In Bob Dudley, BP's new CEO, the company has fresh blood. We have somebody who is not the same as a Tony Hayward or a John Manzoni, who actually came from the Amoco side of the pre-BP merger days and is widely respected in the industry.

It seems that he has a real opportunity to make some of the changes that BP management has been trying to make for many, many years now. But it remains to be seen whether he can actually do that. I mean, the things that we're hearing from BP and from Bob Dudley today are not so different from the things that we heard from Tony Hayward after Prudhoe Bay pipeline or from John Browne after the Texas City blast. Only time will tell whether BP under Bob Dudley actually goes in a new direction.

You know, as one BP executive told Congress in 2006, "Look at our actions, not our words." It remains to be seen whether Bob Dudley implements the kind of changes that will actually transform BP's culture and prevent this kind of accident from happening in the future, or whether the company continues as it has.

My conversations with several oil executives that I spoke with described this process of reforming a company culture as a monumental task. This is not a two-year project. It's probably a 10-year project. And in their words, it needs to be an indisputable number one priority for a company. And it's something that will occupy a chief executive's focus and attention every single day, every day of the week, every week of the year, in perpetuity.