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Financial Times: Front Page: BP knew of safety problems, says report

By Sheila McNulty in Houston: Published: October 31 2006 02:00 | Last updated: October 31 2006 02:00

BP knew it had “significant safety problems” at its Texas City refinery and 34 other locations around the world well before last year’s deadly explosion at the Texas plant, US investigators said in a damning report yesterday.

The US Chemical Safety Board also said cost-cutting helped compromise safety at the Texas refinery, BP’s biggest, where a March 2005 blast killed 15 and injured 500 people in the worst US industrial accident in more than a decade.

“The CSB’s investigation shows that BP’s global management was aware of problems with maintenance, spending and infrastructure well before March 2005,” said Carolyn Merritt, CSB chairwoman. She said BP did make some safety improvements, though it focused 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,” she said.

Ms Merritt said stringent budget cuts throughout BP caused a progressive deterioration of safety at the Texas City refinery. “At an ageing 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.”

The CSB said a 2004 internal audit of 35 BP business units, including Texas City, found significant common gaps, including a lack of leadership competence, pointing to “systematic underlying issues”, widespread tolerance of non-compliance with basic safety rules, and poor implementation and monitoring of safety management systems and processes.

The board’s report comes a week before the first civil trial to arise from the explosion and is likely to lead the UK company to step up negotiations to settle the case, as it has in most of the 1,000 or so others that have followed the blast. The CSB report is likely be used by the federal grand jury investigating whether to bring criminal charges against BP and its executives for the Texas explosion.

Ronnie Chappell, BP spokesman, said: “BP agrees with CSB that the March 23 2005 explosion and fire was a preventable tragedy. However, we do not understand the basis for some of the comments made by the CSB.”

Mr Chappell said the BP Texas City fatal accident investigation team did not identify previous budget decisions or lack of expenditure as a critical factor, or immediate cause of the accident. Indeed, he said, maintenance spending had increased40 per cent over the previous five years and was higher than the industry average per barrel of throughput.

BP has been under heightened congressional and regulatory scrutiny by regulators, Congress and the US Department of Justice following the Texas explosion and subsequent closure of half the company’s BP’s Alaskan oilfield due to severe corrosion.

Copyright The Financial Times Limited 2006

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