BP's 2005 Texas City refinery explosion and management failures

BP Explosion in 2005

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SWOTs that were Compromised in Comparison with the Strategic Plan

The Parts of the Strategic Plan that would have made the Operating Environment Safer

The Role that U.S. Chemical Safety & Hazard Investigation Board would play in the Accident

The Barriers that Prevented the Strategic Plan from being Implemented

BP Explosion in 2005

During the last decade, BP has consistently tried to make themselves standout as a new generation of oil companies. Where, they are focused on addressing the needs of consumers and being a responsible member of the business community. The accident that occurred at the Texas City refinery would challenge this idea. As it would highlight the company's attempts to cut costs and maximize profits. Below we will examine the role that BP would knowingly play, in the events that lead to the explosion and their initial attempts to cover up what had taken place.

SWOTs that were Compromised in Comparison with the Strategic Plan

The accident that took place in Texas City, occurred because of a culture of mismanagement and neglect that had been taking place for decades (as the refinery would fall into a state of disrepair). The best way to fully understand this is through conducting a SWOT analysis of these events. As far as strengths are concerned, BP was well aware that the plant was facing many problems when they purchased it from Amoco in 2002. Where, it was known that the refinery was in desperate need of having significant infrastructure reinvestment. At the same time, BP had a reputation for being the one of the strongest players in the energy sector, due to their ability to maximize profits. When you combine these two elements, it shows how they were a strength (for the company), prior to the accident. As BP could have easily made the necessary investments to upgrade the plant and were well aware of the operational as well safety issues (due to a lack of reinvestment in the refinery). (Blumenthal, 2007) This is important, because it shows how the company did understand the problems that were being experienced at Texas City. As a result, this information is a strength because the company is sturdy enough, financially speaking, to rectify the situation. All they have to do is take the necessary actions to achieve this objective.

As far as weaknesses are concerned BP knowingly violated various safety procedures on a regular basis. This is problematic, because it would create a culture of mismanagement and disregard for various safety regulations. A good example of this can be seen with a health and safety inspection that was conducted at the refinery 18 months before the explosion. Where, they found a number of significant violations to include: alarms that did not work corroded pipes that were about to burst and outdated equipment. (Schorn, 2006) This is important, because it shows how the lack of focusing on safety, would help to create a culture of sloppiness and inefficiency. As result, one can easily draw a connection between these issues and various weaknesses, which helped contribute to the accident.

The opportunities are: that the company can learn from the events surrounding the disaster at Texas City, to prevent them from occurring in the future. This is important, because the company has been struggling, with its public image problem since the disaster. As series of different events would underscore the lack of focus they would have in areas of safety. If BP can begin investing in the different plants / equipment, they could be able to turn the situation in their favor. As they could highlight how they learned from the mistakes at Texas City and begun to implemented new safety protocols company wide. This would be accomplished by addressing various safety issues and investing in the infrastructure (to ensure that they are in compliance with federal regulations).

The possible threats that the company faces is a string of law suits related to the accident. This is problematic, because the settling of various lawsuits with the families of the deceased could expose BP to future ligation. (Schorn, 2006) for example, the explosion would have an impact upon the entire community. Given the fact that large amounts of petrochemicals were dispersed over vast areas, means that there could be lingering health effects later on. Once this takes place, it means that it is only a matter of time until the company will find itself, as the defendant in host of new legal cases surrounding the accident. This could cause the total amounts of compensation and expenses associated with the incident to increase.

The Parts of the Strategic Plan that would have made the Operating Environment Safer

The most obvious part of the Strategic Plan that BP overlooked was goal number three. This states that the CSB wants to have an industry wide implementation of safety procedures across the sector. ("Strategic Plan FY 2004 -- 2008," 2004) at the Texas City refinery, the company would knowingly violate this safety standard on a regular basis. A good example of this can be seen, by looking no further than eight major incidents involving the release of gasoline vapor since 1996. Where, any one of these incidents could have led to a major catastrophe at the refinery. This is troubling, because most refineries will install what is known as flares. These are safety devices that are designed to burn off excess gas overruns. The fact that this continued to occur during the ten years before the accident, highlights the lack of safety standards at the Texas City plant. Part of the reason for this, is because BP had been known for increasing their overall bottom line through cost cutting. As a result, the various cost cutting efforts would have a major impact upon the different safety procedures that were in place. Commenting about what has taken place Carolynn Merritt (the former Chairperson of the U.S. Chemical and Safety Board) said, "Twenty-five percent of their (BP's) fixed costs were cut. And when you cut that much out of a budget in a facility, you lose people, you lose equipment, you lose maintenance, you lose trainers. Our investigation has shown that this was a drastic mistake." This is significant, because it highlights how efforts to cut costs would have a dramatic impact upon the company following the Strategic Plan. As a result, one could argue that the desire of BP to cut costs in any way would make them unable to follow goal number three. As the reduced costs, would slowly have an impact on safety standards at the refinery in Texas City (helping contribute to the accident).

The Role that U.S. Chemical Safety & Hazard Investigation Board would play in the Accident

The CAB would play a role in the investigation after the incident. What happened was the Occupational Health and Safety Administration (OSHA) was negligent, in that they overlooked the obvious safety violations on regular basis at the plant. This is problematic, because when you have a regulatory agency that is unable to effectively shut down locations that are unsafe; it only encourages the company to engage in such behavior. The reason why, is because there is no consequences for BP and their disregard for obvious safety violations. A classic example of this can be found with the eight gas spills that occurred since 1996. Where, the company could continually engage in the pattern of disregard, for the safety of their employees and the general public. This is because OSHA would not take any kind of aggressive enforcement action. In the case of the different gas spills, OSHA could have easily shut down the plant until changes were made in safe regulations. However, the fact that the OSHA continued to overlook what was taking place, meant that they would allow an unsafe work environment to exist. (Blumenthal, 2007) This is important, because it shows how the lack of follow up and the ability to enforce existing environmental / work safety laws, would help to make the situation worse at the Texas City refinery.

After the accident occurred, the CAB would investigate all of the various reports that were received from employees and their families about conditions at the facility. This was in contradiction with the investigation undertaken by BP, which found that employee error was the cause of the accident (not a lack of safety procedures). The results of the investigation by the CAB; would identify significant lapses in the lack of: oversight from OSHA and the cost cutting strategy that BP was utilizing. (Blumenthal, 2007) This is important, because the findings from the investigation would force the industry to reexamine various safety procedures. At the same time, it would push BP to pay $1 billion in making the necessary upgrades to the Texas City facility.

The Barriers that Prevented the Strategic Plan from being Implemented

The barriers that prevented the Strategic Plan from being implemented were: the culture of BP itself. The cost cutting atmosphere of the company would cause the infrastructure at many of their facilities to fall into a state of disrepair. This is problematic, because the lack of investment into new technology and safety equipment; meant that various refineries would become more difficult to operate. As the continued maintenance of key systems will become more expensive (which reduces the amount capital used to maintain them)? At which point, the chances increase that various fail safe measures will not work and different safety procedures will be overlooked. In the case of the Texas City refinery, this would make the situation more dangerous as the lack of investment from the previous owner, would leave the facility in need major infrastructure repairs. Once BP began cutting costs, is when key staff members and various procedures would be eliminated in an effort to save money. At which point, it would only be a matter of time until a tragedy would occur from this strategy. This prevented the implementation of the Strategic Plan, as the cost cutting culture would only make the situation worse.

Clearly, the management of BP knowingly violated the Strategic Plan and the law. As their cost cutting measures, would force employees to work in an unsafe environment for many years. Once this occurred, the company would initially blame employees, while knowing that they played a role in the events that took place. This is troubling, because it shows their desire to maximize profits at any price, would create the right atmosphere for the explosion at the Texas City refinery in 2005. At the same time, the inability of OSHA to shut down this facility highlights, the lack of oversight that was taking place. If OSHA had forced BP to address the obvious safety issues, then the problems surrounding the Texas City plant could have been avoided. This is significant, because it shows how both BP and OSHA would help to create the right conditions for the incident that would take place. As a result, one could argue that the accident at Texas City was the beginning of the reckless environmental and safety policies that BP had engaged in over the years. Where, the lack of focus on safety and extreme cost cutting efforts (when the company was posting record profits) would create the conditions that allowed the accident to occur.