For BP, a Pair of Repairs

BP executives Bob Malone, left, and Steve Marshall were questioned about the pipeline during a briefing with Alaska lawmakers Monday in Juneau.
BP executives Bob Malone, left, and Steve Marshall were questioned about the pipeline during a briefing with Alaska lawmakers Monday in Juneau. (By Brian Wallace -- Associated Press)
By Steven Mufson and Juliet Eilperin
Washington Post Staff Writers
Wednesday, August 9, 2006

Sitting in his Madison Avenue offices two weeks ago, with contemporary art on the walls and a commanding view of Midtown Manhattan, BP PLC chief executive John Browne was asked about the different images of BP, then the world's second-largest oil firm, and its larger rival, Exxon Mobil Corp.

"It's not a matter of competition," Browne said. "It's a matter of different character."

Now the character of BP is being tested. On Sunday, the company revealed that a March oil spill in Alaska stemmed from pipeline corrosion so widespread that BP will suspend all production in Prudhoe Bay, the largest U.S. oil field, while it replaces 16 miles of pipe.

The pipeline fiasco has dealt a particularly hard blow to BP because it has smudged the company's environmentally correct image. For the past seven years, the company has trumpeted its concern for the environment in ads like ones that say, "It's time to turn up the heat on global warming," or "It's time to think outside the barrel." And when Browne talks about "values," he is talking about principles and ethics, not stock values.

Now critics allege that BP neglected its pipelines for years and that its corporate culture fostered disregard of warnings about maintenance. Members of Congress have called for investigations and tougher federal oversight. Energy Secretary Samuel W. Bodman said yesterday that it could take BP six months to get Prudhoe Bay back to full production. And BP's rank among publicly traded oil companies slipped to third as its stock price dropped, pushing its market capitalization below that of Royal Dutch Shell PLC.

On anxious oil markets, prices edged down only slightly yesterday, to $76.31 a barrel on the New York Mercantile Exchange.

In the world of corporate image making, BP's image campaign is still viewed as a striking success. After British Petroleum acquired Amoco and Atlantic Richfield Corp. in 1999, the company needed to rebrand its new U.S. subsidiaries. Abandoning the name British Petroleum and trademark shield, it asked a big ad firm to come up with a new sunny logo and simplified its name to BP, which it said stood for "beyond petroleum."

Ogilvy Public Relations Worldwide uses the campaign it coordinated as a case study. "The rebranding entailed the introduction of a new visual identity . . . designed to help BP transcend the oil sector, deliver top-line growth and define the company as innovative, progressive, environmentally responsible and performance driven," Ogilvy's Web site said. The ads won two PRWeek magazine's campaign of the year awards in 2001.

Browne gained an element of celebrity unusual for oil executives. Vanity Fair featured him in its recent "green" issue, along with celebrities such as Ed Norton and Julia Roberts.

"Their campaign worked. You can argue on whether they're green, but they've clearly gained brand trust and brand value," said Andrew S. Winston, co-author of the upcoming book, "Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage."

In the oil business, some executives are green with envy over the greening of BP's image. Many claim that there is more packaging than substance to BP's claims of concern and that BP inflates the $1 billion a year figure it says its spends on alternative energy by including co-generation projects common in heavy industries. Exxon, for example, spent $1 billion over the past two years on co-generation.

Even $1 billion is a small fraction of the $16 billion BP plans to invest in oil and gas operations this year. David Hamilton, Sierra Club's global warming and energy program director, points out that BP's investments in alternative energy amount to 5.7 percent of its annual capital spending.

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