Brinkerhoff
Essay title: Brinkerhoff
Facts of case:
Brikerhoff International, Inc. is currently in an economic boom following 8 years of economic depression
President Tom Brikerhoff wants to expand company efforts & revenues, and also relieve tension around Safety Supervisor, Kurt Mannheim
Kurt Mannheim concerned about safety of Rig #1-E, however, he had also recently accused Rig #1-EЎ¦s rig manager, Rick Kopulos of allowing alcohol into their base
concern for rig safety might have risen from personal tensions rather than actual safety issues
Brikerhoff considering promotion of Mannheim
Actually concerned w/safety of Rig #20 under Tom Rossick
Drilling IndustryЎXhigh risk & high uncertainties
Rig activity could go from 60% utilization to 20% in 2 weeks b/c of fluctuating demand
Rig operates 24 hours a day w/2 12hour crew shifts
Working „і isolated life for 2 of 3 weeks most of the year; only shared w/other workers; far from other cities & towns
Harsh environmental conditions
Alcohol & drugs were not permitted
Mannheim violated company rules by allowing, although small & controlled amounts, of alcohol onto the base camp
Company history
Brikerhoff continued to buy additional rigs after the Canadian gov. introduced the National Energy Program, which gave a large portion of CanadaЎ¦s oil & gas to another company called Petro-Canada; also charged remaining companies 25% royalties on output, which led to the decline in drilling activities
caused additional debt to company when a year later, oil prices fell to less than $10/barrel; if had purchased less, perhaps would have been in less debt
BII took drastic steps to cut overhead from $2 million plus to less than $500,000
cost reduction not enough, which led to buyout & stock swap between Tom & his father & brother, giving him sole operation
Turning point
Business began to boom again in 1992 when AlbertaЎ¦s gov. granted a royalty holiday til June Ў¦93 & other environmental forces gave further incentive to gas exploration & drilling
However, serious labor shortage & high turnover rates caused problems
BII had problem in 1993ЎXnot large enough to cover total customer demands w/its small inventory of rigs
However, regardless of small size, BII could charge higher per diem rates for some rigs b/c of company reputation for good work, excellent safety record & low maintenance costs
Proves that safety directly affects the rates of oil, which is why current safety concerns are not a minuscule
issue.
Good rig record = fewer delays & shorter completion times
Horizontal drilling assisted in the efficiency of a wellЎ¦s production
If drilling could be cut by 10 days, could save a customer $200,000-$250,000 on a job which costs between $20-25,000/day
Uncertainties of the Business Recovery
Government & customers had imposed though environmental & safety standards
Brikerhoff made failed attempts to arrange joint venture agreements w/other drilling companies (other companies not willing to explore new organizational combinations)
Brikerhoff went against his hesitation & put Rig #22 back into operation
more rigs into operation could lead to low quality, low performance, unsafe practices, & high drilling costs w/unskilled workers, which could hurt more than help the company
Introduced a Quality Assurance Mission Statement
Safety of each employee is the first priority of the company. Required employee involvement w/quality assurance program will lead to improved attitudes to produce better work practices, reduce accidents, reduce days on the job to improve cost efficiency for customers. Will lead to reduced operation costs & a more cooperative environment. Higher efficiency will lead to more projects & the company morale will increase.