Lessons from history: Exxon Valdez

On the 24th March, 1989, the Exxon Valdez oil tanker out from towards the Long Beach, California with the third mate at the helm. The captain had retired for the night after a drinking session with the crew, following the standard 12-14 hour shift. While entering the Prince William Sounds, Alaska, the third mate made the decision to steer outside the normal shipping lane after hearing reports of small icebergs in the area. Despite not being licenced to navigate outside the normal shipping lane, visibility was low at this time of night, iceberg monitoring equipment had been promised but not yet delivered. Although the RAYCAS radar system was broken (and had been for the last year) but the third mate thought the coastguard monitoring should provide added warnings of dangers (not knowing the coastguard no longer provided this service). At 12.03am the Exxon Valdez struck a reef, puncturing the hull, releasing 10.8 million gallons of crude oil into the environment. What followed became standard knowledge in crisis management on what not to do.

The media coverage, for the first time for such an event, provided back to back coverage of the disaster. Video of the extent of the oil slick, heart-breaking pictures of the suffering wildlife, covered in crude oil and interviews with distraught residents was being broadcast globally. Which was in stark contrast to the silence and apparent indifference from the corporation itself. The few comments made by the company spokesman turned out to be inaccurate. While the Chairman was quoted as saying he had no time for ‘that sort of thing’. After a week of building frustration and outrage with the company the chairman agreed to attend a news conference. During which the majority his comments were immediately disputed by eyewitnesses at the conference. And when asked about the clean-up, he stated that it’s not the job of the chairman to read such reports. The damage to their reputation was so significant that many people believed the name of the company itself was Exxon Valdez.

The clean-up efforts of the disaster itself was also a comedy of errors. Chemical dispersants, designed to break up the spill, was dropped onto the wrong location. While the workers themselves would go on to develop severe health problems over the coming years from the chemicals used. While booms and skimmers were deployed to contain the spill, they proved unsuitable for the task with thick oil and kelp clogging the equipment. The majority of the clean-up operation itself was delayed. Which led to missing the opportunity presented by the good weather, and close to impossible when bad weather set in. High pressure water jets were used to clean the oil from the rock and shoreline. This did prove effective in removing the oil. But unfortunately this also wiped out organisms such as plankton as well, which is the base of the food chain. In fact, areas left untouched (for the purpose of scientific research) recovered quicker. In total as many as 250,000 seabirds were killed in the disaster. Together with 2,800 sea otters, approximately 12 river otters, 300 harbour seals, 247 bald eagles, 22 orcas and an unknown number of salmon and herring.

Consequences for the organisation

In the case of Exxon v. Baker the jury awarded $287 million for actual damage and $5 billion for punitive damages. The amount for punitive damages was reduced to $507.5 million through a succession of appeals over the next 20 years.

A succession of environmental legislation was passed, which included the prohibition of any vessel that has caused an oil spill greater than 1 million gallons from entering Prince William Sounds – the Exxon Valdez. As well as an executive order requiring two tugboats to escort every loaded tanker from Valdez out through Prince William Sound.

Although strangely, the disaster didn’t have a significant effect on actual sales. It seems that a bad reputation for environmental damage wasn’t a significant factor in customers’ decision to purchases.


Lessons learnt

A crisis creates an information vacuum. People immediately want to know more about the event. What happened? What risks will it create? Why did it happen? Who was involved? What can be done about it? If the organisation fails to provide answers, others will. And will allow others to define and control the situation.

People don’t just react to the event itself, but to the reasons behind it. If anything, the perceived causes can have more significance than the physical event itself. Because it’s the explanations that defines and characterises the situation, assigns blame and responsibility. And defines the character and motives of the people and companies involved. For example, the same event could be characterised as an accident? Sabotage? Negligence or incompetence? A terrorist attack? Mass murder or an act of potential self-sacrifice, depending on how the story was told.

But most importantly – prepare for disaster. Figure out every potential threat. How likely is it to occur, and what impact could it have? What are the warning signs? Is it preventable and how? Have a simple action plan and a well-trained team in place, and conduct regular exercises. But most importantly, what actions can/should be taken to repair the damage done?

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