KEY POINTS:
BP's top management repeatedly disregarded safety warnings at a Texas refinery for three years before a 2005 explosion killed 15, US investigators concluded.
Company executives ordered 25 per cent budget cuts in 1999 and 2004 in the face of escalating safety warnings and three fatal accidents at the
Texas City refinery in the year before the explosion, the US Chemical Safety Board said yesterday.
The US government's official report into the incident will open the floodgates of legal action against BP, which had fought hard to prevent such an unequivocally damning conclusion.
"Decisions to cut budgets were made at the highest levels of BP Group despite serious safety deficiencies at Texas City," the agency said in its final report on the accident's causes.
Cost-cutting "left the Texas City refinery vulnerable to a catastrophe," the board said.
The explosion, which injured hundreds, was followed by a record US$21 million ($29.8 million) fine for safety violations by the US Occupational Safety and Health Administration and more than 1750 lawsuits, some of which are unresolved. London-based BP admitted safety lapses at the refinery, its largest, and set aside US$1.6 billion to settle claims.
The company said yesterday that while it disagrees strongly with parts of the report, it will "give full and careful consideration to CSB's recommendations".
"BP is committed to preventing such a tragedy from occurring again." spokesman Ronnie Chappell said.
BP, second to Royal Dutch Shell in Europe, has seen its US reputation suffer further since the explosion because of problems including Alaska oil pipeline spills and maintenance delays on its Thunder Horse platform in the Gulf of Mexico.
Chief executive John Browne, 59, who is retiring in July, had his BP compensation cut 28 per cent in 2006. A Texas trial court ordered the CEO to give sworn testimony in lawsuits brought by victims of the accident. Browne's appeal against that order is before the Texas Supreme Court. BP argued he should not have to testify because he lacks unique knowledge of the explosion's causes.
The blast was the worst US industrial accident in more than a decade. It happened when an octane-boosting unit overflowed as it was being restarted. Petrol vapours spilled into an inadequate vent system and ignited, causing an explosion felt 8km away.
BP produced seven safety reports before the explosion that warned of mounting risks at the refinery, the CSB said.
"These audits and studies were shared with BP executives in London, and were provided to at least one member of the executive board," CSB chairman Carolyn Merritt said in a statement with the report. "BP's response was too little and too late."
The report didn't name any executives as responsible, and Merritt declined at a Houston press conference to discuss whether anyone at BP should be fired. "Errors in judgment were made everywhere," she said.
She declined to comment on a Justice Department investigation of the explosion.
There has been "an escalation" in the criminal probe, Brent Coon, a lawyer for many people injured in the blast, said yesterday. "We understand that some BP employees have retained criminal counsel," he told reporters in a conference call.
Internal BP reports warned of rising danger at the Texas facility, lead CSB investigator Don Holmstrom said.
BP's top executives challenged plant managers to cut fixed costs by 25 per cent in 2004, Holmstrom said. A study of pressure-release valves was 13 years overdue, he said.
BP spokesman Neil Chapman last month said spending at the refinery increased from 2001 to 2004.
The CSB said spending on refinery maintenance increased 33 per cent from 2002 to 2004. "However, a significant portion of the increase was the result of unplanned shutdowns and mechanical failures," it said.
Investigators found broken alarms, improperly calibrated pressure gauges and dirt-encrusted dials that operators couldn't read clearly. Before the explosion, supervisors ordered workers to restart the equipment without completing a safety check, CSB investigators found.
"A check-the-box mentality was prevalent at Texas City, where personnel completed paperwork and checked off on safety policy and procedural requirements even when those requirements had not been met," the CSB said.
The agency criticised the Occupational Safety and Health Administration for its monitoring and inspection of refineries.
The CSB urged OSHA to step up enforcement and levy stiff fines on companies with lax practices.
In 20 years before the Texas City blast, accidents killed 10 workers there, and the company was fined US$270,255, the CSB said.
BP negotiated successfully to lower the fines to US$77,860.
"That's like you or me getting a US$60 traffic ticket," Merritt said at the press conference.
Edwin G. Foulke jnr, assistant secretary of labour for OSHA, said the CSB report "confirms OSHA's investigative findings that BP did not make safety and health a priority" at Texas City.
"OSHA is also implementing a national emphasis programme to ensure that every refinery under its jurisdiction is inspected and all employees are protected," Foulke said. He didn't comment on the CSB criticisms.
"Post-incident, BP emphasised that following the procedures would have prevented the explosions and fire on March 23," the CSB said. "However, Texas City management did not emphasise the importance of following procedures."
BP has since agreed to safety improvements at its five US refineries, including replacing antiquated vents with safety flares, moving construction trailers away from operating units, limiting vehicle traffic on site and improving staffing and training levels.
- BLOOMBERG, INDEPENDENT