management

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Mission and vision of Exxon Mobil Corporation

Due to high demand of fuel in the world, a lot of oil companies are involved in oil exploration and development. Therefore, we can see that oil spills are fairly common nowadays and pose a large threat especially for marine life. I feel that it is important to be conscious of the impact and understand the ways to prevent extensive damage.

In this paper, we will describe and analyzes of the Exxon Valdez oil spill disaster in Prince William Sound, Alaska in 1989. The incident occurred on March 1989 and 987-foot tank vessel Exxon Valdez hit at Bligh Reef and caused the eleven million gallon of crude oil gushed from the stricken tanker into the pristine waters of the Prince William Sound. It was created one of the biggest man-made ecological disasters of that decade in U.S history.

Furthermore, this report will discuss about the mission and vision of Exxon Mobil Corporation and the crude oil refining process. It also covers the causes which led to oil spill accident of Exxon Valdez and their impact after the accident. In the other hand, we also study the essential improvement and changes in the management systems so that to prevent the disaster happening again

Introduction

ExxonMobil is a direct descendant of John D. Rockefeller’s Standard Oil Company which was established in 1870, and was formed by the merger of Exxon and Mobil on 30 November 1999. Its headquarters are located in Irving, Texas. And, the current chairman of the Board and CEO of ExxonMobil Corporation is Rex Tillerson.

Since its formation, ExxonMobil has evolved from a domestic and distributor of kerosene to a large multinational corporation and involved at every level of oil and gas exploration, production, refining and marketing and petrochemicals manufacturing. ExxonMobil has upstream activities in some 50 countries. For the downstream, ExxonMobil has refining operation in 26 countries

ExxonMobil is one of the world’s largest publicly traded international oil and gas Company. Currently, it is ranked 3rd according to Forbes 2000. [1] They are also the world’s largest refiner and marketer of petroleum product. [2]

1. Aims and Objectives of Exxon Mobil Corporation

The aim and objective clear stated in the company mission statement, which is “Exxon Mobil Corporation is committed to being the world’s premier petroleum and petrochemical company. To the end, must continuously achieve superior financial and operating results while simultaneously adhering to high ethical standards.” [3]

From the Exxon Mobil mission statement, we can see that Exxon Mobil Corporation is focusing on three aspects, which is premier, financial and ethical standard. For the premier perspective, they are recruited the potential and retain the high quality people because they know that the high quality of employees is the company’s greatest strength and will make the corporation well positioned for ongoing success in the long term. This investment is one of the Exxon Mobil guiding principles: “The exceptional quality of our workforce provides a valuable competitive edge. To build on this advantage, we will strive to hire and retain the most qualified people available and to maximize their opportunities for the success through training and development.” [3] Moreover, by developing the quality employees, automatically, company will provide the high quality product and achieve the customer satisfication throughout the world.

As the listed company, Exxon Mobil belief its responsibility has been first to make money for its shareholders. Under “ Our Business Principle”, shareholder are at the top of the list of stakeholder, above customers, employees and finally communities. The report states: “We are committed to enhancing the long-term value of the investment dollars entrusted to us by our shareholders. By running the business profitably and resposibly, we expext our shareholders to be rewarded with superior return. This commitment drives the management of the company” [3] For example, in 2006, Exxon Mobil delivered their strongest-ever result with net income of more than $39 billion and $32.6 billion in distribution to shareholder. [4]

Thirdly, Exxon Mobil has estabilished a lot of policies, such as environmental policy, safety policy, health policy, product safety policy and so on, which is to comply with all govermental law, rules, and regulations applicable to its business.

Eventually, from the studies, Exxon Mobil able to achieve their objectives as they have earned most profit increase in six year at third-quarter this year. Nowaday, Exxon Mobil was also producing more oil and gas than any of other public companies. [5]

2. Oil and Refinery Industrial Processes and Operations

Our modern technologist society relies very heavily on the fossil fuel as an important source of energy. Crude oil comes from deep underground where the remains of plants and animals from millions of year ago have been heated and pressurized over time. It is little use in their raw state and must undergo a series of refining processes which converts it into useable products.

As observed from Exxon Mobil Corporation oil refining process, three major refinery processes change crude oil into finished product, there are separation (fractional distillation), conversion (cracking and rearranging the molecules) and purification (Treatment). [6]

2.1 Separation (fractional distillation)

Every refinery begins with the separation of crude oil into different fraction by distillation tower. The crude oil separates into fractions according to weight and boiling point. The lighter fractions, including liquid petroleum gas (LPG) and gasoline vapourise rise to the top of the tower. Kerosene and diesel oil, stay in the middle of the tower. Then, heavier liquids separate lower down. Heat energy is the main source in this process, basically crude oil is heated and let it vaporize and then condense the vapor.

Figure: 2.0 Distillation Tower from Exxon Mobil (Australia) [6]

2.2 Conversion (cracking and rearranging the molecules)

Catalytic cracking is the basic petrol making process. This process is very important as it is able to convert the heavy products or heavy liquid to light products. In this process, the heavy portions of the crude oil were heated under pressure and at higher temperature and caused the long chain hydrocarbons molecules break into smaller or lighter molecules.

2.3 Purification or Treatment

Purification is the process to remove contaminants or impurities such as sulfur, nitrogen, and so on. This purification process called hyrotreating. [7] The unfinished products from conversion are then contacted with hydrocarbon under heat and high pressure in result to produce hydrogen sulphide and desulphurised product. The main purpose of this process is to remove sulphur in order to produce high quality products and meeting environmental standards. [6]

.

Figure: 2.1 Oil Refining Process [4]

From the observation, every oil refinery processes from all oil production company are almost the same. But some of the company might develop different and new technology to improve their processes as they want to improve their production yield at lower cost and time.

3. Risks in all areas that lead to the accident

The accidental oil spills in the ocean have occurred around the world. Previous cases, we can see that most of the oil spill happened, 90% is because of human error. For examples, BP Deepwater Horizon oil spill in Gulf of Mexico. [8]

In this case, Exxon Valdez oil spill disaster also happened in the similar causes. This case can analysis through the fish bone diagram shown below.

Causes to lead the Exxon Valdez oil spill disaster

Measurement

People

Environment

Material

Machines

Fatigue

Alcohol Intake

How many people on team

Master was not on bridge

Master provided insufficient supervision

Methods

Vessel Traffic Center lost radar contact

Procedures for departure from traffic lanes not followed

Figure 3.0 Fish Bone Diagram

3.1 People cause

Fatigue is primary root cause for this accident. According to the investigation, the Third mate who was solely responsible for the navigation watch plotted the ship’s position incorrectly, possibly due to fatigue and excessive workload. This is because, he had worked for long hours before the grounding and only have 5 or 6 hours of sleep in the previous 24 hours. He was working beyond his normal watch period and with without any assistance at that time, even though Exxon company policy requires two ships’s officers on the bridge during transit of the Valdez Narrow. The research has shown that “fatigue degrades human performance and can contribute to cause error.”[9]

The second human error is people impair with alcohol. For the Exxon Valdez incident, at the time of grounding, the master was not at the bridge, so his drinking did not directly cause the accident. But, the fact he was drunk which was against the company regulation. [10] The bloods test shown that the blood alcohol content of master as high than the limit Coast Guard regulation permits to operate a ship. [11]

Moreover, the number of crew of Exxon Valdez had been cut to half from 40 people. Therefore, there were caused to insufficient crewmembers to lookout the task or sharing the workload when one of the crewmembers was called for other tasks or took a break. Those of the crews have to routinely worked 12-14 hour shift, plus extensive overtime. It caused they may not have enough rested.

3.2 Methods

At the first, according to National Transportation Safety Board, the U.S. Coast Guard had failed to provide an effective vessel traffic system. There was found that the Vessel Traffic Service (VTS) unable to track Exxon Valdez even though it has been 7.7 miles farther from the shipping lane and VTC watchstander unable to recognize the unsafe situation existed. Furthermore, they failed to provide effective supervision as they have cut down man power during the previous year. [12]

Lastly, effective pilot and escort services were lacking. There was only one tug to accompany Exxon Valdez for the passage through Valdez Narrow. [12]

The major caused of this oil spill disaster seen to be human-caused more than others factors. Risks which is lead to oil spill disaster can be reduced if ExxonMobil has applied the fishbone analysis before the disaster happening.

4. Consequences of all the effects of the accident

Oil spills are widely distributed in the world. Once it is occurred, it can be directly threatening for people, marine life, animals and environments for a long time, as well as economic impact.

4.1 Marine Ecosystem

Oil spills can have serious effects on marine ecosystem. The thick oil which floats on the surface or sink to the bottom can contaminate plankton, algae, fish eggs and larvae. Those of these are the main food source for the fishes. Therefore, fish that feed on these organisms can subsequently become contaminated and it will pass through the food chain to other larger marine organisms like whale, dolphins and so on. [13] All the animals in the ocean depend on the plankton for survival. If it has destroyed, a lot of animal may become extinct.

4.2 Wild Life

Wild life was the next worst effect after the marine life. Many components of spill likes liquid oil, emulsions, particles and tar balls have physical effects to wildlife. Birds will coat with oil when they float on the water surface. Whether it is thin coat of oil on their bodies or not, it can cause the birds lose the ability to fly and eventually lead to drowning or loose body heat rapidly. [14] Other animals, like sea turtles and sea lion may ingest tar ball and particles while breathing or feeding at or near the surface. The toxic will physically block their respiration and feeding.

4.3 Economic Impact

4.3.1 Commercial fisheries

The disaster also harms the commercial fisheries. Most of the people living near the sea work as the fishermen. Fishing is the major economic activity of them. After the spill, residents were ban to fishing and the herring fisheries have to close. This incident causes million dollar losses not only to fishermen but also the area’s important fish processing industry. [15]

4.3.2 Recreational and Tourism

The wealth of abundant wildlife and fish and impressive scenery has attached people to the area of Prince William Sound. The magnificent scenery offers visitors for rafting, fishing, hiking, hunting and so on. However, as a result of oil spill, all of these activities were banned and accessing to beaches was also frozen. Tourism moved or cancelled their destination from the affected areas to those that were safer. As a result, a lot of visitor center has lost so much money.

4.4 Long-term impact

The long term effects of the spill area may result from food chain and habitat disruption as well as from reduction of reproductive capability of animals. [16] It has also been reported in research that oiled birds that have been rehabilitated successfully remain in a state of lower health and continue to suffer impairment in survivability as well as behavioural changes. [17]

Oil spills are always bad news for the environment. The severity of environmental damages caused by a particular oil spill depends on many factors, including the amount of the oil spilled, the type and weight of the oil, the location of the spill, the species of wildlife in the area, the timing or breeding cycles and seasonal migrations, and even the weather at sea during and immediately after the oil spill.

5. Improvement in the management systems

The 1989 Valdez accident is deeply regretted by the Exxon Mobil Company. Since that spill, several significant improvements have been made in oil spill prevention and response planning. To improve oil-spill prevention, ExxonMobil has done the changes.

According to the Oil Pollution Act of 1990, there are required two escort vessels accompany oil tankers in Prince William Sound, Alaska [18]. There are currently have 11 tugs on standby in the system to share the escort duties. Apart from watching and escorting the tankers, tugs also capable to assist each other in case of emergency. During the Valdez’s incident, there was only one escort vessel guide the tanker through the Valdez Narrows.

However, Exxon Mobil has implemented a lot of training to improve and prevent the Valdez case from happening again. For the example, Exxon Mobil has provided training program for vessel captains and pilots. A specially trained and experience pilots required onboard the ship for the entire crossing through the Sound. [19]

As part of the Pollution Act of 1990, the congress required all the tankers enter to the Prince William Sound need to be double hulled and double bottom by the year 2015. After the accident of Valdez oil spill, Exxon has implemented double hulled to almost all of their tankers. The amount of oil spill would have been reduced if the Exxon Valdez had had a double hulled structure. As double hulled structure can be said that able to prevent or reduce oil spill.[19]

Moreover, Exxon Mobil has implemented Operation Integrity Management System (OIMS) in order to improve their company system. With the risk assessment management in OIMS, everybody in ExxonMobil is able to understand and aware for the risks of safety, health, environmental and security, thus it can help to reduce the risk. In the risk management system, hazards also are able to identify easily, so that prevention can be take place immediately. For this reason, Exxon Mobil has organized drug and alcohol testing programs for safety sensitive positions. Other than that, they are also restricted safety-sensitive positions to their employees with no history of substance abuse. [20]

Figure 5.0 OIMS from ExxonMobil [20]

With the improvement done in Exxon, it can be said that Exxon has done a good job in overall. Perhaps Exxon and other oil companies can implement new improvement system in order to enhance the current improvement system as it is still not a perfect improvement. We still able to see the oil spill incident still exist nowadays, as example the oil spilled in Mexico Gulf recently. [ ]

Conclusion

The Exxon Valdez oil spill disaster had led to extreme environments, economic, and social impacts in the area of the oil spills. Although a lot of improvement and changes have done, Exxon Mobil should take this tragedy as a remembrance and wipe out it forever. For other oil company, they must also aware for this and prevent this similar mishap from occurring. Don’t wait something goes wrong, we just mess with it.

The company’s objectives for each oil company are very important. They must put the environment protection as a priority rather than focus on their profitability first. The company management must carry out the yearly or periodical review of all environment objectives and to ensure its continuing suitability and effectiveness.

Finally, government must step in and impose severe regulation on oil companies to prevent this disaster. The punishment of fining to individual and company must established so that it will act as deterrent to others and help prevent oil spills from occurring.

(2625 words)


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