BP: Damning verdict on safety failings

Lord Browne of Madingley's new mantra on safety at BP is that "90 per cent will be what we do, not what we say". Talk, after all, is cheap. Every BP report to its shareholders, every executive's speech, has always emphasised its commitment to keeping its employees safe.

But yesterday's report by the former US secretary of state, James Baker, is 350 pages of analysis not of what BP has said, but of what it has done. On page after page, it details safety failings at the company's five US refineries, from employees too scared to report accidents to an executive class that failed to implement vital safety procedures. The company, it says, had a "corporate blind spot" when it came to safety.

The cliché "damning" hardly does it justice. Better perhaps to point out that the report is "dedicated to the survivors of the Texas City tragedy and the memory of those who lost their lives".

On 23 March, 2005, gas vapours ignited at its southernmost US refinery, causing an explosion that ripped through employee accommodation on the site. Fifteen people died and more than 170 were injured, making it the worst industrial accident in the US for more than a decade.

The theme of the report is that while BP concentrated on reducing personal injuries at its facilities, from accidents such as crashing company vehicles, it neglected the operational safety of the plants themselves. Executives failed to instill culture where this "process safety" was paramount.

As a result, employees were often poorly trained in the safety procedures required to prevent major incidents, while managers were sometimes too focused on upping production to meet profits targets. And all the while, these old refineries were having their budgets cut when what they needed was investment to ensure they could meet the best safety standards.

"BP appears to have had a corporate blind spot relating to process safety," the report concludes. "BP executive management apparently believed that they were appropriately addressing process safety issues and risks, and it took the tragedy of the Texas City accident to wake BP up to the fact that it was not adequately measuring, tracking and managing process safety performance."

Mr Baker and other panel members interviewed more than 700 BP employees, from hourly refinery workers right up to Lord Browne, and conducted public meetings in the communities where the company is a big employer. What they heard led them to conclude that a root and branch overhaul of the culture of the refineries is vital.

The report says: "A significant number of hourly workers stated during interviews that incidents, near misses and safety-related concerns sometimes did not get reported because of fear of repercussion, and in some cases out of a belief that the refinery would not act on the report. These interviewees commented that people who raise these issues were sometimes branded as troublemakers and given less attractive work."

In seeking an answer to how such a culture had grown up, Mr Baker suggests - in more than one way - that it comes down to money. It does so, firstly, in a similar way to the US government's chemical safety board, which linked the Texas City tragedy to a 25 per cent budget cut at the facility. The carefully worded conclusion yesterday was that the panel did not trace any particular safety failings to any specific budget cuts - it could not have done so, because it did not have access to the budget requests made by Texas City and the other refineries.

Given its general remit to comment on safety processes across the organisation, rather than on the particular causes of the Texas City blast, the conclusion is about as tough as it could be. "If a refinery is under-resourced, maintenance may be deferred, inspections and testing may fall behind, old and obsolete equipment may not be replaced, and process risks will inevitably increase," Mr Baker wrote. "The Panel does not believe that BP has always ensured that the resources required for strong process safety performance at its U.S. refineries were identified and provided."

That conclusion will further inflame BP's critics, who wonder why a company which made $22bn in profits last year was unable to find the resources to implement vital safety procedures that would protect its employees.

But there is a second financial factor more surreptitiously at work. "As an aphorism recognises, 'what gets measured gets managed'. Prior to 2006, performance contracts and variable pay programs in BP's US refineries contained primarily personal safety metrics and milestones but did not contain metrics that would act as a significant positive incentive for ensuring process safety performance. In fact, some of BP's historical metrics and milestones in performance contracts and variable pay programmes may have had a negative influence on refinery process safety performance ... Providing refinery workers with a financial incentive to keep pace on a turnaround schedule may well encourage them to take process safety risks."

One of the most alarming aspects of the report is how it details failures not just at Texas City, but across BP's entire refining operation in the US. Where previously Texas City had been characterised as a particularly decrepit inheritance from the Amoco acquisition, with poor management that pre-dated BP's ownership, Lord Browne was forced to accept yesterday that it was no "outlyer" - it was just the place where those systemic failures came to a fatal head.

A refinery at Toledo in Ohio is singled out as a particular concern. A 2004 report from an outside consultancy told the workforce that "safety is No 1" when it demonstrably was not, and only served to increase cynicism within that refinery, the Baker report says. "At Texas City, Toledo, and Whiting, BP has not established a positive, trusting, and open environment with effective lines of communication between management and the workforce, although the safety culture appears to be improving at Texas City and Whiting."

The question hanging in the air, could a Texas City-style accident happen again?

BP has agreed to adopt all of Mr Baker's report, including submitting to an independent monitor of its compliance for the next five years. The tenth and last of the recommendations is that "BP should use the lessons learned from the Texas City tragedy and from the panel's report to transform the company into a recognised industry leader in process safety management". Even given the report's acceptance of BP's significant improvements since the shock of March 2005, everyone agrees that this goal is still over the horizon.

Baker's main points

* Executives must provide leadership and goals on process safety

* Independent monitor to see BP implements recommendations

* Report publicly on process safety performance

* Refinery safety culture should be positive, trusting and open

* New management system to reduce safety risks at refineries

* Extra safety training for refinery managers

* Better safety support for local refinery managers

* Clearly define safety expectations and manager accountability

* Better safety performance measurement and auditing

* Use lessons from Texas City tragedy to become an industry leader in safety