BP under fire over safety after 15 deaths in explosion
Oil giant BP was under fresh pressure today after American safety officials said budget cuts and a lack of leadership contributed to “significant safety problems” at the group’s Texas City plant, where 15 people were killed in an explosion.
BP management knew about maintenance, spending and infrastructure problems well before the blast in March 2005 which also injured more than 170, the US Chemical Safety and Hazard Investigation Board (CSB) said in preliminary findings.
Shares fell 3.5p in early trading today.
CSB chairwoman Carolyn Merritt said that before the explosion, a 2003 external BP audit referred to the Texas City plant’s infrastructure and assets as “poor” and found what it called a “chequebook mentality”.
Ms Merritt added that budget cuts of 25% between 1998 and 2000 caused a progressive deterioration of safety at the refinery.
BP did respond before the explosion with a variety of measures aimed at improving safety, she said.
“However, the focus of many of these initiatives was on improving procedural compliance and reducing occupational injury rates, while catastrophic safety risks remained.
“Unsafe and antiquated equipment designs were left in place and unacceptable deficiencies in preventative maintenance were tolerated.”
BP officials said they were surprised by the CSB’s latest findings in its ongoing investigation.
“We don’t understand the basis for some of the comments made by the CSB,” BP spokesman Neil Chapman said.
“We will await the final written report and hope it will include documentation explaining the basis of their statement.”
Mr Chapman said BP would not specifically comment on what concerns the company has with the CSB’s latest findings. The CSB will not issue a final report until March at the earliest.
Last December, BP’s internal report blamed the blast on failures by management at the refinery, saying it did not make safety a priority, tolerated risks and failed to communicate.
But BP added that it “found no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk”.
Mr Chapman said capital and operating expenditures steadily increased over the last decade at the Texas City facility, particularly from 2001 to 2004.
“We engaged in many efforts to improve the safety culture,” he said, adding that those efforts are continuing.
Ms Merritt said that since the explosion BP has expressed a strong desire to improve its safety performance globally, has co-operated fully with investigators and has shared its experiences with the rest of the refining industry.
BP has been beset by troubles with its North America operations since the blast.
In August, the company cut production at its Prudhoe Bay field in Alaska, the largest in the US, after it uncovered severe pipeline corrosion and a small leak.
BP has also delayed the opening of its Thunder Horse platform in the Gulf of Mexico – damaged by Hurricane Dennis last year – from 2007 to the middle of 2008 because of equipment failures.
Last week, the London-based group posted a fall in third-quarter profits from $6.46bn (€5bn/£3.45bn) to $6.23bn (€4.9bn/£3.33bn). The fall in profits came as output fell to 3.816 million barrels of oil a day between July and September. BP also downgraded its production targets.
The explosion occurred when part of the plant’s isomerisation unit, which boosts the level of octane in gasoline, overfilled with highly flammable liquid hydrocarbons.
The only civil lawsuit involving fatalities from the blast which has not been settled out of court is set to go to trial in November.
