BP to Invest $1 Bln in Texas City Plant After Blast (Update3)
* Texas City, Texas completes the pyramid of 3's... first Oklahoma City, Oklahoma, than New York, New York... than Texas City, Texas... #msg-7839639 has a tidbit...
BP to Invest $1 Bln in Texas City Plant After Blast (Update3)
Dec. 9 (Bloomberg) -- BP Plc, Europe's biggest oil company, will invest about $1 billion over the next five years to improve and maintain its Texas City, Texas, refinery after a March explosion killed 15 people and injured 170.
``The company will install modern process control systems on major units, transition to a more powerful maintenance management system, improve worker training, remove blow down stacks and implement the other recommendations'' in the final investigative report, BP said today in a statement.
The improvements to the plant, the third-largest U.S. refinery, are based in part on recommendations from a 192-page investigative report from the company. The report determined poor supervision and communication were partly to blame for the blast, and faulted safety policies at the facility.
``A billion dollars -- that's fairly sizeable, but not in the scheme of things in respect to the Texas City refinery,'' said Bruce Lanni, an analyst at A.G. Edwards & Sons Inc., who has a buy rating on BP shares and doesn't own any.
``BP is a very upstanding company and they make every effort to insure safety,'' Lanni said. ``It's a very dangerous operation. You're dealing with a lot of volatile materials.''
The accident occurred when workers restarting an octane- enhancement unit overfilled and overheated it, causing the unit to overflow. Workers died because trailers were placed too close to the equipment, according to investigators.
`Sober Look'
``BP's report is a sober look in the mirror that reveals an ineffective safety culture at the Texas City refinery,'' Chemical Safety Board Chairman Carolyn W. Merritt said in a separate statement today.
BP in September agreed to pay a $21.4 million fine for violations that led to the explosion. The chemical safety board concluded in a study earlier this year that a flare system, instead of a blow down stack, could have prevented the blast.
``The absence of key personnel, confusion around who was in charge and the behavior of supervision eroded the chain of command to the point that decision-making authority was unclear,'' the final report showed. ``Although the startup procedure was not fully up to date, if the procedure had been followed, or if different intervention had been made earlier, this incident would not have happened.''
The plant can process 460,000 barrels of oil a day. The only larger U.S. refineries are Exxon Mobil Corp. plants in Baytown, Texas, and Baton Rouge, Louisiana. Texas City is about 40 miles (64 kilometers) south of Houston.
Problems at the Texas City plant occurred on several occasions before the deadly explosion, according to the chemical safety board. In its report released in October, the board said the Texas City refinery had at least 16 abnormal startups since 2000 and at least four flammable-vapor releases since 1995.
`Corrosive Atmosphere'
``What's going on here is the outing of what might be called a `corrosive atmosphere' that existed at this plant prior to the accident, where all sorts of operational procedures as safety procedures had broken down,'' according to Edward Ahnert, an executive in residence at Southern Methodist University's Cox School of Business in Dallas, who teaches courses on corporate responsibility.
``Up until recently, when fuel prices rose so dramatically, the oil companies weren't making a lot of money on refinery investments, and I think a lot of them may have been trying to cut corners,'' Ahnert said today in a telephone interview.
Today's company study was led by John Mogford, BP's senior group vice president for safety and operations. BP said in October that former U.S. Secretary of State James Baker will head a separate independent panel to study the company's safety culture.
``The (independent) panel has received a copy of the Mogford report and it will take it into consideration as it continues its deliberation in the coming year,'' said John Williams, a spokesman for the safety review panel.
To contact the reporter on this story: Amy Strahan in Houston at astrahan@bloomberg.net.
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