CASE 4
Sustainability Challenges in the Gas and Oil
Industry
CASE NOTES FOR INSTRUCTORS
This case highlights the environmental and ethical risks of the oil industry by examining specific
annual revenue. Later tests revealed Captain Hazelwood had a blood-alcohol content of 0.061, although it
is a violation of Coast Guard regulations for a person operating a ship to have a blood-alcohol level in
excess of 0.04. Exxon officials later admitted they knew the captain went through an alcohol
detoxification program, yet they still gave him command of the Exxon Valdez. The slow and unorganized
response caused the situation to worsen, and the companies involved in cleanup did not initially have
tests meant to detect gas in the well. The rig was also equipped with a faulty blowout preventer, which
left enough space for oil to leak out. It took nearly three months to contain the oil leaking into the Gulf. In
the interim, thousands of marine animals died in the oily waters, oil turned beaches black, and hundreds
of people depending on the Gulf of Mexico lost part or all of their income. By the time the leak was
sealed in August 2010, more than 640 miles of shoreline across several states were “tarred” with oil.
Additionally, students are given the opportunity to learn about the pros and cons of hydraulic fracturing
(fracking) for shale gas in the United States. While new hydraulic fracking techniques have made it
possible to drill for this gas, contributing to economic benefits such as energy independence, more jobs,
and a more sustainable source of energy, some say there are many environmental risks associated with
88 Case 4: Sustainability Challenges in the Gas and Oil Industry
demonstrate the impact company practices have on numerous stakeholders, including the environment,
consumers, government, and so on.
QUESTIONS AND DISCUSSION
1. How does managing ethical risk in the petroleum industry relate to reducing accidents?
This case shows the serious consequences that occur from a failure to manage risks with necessary
safeguards to protect employees, local communities, suppliers, and the viability of many industries.
2. Compare the risks that BP, Exxon, and the fracking industry continue to face in providing an
adequate supply of energy?
A focus on profitability has led many of these firms in the gas and oil industry to engage in risky
behavior – some to a large extent, and others to a lesser extent. The biggest risks that these firms face
3. How can ethical leadership help the petroleum industry to manage risk?
Disasters can be reduced and more easily mitigated when reckless risk taking is not part of the ethical
culture of the company or industry. While risks will always exist in this industry, an institution of and
adherence to an ethics and compliance program set up by management can greatly help in managing
ADDITIONAL RESOURCES
• Gulf coast restoration website:
http://www.bp.com/sectionbodycopy.do?categoryId=41&contentId=7067505.
Case 4: Sustainability Challenges in the Gas and Oil Industry 89