Cost-Cutting Led to Blast At BP Plant, Probe Finds
Tuesday, October 31, 2006
BP PLC's cost-cutting efforts contributed to a Texas refinery explosion that killed 15 workers and injured 180 others in March 2005, a federal agency said yesterday.
Carolyn W. Merritt, chairman of the Chemical Safety Board, also said that BP senior management knew of "significant safety problems" at the Texas plant and 34 other BP facilities months or years before the explosion but that "unsafe and antiquated equipment designs were left in place, and unacceptable deficiencies in preventative maintenance were tolerated."
The conclusions, contained in a preliminary report by the board, may raise additional legal problems for the London oil company, which has already set aside $1.6 billion to resolve claims from the accident.
The company said it has settled with the families of all but one of the workers killed in the Texas City, Tex., incident and with hundreds injured. But Brent Coon, the lead plaintiffs' lawyer in the refinery case scheduled to start next week, said that the Justice Department had been asking for documents for its own investigation. "It's a good report," Coon said. "It says many of the things we've said all along."
Merritt said that "BP implemented a 25 percent cut on fixed costs from 1998 to 2000 that adversely impacted maintenance expenditures and infrastructure at the refinery." She said maintenance spending had declined throughout the 1990s, when the refinery belonged to Amoco Corp. Once Amoco merged with BP, she said, further cuts were imposed.
"Every successful corporation must contain its costs," Merritt said. "But at an aging facility like Texas City, it is not responsible to cut budgets related to safety and maintenance without thoroughly examining the impact on the risk of a catastrophic accident."
In the 30 years before the explosion, a worker had died in an accident at the Texas City refinery on average of once every 16 months.
BP, while conceding responsibility, disputed Merritt's conclusions. Company spokesman Ronnie W. Chappell said that BP had boosted maintenance spending by 40 percent in the five years before the accident and that an internal investigation "did not identify previous budget decisions or lack of expenditure as a critical factor or immediate cause of the accident."
He also said the number of injuries at Texas City had fallen 70 percent. "The significant reduction in workplace injury rates led the company to believe that conditions at the refinery were improving," Chappell said.
Don Holmstrom, the CSB's supervisory investigator, said that BP's safety initiatives had "focused largely on improving personnel safety -- such as slips, trips and falls -- rather than management systems, equipment design, and preventative maintenance programs to help prevent the growing risk of major process accidents."
The CSB also said that the training staff at the refinery was cut to eight in 2004 from 30 in 1997 and that the training budget was cut in half, that a 2003 BP audit called the Texas City infrastructure "poor" and cited a "checkbook mentality," that pre-explosion internal reports cited workers who said safety complaints were not heeded, and that a 2002 plan to eliminate a unit (known as a blowdown drum) was never implemented and that the unit exploded in 2005.
BP says it will eliminate blowdown drum units such as the one in Texas City from all its refineries by 2008. It has also moved more than 200 trailers that are used to house workers away from refinery processing equipment. It will spend more than $1 billion to refurbish the Texas City refinery over the next five years.
Coon wants to depose BP chief executive John Browne, but Chappell said Browne has "no unique knowledge" about the explosion. A Texas judge has ruled that Browne must submit to a deposition, but BP has appealed. BP's John Manzoni, head of global refining and marketing, and Mike Hoffman, a global refining executive, have already been deposed in the case.
"We are deeply sorry for what occurred and for the suffering caused by our mistakes," Chappell said.