Organizational learning on preventing oil spills in oil and gas industry

Master of Business Studies

Strategy Track

Title: Organizational learning on Preventing Oil spills

in Oil and Gas Industry

Supervisor: Michelle Westermann-Behaylo

Second Reader: Johan Lindeque

Student Name: Zhiyong Zhou

Student number: 10605673

Content

5. Creating Highly Effective Learning Organizations………17

5.1. Willingness and Attitude………20

5.2. Lessons from the Past………27

5.3. Learning from Others’ Misfortune………33

5.4. Concrete Formal Learning Process………44

6. Discussion………51

7. Conclusion………55

8. Reference List………58

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1. Abstract:

In twenty-first century, learning and knowledge is the main or only source of lasting competitive advantage if we consider that other advantages, for instance, products, technology and expertise, can be imitated sooner or later by your competitors. Excellent learning ability and knowledge management process are the core elements that keep you in a leading position in such a rapidly changing world, where the only constant is change itself. This paper, from four perspectives, the willingness and attitude, learning from past experience, learning from others’ misfortune, and concrete learning process, describes companies’ learning behavior. We pay attention to oil and gas industry with a focus on oil spills that cause dramatically economic and environmental disasters. Through analyzing seven oil and gas companies in the real business world, we conclude that the increasing return phenomenon does not happen in the context of oil spills, and the relationship between previous oil spills and future ones cannot be described in one model but multiple ones. This paper sheds light on how to create highly effective learning organizations and analyzes the building blocks of them.

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2. Introduction:

Human rights have become an increasingly controversial topic recently. Nowadays, many companies, as well as governments or non-governmental organizations (NGO), are concerned with corporate human rights violations in terms of environment, labor, health, and poverty and development. Most of the research focuses on the antecedents and outcomes of corporate abuse allegations, (Barnett, Michael L 2007; Bernhagen, Patrick and Neil J. Mitchell, 2010; Brown, Dana .L, Roemer-Mahler, Anne, & Vetterlein, Antje, 2010; Dam, Lammertjan., & Scholtens, Bert. 2008; Kyte, Rachel., 2008; Neumayer, Eric. 2005), but few of them pay attention to the effect of organizational learning on future human rights abuses. In this master thesis, human rights violations will be combined with theories of increasing return and evolutionary resource based view. Our focus is oil and gas industry that is of importance to the future of human being because energy is an indispensable resource for our daily life. Oil spill is one of the most frequent disasters that affect both environment and economic development of the polluted area influencing daily life of local residents. It is important to know how to effectively learn from past experience and others to protect our environment.

First, from the perspective of increasing return, the tendency is that one who is ahead can be further ahead and one who is left behind will remain further behind (Arthur, W. Brian, 1996). It would be interesting to know if a company that was previously involved in corporate abuse would be more likely to replicate that abuse in the future over a company that had no past record of abuse. Second, evolutionary resource based theory broadens our horizons by changing from a cross-sectional perspective to a longitudinal perspective, which means it is necessary for us to consider time period,

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long-term learning and incremental change (Porter, Michael E. 1991; Stoelhorst, J.W. and Flore Bridoux 2010). Taking an evolutionary resource based view, especially organizational learning into account, we can observe the relationship between one type of corporate abuse allegations with other types over time.

If we have a clear idea of an organization’s educational syllabus and can determine which types of organizational education can contribute to or improve business performance or reduce the chance of violating human right, then we will be able to efficiently reduce corporate abuse allegations through appropriate training.

And our research will focus on oil and gas industry, where the chance that human rights violations occur more often than most other industries. This industry provides a good context to showcase the long-term interrelationship between organizational learning and human rights violations.

As mentioned before, most of scholars focus on the antecedents or outcomes of different types of corporate allegation abuse, such as environment, health, labor, and development and poverty. However, few studies analyze the relationship between previous human right violations and the same company’s future human right violations. It is still unknown whether a company that was previously involved in corporate abuse allegations would be more likely to be a repeat offender than one that did not get involved. Although many researchers have thrown light on building organizational learning ability, some gaps remain. Another gap is that not many studies analyze the effect of different types of organizational learning on future human rights violations. When human rights violations occur, some firms just put a code of conduct in place; some firms will train the employees and teach them the skills to prevent it from happening again; some firms will analyze

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how other firms deal with human rights violation and so on and so forth. The impact of how companies deal with allegations or suits on future organizational behaviors is still unknown. To narrow down the research scope, we focus on oil spills, because the topic of human rights contains varied issues including labor rights, freedom of speech, marriage equality, physical abuse, environmental pollution etc.

The paper therefore develops around the research questions: is there an increasing return phenomenon in human rights fields? To be more precise, is there an increasing return phenomenon regarding the volume of oil spills over time? What is the role of organizational learning on preventing petroleum spills? What are the factors determining the learning outcome?

This paper has several contributions. (1) Contribution to the theory: If the gap is filled, we would have a better understanding of human rights violation from a strategic perspective. We could know how the organizational learning theory can be used in human rights issues. Usually, the increasing return theory is only used to analyze how to attract consumers and how to make a profit (J.W. Stoelhorst, 2005). However, we should also know the application of increasing return theory in human rights field, which indirectly improves business performance. In short, those gaps need to be filled. (2) Contribution to practice: If we know whether previous human rights violations have significant/limited impact on organizational behaviors in the future, the government or NGO would have an idea of which companies should be the main focus and what consequences await those violators to protect human rights. From the company perspective, if the company desires to improve its reputation and to create a win-win situation by benefiting from protecting human rights and

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creating shared value, companies can have a better understanding of how to learn and perform better in the human rights field. And therefore its profitability can also be improved. A negative example is British Petroleum (BP) that spilled a large number of crude oil into the Gulf of Mexico. And statistics show that, in 2010, BP has lost over a third of market value, worth about $70 billion. And the disaster has a direct and indirect relationship with its losing profit. (Andrew Winston, 2010)

The threefold purpose of this thesis is to (1) synthesize and critically assess the literature on human rights, organizational learning and knowledge management; (2) Provide a conceptual framework guiding organizations to assess organizational learning through cross-cases analysis of oil and gas companies. (3) Suggest implications for business practice and future research directions relating to corporation social responsibility in oil and gas industry.

After the introduction, the organization of the rest of paper is as follows. Section 1 introduces our theoretical background briefly summarizing recent research on human rights and organizational learning. Section 2 elaborates the organizational learning process of seven oil and gas companies with a focus on oil spills, and discusses four building blocks (i.e. willingness to learn, lessons from the past and others, and concrete learning process) of organizational learning on preventing future oil spills. Section 3 discusses how to create a highly effective learning organization, and come up with a theoretical model. Section 4 concludes and points out future research direction.

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3.1 Human Rights:

The researches on human rights have developed for decades. The definition and coverage of human rights violations are commonly recognized. As S.Praksh Sethi, David B. Lowry, Emry A Veral, H. Jack Shapiro, and Olga Emelianova (2011) described, human rights violations include issues of environment degradation, mistreatment of local or indigenous people, and social conflict related to bribery and corruption. Human rights also relates to labor and consumer protection (De la Cuesta, Marta, Carmen Valor, Pablo Holgado, 2012).

John Ruggie, the United Nations (UN) Secretary-General’s Special Representative for Business and Human Rights, is the pioneer and most important scholar in this field, who proposed the “Protect, Respect and Remedy” Framework, which is adopted by the UN and other scholars. According to Ruggie (2011), there are three perspectives to solve human rights abuse issues within the framework, which is the foundation of up-to-date research of human rights: The first perspective is that state government should assume the responsibility to protect against human rights abuses by third parties, business enterprises included, by setting out clear expectations and appropriate policies, regulations, and adjudication. The second perspective is that corporations have substantive human rights obligations and responsibility to observe human rights (Cernic J. Letnar, 2010), which means that business enterprises should act with due diligence to avoid infringing on the rights of others and to address adverse impacts with which they are involved, regardless of their size, sector, operational context, ownership and structure. The third and final perspective is the necessity for greater access, by victims, to effectively remedy all allegations of abuse, both judicially and non-judicially.

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There are mitigating circumstances and limitations on the framework; Ruggie has not elaborated further on the extent of this obligation or the consequences in case of non-compliance (De la Cuesta Marta, 2012). Also, as Cernic J Letnar (2010) mentioned, it fails to offer a victim-oriented solution to challenges posed by human rights and business. Additionally, Ruggie has also been reluctant to concede that corporations do not have only negative but also positive human rights obligations in the field of human rights. This opinion is echoed by Michael E. Porter and Mark R. Kramer (2011) who created the term “shared value”, which describes a win-win situation where companies benefit from protecting human rights. They exemplify their point with a real-life business case that by investing in employee wellness programs, Johnson & Johnson has saved $250 million on health care costs. In the case of petroleum spills, reducing oil spilled leads to increased volume of production. And oil companies will increase market share and finally gain competitive advantage. Meanwhile, obviously, the local environment must be improved as a result of reduced oil spilled. There are two areas on which a great number of scholars focus, one is the antecedent of human rights violations or corporate abuse allegations, and the other is the outcome of human rights violations.

For the antecedent part, for instance, some researchers show that external drivers such as financial markets and reputational hazards are keys to explain why some firms have a formal commitment to certain human rights. So those firms have fewer human rights violations (De la Cuesta, Marta, Carmen Valor, Pablo Holgado, 2012). For the outcome part, most literature focuses on the outcomes human rights violations may result in and what factors lead to those outcomes. For instance, J Schrempf (2011) describes a business case that Siemens and Nokia bond with the Iranian

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government and seen as an accomplice who encourages regime’s human rights violations. This business corporation results in criticism from NGO and governments and boycotts of Nokia and Siemens products.

Oil spill is one of human rights violations. Human rights violations include four subcategories, i.e. environment, development & poverty, health, and labor. The United Nations Commission on Human Rights has asserted a relationship between protection of our environment and the respect for human rights, because the aim of environmental protection is to enhance the quality of human life (Dinah Shelton, 1991). Petroleum spill is one of the most frequent disasters that affect both environment and economic development of the polluted area influencing daily life of local residents (Robert Easton, 1972). Oil spills definitely damage natural environment and therefore influence the local economy. For instance, once oil spills occur, the coastline and seawater will be polluted, leading to reduced biodiversity. Increased rates of adult mortality and reduced fertility of sea animals (birds, fishes, etc.) are considered as a result of oil spills (Iñigo Zuberogoitiaa, Jose Antonio Martínezd, Agurtzane Iraetaa, Ainara Azkonaa, Jabi Zabalac, Begoña Jiméneze, Ruben Merinoe, Gema Gómeze, 2006). Hence, fishing sector will suffer. Moreover, economic losses are also related. Collective or public losses are usually identified with cleaning and restoration costs. Tourism and leisure industry will absolutely be influenced due to the damaged landscape (M. Dolores Garza-Gil, Albino Prada-Blanco, M. Xose´ Va´zquez-Rodrı´guez, 2005). If poorly responded, the resulting consequences incur significant recovery costs, prompt large legal liabilities and damage customer reputation and brand name (Manpreet Horaa, and Robert D. Klassenb, 2002). Under certain conditions, oil spills also have influence on health status of local residents. Residents

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who live around the polluted area have a significant chance of experiencing dermal exposure to weathered crude oil, inhale hydrocarbons, or eat contaminated seafood without being aware of it. Oil spills may not only do harm to physical health but also lead to mental diseases. According to Howard J. Osofsky, MD, PhD, professor of psychiatry at Louisiana State University Health Sciences Center, domestic violence, alcohol addiction, depression, frustration, and social withdraw can also be related to oil spills as a result of frequent exposure to crude oil. (Anita Slomski, 2010).

3.2 Organizational Learning

Last century, resource-based view has become popular as scholars analyze firms’ performance from inside out with a focus on the valuable, rare, non-substitute and inimitable resources. (Barney. 1986; Barney. 1991; Peteraf, Margaret A. 1993; Peteraf, Margaret A. and Jay B. Barney. 2003; Stoelhorst, J.W. and Flore Bridoux. 2008). And other significant theories evolved from resource-based view, such as capability view (Dierickx, Ingemar and Karel Cool. 1989), dynamic capability view (Teece David J. en Gary Pisano, and Amy Shuen. 1997; Arend, Richard J. and Philip Bromiley. 2009) and knowledge based view (Grant, Robert M. 1996). The resource-based view emphasizes the importance of knowledge alongside other inimitable resources in firms for sustainable competitive advantage (Barney 1991, Reed and DeFillippi 1990, Conner and Prahalad 1996). Knowledge management and organizational learning are the different sides of the same coin. Tacit knowledge is the opposite of explicit knowledge, and usually the former are more valuable due to the scarcity and non-heritable characteristics. (Ikujiro Nonaka 1991). Tacit knowledge is a critical source of competitive advantage. (Winter 1987; Barney 1991). Knowledge creation has served as one of the significant outcomes of knowledge management in organizations. (Argote et al. 2003, p. 573). Many managers,

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even in big successful corporations, fail to understand what knowledge exactly is and what companies must do to exploit it. According to Ikujiro Nonaka (1991, 1994), generally, four patterns of knowledge creating or transferring can be observed. (1) From tacit to tacit: tacit expertise can be transferred from one individual to another through direct observation, imitation, and practice; (2) from explicit to explicit: organization can synthesize information from different resources and therefore develop a totally new understanding of the old knowledge ; (3) from tacit to explicit: it takes time and effort to articulate what you know but hard to express clearly, so this field can be the focus of knowledge management and this process plays an important role in spreading knowledge from an individual or a small team to across the whole organization; (4) from explicit to tacit: the process of internalization of tacit knowledge helps individuals create new tacit knowledge.

Barbara Levitt and James G. March (1988) define organizational learning as the process of organizations developing conceptual frameworks or paradigms for interpreting that experience and about how organizations encode inferences from history into routines that guide behavior. By routines, they mean invisible process or soft assets such as culture, procedures, values, conventions, regulations, strategies, and technologies through which they operate.

The goal of organizational learning and knowledge management is to create a work environment that helps employees in the creation, transformation, adaption and application of organizational knowledge, and thereby ensure leading position (Chyan Yang and Liang-Chu Chen 2007). Gold et al. (2001) stated that infrastructural knowledge capabilities consist of three aspects, i.e. technical, cultural, and structural knowledge capabilities.

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turn their attention to the measurement of organizational learning ability. Bhatt (2001) proposed that two points (social organizational knowledge capability and technical organizational knowledge capability) can be used to measure organizational knowledge capability. Afterwards, Prieto and Easterby-Smith (2006) echoed with Bhatt, confirming the reliability of measuring organizational knowledge ability from technical and social perspectives. From the perspective of dynamic capability view, organizational learning ability is a small part of firm’s dynamic capabilities and therefore contributes to achieve sustainable competitive advantage. The two perspectives have its own specific focus, because the technical part helps managers to use technology (e.g. ICT or database) to manage knowledge, while the social part emphasizes the crucial role of the non-technical resources, such as leadership or culture, utilized in a knowledge intensive corporation.

4. Research Methods:

We relied on inductive theory building using embedded, multiple cases (Eisenhardt, 1989). The main part of my thesis will be qualitative, but quantitative methods will also partly be used. The focus of my thesis is on the relationship between previous human rights violations, especially environment-related ones, including their extent and number, and labor-related human rights violations reported in the Business and Human Rights Resource Center (BHRRC) database. This is with or without intentional organizational learning regarding preventing environment-related, human rights, or corporate abuse allegations.

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Data Collection

Quantitative research method cannot provide enough information for in-depth analysis for organizational learning, because the vast majority of organizational behaviors cannot be described in a quantitative way. And therefore qualitative research method is selected in this research. Due to limited time and access to some private information, this paper mainly uses secondary data by doing desk research collecting and analyzing data already available in print or published on the Internet. Interview can be an excellent method to get access to confidential information that is not publicly known. (Karp Grace Goc, Byra Mark, Gould Dan, Karper, William, 2000; Glogowska M Young, P Lockyer L, 2011). However, in our studies this is not the case. One of the reason is that the sensitivity of the topic of human rights violations makes employees at a corporation feel uncomfortable about discussing about it, partly due to orders from supervisors to forbid them to give comments publicly on it or perhaps due to concern over damaging reputation of the firm in question. And the efficiency will be rather low, because we have difficulty getting permission from gatekeepers at a company to conduct interviews. Even though we succeed to get permitted, we still cannot guarantee the accuracy, completeness, authenticity and reliability of the information given by an employee if we conduct interviews as our principle research method. And therefore a part of data used in this thesis origin from BHRRC, because this resource center is an independent non-profit organization that declines any donations from any corporations or their funds, or senior managers at major corporations. As a third party, BHRRC has no direct interest or conflict related to companies accused of misbehavior or affected communities. As a result, the data from a third party are less biased and the reliability and independence of information on the website can be

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much better guaranteed. (Brief introduction to Business Human Rights Resource Center, http://www.business-humanrights.org/Aboutus/Briefdescription). Data from other resources will also be considered, such as Green Peace, the most famous international NGO dedicated to protecting the environment and fighting against companies’ environmental misbehaviors (http://www.greenpeace.org) and some newspaper.

In order to obtain a better understanding of the same event from different perspectives, we also analyze how the company in question interpreted the oil spill disasters. We can have a clear picture of how organizations learn from their mistakes and what its commitment is by collecting annual sustainability reports or corporate social responsibility reports from companies’ official websites. After analyzing the existing allegations of corporate abuse, I will compare different firms’ performance on the same issues or same firms’ performance during a certain period of time which should provide an indication of the effects of organizational learning on human rights violations and what the distinctions between different types of organizational learning are.

Industry Selection

The setting is oil and gas industry. We choose several devastating oil spill disasters as our sample. The oil and gas industry is the most appropriate industry for our study for a great deal of reasons. First, food and Energy are the foundation of our daily life, without which we human beings cannot live in the world. (See Appendix Table 1. World Consumption of Energy). Oil and gas are usually a part of the political game (Carol Freedenthal 2011), and one of the reasons for international war such as the war against Iraq in 2003 (Wojciech Ostrowski; Roland Dannreuther, 2013). In 2013, 6 out of top 10 companies in the Fortune 500 list are Oil Chevron No.11, ENI SpA No.17, Statoil

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ASA No 39. This ranking list reflects the facand gas company, including Royal Dutch Shell ranked as No.1, Exxion Mobil No.3. China Petrochemical Corporation No.4, China National Petroleum Corporation No.5, British Petroleum(BP) No. 6, Total SA No. 10, t that oil and gas industry plays an extremely significant role in the world economy.

Second, oil and gas companies are more likely to be involved with human rights violations than companies in other companies, providing many potential research sites and permitting better empirical grounding. Therefore we have sufficient materials to analyze if we choose oil and gas industry. The more those companies damage the environment, the more responses they make to deal with environmental issues and during this process more organizational learning happens. (See Appendix Table 1. Numbers of company responses on human rights violations by sector in BHRRC database)

Varied types of environmental pollution can be related to oil and gas companies. Drilling for oil and gas has the risk of containing air, water and soil (Calabrese, Edward J.; Dragun, James. ; Kostecki, Paul T, 2005). As a result, that pollution can lead to destruction of wildlife and natural resources affecting the livelihood of crab catchers, shell fish operators etc. The equipment and machines used in the production of oil and gas also produce vibration and noise (Mohan D. Rao1, 2010).

Oil spills occur so frequently that they are some of the most important pollution incidents (Liu et al. 2005; Wang et al. 2005). The size of spillage can be measured by barrels per day, volumes or areas.

Companies Selection

The research focused on six publicly held oil and gas firms, each with multiple human rights violations. Multiple cases are likely to produce more generalizable, robust, parsimonious theory

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than single cases (Eisenhardt & Graebner, 2007). Our embedded design uses several units of analysis (i.e., industry, firm, and event level) but event level is our priority. Multiple units of analysis improved the likelihood of rich, accurate theory (Yin, 2003).

All the events in the cases selected are related to oil spill. Seven studied corporations differed in age, with dates of establishment extending from 1907 to 2002. This combination of multiple sizes and ages should improve the reliability, validity and generalizability of the results (Eisenhardt & Graebner, 2007).

We select the companies with the most of times of response on human rights violation (See Appendix Table 1 Numbers of company responses on human rights violations by sector in BHRRC database). Because the companies accused with human rights violations are more likely to have the most responses. And usually companies respond most conduct more organizational learning. And therefore we can have more data available.

Table 1 Overview of the Focal Firms

Company Headquarters Approximate Number of Employees( 20 12) (Partly) State Owned Founding Year Revenue (US$, 2013) British Petroleum United Kingdom 85,700 NO 1909 396.217 billion Chevron Corporation The United States of America 62,000 NO 1984 220.264 billion China National

Petroleum China 1,668,072 YES 1988

CN¥ 2759.3 billion

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5. Creating Highly Effective Learning Organization on Preventing Oil Spills

In addition to traditional purposes, such as providing more value at lower cost than competitors (Barney 1986), managers should also need to give due consideration to the additional goals especially when facing the unstable external environment. The most important ones are to adapt to technology trends, updating government policy and even internal factors ranging from employee morale and emergency response, to meeting procedures and organizational culture. A major method to improve organizational effectiveness is facilitating organizational learning. As the old saying goes, teaching him how to fish by himself is far better than giving a man a fish. It is telling that solving current problems cannot guarantee safety in the future because totally different problems will emerge over time due to the uncertainty of external world. In sum, organizational learning is an indispensable method to improve organizational effectiveness leading to generating ability to solve future problems.

To lead corporations to prevent future oil spills from happening, managers should put assessment of the current willingness and ability to learn on the petroleum spill issue on the priority list.

Corporation ConocoPhillips The United States of America 16,900 NO 2002 58.248 billion Exxon Mobil The United States of America 76,900 NO 1999 420.836 billion Royal Dutch Shell The Netherlands 87,000 NO 1907 451.235 billion

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Managers can also turn to external consultants who serve different corporations in different industries. Consultants can act as a knowledge broker, because they are exposed to varied managers in different fields when consultants provide service to them. (Andrew Hargadon B, 1998). And hence they can establish benchmark to compare performance and identify industry standards and figure out weakness and the difference between the company and the leader in this industry so that the manager have a clear goal of how to compete with their competitors (David A. Garvin, Amy C. Edmondson, and Francesca Gino, 2008).

Measurement of learning outcomes

We investigate how to create a highly effective learning organization (vs. moderately effective and lowly effective) in oil and gas industry. Before introducing our emergent conceptual model, we describe how we measured learning outcomes to identify high moderate and low levels. Due to the intangible feature of learning, it is difficult to measure learning ability by process, and therefore we use two indicators to comprehensively describe the outcomes of learning ability of a firm as follows:

(1) oil spill volume reduction

The most Key Performance Indicator or KPI is the volumes or numbers of oil spill in recent years collected from corporations’ official websites. (See Appendix Table 3-5, Chart 2-5). This is the most convincing and direct evidence of effective learning on prevention of petroleum spill. We compare the change from previous year to 2013. To be specified, for comparison purpose, we

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define highly/moderately/lowly effective learning statistically. If the percentage of volume reduced oil spill compared to baseline is above 50%, we consider the firm as highly effective learning organization; if it is between 20% and 50%, we consider the firm moderately effective learning organization; if it is below 20 %, we consider the firm has lowly effective learning outcome. However, some firms have published this data for long, for instance Shell has started to record numbers and volumes of oil spill since 1995, while some firms have no related data available, such as CNPC. Hence, we also consider other metrics to measure the learning outcomes.

Table 2 Percentage of volume of decreased oil spilled compared with base year

Company BP Chevron CNPC ConocoPhillips ExxonMobil Shell Total Percentage (%) -41.6 -73.5 --- -64.2 +44.4 -73.5 0

Note: “+” means the volume of oil spilled has increased, while “-” means it has decreased

After calculating the first factor, i.e. the percentage of volume of reduced petroleum spilled, we find that in 2013, Chevron has reduced 73.5% of oil spilled compared with 2009 and Royal Dutch Shell has reduced the same percent of oil spilled as Chevron compared with 2004. After Chevron and Royal Dutch Shell, ConocoPhillips has reduced 64.2% from 2008 to 2012. Those three companies are excellent on reducing oil spilled and therefore we list Chevron, ConocoPhillips, and Royal Dutch Shell, as highly effective learning organizations, BP as moderately effective learning organizations. From 2011 to 2013, Total remained the same amount of oil spilled. But Exxon Mobil is the only company whose oil spilled has increased, rather than decreased, gradually from 2010 to 2013. And therefore we regard ExxonMobil, and Total as lowly effective learning organizations. To keep the measurement consistent, CNPC cannot be graded due to lack of related data.

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In this section, we, take oil spills for example, will give insight into how to break down and analyze companies’ ability to self-learn and self-reflect when they deal with oil spills. We will describe in details the four building blocks of self-learning ability: first, we will analyze the learning intention of the firm that is a fundamental cornerstone of learning. Second, we analyze how the firm in question learns from past experience. Third, we take into consideration how the firm in question gains experiences from competitors, government, NGO or other institutions. Fourth, we also need to think about how concrete the formal learning process is. And some criteria have been summarized.

5.1 Willingness and Attitude

First and foremost, what plays a crucial role is the firm’s willingness to and attitude toward reflecting themselves about oil spills. Even if some firms have mature learning system, but lack of strong belief or good attitude must lead to a low-efficient learning outcome. Some good managers usually make bad ethical decisions. From several aspects, we can have a basic understanding of how important managers should think about this problem.

Organizational learning is more a social process than a technology-based process (King 2008). The reason behind it is that knowledge originally exists in the mind of an individual, and then knowledge should be transferred across the small team or the whole organization. “Organizational knowledge” is also the basis for “organizational learning (René J. Jorna, Niels Faber, and Henk Hadders, 2009). From a cognitive psychology perspective, motivation to share one’s knowledge plays a deciding role in transmitting knowledge, although technology can be used to facilitate the process. However, one can transfer one’s knowledge without the help of technology. For instance, in a primitive society, people succeeded to communicate the hunting and gathering skills face to

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face, although it takes more time to understand without tools that can present knowledge vividly. Database or presenting software (e.g. Microsoft PowerPoint) can accelerate the process of transferring knowledge and reduce the frequencies of it with knowledge management database such as “lessons learned” repositories, and directories. However, even though technology is mature or sufficient to share knowledge in an organization, one cannot transmit knowledge to facilitate organizational learning without intrinsic motivation or the entire organization lacks of motivation to learn. Under this condition, the transferring of knowledge will still fail, if not, the efficiency will be pretty low.

Therefore, companies literally cannot process knowledge, i.e. transmit or accept knowledge. But personnel, or to be more specific, the brains of humans can store and process knowledge (René J. Jorna, Niels Faber, and Henk Hadders, 2009). To measure whether a firm can manage to facilitate learning, we measure the willingness to learn about protecting the environment, instead of how many software they use, or do they have an Intranet or database because the learning process is more people intensive instead of technology intensive.

Various indicators can be used to measure firms’ willingness to learn. Nonetheless in this paper, we choose only three indicators from different perspectives to describe a firm’s attitude toward learning. The identifiablility and measurability are issues, because the attitude towards learning is intangible and different scholars have different types of measurement. Hence, we assess the attitude towards learning by some tangible and quantitative indicators.

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To dare to confront its mistake pointed out by other third parties or victims is the first step towards efficient learning. Since 2005, BHRRC has invited corporations to respond to accuse of misbehavior complained by local communities or other victims when BHRRC cannot identify that they have already responded to the issues. This process brings companies’ attention to human rights issues, and permits the public to gain access to the accusation and company’s comments. Although it is difficult to measure the quality of each response by analyzing the response rate and the response rate cannot reflect the actual conduct, the rate of response can reflect the company’s attitude toward dealing with human rights issues. If a firm is unwilling to response to the request, it usually tends to ignore its misconduct, let alone learn from itself or other to improve the situation. We choose the response rate is about the whole human rights issue is because we don’t have other data available about the response of oil spills requested by third parties. Oil spill is a part of human rights issues.

(2) Participant of UN Global Compact

A company not participating in the UN Global Compact does not necessarily equal a company that is unwilling to improve its environmental performance, but a company participating in the UN Global Compact to a large extent showcases its willingness to assume responsibility for the environment. Since UN Global Compact publishes ten principles to instruct companies to embrace universal norms. The UN Global Compact restricts corporate behaviors in four aspects: human rights, labor, environment, and anti-corruption. The environment part contains three specific principles, Principle 7 to 9. Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: Businesses should undertake initiatives to promote greater

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environmental responsibility; Principle 9: Businesses should encourage the development and diffusion of environmentally friendly technologies. Applying for the UN Global Compact is a way to show their commitment to protecting the environment. Using participating UN Global Compact or not as a measurement is easily approachable and fair.

(3) Disclosure of Oil Spill Volume

If a firm even doesn’t have data about oil spills, it is impossible for it to learn from past oil spills because it has no idea how much oil it has spilled. Disclosing the volume of oil spilled is not only the fundamental to measure the learning outcome but also a necessary step to reflect its mistake. If a firm doesn’t publish related data, we can say it lacks of motivation to learn about preventing oil spills.

We also considered other measurements, such as using the description of firm’s willingness disclosed by employees themselves in the sustainability reports. However, every major company publishes social responsibility reports or sustainability reports annually saying that the company is working hard to protect the environment and preventing petroleum spills from happening. Hence, the difference from each other is not clear, and this measurement cannot be used to assess firm’s attitude towards learning. Moreover, third parties don’t have a database about organizational learning yet. In sum, those three indicators are the better options available for us to measure firm’s intention.

The overview of the willingness to learn on protecting environment, especially preventing oil spills, is as follows.

24 Company Rate of Response Participant of UN Global Compact Disclosure of Oil Spill Volume

British Petroleum 100% Yes Yes

Chevron Corporation 71.43% No Yes

China National Petroleum

Corporation 14.29% No No

ConocoPhillips 40% No Yes

Exxon Mobil 75% No Yes

Royal Dutch Shell 91.18% Yes Yes

Total S.A. 83.33% Yes Yes

Source: BHRRC and Companies’ official website Rate of Response

Benchmark: The company response rate to BHRRC on average is around 70%.

The response rate that is below 70% can be regarded low, while the response rate that is higher than 70% can be considered high. British Petroleum is excellent on facing problems as they responded to all (100%) of the requests even though we don’t consider more details of the content. However, China National Petroleum Corporation (14.29%) and ConocoPhillips (40%) are lower than average. Other companies are between 70% and 95%, which are above the worldwide response rate 70%.

Participant of UN Global Compact

In our samples, around half companies have already participated in the UN Global Compact. Total is a member of UN Global Compact LEAD, high-level symposia that will allow members to frequently receive expert advice and exchange experiences with peers on some of the implementation challenges that are considered especially complex and demanding.

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Disclosure of Oil Spill Volume

Except CNPC, other companies on the list disclose the numbers or volumes of oil spills. The data show that every Western country has paid enough attention to environment, but companies in the developing country have not put the protection of the environment on the priority list.

Considering all the factors, we can conclude that BP is the best company in the ranking of its intention that has responded to every request by BHRRC, and also has participated in UN Global Compact. Those behaviors showcase BP’s courage to face its mistakes or other’s doubts about its behavior.

Royal Dutch Shell, with the response rate of more than 90%, has also participated in UN Global Compact and has disclosed the volume and number oil spilled for long. As the biggest oil company by revenue, Shell not only has the greatest completed data about oil spills but also has recorded sabotage spills and operational spills separately. Total also has a high score for response rate of 83.3% and has participated in UN Global Compact.

Chevron and ExxonMobil show their motivation with the response rate of more than 70%, but either of them has participated in UN Global Compact.

CNPC can be considered the worst company on this ranking with a response rate of below 15% and we cannot find any data about its volume of oil spills. And CNPC is the only Chinese company we analyzed and it shows the lowest willingness to protect the environment. And after reading related reports, we find that most feedbacks and comments are against its irresponsible behavior. For instance, CNPC caused an oil spill disaster in Dalian, a tourism city in the northeast of China. Managers of CNPC have not shown up at press conference many times and gave no responses.

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After combing the level of motivation and the outcomes after several years of learning on preventing of oil spills (i.e. the amount of reduced oil spilled), we find that BP is good at reducing oil spills (reduced 41.6%) and shows a positive attitude towards learning. The willingness and learning outcome is positively related; Chevron is excellent at reducing oil spills (reduced 73.5%) and shows a positive attitude towards learning. Therefore the willingness and learning outcome is positively related. CNPC shows a negative attitude towards learning, but we cannot tell the learning outcome is good or not. Therefore we cannot judge the relationship between learning outcomes and willingness; ConocoPhillips is excellent on reducing oil spills (64.2%), but the score of willingness is not high. Therefore we cannot conclude that the learning outcome is positively related with motivation. ExxonMobil shows its motivation to learn, but the result is disappointing with increased oil spills. Therefore we conclude that in this case the learning outcome and motivation are negatively related. Shell is excellent at reducing oil spills (73.5%), and shows a strong motivation. Hence, the learning outcome is positively related with motivation. Total has not increased the volume of oil spills i.e. the result is neither optimistic nor pessimistic, but its learning motivation is strong. Therefore we assume that the relationship between learning outcome and attitude is not positive.

Taking seven cases into consideration, we cannot predict any relationship between willingness and the amount of reduced oil spills, although the common sense is that the company with strong motivation will have a better learning outcome.

Proposition 1: The corporations with a great willingness to learn and positive attitude are not

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5.2 Lessons from the past:

Innovation, in some sense, is the improved pattern of a traditional knowledge or process. Current technology usually originates from a traditional model and is improved generation by generation. According to Clayton M. Christina (1992), the development of technology follows S-curve. From a perspective of evolutionary resource based view, using the retrospect process to harness knowledge is an important source of developing new technology (Stoelhorst, J.W. and Flore Bridoux, 2010). Scholars have shown that previous experience considerably helps when managers have to deal with emergent situations based on incomplete or even misleading information. According to Timothy D. Wilson, Jay Meyers, and Daniel T. Gilbert (2001), three criteria must be satisfied to learn from previous experience. First, managers should compare their previous experiences with future ones, instead of just considering an upcoming event without relating it to the past misfortune. Because when managers make decisions ignoring the previous experience, they are more likely to make the same mistake again. Second, even though managers do consult the lessons they have learned, they still should think about which of their many previous experiences are applicable to the future event they are dealing with, because it is unrealistic to review every detailed process after actions. Third, after recognizing which events are applicable and try their best to think about them, they still should recall or reconstruct accurately how they did and how to adapt it correctly to suit future needs. Managers should be able to push an issue to its root causes. Otherwise they cannot make the best use of the past experiences.

According to Kenneth G. Cooper, James M. Lyneis, and Benjamin J. Bryant (2002), “an understanding that the investment in learning can pay off, and that there needs to be two outputs

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from every project: the product itself and the post-project assessment of what was learned”. This is exactly the essence of after-action review, or formal and informal post-incident discussions. After-action review is a specific type of workplace meeting. It is a significant part of how employees make sense of disasters and accidents encountered and reflect which responses made were appropriate or inappropriate. Ultimately, they set the stage for what can be learned from the incident (Joseph A. Allen, Benjamin E. Baran, Cliff W. Scott, 2010).

On the part of the case description, we will focus on after-action review. Another reason is that all the companies want to signal their desire to protect the environment, and indicate that they are eager to learn. However, vast majority of them only disclose the outcome of learning, such as “we have arose the awareness of safety and reduced the risk of oil spills” (CNPC), instead of disclosing the detailed learning process. All the companies only showcase their achievement from which we cannot gather the data the research needs. However, processes can present more information by which we can use in order to compare the learning ability. Therefore, we only analyze the learning ability from one narrow perspective- systematic after-action review. Also, we can ensure the comparability. Other methods can also be used to show firms’ ability, but we will discuss it in the section “Concrete Learning Process”. In the case of petroleum spills, managers can ask “Does the firm acknowledge the importance of systematic after-action review in the field?” and “Whether managers or engineers successfully bring it into practice?”

Table 4 Seven Companies’ After-action Review Company After-action Review(AAR)

British “Although we haven’t yet embedded AARs to the same extent as the Army they are

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Petroleu m

--Chris Collison and Geoff Parcell work with knowledge management learning and innovation at BP.

Source:

http://www.ikmagazine.com/xq/asp/sid.0/articleid.01E48E89-C11D-4050-B478-1DEA FEE53A1F/eTitle.Learning_while_doing_The_after_action_review_process/qx/display .htm

Chevron “Chevron has introduced similar systems whereby they learn before, during, and after

the undertaking of a large project. Major cost savings have been realized by introducing these learning processes. For example, Chevron introduced a lessons learned tool for its drilling processes. Every time drilling takes place in a particular area, lessons are recorded. The next time drilling takes place in a similar area, lessons learned during the last drilling operations are available. This results in fewer errors and less“reinventing of the wheel.” Chevron has also recorded waste savings in its drilling operations.”—Book: Knowledge management in theory and practice

Source: http://books.google.nl/books?id=CU20AAAAQBAJ&pg=PA229&lpg=PA229&dq=ch evron+after+action+review&source=bl&ots=lw9l_wFIxv&sig=2BYsK0acMMN-UaN KJgOlXxS0URM&hl=en&sa=X&ei=fqCuU6vAM6GTywPnnICoDw&redir_esc=y#v =onepage&q=chevron%20after%20action%20review&f=false CNPC No record ConocoPh illips

Job description of engineer: “Identifying and implementing real-time performance improvements by conducting weekly after action reviews in conjunction with fellow completion engineers, contractors and team members.”

Source: https://www.linkedin.com/jobs2/view/16645373

“Conduct all completion engineering for completions including but not limited to completing MaxBook, specifying completion equipment, writing detailed procedures, conducting after action reviews, and compiling end of well reports.”

Source: http://lowongankerja-bumn.com/lowongan-conocophillips-indonesia-jakarta/ Exxon Mobil No record Royal Dutch Shell

“The job description of knowledge manager at Shell: Facilitate After-Action Review for every offshore phase and documents findings; Identity Lessons Learned review in all planning meetings”

source: http://www.nickmilton.com/2013/07/km-role-description-shell.html

“AAR meetings became a popular business tool after Shell Oil began experimenting with them in 1998 at the suggestion of board member Gordon Sullivan, a retired general”.—Harvard Business Review

Source:

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“We will apply any relevant findings from this incident across our operations at Shell, and we will also share them with others in the industry.”

“Though there are things that precipitated that incident that we work very hard to prevent on our projects, we assessed the situation and immediately applied what we learned to our operations plans around the world.”

“The IRF, OGP, IADC, API and others have done a good job of collecting certain incident data after accidents, but our goal should be to collect complete information for the entire offshore industry.”

“In that regard, Shell strongly supports the finding from last year’s IRF conference in Vancouver calling for a comprehensive and verified international incident database.” Source:

http://www.shell.com/global/aboutshell/media/speeches-and-webcasts/2011/marvin-od um-stavanger-03102011.html

“We thoroughly investigate all incidents to make sure learnings are shared...to further improve our performance going forwards.”

Source:

http://www.shell.com/global/aboutshell/media/speeches-and-webcasts/2014/2014-agm-chairman-ceo-210514.html

“Shell Oil may have been the first civilian adopter of the traditional Army AAR method”--- Jeffrey Kaliner’s thesis When will we ever learn? The after action review,

lessons learned and the next steps in training and educating the homeland security enterprise for the 21st century

Total No record

Generally, we find that BP, Shell, Chevron and ConocoPhillips have introduced after-action review systems, while CNPC, Exxon and Total have no related data available on the Internet. We assume CNPC, Exxon and Total don’t release the importance of after-action review, because we cannot find any hint on their official website or other websites.

BP has introduced the after-action system, but according to two senior managers Collison and Geoff Parcell Chris who work with knowledge management learning and innovation at BP, “Although we haven’t yet embedded AARs to the same extent as the Army they are widely used across BP’s activities.” They admitted that the after-action review system is just partially introduced.

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learned tool for its drilling processes. Every time drilling takes place in a particular area, lessons are recorded.” This description shows that Chevron is good at restoring knowledge for future use. The best time to carry out an after-action review is when the project or a stage immediately finished. Chevron conducts after-action review every time rather than every year, and therefore the individual has the fresh memory to reflect the process. As a result, the knowledge can be created by brainstorming with colleagues when everyone communicates the experience and expresses his opinion. “The next time drilling takes place in a similar area, lessons learned during the last drilling operations are available. This results in fewer errors and less ’reinventing of the wheel.’ Chevron has also recorded waste savings in its drilling operations”. Sharing the knowledge created from the after-action review is the key point to make best use of knowledge to generate value to the maximum. Otherwise after-action review is useless.

Shell is the company with the most successful after-action review. According to Marilyn Darling, Charles Parry, and Joseph Moore (2005), “AAR meetings became a popular business tool after Shell Oil began experimenting with them in 1998 at the suggestion of board member Gordon Sullivan, a retired general.” And Jeffrey Kaliner states that “Shell Oil may have been the first civilian adopter of the traditional Army AAR method”. With long history of adopting after-action reviews, Shell has already led the industry in this field. “We thoroughly investigate all incidents to make sure learnings are shared...to further improve our performance going forwards.” Shell has understood the essence of after-review action, i.e. creating, sharing, and reusing knowledge. Shell is also pushing the standard to a new level. “We will apply any relevant findings from this incident across our operations at Shell, and we will also share them with others in the industry.” It not only

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share and transfer the knowledge it created within the organization worldwide, but also transmit it to other institutions in the oil and gas industry. Moreover, as we can tell its ambition from the speech of a senior manager: -“The IRF, OGP, IADC, API and others have done a good job of collecting certain incident data after accidents, but our goal should be to collect complete information for the entire offshore industry.”“In that regard, Shell strongly supports the finding from last year’s IRF conference in Vancouver calling for a comprehensive and verified international incident database.” Shell is aimed at building a global database to store those tacit knowledge that contributed by front line engineers in the fields not only at Shell but also at other companies. To maintain valuable operating experience, the managers should transfer them from tacit experience to explicit knowledge that can be stored in a database and therefore can be reused easily by other colleagues in the future. Shell also hires experts to implement the program. As we can see from the job description of knowledge managers at Shell “Facilitate After-Action Review for every offshore phase and documents findings; Identity Lessons Learned review in all planning meetings” Shell assign talents with 10-15 years of working experience to instruct employees to conduct after-action reviews. This behavior signals it puts after-action reviews on the priority list.

ConocoPhillips also specify it regard after-action review as a part of the daily work of engineers, as we can see from the job description of engineer: “Identifying and implementing real-time performance improvements by conducting weekly after action reviews in conjunction with fellow completion engineers, contractors and team members”. But unlike Shell where knowledge manager plays a key role in reviewing, ConocoPhillips assign engineers more authority. It emphasizes that after-action reviews include every individual participated or closest to an action, regardless the

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organizational hierarchy, whatever their decision-making authority or position in the organization. It establishes a system involving multiple perspectives based on everyones’ experience. It is therefore a fundamentally participatory process. (Richard Sexton and Isobel McConnan 2003)

After reviewing all the cases, we can find, not surprisingly, that the companies with systematic after-action review have the outstanding performance on reducing oil spills. For instance, Shell can learn from the mistakes immediately after the project and share the knowledge learned within the organization worldwide. Moreover, Shell is building a database to store and maintain those explicit knowledge translated from tacit knowledge. However, those companies (CNPC, ExxonMobil, and Total) without after-action review have worse learning outcomes. That is, Total has not reduced its oil spills, ExxonMobil has increased 44.4% and CNPC even does not disclose related data. The result is presicely the same with people’s expectation.

This suggests:

Proposition 2: The corporations that are good at learning from past experience (e.g. having

systematic after-action review) are more likely to produce highly effective outcomes.

5.3. Learning from Others’ Misfortune:

Lessons learned for its own mistake is necessary to gain knowledge to avoid the same mistake, but a company cannot always experience the same situation as it did. A complementary method to facilitate organizational learning and avoid mistakes is to acquire knowledge from competitors, NGOs, governments, and academic institutions. Lessons from its own historical experience and from others are alternative to gain experience. However, the latter focuses more on external knowledge acquisition by sharing information with others, while the former emphasizes internal

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knowledge creation by reflecting its misbehaviors. Within an organization, risk managers and knowledge managers are usually the individuals who are directly responsible for acquiring knowledge from others’ misfortune.

Nowadays, cooperation between oil giants has become popular. Those companies work together in order to learn from each other due to their expertise in dealing with problems in different geographical or technical areas. (Jackson, 1995; Zakarian & Kusian, 1999). Examples include product development teams, cross-unit teams, brainstorming groups, and management teams (Gerben S. Van Der Vegt and J. Stuart Bunderson, 2005). And the interaction between skill diversity will contribute to improve team learning behavior, and that team learning behavior will enhance overall team effectiveness by promoting continuous process improvement (Edmondson, 1999). Working with other institutions allows the firm chances to systematically collect information from competitors, supplier or customers directly or indirectly, to gain access to the newest technology, and to compare its performance with that of leading competitors. (Marilyn Darling, Charles Parry, and Joseph Moore, 2005)

According to Andrew B. Hargadon’s framework (1998), several actions needed to be taken to make the best use of external knowledge. First, the firm should be exposed to a great number of varied organizations within or outside the industry, and have a good understand what their expertise is. Second, the firm in question needs to acquire knowledge through traditional methods such as alliances or acquisitions. For instance, the firm can cooperate with academic research centers or acquire a company with the valuable technology needed. The firm can also buy patents instead of

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developing the technology in need by itself or attract the talents who invent this technology. After acquiring knowledge, the manager should be able to store the knowledge for later use.

Third, the managers are required to link the knowledge acquired to the emerging problems and adapt it to solve the issues. Last but not least, the most important process is to apply the knowledge or technology learned from rivals, NGOs, or academic institutions to practice, provide real value or reduce the risk of hazards.

We can find a great number of information on companies’ website about working hard with other companies or NGOs dealing with oil spills. But all the companies state that they are engaged in a wild range of cooperation with different organizations.

And therefore, we focus on one single event—BP’s Deepwater Horizon oil spill in the Gulf of Mexico to identify the response of different companies to the same event. Thereby we can guarantee the comparability across different companies.

The reason why we choose the disaster of BP Deepwater Horizon is multiple. First, this event is extremely histoical and famous, because the blowout of Deepwater Horizon rig caused dramatic loss. The blowout is the most serious oil spill event in the history. The disaster of deepwater Horizon oil spill resulted in death of 11 workers working on the rig and caused 17 injured. Enormous economic loss included the sinking of the rig, recovery cost, and damaged fishing and tourism sector (Clifford, 2010). Second, the reason behind it is operational accident not natural disaster (Richard T. Sylves and Louise K. Comfort, 2012), so a great number of manual mistakes can be identified. For instance, BP’s managers were accused of flawed managerial decisions such as failure to make use of automatic alarm systems and ignorance of a great number of broken hardware

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on the rig. And managers at BP chose to install 6 devices to ensure the pipe was centered in the well instead of 21 devices advised by the cementing contractor Halliburton.

In sum, this section we will discuss the response and learning process of other oil giants except BP. Other events can also show firms’ ability to learn from others, but we will discuss it in the next section.

Table 5 Six companies learning from BP’s oil spills disaster in 2010 Company Learning from BP’s in Gulf of Mexico

Chevron “Once the oil was released, we learned that no company, including Chevron, had invested

any significant dollars into cleanup research or preparedness, although all were required to do so under the 1990 Oil Pollution Act. Ships to contain the oil were not ready, nor were adequate boom or skimmers to protect the shore”.-- Chevron's Shareholders Should Say No to Offshore Drilling”

Source:

http://truecostofchevron.com/20110520-chevrons-shareholders-should-say-no-to-offshore-drilling.html

“We must also expedite the work of two new industry task forces – one focused on subsea well control and the other on spill response and clean up. We also committed to work with the president’s independent commission.”

“We know that we can always learn and improve. So we welcome any new standards and safeguards that improve safety and prevent future accidents. To that end, we must act quickly to implement the recommendations made by the Joint Industry Task Force to ensure that all companies are operating with the same high standards of safety and reliability. Chevron will adopt any new standards that it doesn’t already apply.”

Source:

http://www.chevron.com/chevron/speeches/article/06152010_drillingdownonamericasener gyfuturesafetysecurityandcleanenergy.news

CNPC “CNOOC, Sinopec and CNPC are triggered with joint efforts to upgrade safety rules for

shallow and deep water drilling, so as to keep up with increasingly risky operations in an increasingly tough situation in China. Especially, there is a pressing need to rebuild integrated strategy and reshape the future of offshore play in South China Sea, the major and prospective deepwater area typically featuring in HPHT and lacking of matched drilling risk control technologies. Rigorous requirements are primarily analyzed with respect to present status of offshore drilling in China.

37 ConocoPh illips/ Exxon Mobil/ Shell/ Chevron

“In July 2010, ConocoPhillips Chevron, ExxonMobil and Shell committed to providing a new containment response capability in the Gulf of Mexico. These founding companies of Marine Well Containment Company (MWCC) an independent, not-for-profit, company, recognized the need to be better prepared in the event an operator lost control and subsequent containment of a well. As a result, in February 2011, MWCC's interim well capping and containment system became available for use. The interim system improved the industry's ability to respond to a deepwater well control incident in the U.S. Gulf of Mexico”

Source:

http://www.conocophillips.com/sustainable-development/safety-health/offshore-incident-pr evention-response/Pages/spill-containment.aspx

“Four oil majors announced plans July 21 to build and deploy a rapid response system that would be available to capture and contain oil in the event of a future well blowout in the deepwater Gulf of Mexico. The companies committed $1 billion to fund initial costs.” Source:http://www.shell.com/global/aboutshell/media/news-and-media-releases/2010/new-oil-containment-system-22072010.html

ExxonMo bil

“ExxonMobil has been designated by the founding sponsors to lead the engineering, procurement and construction of the system components.”

Source:http://s01.static-shell.com/content/dam/shell/static/media/downloads/press/contain ment-systemfactsheet220710.pdf

“Since the Apr. 20 blowout of BP PLC's deepwater Macondo will on Mississippi Canyon Block 252, industry has found itself building special subsea equipment as needed to cap the runaway well and to divert leaking oil and gas.

John Watson, Chevron chairman and chief executive officer, said oil companies realize they need the public's trust that industry can produce oil and gas safely and in an environmentally responsible manner.

"We are committed to advancing safe operations through enhanced prevention, better well containment and intervention, and improved spill response," Watson said. "This new system significantly enhances the industry's ability to effectively respond to any unforeseen incidents."

“The system will include specially designed subsea containment equipment connected by manifolds, jumpers, and risers to capture vessels that can store and offload the oil.”– ExxonMobil Official Website

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Shell “As well as developing technology measures to reduce the chances of such an incident

recurring, we need to look at the structural relationships within the industry, to create even greater partnership and alignment between the field development community and the service sector. Strong leadership is required from all sides; at Shell, we are determined to show the way.”

“The Deepwater Horizon disaster had a profound impact on the industry, and instigated a thorough review of our approach to deepwater development, especially in terms of drilling and well construction. Despite our utmost confidence in Shell’s standard well designs and construction procedures, we are focusing on a series of measures to further reduce the chance of a catastrophic well failure.”

Source:

http://s02.static-shell.com/content/dam/shell-new/local/corporate/careers/downloads/pdf/de epwater-meetingdemand.pdf

“We are one of the founding members of the Marine Well Containment Company, which was formed after the spill to focus on intervention capabilities in the Gulf of Mexico. We are also a key contributor and supporter of the Center for Offshore Safety

“It’s a U.S. initiative, but with a number of global corporations as members, its sole focus is improving safety within the deepwater industry as a whole.

Source:

http://www.shell.com/global/aboutshell/media/speeches-and-webcasts/2011/marvin-odum-stavanger-03102011.html

“The fact of the matter is this: We are continually looking for opportunities to get better. This includes looking at incidents that occur on other operators’ projects -- for example, the Macondo spill.”

Total “Protecting the areas in which we operate from accidental pollution has always been a top

priority for Total. The accident in 2010 involving the Deepwater Horizondrilling rig in the Gulf of Mexico was a tragic reminder of the importance of preparing for emergency situations.”

Source:

http://total.com/en/society-environment/environment/local-environmental-footprint/pollutio n-accidents

“Determined to learn from this incident, Total set up three task forces in June 2010, each dedicated to a specific topic:

Deep offshore drilling operations, to analyze the causes of the incident and use that

information to improve well design and drilling procedures and to strengthen inspections and audits.

Spill recovery, in partnership with other oil companies, to develop and build a system to

seal a subsea well, either by capping it or by capturing and containing the effluent for treatment in a surface facility.

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our equipment and dispersant resources for example.

The work carried out by these task forces is being pursued internally and as part of the Oil Spill Response Joint Industry Project (OSR-JIP), of which Total is a member. This forum for collaboration was set up jointly by two oil and gas industry associations, IPIECA and OGP.

Source: Total Sustainability reports 2013

After the disaster, although BP took some actions to clean up the oil spilled, third party charged BP of ignoring benefit of the local community, because there is still oil spilled founded several years after the disaster. What upsets the public is that “Steven Newman, and other executives of Transocean, the owner and operator of the rig, were not only awarded raises, but also millions of dollars in bonuses for 2010 after ‘the best year in safety performance in our company’s history,’ according to the company’s annual report and proxy statement.” BP seems never learn from its mistake, at least the attitude is not positive even though BP should have learned it the hard way. (Source:http://www.globalexchange.org/blogs/chevron/2011/04/15/one-year-after-deepwater-horizo n-disaster-rig-operator-claims-best-year-in-safety-performance-gives-execs-big-bonuses/).

Other giant companies have published statements on their official website indicating they learned some lessons. And four of them, Chevron, ConocoPhillips, ExxonMobil and Royal Dutch Shell, have taken real actions immediately in response to the blowout under the lead of Exxon. All of them signify their contributory role in dealing with the crisis, for instance, Shell claims that “Despite our utmost confidence in Shell’s standard well designs and construction procedures, we are focusing on a series of measures to further reduce the chance of a catastrophic well failure.” The statement has dual meanings. One is that Shell makes use of other’s misfortune to gain knowledge to avoid the same mistake from happening in the future. But more importantly, another point is that Shell is showcasing its ability and power when its main rival undergoes crisis. To acquire permission from