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TEXAS CITY, Texas -- BP is facing numerous allegations and investigations into last year's Texas City, Texas refinery explosion. Among them, that the company's cost-cutting led to the avoidable disaster, according to a report aired by CBS' investigative news show 60 Minutes on Sunday.
According to the report, on the day of the explosion, March 23, 2005, employees were re-starting a unit that was previously shut down for repairs. A tower that was being filled with gasoline overflowed, sending excess gasoline into a back-up unit which also overflowed, releasing a geyser of gasoline into the air.
"I looked down the road. It looked like fumes, like on a real hot day, you see these heat waves coming up and then, I saw an ignition and a blast. Then my windshield shattered. The roof of the vehicle I was driving caved in on me," Pat Nickerson, a long time employee of the Texas City refinery, told 60 Minutes. The gas formed a vapor cloud on the ground, which was most likely ignited from an idling truck.
At least 170 people were injured in the explosion, which 60 Minutes reported as the worst workplace accident since 1989.
The company's refinery, stretching almost two square miles, is the third largest in the U.S. In the days after the explosion, BP fired six employees and blamed the accident on operator error.
60 Minutes toured the refinery, but could not secure an on-camera interview from the company. BP did, however, give the program its report on the explosion, which concluded that there was "no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk."
The chief government official who investigated the explosion told 60 Minutes that the company's report was false. "The problems that existed at BP Texas City were neither momentary nor superficial. They ran deep through that operation of a risk denial and a risk blindness that was not being addressed anywhere in the organization," said Carolyn Merritt, chairman of the U.S. Chemical Safety Board, the federal agency which investigates all major chemical disasters. "These things do not have to happen. They are preventable. They are predictable, and people do not have to die because they're earning a living."
Merritt's 18-month investigation found antiquated equipment, corroded pipes and broken safety alarms at the plant, according to CBS.
The incident involved "three key pieces of instrumentation that were actually supposed to be repaired that were not repaired. And the management knew this," she told 60 Minutes. "They authorized the startup knowing that these three pieces of equipment were not properly working," Merritt said.
If the faulty equipment was not enough, BP also violated its rule that office trailers need to be parked at a safe distance from dangerous operations. The trailers that housed BP employees at the time of the explosion were parked in an open area, next to the unit being filled with gasoline. The company also failed to inform the workers in the trailers about the processes being done nearby. "There was not a thing said about that unit starting up," Pat Nickerson told CBS' Ed Bradley.
"Placing a trailer during a startup operation that's going to be full of people without any warning is the telltale sign that you've lost that understanding and realization of the very risk of what you do," Merritt told 60 Minutes.
Also interviewed was Matt Simmons, chairman of an energy investment banking firm. He said BP has become a global energy player by acquiring companies at cheap prices and cost-cutting. When asked if the money BP made was from cutting costs, Simmons told 60 Minutes, "Well, they had to. But I don't think it was obvious to anybody until now you look back with the benefit of hindsight, they obviously cut way too many costs. … The question becomes at what point do you basically go beyond normal cost-cutting and you're in to reckless behavior."
The report alleges that when BP acquired the Texas City refinery from Amoco eight years ago, the site badly needed repairs. It went on to charge that instead of spending money to revitalize the newly acquired plant, executives in London told refinery managers company-wide to cut their budgets.
"Twenty-five percent of their 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," Merritt told 60 Minutes. "Our investigation has shown that this was a drastic mistake." When asked if this budget cut had a direct connection to the explosion, Merritt said "We believe there is."
Brent Coon, a Texas lawyer representing several victims who are suing BP, will argue that the company knowingly put its employees at risk by the absence of flares that would have burned off the excess gas vapors. "They knew that if they didn't fix these things, they were increasing the risk, unnecessarily increasing the risk, of something major happening," Coon told 60 Minutes.
Employees were aware of the unsafe conditions prior to the explosion, claimed Coon, who said that Don Parus, the refinery's plant manager, showed a report to executives in London that the workers felt the plant was dangerous. Two months later, the refinery exploded, Coon told 60 Minutes.
Although BP reportedly set aside $1.6 billion to settle lawsuits with the refinery's victims and survivors, one person has so far refused to settle. Eva Rowe, whose parents died in the explosion, has filed a lawsuit against the company. Rowe's is the first and possible only civil suit against BP for the explosion. Even though Rowe was offered a settlement for the loss of parents James and Linda Rowe, she will go to trial in efforts to publicize what she feels is the company's lack of concern over safety.