Royal Dutch Shell Plc  .com Rotating Header Image Throw the Book at BP

By David Lee Smith November 26, 2007

This one will put me in strange territory, since I’m not usually one to come down on the energy companies. The group typically has more than enough detractors, many of whom are irrational and uninformed. But in the case of BP (NYSE: BP) and the aftermath of the 2005 explosion at its Texas refinery, I’ll make a vocal exception.

First some facts: On March 23, 2005, an octane-boosting unit at the company’s Texas City, Texas, refinery exploded as it was being restarted following repairs. The resulting blast, which killed 15 and injured hundreds, blew out windows five miles away. The U.S. Chemical Safety Board subsequently found that the company’s excessive budget cuts had compromised safety at the facility.

The Texas explosion is only one of three legal issues for BP. In addition to the explosion is a 200,000-gallon oil spill resulting from a corroded pipeline and an attempt to corner the propane-trading market. The company had thought it was free and clear of further liability on all these issues when it agreed last month to combined fines adding up to $373 million.

From that $373 million, only a total of $50 million was to go to victims of the refinery blast. But those victims’ attorneys now have successfully sought to have the judge in the case recused on the basis that he’d worked for BP’s law firm prior to being appointed to the federal bench. Further, they’re seeking what I believe is a more realistic damage figure from the company — $2 billion — rather than the much lower figure provided for under the plea bargain.

I agree that the resulting civil damages in these kinds of cases are often absurdly inflated. ExxonMobil (NYSE: XOM), for instance, is still fighting big damages for its 1989 Exxon Valdez Alaska spill.

There obviously was excessive corner-cutting at the second-largest European oil company — behind Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) — during the troubled final years under its now departed CEO, Lord John Browne. I’m inclined to agree with refinery blast victims who question why the $50 million in fines levied against BP for the environmental crimes that likely led to the explosion are but a sixth of the $303 million BP is paying for attempting to fix the propane market. Folks died at Texas City, but there’s no evidence that the commodities caper had a similarly serious result.

So here’s hoping the next sound you hear at BP is a book being fired hard and fast past the company’s corporate ear by a Houston-based judge. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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