On March 23rd 2005 a huge explosion at BP’s Texas oil refinery killed 15 people and injured more than 180. Most were its own staff. The refinery had suffered safety problems before. The previous year two workers died when scalded by super-heated water that escaped from a high-pressure pipe.
The British media focused on the effect of the 2005 blast: the price of oil rose by several $s a barrel. In Texas, however, the local media were outraged by ‘yet another’ safety scandal involving British Petroleum (BP).
Over the following months, BP’s reputation in Britain remained unaffected. It remained a media darling for its constant references to global warming, sustainability and social responsibility. Its boss, Lord Browne, was invariably described as one of Britain’s most admired business leaders. Lord Browne’s strategy of giving BP the image of being ‘Beyond Petroleum’ had been very shrewd. Journalists were used to praising BP for its ethical standards. Its website used a green palette to communicate its messages of social responsibility.
In 2006, however, the bad headlines came from another part of America. In January BP was fined $1.42 million for safety violations at its Prudhoe Bay oilfield in Alaska. Two months later a hole in an oil pipeline leaked more than 1.2 million litres of oil, creating an environmental ‘catastrophe’. It later emerged that BP had failed to maintain the pipeline properly. Specifically the company had not invested in a ‘pipeline crawler’ that automatically checks for cracks. In the summer 2006 it was forced to close the whole oilfield because of safety concerns.
In November 2006 an official report into the Texas explosion made it clear that BP managers had known of ‘significant safety problems’ at the refinery long before the deadly explosion. The US Chemical Safety Board (CSB) found numerous internal BP reports setting out maintenance backlogs and poor, ageing equipment. The CSB also found evidence of research carried out among staff that gave an awful insight into management practices (see Appendix). Late in October 2006 the CSB Chairwoman blamed the explosion on ‘ageing infrastructure, overzealous cost-cutting, inadequate design and risk blindness’.
She went on to say that ‘BP implemented a 25% cut on fixed costs from 1998 to 2000 that adversely impacted maintenance expenditures at the refinery’. The report stated that ‘BP’s global management’ (i.e. British Head Office) ‘was aware of problems with maintenance spending and infrastructure well before March 2005’. Yet they did nothing about it. The Chairwoman delivered the final critique: | |[pic] | | | | | | | | | | |To the right: a photo of the | | |destruction caused by the 2005 | | |Texas City explosion in which 15 | | |people died. | |
‘Every successful corporation must contain its costs. But at an ageing facility like Texas City, it is not responsible to cut budgets related to safety and maintenance without thoroughly examining the impact on the risk of a catastrophic accident’. BP confirmed that its own...