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BP Texas City

Summary

In March 2005, an explosion and fire at brutishpetroleums Texas City. In this disaster15 people

killed and 550 people injured. The disaster triggered three investigations: one internal

investigation of BP, one by U.S. chemical safety board and third independent investigation by

farmer U.S. secretary James Baker with 11 members Panel.

BP has purchased a strategy emphasizing with cutting and profitability. The basic conclusion of

the investigation was that cost cutting compromise safety at the Texas City refinery. The

chemical safety boards (C S B) investigation, showed that BPs 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 behavior and procedural

compliance, and on thereby reducing safety accident rates. The problem was that catastrophic

safety risks remained. For example, unsafe and anticipated equipment designs were left in

place and acceptable deficiencies in preventive maintenance were tolerated.

The CSB said that a 2004 internal audit of 35BP business unit, found significant safety gaps

wide spread tolerance of non compliance with basic safety rules and poor monitoring of safetymanagement system the CSB found that the Texas city explosion followed a pattern of years of

major accident at the facility there had been average of one employee death every 16 month for

the last 30 year. The CSB found that for equipment involved was an obsolete design and that key

pieces of its instrumentation were not working in 2003, BPs external audit refer infrastructure

and assists as poor and found what it referred to as a check book mentality CSB found BP had

implemented a 25% cut on fixed cost between 1998-2000 and in 2004, there were three major

accidents killed three workers.

BPs own internal report concludes that the problems at Texas City were not of recent origin and

instead were tears in the making. Its investigation found, no evidence of anyone put others at

risk. BPs report concludes that there were five underlying causes for explosion.

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A working environment that had eroded to one characterized by resistance to change, anda lack of trust.

Safety, performance and risk reduction priorities had not been set and consistentlyreinforced by making management.

Changes in the complex organization led to a lack of clear accountabilities and poorcommunication.

A poor level of hazard awareness and understanding of safety resulted in workersaccepting levels of risk that were considerably higher than at comparable installations.

A lack of adequate early warning systems for problems, and no independent means ofunderstanding the deteriorating standards at the plant.

The reports from 11- personpanel looked at BPs corporate safety oversight, the corporate safetyculture and the process safety management system. Basically , this panel conducted that BP had

not provided effective safety process leadership and had not established safety as a core value BP

emphasized personal safety and had in fact improve personal safety performance, but had not

emphasized the overall safety process, BP created a false since of confidence that it was properly

addressing process safety risks, the safety culture at Texas city did not have the positive, trusting

, open environment that a proper safety culture required . The panels other findings concluded:

BP did not always ensure that adequate resources were effectively allocated to support orsustain a high level of process safety performance.

BPs refinery personnel are overload 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 companys corporate safety management system did not make sure that there was

timely compliance with internal process safety standards and programs.

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BPs executive management either did not receive specific information that showed thatprocess 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 these:

1. The companys corporate management must provide leadership on process safety.

2. The company should establish a process safety that 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 expectation and strengthen accountability for process safety

performance.

6. BP should coordinate its process safety support for the refining line organization.

7. BP should an integrated set of leading and lagging performance indicators for effectively

monitoring process safety performance.

8. BP should established and implement an effective system to audit process safety performance.

9. The companys board should monitor the implementation of the panels recommendations and

the ongoing process safety performances of the refineries.

10. BP should transform into a recognized industry leader in process safety management.

In making its recommendations, the panel signed out the companys 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.

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Overall, the breaker panel found that BPs top management had not provided effective

leadership on safety.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.

Solution

Q-1 The textbook defines ethics ass the principles of conduct governing an individual or a

group, and specifically as the standards 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 companys ethical

system as it is in its safety systems and how would you defend your conclusion?

A-1 the significant break down in safety requirements became part of the culture at BP

Q-2 Are the occupational safety and health administrations standards, policies, and rules aimed

at addressing problem like the once 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?

Q-3 Since there where 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 this glaring sources of

potential catastrophic events?

Q-4 The text book lists numerous suggestion for how to prevent accidents. Based on what you

know about the Texas City explosion, what do you said Texas City tell you about the most

important three step an employer can take to prevent accidents?

Q-5 Based on what you learned in chapter 16, 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?

Q-6 Explain specifically how strategic human resource management at BP seems to have

supported the companys broader strategic aims. What does this say about the advisability of

always linking human resource strategy to a companys strategic aims?