Leak shows BP knew of Texas risk

BP baord directors were made aware of the link between spending cuts and poor maintenance at its Texas City refinery two-and-a-half years before the fatal explosion at the site in March 2005, according to documents seen by The Observer.

An internal presentation made to John Manzoni, chief executive for refining and marketing, in November 2003 links the 'history of reduced investment' at the Texas City refinery with 'poor maintenance practices'. It also makes clear that the refinery's performance on safety, integrity and maintenance, was weak.

Investigators for the US Chemical Safety and Hazard Investigation Board (CSB) have been investigating the cause of the accident for two years and their final report will be published on Tuesday. They believe that the legacy of low investment in Texas City throughout the 1990s and the rate of spending cuts accelerated in the two years after BP's 1998 takeover of previous owner Amoco - led to problems with the 'mechanical integrity' of the plant that could have led to the accident.

The CSB's chairwoman, Carolyn Merritt, told The Observer last week that there was a link between cost cutting and the accident, in which 15 people were killed. BP denies this link.

The 2003 Texas City Refinery Review presentation, obtained by lawyers representing victims of the accident, was sub-titled 'Bilateral with John Manzoni' and is thought to form part of the evidence in the CSB inquiry. One slide, headed 'History of Reduced Investment $s', states that total fixed costs peaked in the early 1990s at $727m, and that by 1999 they had been reduced to $347m.

A graph on the same page shows capital spending falling from 1992, with the steepest drop in the two years after the Amoco takeover. At this point on the graph an arrow indicates 25 per cent cost-cutting targets, a 'challenge' issued to US refinery managers by BP when it took over. The following page is headed '... and poor maintenance practices' and states 'for the last 10 years the refinery has remained in the lowest percentile grouping for Operational Availability'.

Investigators are concerned about poor 'mechanical integrity' and that this was caused by cost-cutting. The CSB has stated previously that the cause of the accident was a 'geyser-like' release of vapour from a piece of equipment. One industry source said: 'The issue of mechanical integrity is to recognise failures before they occur. Poor mechanical integrity can lead to releases.'

Investigators are also focusing on later presentations and emails. One, in July 2004 is said to have indicated that mechanical integrity and shut-downs had continued to be major problems.
Ronnie Chappell, a spokesman for BP, said: 'Previous budget decisions were not a critical factor leading to this tragedy.'

He said that increased spending since 2000 had been focused both on environmental projects and mechanical integrity. He added that BP's internal review, conducted by executive John Mogford, and published in December 2005, found that human error was to blame for the accident and that the blowdown drum had not been identified as a safety risk by a series of reviews.

Source: The Observer