Warwick Business School

Brent Spar

Brent Spar co-owned by Shell UK and Esso (50:50)

Loading and storage buoy for crude oil in the North Sea, 200 km northeastof the Shetland Islands (British waters)

463 feet high, and weighting about 14,500 tons

Served from 1979 until 1991, ready for disposal

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Proposal for Disposal

For Brent Spar, two shortlisted options were identified: Horizontal on-shore dismantling

○ Cost: £41 million○ Environmental risk since the buoy might break in shallow costal

waters Deep water disposal

○ Cost: £12 million○ Low environmental risk since no flipping is necessary

Several independent studies confirmed the low risk of deep waterdisposal

Shell UK proposed deep water disposal as Best Practical EnvironmentalOption (BPEO), this met UK government approval. The Europeangovernments were informed and there was no official protest.

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Founded in Vancouver in 1971, Greenpeace has grown into the world’slargest environmental group, with its biggest section in Germany where itenjoys high acceptance and popularity.

Greenpeace was informed about potential deep water disposal of BrentSpar and started stunt protesting.

Shell UK abandoned the plan for deep water disposal under the pressurefrom the public.

Later study confirmed that the original proposal by Shell UK was the rightdecision in terms of environmental implication.

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Timeline

Made with Office Timeline 2010

Jan1991 Sep May

1992Jan1993 Sep May

1994Jan1995 Sep May

1996Jan1997 Sep

Shell announces re-use as Norwegianferry quay29/1/98

Abandonment Plan submitted toUK Government1/12/94

Independent AberdeenUniversity Study1/2/94

Ceases Operating9/91

Decommissioningstudies

30/4/95 - 23/5/95

14/6/95 - 20/6/95

Greenpeaceactivists on Spar

Germanpublic protests

Shell analyses alternative proposals 30/6/95 - 29/1/98

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Timeline (01/05/95 – 18/10/95)

Made with Office Timeline 2010 www.officetimeline.com

May1995 Jun Jul Aug Sep Oct

Greenpeaceadmits inaccurateclaims5/9/95

UK scientists reiterate support11/9/95

Independent auditresults endorse Shellcompetence18/10/95

20/6/95UK scientific debate supportsShell30/6/95

Norway grants storagepermission7/7/95

Shell UK commissionsindependant Norwegian audit12/7/95

Spar towed to disposal site11/6/95

Chancellor Kohl protests at G715/6/95

Northen Europeangovernments indicateopposition

GermanMinistry of theEnvironmentprotests9/5/95

IndependentUK scientistsstatesupport13/5/95

UK Governmentannounces approvaland contacts 12nations1/5/95UK Governmentgrants disposallicence5/5/95

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Brent Spar Stakeholders

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Brent SparStakeholders

UK Government••

Protect environmentPublic sentiment

German Government• Public sentiment

UK Universities• Research disposal

methods

Shell•••

Decommissioning option is viableComplies with regulationsSupported with research

General Public••

•

Trust in GreenpeaceEnvironmentallyconsciousAnti oil company moral

Greenpeace••

•••

Environmental protectionLook for high profile, highlyvisible targetsMedia attentionPublic supportIncrease in donations

Opportunities(External)1.Explorenewoilfields2.ExploreSustainableenergysource3.Establishpartnershipwithstakeholders

Threats(External)1.Industryregulations2.Interestgroupadvocatingenvironmentalissues3.Increasednegativepublicopinion

Strengths(Internal)1.LeaderinGlobalOilIndustry2.Politicalalignment3.Integratedupstreamanddownstreamprocesses4.Brandimage5.Strongassetbase

Weaknesses(Internal)1.Operatinginunstableenvironment2.Uncoordinated,decentralisedstructure

SWOT Analysis

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Strategic FitEnvironment

Increased consciousness for environmental issues by the diversified stakeholdersGrowing impression of major oil companies as monopolist, and high-profit seekers

Growing demand for energy

StrategySustainable long term profitability

Renewable energy sourcesSafety & environmental consciousnessSocial & Community responsibility

Core CompetenceInnovationTechnology

Experts in oil rigs and highly developed operations

OrganizationDecentralised organisation structure

Highly skilled employeesWide geographical locations

Strong company valuesWell structured recruitment and development process and learning organisation

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Warwick Business School

Risk Criteria

SWO

Risk Identification (Risk Chart) Risk Assessment & Ranking

Risk Reduction Strategies

Crisis Prevention Simulations

TCrisis Management

Environmental Impact

Financial Impact

Health & Safety

Engineering Complexity

Stakeholder involvement

Risk Assessment ChartCriteria

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1 23 4

Warwick Business School

Scenario PlanningScenario Planning seeks not to predict the future but to envisage the alternate views ofthe future in the forms of distinct configurations of key environmental variables(Schoemaker, 1993)

The steps involved in the Scenario :• Elaborate the scenarios - picking out elements, likelihood or plausibility,

constructing coherent scenarios from the elements• Analysing the consequences - “If this comes true, what happens to us?”• Analysing the implications now - “What should we do know to prepare for this?”

Strategic Decisions

Key Decision Factors

Scenario Logics

Crisis Scenarios

EnvironmentalForces

DecisionImplications

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PossibleOutcomes Impact(Low/High)

DecommissioningofBrentRigatSea High

DecommissioningofBrentRigonLand

High

GovernmentobjecttothedecommissioningofBrentRigatSea

Med

Publicopinionagainsttheselecteddecommissioningplan

Low

Possible Outcomes & Impact

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Uncertainty

Low

• Brand damage orpublic outrage

High

• Technologybreakthrough

• Brent decommissioning location• Regulation change

Low

Control

Combining outcomes into scenariosHigh

• Government Regulation ondecommissioning at Sea

• Unable to sway public opinion

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Cost

to organization

Crisis IdentificationBegins

Time

Phases

Anticipation Uncontrolled Controlled Reputation Restoration

Anticipation••

Threat of the activistsLack of understanding of activistperspective

• Decommissioning plan wasdecentralised and notcommunicated to the relevant

Identification• Focused on technical issues losing

sight of the important issue – publicopinion & global brand protection

••

Flawed communication strategyMixed communication

Post-Crisis••

Increase Stakeholder involvementImprove media &Communications strategy

• Amended corporate values toinclude the learning

• Spar was used to build a quay

Crisis ManagementUnanticipated Crisis

Anticipated Crisis

ContinuingReputational

Impact