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The Wall Street Journal: BP Cost Cuts Cited in Blast At Texas Plant

By CHIP CUMMINS
March 21, 2007; Page A10

A new report into a BP PLC refinery accident in Texas in 2005 raises fresh questions about the role that cost cutting and budgetary constraints played in the plant’s poor condition and safety record.

According to a report published yesterday by the U.S. Chemical Safety and Hazard Investigation Board, BP executives failed to heed years of warnings about serious deficiencies at the company’s Texas City refinery, including an internal assessment that budget constraints had jeopardized the plant’s safety. The CSB, as the federal agency is known, investigates big industrial-chemical accidents.

The agency found that budget cuts impaired safety practices at BP’s plant, and it accused the British oil giant of not providing adequate resources to prevent major accidents. An explosion at a gasoline-processing unit on March 23, 2005, killed 15 workers and injured 180.

“Managers received warnings about serious deficiencies regarding the mechanical integrity of aging equipment, process safety, and the negative safety impact of budget cuts and production pressures,” the report found. The conclusions echo previous assertions raised by the CSB that cost cutting played a significant role in the accident. But the 335-page report published yesterday also outlines for the first time internal BP documents supporting that conclusion.

For instance, a 2002 BP report on the refinery’s poor condition at the time found that “current integrity and reliability issues at [the refinery] are clearly linked to the reduction in maintenance spending over the last decade,” the CSB report cited that report as saying.

BP has taken responsibility for the blast, detailing the plant’s poor condition, safety and management practices in its own public reports.

The company also paid a $21.4 million fine to workplace-safety regulators in 2005 to resolve civil violations of safety rules at Texas City. The U.S. Justice Department is still conducting a criminal probe.

The company has long denied that cost cutting played a role in the accident. In a statement yesterday, BP said it would weigh the agency’s recommendations for improvement, “notwithstanding the Company’s strong disagreement with some of the content of the CSB report, particularly many of the findings and conclusions.”

The CSB report took a swipe at the Occupational Safety and Health Administration, an arm of the U.S. Labor Department that serves as the country’s chief workplace-safety regulator. The CSB faulted OSHA as concentrating its inspection teams on facilities that had high rates of accidents. OSHA’s press office didn’t return phone calls seeking comment.

• Read the CSB’s press statement and BP’s response.
 
• See a timeline of key dates in BP’s woes.
 
REACTION AT ENERGY ROUNDUP
 
• Shell’s Safety Record Is Worse

Write to Chip Cummins at [email protected]

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