Back to FT Energy Source homepageFour years after the Texas City refinery exploded, leaving BP vowing to improve process safety across its US operations, the UK oil company is back on the wrong side of regulatory officials.
Last week, the US Labor Department said BP still has systemic safety issues, four years after an explosion at its Texas refinery killed 15 people and injured 170. The Department’s Occupational Safety & Health Administration (Osha) issued a record $87.4m (£53m) in proposed fines on the company, noting that, in spite of Lord Browne being replaced as BP chief executive after the blast, BP continued to violate US safety regulations under the leadership of Tony Hayward. Osha insisted BP had yet to correct potential hazards faced by BP employees.
BP denied the accusations, saying it has done all it agreed to do and invested more than $1bn in upgrading the facility. It is contesting the fines.
The dispute is important because BP’s compliance with Osha was one of the terms of its probation, set by the Department of Justice in 2007, when BP agreed to three years’ probation and to pay fines totalling $380m to US authorities to settle violations linked to the refinery explosion, oil pipeline leaks and fraud in energy trading. The Department of Justice is reviewing the allegations and will take all appropriate actions to ensure the plea agreement is not violated, said Charles Miller, a department spokesman.
All this has led the US Chemical Safety Board (CSB), which performed an exhaustive investigation of the 2005 explosion site and then recommended a string of improvements, to call on BP to implement one of those recommendations that it ignored. John Bresland, chairman of the CSB, had this to say:
I believe it’s particularly important that the BP’s corporate board of directors appoint an additional non-executive member with significant progessional expertise and experience in refinery operations and process safety, as we recommended. Such a position would provide process safety expertise at the highest level of decision-making. Thus far, BP has not adopted this CSB recommendation.
BP believes it has adequate expertise on its board. But CSB is basing its recommendation on more than just the 2005 blast. Bresland noted that on January 14, 2008, there was another tragic accident at the Texas City refinery, which it is investigating to this day. The investigation has become so protracted that the CSB is not expected to wrap it up until March 2010.
CSB notes that, in that accident, a BP supervisor was fatally injured when the top of the housing structure of a large steel filter suddenly blew off in the refinery’s ultracracker unit. This was the third fatality at the refinery since the 2005 explosion.
That accidents of this nature can continue, and US regulators can continue to find BP in violation of the law, seems staggering. And it is not just in one or two instances. Osha said that in inspecting just three of the 28 units at the refinery under its jurisdiction, it felt justified in fining BP $56.7m for 270 instances in which it failed to correct problems identified from the blast. In addition, those inspections uncovered 439 new “wilful violations” for failure to follow industry accepted controls on the pressure relief safety systems and other process safety management violations, which carry penalties totalling $30.7m.
Hilda Solis, US Secretary of Labor, said BP continues to lack clear operational procedures that could prevent another explosion. It is time the US government forced the issue with BP. Four years is too long a grace period.
Related links:
US government continues to let BP slide (FT Energy Source, 24/09/09)
