Royal Dutch Shell Plc  .com Rotating Header Image

Financial Times: BP settles Texas City blast lawsuit

By Sheila McNulty in Houston: Published: November 9 2006 18:30 | Last updated: November 10 2006 02:11

BP on Thursday settled the main civil case arising from the fatal Texas City refinery explosion.

It lifts the immediate threat of highly damaging documents being made public and the prospect of Lord Browne, BP’s chief executive, being forced to testify.

BP said it would make $32m (£17m) in worker training and healthcare donations to help those in the industry, and provide a private settlement to the claimant to end the trial, which was to have started with opening arguments on Monday.

The company also agreed that plaintiffs could release all 7m of the documents they uncovered in researching their case to federal agencies investigating the blast, and work towards eventually making most of them public.

But the deal does not end BP’s problems in North America. The company still faces the threat of criminal prosecution arising from a grand jury investigation into the actions of the company and its executives. Fifteen people died and an estimated 500 were injured when the plant exploded last year – the worst US industrial accident for more than a decade.

The blast raised concerns among federal regulators about problems with BP’s safety culture in the US, which were heightened by the closure of half of BP’s Alaskan oilfield earlier this year after the discovery of severe pipeline corrosion.

Eva Rowe, the 22-year-old claimant whose parents died in the fire, voiced her satisfaction with the outcome. She had been alone out of the 1,000 claimants in refusing to accept only a private financial settlement.

“I wanted to help people, and that is what I was able to do. My parents’ death was not in vain and, even from their deathbed, they were able to help.’’

Attorneys for the plaintiffs said BP had agreed to donate $12.5m to Texas A&M University’s process safety centre; $12.5m to the University of Texas Medical Branch burns unit; and $5m to the College of the Mainland’s safety training for refinery and chemical plant workers. The donations will be made in the name of the 15 who died.

The attorneys said BP had also agreed to provide $1m to the cancer centre at St Jude’s Children’s Hospital in Memphis in honour of Ms Rowe’s parents, as well as $1m to the Louisiana school where her mother was a teacher.

“We are deeply sorry for Ms Rowe’s loss,’’ said BP spokesman Ronnie Chappell. “We regret that our mistakes caused harm to so many people. We are working hard to ensure that something like this doesn’t happen again in other BP facilities.”

Ms Rowe’s lawyer Brent Coon said he would work with BP to agree which documents would be released and settle any disagreements through an arbitrator. He hoped to work with legislators to make all refineries safer.

Copyright The Financial Times Limited 2006

RELATED ARTICLE

Financial TImes: How BP put a price on human life

By Sheila McNulty in Houston: Published: November 7 2006 02:00 | Last updated: November 7 2006 02:00

BP was not only willing to put a value on human life, something its predecessor Amoco refused to do – it listed it at $20m (£10.5m) for a single fatality incident, with the cost escalating for multiple deaths in the same accident, the Financial Times has learned.

The details, revealed in sworn testimony, come as the first civil trial begins this week arising from the fatal explosion at BP’s Texas City refinery in 2005.

“If the incident had four fatalities, then the number would escalate to $40m. In, you know, 100 fatalities, the number would escalate to $200m per life,” said Robert Mancini, who is now a BP consultant in process safety, following his 2004 retirement from the UK company as a chemical engineer.

Mr Mancini’s comments were made on October 19 2006, in videotaped sworn testimony to plaintiffs’ lawyers to be used in the trial. A copy of the transcript of his deposition was seen by the FT.

The claimant in the trial, Eva Rowe, who lost both parents in the explosion, has so far been unwilling to settle, like the majority of claimants in the other death and injury cases.

Fifteen workers were killed and an estimated 500 people in and around the facility injured when the Texas City refinery exploded last year.

BP immediately set aside $700m to litigate or settle the lawsuits, yet the terms of each has been confidential.

In an e-mail to a colleague from 1999, the year BP bought US rival Amoco, Mr Mancini explained the different approaches to risk assessment and management by the two companies.

The e-mail, a copy of which also was seen by the FT, states in capital letters: “COST’ OF A HUMAN LIFE.”

It continues: “BP embraced the principle that these costs can be specified for the purposes of cost benefit analysis. Amoco was generally unwilling to take this step. This is more a cultural issue than a technical one, but one that will have to be addressed.”

In another set of documents, dated October 17 2002, the BP documents likened its staff to the “three little pigs” and a massive accident, such as the Texas City explosion, as the “big bad wolf” of the children’s fable. BP noted: “If the wolf blows down the house, the piggy is gobbled,” and asked, “Which type house should the piggy build?”

At the top of the documents, which were for a “major accident risk awareness training”, BP depicted the three little pigs as piggy banks, under its logo, and then broke down different options under the ‘House’ subheading – as straw, sticks, brick and blast resistant.

In handwriting – in the copy BP provided to the plaintiffs’ lawyers – the word “optimized” is written by someone and an arrow is drawn to the house of bricks, which listed at $200 – the cheapest option.

John Manzoni, BP’s head of global refining, was clearly disturbed at seeing a copy of the pig analogy during his deposition, taken September 8 2006.

A transcript of the videotaped sworn testimony, to be shown during the trial, has him saying: “I – well, first of all, I am not – this is – this is the most extraordinary set of charts to use these sorts of analogies in this . . . It is an extraordinary way of articulating something about risk.”

Mr Mancini, however, was able to explain in his deposition: “It just gets the idea across that there are different types of vulnerabilities out there . . . We chose something that was very easy to understand, that people might get a little humour out of, wake them up if they are falling asleep, and make it interesting; but it’s not a treatise on facility siting.”

Ronnie Chappell, BP spokesman, said neither the analytical concepts discussed in Mr Mancini’s March 1999 e-mail on the “cost” of a human life, nor the other materials, referencing the value assigned per life and the pigs analogy, were factors in the refinery explosion.

Mr Chappell said: “These concepts were not used by BP when making spending decisions at Texas City.”

In addition, he said, BP’s investigation team did not identify budget decisions or lack of expenditure as a critical factor, or immediate cause of the accident. Indeed, he said, that team noted maintenance and turnaround spending in the years prior to the incident had increased as Texas City staff addressed the safety and plant integrity issues of greatest concern.

Yet the US Chemical Safety Board, the main US federal agency investigating the blast, said last week that cost-cutting helped compromise safety at the Texas City refinery, BP’s biggest.

The agency added that it considered this was a contributing factor in the worst US industrial accident in more than a decade.

Copyright The Financial Times Limited 2006

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “Financial Times: BP settles Texas City blast lawsuit”

Leave a Comment

%d bloggers like this: