By Anjali Cordeiro and Jessica Resnick-Ault
Of DOW JONES NEWSWIRES
TEXAS CITY, Texas (Dow Jones)-- BP PLC (BP) said Tuesday that failures by its employees were responsible for an explosion at its Texas City refinery on March 23, the deadliest industrial accident in 15 years.
The world's second-largest oil company said it will pay compensation to the 170 injured in the explosion, as well as to the families of the 15 who died. BP apologized for the mistakes and said its goal is "to provide fair compensation without the need for lawsuits or lengthy court proceedings."
"We regret that our mistakes have caused so much suffering," Ross Pillari, president of BP Products North America, said at a news conference.
Pillari wouldn't say how much the company planned to spend on compensation or on improved safety measures at Texas City and BP's other refineries.
The cost for compensating the families alone is expected to range above $400 million, according to one lawyer involved with the litigation. Rob Ammons , a lawyer who filed a petition with Galveston County District Court two weeks ago, claims he now represents over 100 injured workers.
BP shares ended trading 72 cents higher at $59.17, up about 15 cents from where they were trading before the announcement.
In response to the report, BP Products will take disciplinary action against supervisors and hourly employees who were directly responsible for operating the isomerization unit on March 22 and 23. These actions will range from warnings to termination of employment. As the investigation continues and new information is discovered, others may also be disciplined, the company said.
But the labor union representing hourly refinery workers characterized the report as unfair.
"Blaming workers doesn't solve the problem of unsafe conditions in that refinery," said Gary Beevers, regional director of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union.
An explosion at the Texas City refinery in March, 2004, forced employees to evacuate. The Occupational Health and Safety Administration fined the company $ 63,000 in October as a result.
In September, two workers at the facility died and another was seriously injured in an accident involving superheated water. The agency proposed a $109 , 500 fine, which BP is contesting.
Pillari said the accident was caused by mistakes that took place before and during the startup of the refinery's isomerization unit, which produces octane boosters for gasoline.
The mistakes began with the overheating and overfilling of a section of the isomerization unit, Pillari said.
"If ISOM unit management had properly supervised the startup, or if ISOM unit operators had followed procedures or taken corrective action earlier, the explosion would not have occurred," he said.
When the night shift turned over the startup to the day shift at 6 a.m., there wasn't an adequate exchange of information, and the exchange was not supervised, Pillari said. The supervisor of the unit didn't arrive until about 7:15 a.m. and left at 10:30 a.m.
"The day shift supervisor was absent during several critical times," Pillari said.
Under pressure in the column, the hydrocarbon liquid and vapor rushed into an attached blow-down drum, overfilling it. Had the spill been routed to a flare, the severity of the accident might have been reduced, Pillari said.
The blow-down drum overflowed, and the liquid and vapor ignited. Pillari said the source of the ignition hasn't been pinpointed. The resulting explosion and blaze especially affected those workers in nearby trailers.
Since the explosion, federal investigators have questioned whether the construction trailers, placed within 125 feet of the unit, were too close. Pillari said the presence of workers in these trailers "greatly increased the number of deaths and injuries."
The area near the blow-down stack of the isomerization unit was deemed safe for trailers, according to Pillari. The decision to locate the trailers there had been preceded by a hazard review "that did not recognize the possibility that multiple failures by ISOM unit personnel could result in such a massive flow of liquids and vapors to the blow-down stack," he said.
The refinery is the country's third largest. BP's incident investigation was conducted by a team of BP executives, BP refining and safety experts and salaried and union employees of the Texas City refinery.
As recommended in the report, the company will commission a study to make recommendations for the safe placement of temporary structures at all of its refineries, he said. In the interim, the Texas City refinery has prohibited placing trailers within 500 feet of a process unit.
BP said it has clarified and reinforced roles and responsibilities around startup, operating and evacuation procedures.
-By Anjali Cordeiro and Jessica Resnick-Ault, Dow Jones Newsires; 713-547- 9208; email@example.com
(Benoit Faucon in London contributed to this article.) Dow Jones Newswires 05-17-05 2147ET Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.