The New York Times
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January 17, 2007

Inquiry Faults Management at BP in Blast That Killed 15

By HEATHER TIMMONS

LONDON, Jan. 16 — An investigation led by former Secretary of State James A. Baker III has concluded that weak leadership at BP and a lack of attention to effective safety helped create a dangerous setting that led to 15 deaths at the oil giant’s Texas refinery, according to the report released Tuesday.

Based on hundreds of interviews with employees, the 374-page report painted a layered picture of recurring neglect, avoidance and wrong-headed corporate directives that culminated in the fatal explosion at the refinery in 2005.

The panel made 10 recommendations, including the creation of an independent monitor to report to the company’s board over a five-year period. BP responded that it would carry out the 11-member panel’s findings.

The company’s departing chief executive, John Browne, denied that there were fundamental problems with BP’s structure or that a succession of problems were related. But he said he “has a responsibility to implement these findings” and a “moral responsibility” to make sure the company is improved.

Mr. Browne said last week that he would retire from BP in July, 18 months sooner than expected. He will be succeeded by Tony Hayward, the head of exploration and production, who will face the challenge of trying to repair the company’s reputation with investors and the public.

The Baker report said the company had fundamental problems in its “decentralized management system and entrepreneurial culture,” which left safety processes to the discretion of managers and did not define what was expected of them. Executive management was not held accountable for safety process of the United States refineries, the report said.

Though the panel did not explicitly blame Mr. Browne, he was a key proponent of the entrepreneurial culture.

The Baker report said that workers at BP’s United States refineries were overworked and the refineries thinly staffed and that employees there did not report accidents and safety concerns because they feared repercussions or judged that the company would not do anything about them.

Internal company audits were focused on making sure that refineries were in compliance with laws, rather than ensuring that management systems were making the refineries safe, it added.

The report made a series of suggestions about improving safety culture, including improving the auditing and safety education at all the United States refineries. Since the explosion, BP has created a safety and operations division that reports to the chief executive and has increased its budget for its refining operations.

BP has said in the past that it will spend $200 million to pay for 300 external experts to conduct audits and redesigns. It has also said it has set aside money to compensate victims of the explosion at Texas City, Tex., near Galveston, which also injured 170 people.

Though it did not conclude that BP purposely reduced safety spending, the report said that cost-cutting at BP had been severe. At the Texas City refinery, total maintenance spending fell 41 percent from 1992 to 1999, and total capital spending fell 84 percent from 1992 to 2000. On top of those cuts, BP challenged its managers to reduce costs by 25 percent after its merger with Amoco in 1998.

The investigation was initiated after the Texas City refinery explosion. Investigators at the Chemical Safety and Hazard Investigation Board say that flammable liquids overflowed at the plant, creating a cloud of vapor that ignited.

BP has had a succession of diverse problems in recent years, including leaks in its Alaska pipeline and accusations of market manipulation at its trading desks, leading some to re-examine a once highly praised company and its longtime chief executive, Mr. Browne.

Many workers at Texas City, Toledo and Whiting refineries complained about a lack of funds that helped create unsafe conditions, the report said, telling investigators they thought that “profit comes before safety” at the company.

On Tuesday, BP officials denied that this was the case.

Mr. Baker served as chairman of a panel reviewing BP’s safety practices.

The chairman and president of BP America, Robert A. Malone, said in an interview that the report is “hard-hitting and it hurts.” Mr. Malone emphasized that reducing costs did not necessarily translate into safety problems, and that the company had never refused to finance a safety matter.

BP managers were flooded with what the report called “initiative overload.” The company required that managers follow numerous initiatives, on issues as diverse as health, environmental matters and asset sales, which took attention away from day-to-day safety concerns. The “large number of initiatives and related paperwork contributed to a heavy workload and prevented the work force from being as focused on safety and operations as they would like,” the report found.

Employees at BP’s United States refineries also worked significant amounts of overtime, it found. According to minutes of a 2003 meeting, some laboratory staff members worked 24 hours consecutively. High turnover at BP refineries, particularly in management, also contributed to inconsistent safety procedures.

It was clear from the report that BP managers had been aware there were problems at refineries. In 2003 and 2004, managers said the refinery in Texas City was at risk because of “infrastructure integrity and mechanical reliability.”