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BP Adds $13M to Refinery Disaster Tab

Thursday, July 12, 2012

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BP’s costs for a 2005 series of deadly refinery explosions are inching steadily closer to $2 billion, with a new $13 million federal settlement announced Thursday (July 12).

 Chemical Safety Board

 U.S. Chemical Safety Board

The March 2005 explosion at BP America in Texas City, TX, killed 15 employees, injured 180 people, laid waste to the plant, and caused $1.5 billion in losses.

The Occupational Safety and Health Administration announced that it had reached agreement with BP Products North America Inc. on 409 of 439 citations issued in October 2009 for willful violations of OSHA’s Process Safety Management standard at BP’s refinery in Texas City, TX.

Those citations originally carried fines totaling $30.7 million.

The 2005 disaster killed 15 employees, injured 180, and caused more than $1.5 billion in financial losses.

Safeguarding Highly Hazardous Chemicals

OSHA’s Process Safety Management (PSM) of Highly Hazardous Chemicals standard outlines requirements for managing the hazards of processes that use highly hazardous chemicals. The standards aim to ensure that companies have technologies, procedures, and management practices in place to prevent the catastrophic release or explosion of hazardous chemicals.

OSHA released the PSM standard in 1992. In 2009, following the Texas refinery accident, the agency developed a specific PSM National Emphasis Program for petroleum refineries.

In 2011, following similar disasters in other industries, OSHA extended the National Emphasis Program to other chemical plants.

Series of Explosions

The BP accident occurred about 1:20 p.m. March 23, 2005, when a series of explosions shook the refinery during the restart of a hydrocarbon isomerization unit.

 A Green Living/SymonSez

 A Green Living/SymonSez

BP says it has invested more than $1.5 billion in safety improvements since the blaze.

Many of the victims worked in or around trailers located near an atmospheric vent stack. The explosions occurred when a distillation tower flooded with hydrocarbons and was over-pressurized, causing a geyser-like release from the vent stack.

In a 2007 report on the accident, the U.S. Chemical Safety Board blamed the disaster on “organizational and safety deficiencies at all levels of the BP Corporation”—from mechanical and process issues at the plant level to corporate shortcomings in the UK.

“Warning signs of a possible disaster were present for several years, but company officials did not intervene effectively to prevent it,” the Safety Board said.

The board noted that two other serious incidents at the refinery followed the March disaster within months, leaving tens of millions of dollars in damage.

Hundreds of Citations

The citations settled Thursday stem from an inspection that OSHA conducted in 2009 to evaluate BP’s performance since the initial investigation.

In September 2005, OSHA fined BP a then-record $21 million as a result of the accident. Those citations led to an agreement that required BP to identify and correct a variety of deficiencies. BP has paid that $21 million fine.

In 2009, OSHA investigated BP’s follow-through on the 2005 agreement and found that the company had failed to correct numerous items. Those lapses led OSHA to issue 270 failure-to-abate notices. In a 2010 settlement, BP agreed to pay a $50.6 million penalty to resolve those notices and invest at least $500 million in safety improvements at the plant. Those have also been paid, the parties say.

Meanwhile, however, the 2009 inspection also led OSHA to issue 439 new willful violations of the PSM standard, including failing to follow industry-accepted engineering practices for pressure relief safety systems—a problem that previous audits had criticized in prior years.

Those PSM citations, which originally carried $30.7 million in total fines, were the basis of the settlement announced Thursday.

Under the agreement, BP accepted a fine of $13,027,000 million and agreed to abate any remaining violations by the end of 2012. Like the 2010 settlement, the new one requires oversight by independent third-party experts and quarterly progress reports on BP’s activity.

“For the workers at BP’s Texas City refinery, this settlement will help establish a culture of safety,” said Secretary of Labor Hilda L. Solis. “The workers who help keep our nation’s oil and gas industries running deserve to go to work each day without fear of losing their lives.”

‘Committed to Safety’

BP said Thursday that it had spent more than $1 billion on safety improvements to the plant, in addition to the $500 million specified in the 2010 agreement.

“BP is committed to workplace safety,” said Iain Conn, BP’s global head of Refining & Marketing. “A strong relationship with OSHA is part of that commitment.”

He added, “Our aim is to be a leader in process safety, and we look forward to continuing our cooperation with OSHA to create an even safer workplace in BP and in our industry as a whole.”

Steve Cornell, President of BP Products North America, said the agreement “represents another milestone in our commitment to safe and compliant operations.”

Citation Details

The new settlement resolves the 439 original willful citations this way:

• BP accepted 57 willful and 31 serious citations as issued;

• 61 original willful citations have been grouped as 34 repeat citations;

• 150 willful citations have been grouped as 92 unclassified citations;

• OSHA withdrew 110 citations, after BP provided additional documentation; and

• 30 unresolved citations have been grouped as 22 and remain in dispute.

An OSHA spokesman said the unresolved violations related to BP’s failure to protect certain pressure relief valves in accordance with Recognized and Generally Accepted Good Engineering Practices.

This same issue is currently being litigated before the Occupational Safety and Health Review Commission (an independent agency) in a separate case against the BP-Husky refinery in Toledo, OH.

Other Fines

Since the explosion, BP has also paid, or agreed to pay:

• $50 million to the state of Texas, under a November 2011 settlement of environmental litigation claims stemming from the disaster;

• $15 million under a September 2010 agreement to resolve federal Clean Air Act violations at the refinery. That penalty is the largest ever imposed by the Environmental Protection Agency for civil violations of the law’s chemical accident prevention regulations; and

• $179 million under a February 2009 settlement with EPA that requires BP to spend more than $161 million on pollution controls, enhanced maintenance and monitoring, and improved internal management practices at the refinery; pay a $12 million civil penalty; and spend $6 million on a supplemental project to reduce air pollution in the Texas City area.

“BP has invested more in the United States over the last five years than any other oil and gas company,” the company said Thursday. “With more than $52 billion in capital spending between 2007 and 2011, BP invests more in the U.S. than in any other country.”

   

Tagged categories: Accidents; BP; Chemical Plants; EPA; Oil and Gas; OSHA

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