BP Fined $87 Million Over Explosion

Wall Street Journal
October 30, 2009

http://online.wsj.com/article/SB10001424052748703399204574505034081842414.html

By GUY CHAZAN

U.S. workplace-safety regulators Friday slapped British oil giant BP PLC with a record $87 million fine for failing to correct safety problems at its Texas City refinery, the scene of an explosion in 2005 that killed 15 people.

The fine issued by the Occupational Safety and Health Administration — the largest in the agency’s history — shows how hard it has been for BP to draw a line under Texas City, a disaster that badly tarnished its reputation in the U.S. A person close to the company said it was considering appealing the decision.

A birds eye view of the wreckage at the BP facility in Texas City on March 24, 2005.

The hefty penalty comes two years after BP agreed to pay a $50 million criminal fine over the explosion — the biggest ever levied under the Clean Air Act. BP already paid OSHA $21.4 million in fines for safety violations at Texas City in Sept. 2005, and has also settled thousands of civil claims related to the blast.

BP said it was “disappointed” with OSHA’s citations. “We believe our efforts to improve process safety performance have been among the most strenuous and comprehensive that the refining industry has ever seen,” it said in a statement.

At issue is a dispute over the settlement agreement BP entered into with OSHA in September 2005, under which the oil company pledged to remove potential hazards similar to those that caused the refinery blast.

BP believes it is compliance with the agreement, despite OSHA’s criticisms, and has referred the matter to the Occupational Health & Safety Review Commission, a body that is independent of OSHA.

BP said it was dismayed that OSHA had gone ahead before the Review Commission had given the dispute its full consideration. “We continue to believe we are in full compliance with the Settlement Agreement, and we look forward to demonstrating that before the Review Commission,” BP said.

OSHA said it was issuing BP with 271 notifications for non-compliance, with fines totaling $56.9 million. It also identified 439 “willful violations” of process safety management, with penalties totaling $30.7 million.

In a statement, Labor Secretary Hilda Solis said instead of taking action to protect employees, BP had allowed “hundreds of potential hazards to continue unabated.”

“Workplace safety is more than a slogan. It’s the law,” she said. “The U.S. Department of Labor will not tolerate the preventable exposure of workers to hazardous conditions.”

After the 2005 blast, which killed 15 people and injured 170, regulators and BP internal investigators uncovered a series of big safety and operational shortcomings at the plant and across BP’s American refining unit, saying BP’s aggressive cost-cutting had played a big role in the tragedy — one of the deadliest industrial accidents in the U.S. in the last 20 years.

The Chemical Safety and Hazard Investigation Board concluded in 2006 that decisions by senior BP management to defer overhauls, cut staff and rein in costs at Texas City had helped cause the explosion. Since the disaster, BP says it has invested billions of dollars in its refining business to improve safety.

The blast occurred in a part of the refinery known as an isomerization unit, that processes gasoline to boost octane. The unit’s processing tower where gasoline components are separated was overfilled, and an explosive mix of hydrocarbon liquid and vapor was formed which escaped into the atmosphere and was ignited. Alarms and gauges that were supposed to warn that the equipment was overfilled did not work properly.

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~ by fredfelleman on October 30, 2009.

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