Safety panel slams BP over refinery blast

NEW YORK (CNNMoney.com) -- BP had serious safety problems at its five U.S. refineries before a 2005 explosion at a Texas plant killed 15 workers, an independent panel reviewing that accident said Tuesday.

The panel, headed by the former Secretary of State James Baker III, focused on conditions that led to the explosion at BP's refinery in Texas City on March 23, 2005. The blast killed 15 and injured more than 170.

A safety panel investigating the March 2005 explosion at BP's Texas City refinery that left 15 dead issued its findings on Tuesday.

The 300-plus page report criticized BP in several areas, poking holes in the company's safety management system and the company's lopsided focus on the personal safety of its workers by ignoring process safety, or hazards at its refineries that could have resulted in multiple injuries or fatalities.

"Based on its review, the panel believes that BP has not provided effective process safety leadership and has not adequately established process safety as a core value across all its five U.S. refineries," the panel wrote in its report.

The panel did commend BP for making some safety improvements since the accident and said it found no evidence that BP intentionally scrimped on safety in order to cut costs - a charge that has been disputed by the U.S. Chemical Safety and Hazard Investigation Board.

The board, a federal agency that investigates workplace safety and insisted on the creation of the review panel, had charged recently that the Texas City disaster was the result of "drastic cost-cutting at the Texas City refinery."

In its findings, the panel outlined 10 recommendations for further improvement at BP, including creating a system to audit safety at its refineries.

The Baker panel also recommended having an independent monitor report to BP's board of directors on safety improvements over the next five years.

"It is our view that if BP follows our recommendations, a lot of good can happen," Baker said at a news conference after the report was released.

BP (up $0.30 to $63.58, Charts) said it will implement the recommendations made by the panel.

At a press conference Tuesday, BP CEO John Browne said BP "gets it", noting that the company plans on applying the panel's recommendations to its global operations.

"We will use this report to enhance and continue the substantial effort already underway to improve safety culture and process safety management at our facilities," Browne said in an earlier statement.

"We will want to do everything possible to prevent another tragedy like the one that occurred at Texas City."

BP has already taken a number of steps in response to the Texas City explosion, including increasing spending on U.S. refineries over the next four years to an average $1.7 billion annually.

But Fadel Gheit, an energy analyst at Oppenheimer, says that the changes recommended by the panel are already mostly in place.

"Most of the things that report recommended have been largely implemented," said Gheit. "They are already on the right track."

Browne, who announced Friday that he will step down at the end of July, 17 months earlier than planned, said his decision to resign had nothing to do with his decision to move up his retirement date.

Browne will be replaced by Tony Hayward who heads BP's exploration and production unit.

As part of the review process, the 11-member panel traveled to each of BP's five U.S. refineries, conducting safety reviews and interviewing hundreds of employees.

BP has set aside $1.6 billion for settlements related to the accident.

The Texas City incident is one of several problems that have plagued BP in recent years. The oil giant was widely criticized last summer after it was forced to halt about 200,000 barrels of daily oil production at its Prudhoe Bay oil field in Alaska after it discovered corrosion in its pipelines there.

In related news, the United Steelworkers union said Tuesday it reached an agreement with BP on a comprehensive joint safety initiative.

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