BP TEXAS CITY*

When BP s Horizon oil rig exploded in the Gulf of Mexico in 2010, it triggered
tragic reminders for experts in the safety community. In March 2005, an explosion
and fire at British Petroleum s (BP) Texas City, Texas, refinery killed 15 people
and injured 500 people in the worst U.S. industrial accident in more than 10
years. That disaster triggered three investigations: one internal investigation by
BP, one by the U.S. Chemical Safety Board, and an independent investigation
chaired by former U.S. Secretary of State James Baker and an 11-member panel
that was organized at BP s request. To put the results of these three
investigations into context, it s useful to understand that under its current
management, BP had pursued, for the past 10 or so years before the Texas City
explosion, a strategy emphasizing cost-cutting and profitability. The basic
conclusion of the investigations was that cost-cutting helped compromise safety
at the Texas City refinery. It s useful to consider each investigation s findings. The
Chemical Safety Board s (CSB) investigation, according to Carol Merritt, the board
s chairwoman, showed that BP s global management was aware of problems with
maintenance, spending, and infrastructure well before March 2005. Apparently,
faced with numerous earlier accidents, BP did make some safety
improvements. However, it focused primarily on emphasizing personal employee
safety behaviors and procedural compliance, and on thereby reducing safety
accident rates. The problem (according to the CSB) was that catastrophic
safety risks remained. For example, according to the CSB, unsafe and antiquated
equipment designs were left in place, and unacceptable deficiencies in preventive
maintenance were tolerated. Basically, the CSB found that BP s budget cuts led to
a progressive deterioration of safety at the Texas City refinery. Said Ms. Merritt,
In an aging 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.
Looking at specifics, the CSB said that a 2004 internal audit of 35 BP
business units, including Texas City (BP s largest refinery), found significant safety
gaps they all had in common, including for instance, a lack of leadership

competence, and systemic underlying issues such as a widespread tolerance of

noncompliance with basic safety rules and poor monitoring of safety
management systems and processes. Ironically, the CSB found that BP s
accident prevention effort at Texas City had achieved a 70% reduction in
worker injuries in the year before the explosion. Unfortunately, this simply
meant that individual employees were having fewer accidents. The larger, more
fundamental problem was that the potentially explosive situation inherent in
the depreciating machinery remained. The CSB found that the Texas City
explosion followed a pattern of years of major accidents at the facility. In fact,
there had apparently been an average of one employee death every 16 months
at the plant for the last 30 years. The CSB found that the equipment
directly involved in the most recent explosion was an obsolete design
already phased out in most refineries and chemical plants, and that key pieces of
its instrumentation were not working. There had also been previous
instances where flammable vapors were released from the same unit in the 10
years prior to the explosion.
In 2003, an external audit had referred to the Texas City refinery s infrastructure
and assets as poor and found what it referred to as a checkbook mentality, one
in which budgets were not sufficient to manage all the risks. In particular, the CSB
found that BP had implemented a 25% cut on fixed costs between 1998 and 2000
and that this adversely impacted maintenance expenditures and net
expenditures, and refinery infrastructure. Going on, the CSB found that in 2004,
there were three major accidents at the refinery that killed three workers. BP s
own internal report concluded that the problems at Texas City were not of
recent origin, and instead were years in the making. It said BP was taking steps to
address them. Its investigation found no evidence of anyone consciously or
intentionally taking actions or making decisions that put others at risk. Said BP s
report, The underlying reasons for the behaviors and actions displayed during the
incident are complex, and the team has spent much time trying to understand
them it is evident that they were many years in the making and will require
concerted and committed actions to address. BP s report concluded that there
were five underlying causes for the massive explosion:

 A working environment had eroded to one characterized by resistance to

change, and a lack of trust.
Safety, performance, and risk reduction priorities had not been set and
consistently reinforced by management.
Changes in the complex organization led to a lack of clear accountabilities
and poor communication.
A poor level of hazard awareness and understanding of safety resulted in
workers accepting levels of risk that were considerably higher than at
comparable installations.
Adequate early warning systems for problems were lacking, and there were
no independent means of understanding the deteriorating standards at the
plant.
The report from the BP-initiated but independent 11-person panel chaired
by former U.S. Secretary of State James Baker contained specific
conclusions and recommendations.
The Baker panel looked at BP s corporate safety oversight, the corporate safety
culture, and the process safety management systems at BP at the Texas City plant
as well at BP s other refineries. Basically, the Baker panel concluded that BP
had not provided effective safety process leadership and had not established
safety as a core value at the five refineries it looked at (including Texas City). Like
the CSB, the Baker panel found that BP had emphasized personal safety in recent
years and had in fact improved personal safety performance, but had not
emphasized the overall safety process, thereby mistakenly interpreting
improving personal injury rates as an indication of acceptable process safety
performance at its U.S. refineries. In fact, the Baker panel went on, by focusing
on these somewhat misleading improving personal injury rates, BP created a
false sense of confidence that it was properly addressing process safety risks. It
also found that the safety culture at Texas City did not have the positive, trusting,
open environment that a proper safety culture required. The Baker panel s other
findings included the following.

BP did not always ensure that adequate resources were effectively allocated to
support or sustain a high level of process safety performance.
BP s refinery personnel are overloaded by corporate initiatives. Operators and
maintenance personnel work high rates of overtime.
BP tended to have a short-term focus and its decentralized management system
and entrepreneurial culture delegated substantial discretion to refinery plant
managers without clearly defining process safety expectations, responsibilities, or
accountabilities.
There was no common, unifying process safety culture among the five refineries.
The company s corporate safety management system did not make sure there
was timely compliance with internal process safety standards and programs.
BP s executive management either did not receive refinery-specific information
that showed that process safety deficiencies existed at some of the plants, or did
not effectively respond to any information it did receive.
The Baker panel made several safety recommendations for BP, including the
following.
1. The company s corporate management must provide leadership on process
safety.
2. The company should establish a process safety management system that
identifies, reduces, and manages the process safety risks of the refineries.
3. The company should make sure its employees have an appropriate level of
process safety knowledge and expertise.
4. The company should involve relevant stakeholders in developing a positive,
trusting, and open process safety culture at each refinery.
5. BP should clearly define expectations and strengthen accountability for process
safety performance.

6. BP should better coordinate its process safety support for the refining line
organization.
7. BP should develop an integrated set of leading and lagging performance
indicators for effectively monitoring process safety performance.
8. BP should establish and implement an effective system to audit process safety
performance.
9. The company s board should monitor the implementation of the panel s
recommendations and the ongoing process safety performance of the refineries.
10. BP should transform into a recognized industry leader in process safety
management.

In making its recommendations, the panel singled out the company s chief
executive at the time, Lord Browne, by saying, In hindsight, the panel believes if
Browne had demonstrated comparable leadership on and commitment to process
safety [as he did for responding to climate change] that would have resulted in a
higher level of safety at refineries.
Overall, the Baker panel found that BP s top management had not provide
effective leadership on safety. It found that the failings went to the very top of
the organization, to the company s chief executive, and to several of his top
lieutenants. The Baker panel emphasized the importance of top management
commitment, saying, for instance, that it is imperative that BP leadership set the
process safety tone at the top of the organization and establish appropriate
expectations regarding process safety performance. It also said BP has not
provided effective leadership in making certain its management and U.S.
refining workforce understand what is expected of them regarding process
safety performance. Lord Browne, the chief executive, stepped down about a year
after the explosion. About the same time, some BP shareholders were calling for
the company s executives and board directors to have their bonuses more closely
tied to the company s safety and environmental performance in the wake of

Texas City. In October 2009, OSHA announced it was filing the largest fine in its
history for this accident, for $87 million, against BP. One year later, BP s Horizon
oil rig in the Gulf of Mexico exploded, taking 11 lives.
Questions
1. The textbook defines ethics as the principles of conduct governing an
individual or a group, and specifically as the standards one uses to
decide what their conduct should be. To what extent do you believe that
what happened at BP is as much a breakdown in the company s ethical
systems as it is in its safety systems, and how would you defend your
conclusion?
2. Are the Occupational Safety and Health Administration s standards,
policies, and rules aimed at addressing problems like the ones that
apparently existed at the Texas City plant? If so, how would you explain
the fact that problems like these could have continued for so many
years?
3. Since there were apparently at least three deaths in the year prior to
the major explosion, and an average of about one employee death per 16
months for the previous 10 years, how would you account for the fact
that mandatory OSHA inspections missed these glaring sources of
potential catastrophic events?
4. The textbook lists numerous suggestions for how to prevent
accidents. Based on what you know about the Texas City explosion, what
do you say Texas City tells you about the most important three steps an
employer can take to prevent accidents?
5. Based on what you learned in Chapter 16(Safety), would you make any
additional recommendations to BP over and above those
recommendations made by the Baker panel and the CSB? If so, what
would those recommendations be?
6. Explain specifically how strategic human resource management at BP
seems to have supported the company s broader strategic aims. What

does this say about the advisability of always linking human resource
strategy to a company s strategic aims?