Report Cites Unsafe Conditions at BP Refineries Before Deadly Texas City Explosion

British oil company BP (BP) failed to emphasize safety at its U.S. refineries before the 2005 Texas City explosion that killed 15, according to a report released Tuesday by an independent panel led by former U.S. Secretary of State James A. Baker III.

The panel, in a statement summarizing its 300-plus page report on BP PLC's operations, said the company had made strides in personal accident prevention but came up short on the bigger picture.

"The panel maintains a central theme that prior to the Texas City tragedy BP emphasized personal safety and had achieved significant improvements in personal injury rates, but the company did not emphasize process safety," the statement said. "BP mistakenly interpreted improving personal injury rates as an indication of acceptable process safety performance at its U.S. refineries."

The 11-member panel made 10 recommendations, including that an independent monitor report to the company's board of directors for five years.

"BP gets it and I get it, too," BP CEO John Browne told reporters by video link from London. "I recognize the need for improvement."

Browne, who got the report from Baker on Sunday, called the report a "hard-hitting and critical analysis that focused on deficiencies and negatives."

Browne defended the company's overall safety record, which the Baker report acknowledged was sufficient in terms of personal injury prevention and environmental safety.

But on so-called process safety, "it wasn't excellent enough," Browne said. "And the standard is excellence."

The chief executive said the company would implement the panel's recommendations, including the independent monitor. But he said the company needs to compare Baker's report with a companywide safety examination that began soon after the Texas City explosion and gave no time frame for making the changes Baker's group suggested.

Baker has led the panel investigating corporate management at Houston-based BP Products North America following the March 2005 blast that killed 15 people and injured more than 170 others.

The U.S. Chemical Safety and Hazard Investigation Board, known as the CSB, urged BP in August 2005 to hire outside experts to look at the company's oversight of safety management systems and make its findings public — similar to an investigation at NASA following the space shuttle Columbia tragedy.

The panel, announced in October 2005, has traveled to BP's five U.S. refineries and interviewed hundreds of employees.

"BP tended to have a short-term focus in its U.S. refining operations, and its decentralized management system and entrepreneurial culture delegated substantial discretion to U.S. refinery plant managers without clearly defining process safety expectations, responsibilities or accountabilities," the panel said in the report.

Baker, a senior partner at the Houston-based Baker Botts law firm, was White House chief of staff and treasury secretary in the Reagan administration and secretary of state in the first Bush administration. The release of the BP report was twice delayed because of his work with the Iraq Study Group, which made its recommendations to President Bush last month on how to revamp U.S. policy in Iraq.

The release of the report comes less than a week after London-based BP said Chief Executive John Browne would step down by the end of July, more than a year ahead of schedule.

BP said Friday that Browne, 58, will be succeeded by Tony Hayward, the head of exploration and production, who will assume the task of trying to repair the company's reputation with the public and investors. Problems stem from a series of well-publicized mishaps that include the Texas explosion and last year's giant oil spill in Alaska.

Browne said Tuesday the report had "nothing to do" with his decision to retire earlier than expected, noting that he decided in December that when the company's board found a successor, he would step aside.

John Manzoni, the company's head of refining and marketing, said Tuesday he had no plans to resign.

The 2005 explosion has so far cost the company around $2 billion in compensation payouts, repairs and lost profits. BP has settled hundreds of lawsuits related to the accident, putting aside $1.6 billion just to resolve legal disputes.

Based on its investigation, the CSB has criticized BP for its safety systems at Texas City, about 40 miles southeast of Houston, finding the company fostered bad management at the plant and failed to fix problems.

In September 2005, the U.S. Occupational Safety and Health Administration found BP committed more than 300 willful violations of its rules and fined the company $21.3 million.

BP's own December 2005 report blamed failures by management at the refinery, saying it didn't make safety a priority, tolerated risks and failed to communicate. But BP added it "found no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk."

The CSB has credited BP for cooperating with its investigation, making sweeping changes in how it recognizes potential hazards and hiring the Baker panel.

BP has said it will invest about $1 billion over five years to improve and maintain the Texas City site. BP also operates refineries in California, Indiana, Washington and Ohio.

BP shares fell 1.5 percent to close at 5.41 pounds ($10.62) on the London Stock Exchange.