BP Failed on Safety, Report Says
Wednesday, January 17, 2007
BP's safety practices came under fire yesterday from a blue-ribbon panel that said the oil company skimped on spending and failed to take other steps that might have prevented a deadly refinery explosion in March 2005.
In a 347-page report, the panel chaired by former secretary of state James A. Baker III said that the London company failed to provide "effective" leadership to make the safety of its industrial equipment "a core value" at its five U.S. refineries."
The 11-member panel, asked by BP to study all of its U.S. refineries at the urging of the U.S. Chemical Safety Board, made 10 recommendations for BP to improve safety, including hiring a special monitor to check on the company's progress.
BP said it would adopt all the recommendations and noted that it had already taken many steps to fix the problems that led to the blast at its Texas City, Tex., refinery, which killed 15 workers and injured more than 170 others.
"BP gets it, and I get it too," chief executive John Browne said yesterday in a teleconference with reporters. "I recognize the need for improvement."
But he took issue with those who criticized him for failing to devote enough money to refinery safety. "We've never focused on profits above safety," he said.
The Texas City refinery explosion was the first of a series of setbacks over the past two years that sent BP reeling and contributed to the announcement Friday that Browne would retire early. Browne, who built BP into one of the world's supermajor oil companies in 10 years as chief executive, had said he would stay until the end of 2008. He now plans to leave in July and join a private equity firm.
The Baker panel's report did not point a finger at Browne or any other BP executive, but it targeted some of the same issues cited by government regulators and lawyers suing BP on behalf of those injured in the blast.
The panel said that BP had not learned from a long string of past accidents , had "a false sense of confidence" about safety, "did not always ensure that adequate resources were effectively allocated to support or sustain a high level" of safety in the industrial process and rotated refinery chiefs too quickly.
The Texas City refinery, built in 1934, has had eight managers since 2000. BP executives said yesterday that managers would now remain at one refinery for three to five years.
The panel also cited earlier reports that some Texas City refinery workers had put in 12-hour shifts for 30 consecutive days, and that even if fatigue did not cause the accident, it contributed to safety risks.
Some BP critics have said that top executives are culpable because of cost cutting that might have led to the accident. The Baker report notes that before the accident, Amoco, which was later bought by BP, had cut maintenance spending at the Texas City refinery by 41 percent and capital spending by 84 percent from 1992 to 1998. Despite those cuts, BP asked for a 25 percent reduction in costs after it took over the refinery in 2000 as part of its purchase of Amoco. The panel noted that managers' performance was measured in part by their ability to meet that target. Texas City came close, the panel said.
The Texas City plant was not the only refinery in need of greater company spending. The panel said that many hourly workers interviewed at BP's Whiting, Ind., refinery reported that as a result of underfunding, "preventive maintenance was seldom practiced, the refinery had a 'run until it breaks' mentality, and the workforce had a great deal of experience running equipment with 'Band-Aids.' " A survey of people working at a Toledo refinery showed that 33 percent of operations managers, 44 percent of maintenance technicians and 63 percent of health-and-safety employees disagreed with the statement that "process safety programs . . . have adequate funding."
After a consultant hired by BP urged bigger refinery budgets, BP increased spending somewhat. But in late 2004, weeks before the explosion, BP headquarters had asked its refineries to trim costs by an additional 25 percent. "It is not clear to the Panel why the U.S. refineries did not receive greater funding," the Baker report says.
Browne said yesterday that no specific request for spending on safety was ever turned down, though he acknowledged that he only set broad budget guidelines.
The Baker panel will not have the last word on the Texas City disaster. The Chemical Safety Board expects to issue a report in March. Daniel Horowitz, a spokesman for the board, said yesterday that the Baker panel's report showed that many things contribute to accidents like the one in Texas City. "It is a very significant finding that BP does not effectively investigate incidents throughout the corporation," he said. "If you're not learning from near misses, you're not in a position to prevent major disasters like the one in Texas City."
Browne, who visited the refinery the day after the blast, said: "I will always remember that day vividly." He said it "was a watershed" that would "forever change BP."