Ever since the Deepwater Horizon exploded in the Gulf of Mexico, David Senko has been tallying the similarities between what he calls "my blast" in 2005 and this new BP (NYSE:BP) disaster.
"His" blast erupted on a clear March afternoon at an antiquated BP refinery that sits on the southern edge of this small Texas town. It killed 15 people -- four more than died on the Deepwater Horizon -- including 11 contractors in a crew that Senko led at the site. Unlike the Deepwater Horizon, however, the effects of the 2005 blast were largely confined to Texas City, so the story of what happened there quickly slipped from the national news.
The Texas City disaster has taken on new relevance today, because the investigations that were done in its aftermath reveal so much about the company that is responsible for what's happening now in the Gulf. Government probes, court filings and BP's own confidential investigations paint a picture of a company that ignored repeated warnings about the plant's deteriorating condition and instead remained focused on minimizing costs and maximizing profits. According to a safety audit BP conducted just before the 2005 blast, many of the plant's more than 2,000 employees arrived at work each day with an "exceptional degree of fear of catastrophic incidents."
What BP has -- or hasn't done -- to improve conditions at the Texas City plant since the explosion is also laid out in the documents.
The U.S. Occupational Safety and Health Administration fined BP $87 million last year -- the largest fine in OSHA history -- for failing to repair many of the safety problems that led to the blast. Four more workers have died in various accidents since then, and two chemical releases in 2007 sent more than 130 people to the hospital.
The plant has been cited so often for violating Texas' air quality laws, which are among the nation's weakest, that last year the Texas Attorney General's office filed civil charges against BP in state court. The most recent violation began two weeks before the Deepwater Horizon sank into the Gulf: Over a 40-day period the plant spewed 538,000 pounds of toxic chemicals into the air, including 17,300 pounds of benzene, a known carcinogen. Environmental experts say the release ranks among the worst air quality violations in Texas in the last decade.
Despite the deaths and the chemical releases, most Texas City residents remain loyal to the company. BP has donated millions of dollars to a community center, parks and the local high school, and people here know their town of 44,000 would wither if the refinery was closed. BP is not only the town's biggest employer; it's also its best-paying, offering starting salaries of $62,000.
"Nobody wants somebody dying on their watch," said Mayor Matt Doyle, a Texas City native whose father also served as mayor. Doyle led the town through the 2005 explosion, and his face grows tense when he talks about it. But bring up BP and the conversation quickly focuses on "vital employment."
Sometimes, though, this tradeoff becomes too terrible to bear, which is why Senko left his lucrative job in the industry and now crusades for legislation to protect its workers.
For much of his career, Senko worked for an engineering firm that had a longstanding contact with BP, and in 2004 he found himself working at the Texas City plant. Before long, he said his workers began complaining to him about safety conditions. The problems were so persistent that Eugene White, his safety manager, threatened to quit.
Senko can't shake off the memory of the balmy day in March 2005 when he met White in a secluded corner of the refinery and persuaded him to stay. "We had a heart to heart," he recalled in a recent interview. "I said, 'Eugene, don't leave now. We've got two weeks left, then you're home free.'"
When the explosion occurred on the afternoon of March 23, 2005, several members of Senko's crew -- including White -- were having their regular afternoon meeting in a temporary work trailer that instantly became a pile of rubble and bodies. Senko would have been there too, if he hadn't been on an emergency trip to a BP plant in California, where other workers from his company were also complaining about safety problems.
"Record OSHA fines, all these hearings, going to criminal court, all these civil cases -- it's had zero impact," Senko said from his home in Houston. "And here we go again. Eleven more people have lost their lives."
The Problems Began Before BP
BP's Texas City Refinery is spread across two square miles of the flat south Texas landscape, its white and gray tanks and towers surrounded by chain-link fence. It is one of the largest and oldest refineries in the United States, capable of producing 3 percent of the nation's gasoline. The buzz of its engines can be heard blocks away, and a strong scent of chemicals lingers at its perimeter. At night, hundreds of orange bulbs give it an imposing glow, as if it were its own city.
The original refinery was built by Pan American Refining Corp. in the 1930s, and the facility has cycled through a string of owners since then. When BP took possession of the plant after the company's 1999 merger with Amoco, the refinery was losing money and in bad repair. Three times during the 1990s, Amoco had chosen not to make major upgrades that various reports said were needed. A staff recommendation in 1991 and an OSHA citation in 1992 specifically urged Amoco to replace the blowdown drums, a key part of the plant's antiquated safety relief system. The drums are a safety system of last resort; they are supposed to vent overpressurized chemicals into the atmosphere in case of an emergency.
Friction emerged during the merger, according to internal BP documents. BP had a reputation for turning quick profits, industry experts say, by wringing money from the companies it bought, while Amoco was considered more sensitive to the needs of its employees. In a 2000 report, BP had also put a $10 million price tag on a human life, something Amoco refused to do.
"BP embraced the principle that these costs can be specified for the purposes of cost benefit analysis," Robert Mancini, a member of BP's risk management team, wrote in a 1999 e-mail to other BP managers. "Amoco was generally unwilling to take this step. This is more a cultural issue than a technical one, but one that will have to be addressed."
Soon after the merger, BP demanded a 25 percent budget cut across all its U.S. operations.
Among the reductions at Texas City:
Cut inspectors and maintenance workers by the dozens to save just over $1 million.Eliminate safety calendars: $40,000 in savings.Reduce purchases of safety shoes for employees: $50,000 in savings.Eliminate safety awards: $75,000 in savings.
Pat Nickerson, a former construction adviser at the plant, said in an interview that he noticed a steady degradation of safety culture and maintenance. When he mentioned his concerns to his bosses, he said they told him to "keep my mouth shut and don't worry about it."
According to a 2007 government investigation, BP dismantled Amoco's centralized health and safety management system and replaced it with a system that varied from operation to operation, a shift that investigators later said "resulted in a loss of focus on process safety."
In 2002, Don Parus, who had come up through the Amoco ranks, was transferred from BP's London headquarters to serve as a site director at the Texas City Refinery. One of the first things he did was hire an outside firm to do a safety audit. It found "serious concerns about the potential for a major site incident due to the large number of hydrocarbon releases (over 80 in the 2000-2001 period)." It also found "mechanical integrity issues" and overdue inspections.
The report recommended $235 million in upgrades to the plant, but it is unclear whether they were made. Safety audits in 2003 and 2004 noted similar problems.
A year later, London again pressured Texas City to reduce its budget, saying the plant was eating up too much capital and not turning enough profit. In response, BP instituted the Texas City Refinery Repositioning Project. In an e-mail to BP staff about the project, Dennis Link, a manager at the plant, said the "key message" is that the refinery "is NOT delivering on profitability vs. % of capital investment. This is part of our 'sense of urgency.'"
New managers who arrived at the refinery were often shocked by the state of the facility. In an interview with BP's internal investigators, one described a "big old run down and dirty refinery" where "people were desperate for hope." Another manager, who had left the plant in 1995 and returned 10 years later, told investigators she was "appalled by the general state of disrepair," according to an internal BP investigation.
One new employee reported being laughed at when he suggested shutting down a unit after a three-quarter-inch fuel gas line blew out. "The mentality in refining is that the units are to continue running no matter what -- it's the cowboy mentality 'save the day,'" according to a 2006 BP investigation.
By 2004, Texas City had become BP's most profitable refinery, raking in more than $900 million in earnings. But BP wanted more.
At the close of the refinery's most successful year ever, London executives gave Parus, who had recently been named the site's business unit leader, a "budget challenge," asking him to slice $65 million from the plant's $300 million operating budget.
Parus declined to comment for this story, but according to a deposition he gave in connection with the 2005 explosion, he pushed back. After several rounds of negotiations, BP reduced the cut to $48 million.
By now, the years of neglect were catching up with Texas City, and Parus made that clear to BP executives Mike Hoffman and John Manzoni. In an emotional meeting in London, Parus showed them pictures of workers who had died at the plant and "portrayed to them that there was a huge cultural issue at TXC on safety," according to an internal BP investigation.
Even as the plant's profits continued climbing, reaching nearly $100 million in January 2005 alone, Parus sent an e-mail to his staff saying that "2004 was not a positive year for Texas City Safety," citing three "avoidable" deaths and a major fire. He called for a two-day leadership meeting that "can, and must, be a turning point for the Safety Performance of this site."
That same month, the Telos Group, an outside auditor that Parus had hired, produced what was probably the most damning internal report ever to emerge from the Texas City refinery. After surveying more than 1,000 workers and interviewing hundreds, the auditors concluded that the plant's employees had an "exceptional degree of fear" of a catastrophe, and that "blindness" across the entire corporation prevented critical safety information from reaching the top levels of BP management. It also said that poor conditions at the plant created hazards "you would never encounter at Shell, Chevron, Exxon, etc."
The 62-page report included direct quotes from some of the workers:
"The heroes around here are the ones working to the production goals and who complete them early. 80 to 90 per cent of what gets recognized is doing it fast counts."
"Telling the manager what they want to hear, that gets rewarded. For example, one person who had cut costs, done a lot of Band-Aids with maintenance and had a quit-your-bellyaching, quit-your-complaining attitude was rewarded in the last reorganization. When his replacement was brought into his previous maintenance position, his replacement found that not a single pump was fit for service; air compressors, not one spare was fit for service."
"Units are 90% of the time run to failure, due to postponing turnarounds [maintenance]. So making money or saving money for that particular year looks good on the books. This is a serious safety concern to operating personnel. We do not walk the talk all the time. Costs and budgets are preached to reduce costs."
Parus shared the results of the report with BP's Gower and Hoffman at a Houston hotel.
"It didn't seem to be a shock to them," Parus said in his deposition. He said he left the meeting without getting increased support.
In March, refinery managers outlined key risks facing the refinery in 2005. One was that plant workers would avoid reporting some safety incidents "in fear of consequences."
Another was that the Texas City site "kills someone in the next 12-18 month" [sic].
On March 23, 2005, Pat Nickerson was steering his company Jeep toward the trailers where the contractors worked when he saw a cloud of gas spewing from a blowdown drum next to a tower in the isomerization unit, about 250 feet in front of him.
Nickerson braced himself inside the Jeep. The blowdown drum was the last escape route for liquid from overpressurized units, and he knew the cloud of gas meant something had gone terribly wrong. When the massive explosion tore through the isomerization unit, it shattered the Jeep's windshield and knocked him unconscious.
When Nickerson woke up, the Jeep had been shut off and an immense fire was raging just feet away. He saw Ralph Dean, one of the contractors, rushing toward the trailer where the contractors often met. Nickerson ran to help, "but there was nothing left" but rubble and bodies.
In the debris, he recognized Ryan Rodriguez, who was "like a second son to me." Nickerson pulled Rodriguez to safety, but he was barely conscious. When the emergency workers arrived, they covered the young man's body with a sheet as they carried him to a helicopter.
"I think he died in my arms," Nickerson said.
When Senko, the contractor whose team was working in the trailer, got word of the blast, he got on a plane and arrived home in time to help identify their bodies.
He's still dealing with the emotional trauma. The faces of his friends are with him every minute of every day, he said.
Investigators eventually pieced together the chain of events that led to the explosion.
They found that workers had accidentally filled a tower in the isomerization unit with 138 feet of flammable liquid, when the tower should have been filled with only 6 ½ feet. The window on the tower that the workers might have used to spot their mistake was so dirty that they couldn't see how much fluid was inside, and the gauge that was supposed to measure the height of the liquid had wasn't designed to measure more than 10 feet. Some safety devices that should have sounded an alarm failed -- others were ignored.
The workers began heating the fluid at the bottom of the tower, as they usually did when they started the system. But with so much fluid in the tower there was no room for it to expand. As soon as it began to boil, it forced its way into the blowdown drum, which couldn't contain it. A massive cloud of heavy gases spewed out the top, then sank to the ground in a clear fog, bending the air in wavy lines like the ones that settle on the horizon on a hot day. When the gas found a spark in an idling truck 25 feet away, it triggered an explosion so powerful that it shattered windows of nearby homes.
Investigations after the blast showed that it might have been prevented.
Company documents produced during a lawsuit by a woman whose parents were killed in the blast showed that in 2002 BP managers had considered installing a flare on top of the blowdown drum to burn off excess gas, a safety feature that wasn't yet mandated by Texas regulators.
"Therefore, we need to decide if we want to invest $150M (thousand) now to save more money later on," wrote BP employee David Arnett in an e-mail to bosses at Texas City. Walt Wundrow, a technical manager, responded to the group: "My counsel is avoid any pre-investment against uncertain future requirements," adding, capital expenditure "is very tight. Bank 150k savings now." another BP employee agreed. "Bank the savings in 99.999% of the cases." he wrote.
A flare would have reduced the tragedy to a minor irritation, said Michael Sawyer, a process safety engineer who has investigated the Texas City plant for some of the plaintiffs' attorneys. "We might have had a lot of little spot fires out in the ground out in the flare yard, but there's nothing there except rocks and weeds," he said in a recent interview. "No one would have been killed, no one would have been injured and no one would have even known or cared about it."
Less than a mile from the blast, tiles fell from the ceiling of the New Life Fellowship church, where R.L. Calhoun has been the pastor for nearly 18 years. When he heard about what happened, Calhoun immediately thought of his cousin, Darnell, who like many members of his congregation work at the refinery.
Days after the blast, Pastor Calhoun and two local ministers spoke at a memorial service at the refinery for the 15 who had died and the 180 who had been injured. He recited a poem by Jane Merchant.
"For half a hundred times I've sobbed, I can't go on, I can't go on! And yet for full a half a hundred times I've hushed those sobs and gone." My answer if you ask me how, May seem presumptuously odd, But I know what kept keeping on When I could not, was God."
Calhoun's cousin survived the blast -- he was home that day with a sore back. But Calhoun has lived in Texas City too long to believe that another blast is impossible.
Accidents are part of life, no matter where you live, he said in a recent interview. And besides, without BP, how would Texas City survive? And doesn't the United States need the gasoline the refinery produces?
"America depends on this city more than they realize," he said. "Nobody knows too much about Texas City in New York, but boy, do they depend on us."
Fallout from the Blast
After the Texas City explosion, the Occupational Safety and Health Administration fined BP $21 million. The company also agreed to a $50 million plea bargain with the U.S. Department of Justice, in which it promised to comply with the improvements OSHA required.
The string of investigations that were conducted after the blast cited cost cutting and poor maintenance as contributing factors.
One internal BP report said that BP had a "poor understanding of risk." Another noted that workers had a "lack of awareness of potential consequences."
A 341-page investigation by the Chemicals Safety Board found that "budget cuts and production pressures seriously impacted safe operations at Texas City" and that BP executives "failed to provide effective leadership and oversight to control major accident risk."
One of the most prominent reports, known as the Baker Panel report because it was chaired by former Secretary of State James Baker, said "BP appears to have had a corporate blind spot relating to process safety."
In a 2007 speech, BP's CEO, Lord John Brown, said the company would spend $1.7 billion more on safety each year for the next four years. The 2005 blast, he said, "was a watershed, and it would forever change BP. That remains true."
But a few weeks after that speech, Brown was forced to resign because of a sex scandal. Tony Hayward was appointed CEO.
The Texas City tragedy soon faded from the national spotlight, but the refinery's problems continued:
In July 2006, a contract worker was crushed to death against the basket of an aerial lift while doing work prompted by the 2005 blast.In June 2007, a contract worker was electrocuted while working on a lighting circuit in one of the units.In January 2008, the top blew off a water filter, killing a BP supervisor.In October 2008, a contract worker was killed after being struck by the bucket of a backhoe.
Tony Buzbee, a lawyer who has represented plaintiffs in more than 300 cases against BP, hired process safety engineer Michael Sawyer in 2008 to review BP's audits and determine whether working conditions at the refinery had improved.
The answer was no.
"BP presently continues to violate Federal law with respect to major process safety management (PSM) requirements, including the same and similar violations as those which resulted in the March, 2005 explosion," Sawyer wrote in his report.
In October 2009, OSHA reached a similar conclusion and fined BP $87 million.
OSHA cited the company with 270 violations for not complying with the agreement it had signed with the agency after the 2005 blast. It also found 439 new "egregious and willful" safety violations, including inadequate safety relief systems.
BP has made "significant progress, but they have not made enough progress," Jordan Barab, assistant secretary of labor for OSHA, told ProPublica. "I've often said before that we think the company as a whole has a systemic safety and health problem throughout its facilities."
Brent Coon, another lawyer who spends about 50 percent of his time on cases against BP, has asked (PDF) the Justice Department to throw out the 2007 plea deal with BP because of the plant's recent problems and what has happened in the Gulf. The Justice Department declined to comment for this story, but in a letter to Coon it said it is "still monitoring closely BP's required compliance with the conditions of probation."
"A lot of key decisions that they made, in the grand scheme of things, they're not saving a lot of money," said Buzbee, who has worked with Coon on some cases. "It's just the mentality of being willing to accept certain risks that put people in danger."
BP is contesting the $87 million fine, saying that its agreement with the government required it only to begin the improvements by fall 2009, not to complete them.
BP told ProPublica it has spent $1 billion to improve plant safety and environmental performance at the refinery. Among other improvements (PDF), it has removed blowdown drums, installed burnoff flares and conducted pre-start-up safety reviews. This has helped improve the refinerys recordable injury rate to place it among industry leaders, BP says.
Mirrors of Texas City in the Gulf
Five years after the Texas City blast, a similar story of cutting costs to maximize profits is emerging from the Deepwater Horizon explosion.
Internal e-mails and reports obtained by the House Energy and Commerce Committee show that in the days before the explosion BP made five critical choices to save money, even though it knew that the well had a "SEVERE gas flow problem," according to a document sent to BP by Halliburton (NYSE:HAL) , the contractor responsible for cementing the well.
In one instance, the company ignored a suggestion from Halliburton to install 21 centralizers, a step that would have helped secure the well. "It will take 10 hours to install them," a BP official said in an internal e-mail. "I do not like this."
Instead, BP installed just six centralizers. When someone raised concerns about that decision, Brett Cocales, a BP employee, responded: "who cares, it's done, end of story, will probably be fine."
Four days later, a few hours after dusk on April 20, methane shot up the well and was ignited by a spark in the rig's engines. The 11 people who died there brought the total number deaths at BP's United States operations since 2005 to 32.
A memorial service for one of the rig workers, Jason Anderson, was held in Bay City, Texas, about 90 miles from Texas City.
"We definitely do not understand why Jason is gone and the other 10 members of his rig," Pastor Clyde Grier was quoted as saying to the packed church. "We cannot let the things we don't understand dismiss what we do."
ProPublica's Lisa Schwartz, Nicholas Kusnetz and Sheelagh McNeill contributed to this report.
July 3, 2010