Professionalism/BP Texas City Refinery Explosion

On March 23, 2005, an explosion occurred at the isomerization process unit of the BP’s Texas City Refinery located in Texas City, Texas. The explosion killed 15 workers and injured more than 170 others.

Background

The Texas City Oil Refinery was built in 1934 and purchased by BP in 1999. It had been previously owned and operated by Amoco since its creation. Under Amoco ownership the refinery had a history of postponing major upgrades due to a cost saving management style. As of 2005, the Texas City refinery was the second largest refinery in the state and third largest in the country, processing up to 437,000 barrels of crude oil per day. It is currently the fifth largest such refinery in the country. The Texas City Refinery is unique in that it can process over 50 different types of crude oil into a wide variety of products ranging from traditional gas and diesel to jet fuel.

Explosion

Fire-extinguishing operations after the explosion

On March 23, 2005, 15 people were killed and another 180 injured after an explosion occurred at the Texas City Refinery. The explosion was a direct result of a malfunction of hardware in the isomerization unit. At approximately 2:00 AM, engineers routinely turned on the hydrocarbon intake valve to release highly flammable liquid hydro-carbons into a raffinate splitter tower. During routine operations, this tower is supposed to fill to around 6 feet of fluid before a sensor will advise the engineers to cease hydro-carbon release. However, on this day, the safety alarm failed to go off and by the time engineers were able to identify that the tower was over-filling at around 3:30 AM, the level of hydro-carbons had reached 13 feet. This level was maintained during the night until normal day operations began again at around 9:30 AM. At this time, however, operators kept pumping fuel into the splitter tower but failed to open the outtake valve, and because the splitter tower warning system had already failed, flammable fluid built up in the tower to over 20 times the normal height, or approximately 138 feet while the sensors indicated the level was at a normal 10 feet.

At 12:40 PM a high pressure alarm was activated and the furnaces heating the splitter tower were turned off, and the outtake valve was finally opened. The quick release of liquid that had been heated far beyond normal specifications overloaded the heat in the heat exchange unit causing the liquid going into the tower to be over 150 degrees hotter than normal. Once this liquid mixed in with the already high level of fluid in the splitter tower, it boiled and expanded forcing a rush of flammable liquid hydro-carbons to spill out of the safe-guard release tube, filling up the blow-down drum and causing a "geyser-like" release of flammable liquid hydro-carbons into the atmosphere for about a minute, leaving a large flammable vapor cloud. At 1:20 PM, the cloud was ignited by a diesel pickup truck located about 20 feet from the blow-down drum, causing a series of explosions across the plant as fuel storage units were reached by the growing fire.

Aftermath

Immediately after the explosion on March 23, 2005, members of the U.S. Chemical Safety Board (CSB) were on site to determine the root cause of the accident and where blame and responsibility should be placed. In the end, BP was held liable for the event and ordered to pay out over $1.6 Billion to upwards of 1000 different claimants ranging from employees families to neighbors within a mile radius of the plant who had their windows blown out in the explosion. The CSB published a scathing review of BP's practices in the United States. BP has since sold both of its largest refineries in the United States as public pressure to maintain safety standards has led these ventures to become less economical than the UK plant sites. Also released was a report from former US Secretary of State James Baker that highlighted the flaws and lack of commitment to safety inherent to BP on a company wide scale. The trial to settle the fine to be paid by BP generated lots of public interest and was fought by Brent Coon & Associates, culminating in $50 Million being paid by BP in August of 2010.

Factors Leading to Explosion

Multiple factors worked in tangent to lead to the eventual failures that resulted in the refinery explosion. Such factors included technical failures, human errors, as well as organizational and regulatory failings. In the Chemical Safety and Hazard Investigation Board reports, organizational failings such as corporate cost-cutting and failure to invest in safety infrastructure as well as the lack of safety culture were listed as the major contributing factors to the explosion. These underlying issues manifested in the technical failures such as the undersized blow down drum which started the cascade leading to the eventual catastrophe.

Managerial Transitions

Since BP’s acquisition of Amoco who owned the plant before 1998, there have been five plant manager transitions in the six year leading up to the explosion (1999-2005). This rapid change in management at the plant contributed to a lack of leadership accountability as managers are not held accountable to mishaps after their departure. The lack of leadership accountability in turn led to the lack of safety investments due to managers’ short event horizon and desire to demonstrate ability to comply with lean operation and corporate directives.

Human Factors

Human errors also played a major role in the Texas City Refinery explosion. Due to lack of funding and focus on safety, employees were often undertrained and lacked adequate supervision for process startup or changeover. Plant employees at the time had been working 12-hour days for 30 days in a row, often with 2 hour commutes. These employee weaknesses combined and factored into the lack of immediate response to stop the progression of events leading up to the explosion.

Aging Plant

Worn condition of ultracracker unit

Technical issues also contributed to the demise of the refinery. The plant was constructed in 1937 and was 70 years old and dilapidated at the time of explosion. In the 30 years prior to the explosion, which dates before BP acquisition of Amoco, there were already 23 fatalities. A report by an independent auditing agency, the Telos group, cited broken alarms and gauges and outdated and undersized equipment. After the explosion, the final report by U.S. Chemical Safety and Hazard Investigation Board cited a plethora of technical failings such as inadequate pressure relief valves and undersized raffinate towers. Geoffrey Gioja, a co-author of the Telo’s group audit, stated 'We have never seen a site where the notion 'I could die today' was so real." A particularly revealing fact of the state of the plant is that workers for a time passed a billboard commemorating two colleagues scalded to death by boiling water in 2004.

Organizational Failure

BP's lack of culture for safety and accountability represented an organizational failure that penetrated through BP's corporate levels. This was particularly evident in the fact that instead of investing in much needed safety renovations, in 1999, senior executives made a 25% cut in fixed costs for the Texas City Refinery. This fixed cost cut exerted financial pressure on managers, making allocation of resource toward much needed safety improvements even more unlikely. BP’s organizational and culture failure also includes the inability to accept fault and constructive criticism. Even after the disaster, BP denied fault for cutting Texas City Refinery costs with the suggestion that the cut was not a "directive" but a "challenge" to achieve desired safety target without compromising profitability. The mentality of the BP executives at the time may best be exemplified by BP exec John Manzoni, who was asked to visit the refinery while on vacation. John Manzoni later commented "we spent the day there -at the cost of a precious day of my leave."

Lack of Economic Incentives

OSHA regulates plant safety

The plant explosion and BP's lack of safety culture may both be partially explained by the lack of economic incentives for safety. Prior to the explosion, Occupation Safety and Health Administration (OSHA) found what they called 300 "egregious, willful violations", for which OSHA only enforced a maximum fine of $21m. Considering that BP's yearly revenue was $254b around 2005, the 21 million dollar fine was not a justifiable punishment and was not effective in eliciting improvements on plant safety and safety culture from BP. This fine was incidentally also significantly lower than the projected $1bn required for safety improvements, which meant that it was much more economical for BP to pay the fine rather than implementing safety measures.

Related Incidents

BP has faced intense scrutiny for multiple industrial disasters that have occurred in the past decade. Ongoing criticism of safety measures following the Texas City refinery explosion led to Tony Hayward replacing Lorde Browne as CEO in 2007. However, safety incident investigations have continued to attribute cost cutting and efficiency goals as components of BP industrial disasters.

Prudhoe Bay Oil Spill

BP Operations in the Prudhoe Bay area

On March 2, 2006, an estimated 267,000 gallons of crude oil leaked through a corroded pipeline in western Prudhoe Bay, Alaska. Members of Congress criticized BP for failing to inspect the pipeline, which had not been checked for corrosion since 1998, and for ignoring other signals that should have raised concerns. A 1992 test detected the presence of calcium in the pipeline but did not raise any concerns about corrosion. BP Alaska pleaded guilty to a misdemeanor count of discharging oil in violation of the U.S. Clean Water Act, but only paid $20 million in fines for knowing neglect of corroding pipelines.

Deepwater Horizon Oil Spill

Deepwater Horizon burning following the explosion

A gas explosion on April 20, 2010 aboard the BP Deepwater Horizon oil rig claimed 11 lives and discharged an estimated 4.9 million barrels of oil into the Gulf of Mexico. Oil flowed for 87 days until the well was capped on July 15. It is considered the largest marine oil spill disaster in history.

Numerous investigations investigated the causes of the explosion and resulting spill. Most notably, the U.S. government September 2011 report attributed the majority of blame to BP but also faulted the rig owner Transocean and cement contractor Halliburton, noting financial pressures may have dominated safety concerns and poor communication led to unqualified individuals making decisions in their own company’s best interest. Transocean was also faulted for providing financial bonuses to workers based on the speed which they completed safety repairs.

Jesse Gagliano, a Halliburton technical adviser, testified that he raised concerns about the high probability of a gas leak in the days before the disaster. He recommended 21 centralizer devices be installed to strengthen the cement wall and prevent leaks. BP ultimately installed 6 – a job that Gagliano and Halliburton approved and documented as having been conducted properly. While testifying, BP released a statement stating “If Halliburton had significant concerns about its ability to provide a safe and high-quality cement job in the Macondo well, then it had the responsibility and obligation to refuse to perform the job. To do otherwise would have been morally repugnant.”

The U.S. Department of Justice filed suit against BP, claiming “gross negligence and willful misconduct.” BP ultimately paid more than $4.5 billion in fines, the largest of its kind. BP was also banned from seeking new government contracts for “lack of business integrity.” The spill also led to the ouster of BP CEO Tony Hayward in July 2010, who was widely condemned for stating “There’s no one who wants this over more than I do, I’d like my life back.”

Conclusions and Generalizations

Direct causes of industrial disasters are rarely apparent. Less tangible factors, including poor manufacturing cultures, inadequate communication, and emphasis on efficiency over safety can in conjunction precipitate industrial accidents. The U.S. September 2011 Deepwater Horizon report noted “root causes are systematic and, absent significant reform in both industry practices and government policies, might well recur.” Economic motivations of commercial corporations frequently compete with safety maintenance, resulting in compromising decisions which save companies' time and money in the short run. Such shortsighted economic incentives may distort professional integrity and ethics and often lead to industrial disasters.