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Anchorage Daily News
January 31, 2007

http://www.adn.com/front/story/8604491p-8497377c.html

BP will cut pipeline again to study corrosion
EXPLORATORY: The U.S. request is not related to criminal investigation.
By WESLEY LOY
Anchorage Daily News
Published: January 31, 2007
Last Modified: January 31, 2007 at 03:45 AM

PHOTO
http://www.adn.com/ips_rich_content/633-31PrudhoePipeLoc.gif

BP this week plans to cut a 40-foot section out of a major Prudhoe Bay pipeline and study it for clues about why it sprang leaks last summer, causing an unsettling partial shutdown of the nation's largest oil field.

It's the second time in less than a year that federal authorities have asked BP to snip out a piece of Prudhoe pipe for analysis.

Last year, a federal grand jury investigating possible criminal violations hit BP with a subpoena for a segment of another leaky pipeline. That piece is being held as evidence.

This latest request for a pipe section isn't related to the criminal investigation, a federal official said Tuesday.

Rather, it is part of efforts to learn more about the aggressive strain of corrosion that ate numerous holes and near-holes inside the steel pipeline that leaked in August. The pipe, three miles long and 30 inches in diameter, is on Prudhoe's east side.

"The main goal is to find out the root cause," said James Wiggins, a spokesman for the U.S. Pipeline and Hazardous Materials Safety Administration. The answer could prevent future pipeline ruptures, he said.

BP runs the giant oil field on behalf of itself and other owners including Exxon Mobil and Conoco Phillips.

The London-based company has been under fire since early last year for lax maintenance of Prudhoe Bay pipelines, drawing scrutiny and pointed criticism from pipeline regulators, members of Congress and others.

The problem pipes are known as transit lines -- major trunk lines that drain oil out of the vast field and feed it into the larger trans-Alaska pipeline, which carries the crude 800 miles south to the tanker port at Valdez.

The transit lines are old, installed before North Slope oil production began in 1977.

Because the lines carry pure crude oil free of corrosive water, BP executives have said they were surprised that holes developed and caused leaks. But they also have admitted the company failed to regularly clean and inspect the pipes for problems.

According to letters exchanged between BP and the federal pipeline administration, BP crews will begin work Thursday on cutting out the 40-foot section of pipe.

"It's not a small job," BP spokesman Daren Beaudo said Tuesday.

The badly corroded, above-ground pipeline has been out of service since it leaked in August, and BP plans to demolish it. It's been drained, but some residual oil might still be inside, Beaudo said.

Crews will take precautions to contain any oil that might spill when they cut out the section, and dangerous petroleum vapors will be snuffed by sweeping the pipeline with nitrogen, according to a BP plan submitted to regulators.

The plan says a crane will lift the length of pipe onto a truck for delivery to a shop, where it will be cut into smaller pieces for study of corroded spots, sediment buildup and scaly deposits, which are thought to have contributed to the corrosion outbreak.

Meantime, the exposed ends of the pipe left in the field will have to be sealed to prevent leaks.

The whole operation is expected to take four days, and federal pipeline regulators will be on hand to "witness the activities," according to the correspondence.

The regulators also asked BP to document the "chain of custody" for the pipe section.

That doesn't necessarily mean the section is evidence to be considered in a criminal investigation or enforcement action against BP, Wiggins said.

Rather, that's the normal procedure any time segments are cut out of pipelines for study, as happens from time to time on damaged or ruptured pipelines around the country, he said.

Beaudo said BP is cooperating fully in handing over the pipe section to regulators.

"They said they wanted it and we said we'd do it," he said. "We're all interested in the corrosion mechanism."

In October, after BP received a subpoena, the company cut a section out of a similar transit line on the western side of Prudhoe Bay.

That section encompasses the almond-sized hole through which an estimated 201,000 gallons of crude oil leaked slowly onto the tundra. The spill, discovered in March, was the largest oil spill ever on the North Slope.

Daily News reporter Wesley Loy can be reached at wloy@adn.com or 257-4590.

BP bosses debated Texas report
By Sheila McNulty in Houston
Published: January 29 2007 02:00 |
Last updated: January 29 2007 02:00

BP's senior executives debated how much to reveal in its own report on the fatal Texas City accident, according to internal e-mails.

Cynthia J Warner, BP's new group vice-president for refining, was in favour of limiting what was included in the internal report, the Financial Times has learned.

"I think it's essential that we limit root causes in this report to those that led to the Isom incident and to those things that would have been discovered in the focused investigation of the Isom incident,'' Ms Warner said in an e-mail to John Mogford, BP's global head of safety and operations.

The FT has obtained a copy of the e-mail, dated October 12 2005.

Ronnie Chappell, BP representative, said Mr Mogford had asked Ms Warner to comment on his report into the critical factors and underlying causes of the March 2005 explosion of the Isom unit at Texas City, which killed 15 and injured 500 in the biggest US industrial accident in a decade.

Yet Ms Warner complained to Mr Mogford that she was "disappointed that almost none of my input seems to have been included".

"This will become a public document and, thereby, creates a level of specific commitment and need to discuss that requires a very high standard of us being absolutely sure of our position.

"I agree that there is a much broader set of root causes that we must address related to our overall system of Operations Excellence, but the Isom investigation isn't the place to put these things, and you and I have been put in place to find and address them, so I'm not worried that they will get overlooked.''

Despite noting that the report was Mr Mogford's responsibility and "no one can tell you what ought to be in it", Ms Warner said: "I just want to be sure you've had the chance to hear some views of someone who has spent a lot of time in refineries and in Texas City so you can consider them.''

She was concerned that some areas were being overlooked.

"There are some critical things that aren't included as root causes that I think we must highlight and fix. One is the underlying issue of divisiveness and lack of teamwork and another is the absence of a technical focus on the day-to-day operations of the equipment at the Isom unit.''

Ms Warner objected to Mr Mogford's conclusions on BP's outdated blowdown system, which vented to the atmosphere instead of to a more modern flare.

"I think we are getting way ahead of ourselves when we conclude that the appalling lack of focus on the Blowdown system as a critical safety system that needed to be focused upon, maintained, and eventually phased out is a sign that our overall focus on Process Safety is a shambles.''

Ms Warner admitted BP could have problems with its process safety system but added: "There are a lot of good things about it and, for the most part, I'll allege that it's in good shape.''

The independent panel led by James A Baker III, the former secretary of state, reported last week that "significant process safety culture issues exist at all five US refineries''.

BP Web site
January 16, 2007

BP News <editor@bp.com>

BP will Implement Recommendations
of Independent Safety Review Panel

HOUSTON -- BP p.l.c. will implement the recommendations made by an independent safety review panel as part of the company's continuing effort to improve its safety culture and to strengthen and standardize process safety management at BP's five U.S. refineries.

BP already has taken a number of actions which align with the recommendations of the BP US Refineries Independent Safety Review Panel and will, after a more thorough review, develop plans for additional action at its U.S. refineries and for applying lessons learned elsewhere.

In a report made public today, the Panel identified material deficiencies in process safety performance at BP's U.S. refineries and called on BP to give process safety the same priority BP has historically given personal safety and environmental performance. The Panel made recommendations for improving BP's process safety leadership, systems, expertise and oversight of process safety performance.

The Panel, led by former U.S. Secretary of State James A. Baker, III, was appointed by BP Group Chief Executive John Browne in October 2005 on the recommendation of the U.S. Chemical Safety and Hazard Investigation Board (CSB). BP is cooperating with the CSB in its investigation of the March 23, 2005 explosion and fire at the Texas City refinery that claimed the lives of 15 workers and injured many more.

John Browne said: "I want to thank Secretary Baker and the other Panel members for their effort, their insights and their recommendations," Browne said. "We asked for a candid assessment from this diverse group of experts and they delivered one. 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."

The Panel acknowledged the company's efforts stating that "since March of 2005 BP has expressed a major commitment to a far better process safety regime, has committed significant resources and personnel to that end, and has undertaken or announced many measures that could impact process safety performance at BP's five U.S. refineries." The Panel also said that making dramatic change in large companies is difficult in short time frames and that the ultimate effectiveness of the actions taken or planned by BP could only be determined over time.

"Many of the Panel's recommendations are consistent with the findings of our own internal reviews," said Browne. "As a result, we have been in action on many of their recommendations for a year or more. Our progress has been encouraging but there is much more to do. Members of our refining leadership team will be meeting with the Panel within the week to address how best to implement these recommendations.

"I share the Panel's confidence in BP's refining workforce," Browne added. "They are, as the Panel stated, ready, willing and able to participate in a sustained effort to move BP towards process safety excellence. As I told the Panel, I intend to ensure BP becomes an industry leader in process safety management and performance. We will want to do everything possible to prevent another tragedy like the one that occurred at Texas City."

Notes to editors
The full text of the report prepared by the BP US Refineries Independent Safety Review Panel is available at www.bp.com/bakerpanelreport (pdf, 2352KB)

•       The BP US Refineries Independent Safety Review Panel was established to make a thorough, independent and credible assessment of corporate oversight of safety management systems at the company's five U.S. refineries and of the company's corporate safety culture. The Panel did not investigate the Texas City incident or any other past event.

•       The Panel makes clear in Section 1 that its findings "should not be construed as suggesting or determining that any particular individual, whether a refinery employee or contractor, refinery manager, corporate-level manager or BP board member failed to meet any applicable legal standard, was negligent, otherwise committed a wrongful or tortious conduct, or breached any duties owed to BP, BP's shareholders or anyone else. Any such finding or determination is outside the scope of the Panel's charter. The Panel simply did not seek to develop the type of data and evidence that would be necessary to make such a finding or determination. The Panel observes, however, that during the course of its review, it saw no information to suggest that anyone - from BP's board members to its hourly workers - acted in anything other than good faith."

•       The Panel also says that it is under no illusion that the deficiencies in process safety culture, management, or corporate oversight identified in the report are limited to BP. All companies in the industry should give serious consideration to its recommendations.

•       BP has taken significant action to reduce risk and improve process safety performance at its U.S. refineries and its other facilities around the world. Those actions include:

o       Formation of a senior executive team, which includes several managing directors, to support and oversee process safety, integrity management, and operational integrity initiatives within the company.

o       Creation of a new Safety and Operations function responsible for establishing Group operations and process safety standards and auditing safety and operations performance. The Safety and Operations function reports directly to the Group Chief Executive.

o       The appointment of a new Group Vice President for Refining familiar with the work of the Panel. Cynthia Warner will move into the position effective April 1, 2007 after serving as the company's liaison with the Panel.

o       Significant expansion of the responsibilities and powers of the Chairman and President of BP America to include monitoring BP's U.S. operations to ensure compliance with regulatory requirements and company standards, and to rectify problems when they are identified. Robert A. Malone, a BP Executive Vice President with significant operations experience, was appointed to the post effective July 1, 2006. He reports directly to the Group Chief Executive.

o       Creation of an advisory board to assist BP America management in monitoring and assessing BP's US operations.

o       Appointment of retired federal Judge Stanley Sporkin to act as a channel for receiving, investigating and resolving concerns raised by BP staff and contract workers in the U.S.

o       An increase in spending from $1.2 billion in 2005 to an average of $1.7 billion per year from 2007 to 2010 to improve the integrity and reliability of our refining assets in the United States. This represents an increase in, and an acceleration of, planned spending.

o       Systems to manage process safety at the refineries are undergoing a major upgrade, with some $200 million earmarked to pay for 300 external experts who are conducting comprehensive audits and re-designs, where necessary, of all process safety systems. The new systems are targeted to be installed and working by the end of 2007, a year ahead of the original schedule.

o       Adoption of new corporate standards governing operations integrity management and control of work and the adoption of a new engineering technical practice governing the use of temporary occupied structures in refineries and other facilities.

o       Significant external recruitment across our US refining businesses to increase underlying capability in operations and engineering.

o       Providing focus through the creation of a six point plan, including implementation of the Integrity Management and Control of Work Group Standards.

o       Changes in the way safety audits are conducted and results communicated within the corporation. The company has appointed a central 60-person operations and safety audit team led by an expert recruited from outside the company.

o       Development of metrics as leading indicators of process safety performance.

o       Installation of modern process control systems on major units, the transition to a more powerful maintenance management system, improvements in worker training, and the removal of blow down stacks which vent heavier than air light hydrocarbons to atmosphere.

Other background
• BP has accepted responsibility for the March 23 explosion at the Texas City refinery and for the management system failures and employee mistakes which contributed to or caused the explosion.

• The company has set aside $1.6 billion to compensate victims of the explosion and has worked to resolve claims arising from the incident. Settlements have been achieved with the families of every worker who died and with many of the workers who suffered injuries.

• BP has entered a settlement with the U.S. Occupational Safety and Health Administration resolving more than 300 separate alleged violations of OSHA safety regulations. BP paid a fine of just over $21 million. The company agreed to a number of corrective actions, including the hiring and placement of process safety and organizational experts at the refinery. Under the agreement, BP does not admit the alleged violations or agree with the way OSHA has characterized them.

• BP continues to cooperate with the CSB, the U.S. Environmental Protection Agency and the Texas Commission on Environmental Quality regarding the Texas City explosion and related concerns.

• BP has endorsed a CSB recommendation urging the industry to revisit existing standards for the use of temporary buildings inside refineries and other processing plants. BP has established a new standard for its refining operations and plans to share it with others in industry.

For further information contact:
Name: Ronnie Chappell
Office: BP Press Office, Houston
Telephone: +1 (281) 366 5174
Office: BP Press Office, London
Telephone:+44 (0)207 496 4076

Anchorage Daily News
January 24, 2007

http://www.adn.com/money/industries/oil/story/8585798p-8478888c.html

Kuparuk oil field marks 25th anniversary
MORE TO COME: Officials say production
not yet to halfway point.
By KRISTEN NELSON
Petroleum News
Published: January 24, 2007
Last Modified: January 24, 2007 at 03:38 AM

The Kuparuk River oil field, the state's second largest, has been in production for more than 25 years, since Dec. 13, 1981.

It has a lot more anniversaries to go.

"We don't feel we're halfway through the field's life yet, even though we're at the 25-year anniversary," said Paul Dubuisson, manager of North Slope operations for Conoco Phillips, the company that runs Kuparuk.

"Today the field continues to be an important legacy asset to our company," added Jim Bowles, Conoco's Alaska president.

Kuparuk, discovered in 1969, is located to the west of Prudhoe Bay, the largest oil field not only in Alaska but the nation.

According to state figures, Kuparuk and related fields had produced almost 2.2 billion barrels of oil through the end of November. By comparison, Prudhoe has produced more than 11 billion barrels.

The sprawling Kuparuk field has 47 active drill sites and some 1,100 wells, about half of which produce oil; the others inject water, gas or other substances back underground, Dubuisson said.

By applying advanced technologies, Conoco engineers see a lot of potential left in Kuparuk.

"Like most large fields it continues to expand," Dubuisson said. Engineers see two main targets for getting more out of Kuparuk: Tapping the pools of thick, sticky oil called heavy crude associated with Kuparuk, and also drilling more wells to exploit thoroughly the field's conventional oil reservoirs.

New drilling techniques and other innovations have unlocked "a tremendous amount -- but there's even more there," Dubuisson said.

Three-dimensional seismic surveys conducted in the field two winters ago allowed Conoco to identify "quite a bit" of potential in the existing field for more development, which can be done with more drilling and treatments such as waterflood.

Billions of barrels of heavy crude are contained in West Sak and Ugnu, two heavy oil accumulations that overlie the deeper Kuparuk reservoir. Because the heavy oil layers are relatively cold, sticky and hard to pump, Conoco historically has simply drilled through the West Sak and Ugnu pools to tap the Kuparuk oil, which is easier to produce.

As the Kuparuk pool plays out, more emphasis will be placed on developing the heavy crude, Conoco managers say.

West Sak development already is under way at Kuparuk, and someday work might pick up to develop Ugnu, which lies above West Sak and is an even heavier grade of oil.

Conoco is making good progress at West Sak, Dubuisson said.

"We brought on another well (Dec. 10) making about 3,000 barrels a day," he said. "It wasn't that long ago it would have been a couple hundred barrels a day."

One problem with the heavy crude is that a lot of sand tends to come out of the ground mixed with the oil. Conoco has improved equipment and found ways to separate the oil and sand.

"We've gotten very good at managing it," Dubuisson said. "The wells produce some sand initially when you bring them on, but as you clean them up ... it goes back to just a very small background level."

State records show West Sak has produced 25.9 million barrels so far, while Ugnu has produced 1,606 barrels.

Conoco owns 52 percent of Kuparuk and runs it on behalf of other owners including BP, which owns 37 percent, Exxon Mobil with 6 percent and Chevron with 5 percent.

Xxxxxxxxxxxxxxxxxxxxxxxxxx

http://www.adn.com/news/alaska/wildlife/bears/polar_bears/story/8586538p-8479596c.html

Polar bears shift dens off the ice
BEAUFORT SEA: Study shows that pregnant sows dig in on land; global warming is cited.
By DAN JOLING
The Associated Press
Published: January 24, 2007
Last Modified: January 24, 2007 at 02:24 AM

More pregnant polar bears in Alaska are digging snow dens on land instead of sea ice, according to a federal study, and researchers say deteriorating sea ice due to climate warming is the likely reason.

From 1985 to 1994, 62 percent of the female polar bears studied dug dens in snow on sea ice. From 1998 to 2004, just 37 percent gave birth on sea ice. The rest instead dug snow dens on land, according to the study by three U.S. Geological Survey researchers.

Bears that continued to den on ice moved east in the Beaufort Sea off Alaska's northern coast, away from ice that was thinner or unstable.

"We hypothesized that the sea ice changes may have reduced the availability or degraded the quality of offshore denning habits and altered the spatial distribution of denning," said wildlife biologist Anthony Fischbach, lead author of the study. "In recent years, Arctic pack ice has formed progressively later, melted earlier, and lost much of its older and thicker multiyear component."

The study makes no predictions of harm in the short term but suggests the Beaufort Sea bear population could be harmed if warming continues. Though bears are powerful swimmers, at some point they might face daunting distances of open water to reach denning habitat on shore.

"If Arctic sea ice continues to decline, we predict that the proportion of coastal denning will continue to increase until the autumn ice conditions prevent pregnant bears foraging offshore from reaching the coast in advance of denning," Fischbach said.

The study is under USGS review. Fischbach spoke about the study at the Alaska Marine Science Symposium, which continues through today in Anchorage. The co-authors are research wildlife biologists Steven Amstrup and David Douglas.

The study is likely to give ammunition to conservation groups calling for polar bears to be listed as threatened under the Endangered Species Act.

Three conservation groups sued the federal government in late 2005 seeking protections for polar bears under the law, blaming global warming for the melting of sea ice, the primary habitat of the animals.

Department of Interior Secretary Dirk Kempthorne in December proposed listing polar bears as a "threatened" species. A public comment period on the proposal is open through April 9.

"Threatened" under the law means a species is likely to become endangered in the foreseeable future. "Endangered" means it is in danger of extinction throughout all or a significant portion of its range.

The listing is opposed by Alaska Republican Gov. Sarah Palin, who told Kempthorne by letter that listing polar bears has the potential to damage the economy of Alaska and the nation without any benefit to polar bear numbers or their habitat, and that there are no human activities that can be regulated to effect change.

Conservationists disagree.

"The dire impacts from global warming on America's polar bears continue to mount: drownings, cannibalism, starvation, reduced cub survival and now denning dislocation," said Deborah Williams, president of Alaska Conservation Solutions, an Anchorage-based group aimed at halting climate change. "Clearly, we need to demand that Congress and the administration protect polar bears, and our future, by reducing greenhouse gas emissions and listing polar bears under the Endangered Species Act."

Kassie Siegel of the Center for Biological Diversity, the lead author of the petition seeking to list polar bears as threatened, said the study underscores the scope of changes in the Arctic.

"It's such the canary in the coal mine," Siegel said. "If you want to know what's going to be happening in the rest of the world in 25 years, all you have to know is what's happening in the Arctic. Everything is changing, and not for the better."

Alaska polar bears spend most of their lives on sea ice, a marine habitat from which they hunt for their main prey, ringed seals, plus bearded seals and other animals.

Typically in November or December, after sea ice has reconnected to Alaska's coast, pregnant polar bears dig dens where snow has piled into drifts.

Sea ice pushed into shore becomes jumbled into pressure ridges that capture snow used for dens. However, with new ice, that can happen after bears want to make dens. On shore, terrestrial features catch snow.

"They're generally using coastal bluffs and the river bluffs," said study co-author David Douglas. "Along the big rivers, they have bluffs that catch snow."

The USGS estimates the Beaufort Sea polar bear population at 1,526. In the study, researchers determined that denning distribution had shifted, based on satellite radio tracking of 89 bears in northern Alaska that led them to 124 dens between 1985 and 2004.

They believe pregnant bears shifted onto shore because the sea froze later, creating few pressure ridges. Also, more old ice that may have had pressure ridges had melted.

"The first-year ice would just be forming," Douglas said. "It's very flat, unless there's been an early winter that allows it to thicken enough and actually ridge up and then catch snow."

They did not speculate whether bears might be harmed in the short term.

"The big issue is, the long term may be coming sooner that we thought it was," Fischbach said.

"If the foraging areas get so far off shore they (bears) cannot reach the coastal areas in advance of denning, and at the same time they'll be facing deterioration of the offshore denning habitat, then we would expect there would be reproductive consequences to the population."

Researchers rejected two alternative hypotheses for the shift to land -- hunting and the presence of more whale carcasses on beaches. Canada and the United States minimized hunting about 30 years ago but the denning shift occurred less than a decade ago. They also observed that just 5 percent of "pre-denning" females passed within 5 kilometers of a carcass site, compared to 30 percent of females that did not den that year.

Houston Chronicle
January 21, 2007

http://www.chron.com/disp/story.mpl/business/4486108.html

BP workers ill-trained for dangers, report says
Baker panel criticizes lack of hands-on exercises
By ANNE BELLI
Copyright 2007 Houston Chronicle

When a unit at BP's Texas City refinery unexpectedly shut down during a power outage a few weeks ago, newly hired operators froze in confusion, not knowing how to handle the potentially dangerous situation.

"I never saw so many scared faces in my life," said one seasoned operator.

"These were brand-new operators. Some of these guys had not been trained, and they did not know what to do," said the operator, who spoke on condition of anonymity out of fear of retribution.

Indeed, BP's training of its workers who operate and oversee some of the most dangerous equipment in the country falls short of providing them with the expertise they need to safely do their jobs, said a panel of experts headed by former Secretary of State James A. Baker III.

The safety review panel was formed at the behest of federal investigators looking into the March 2005 blast at the Texas City plant, where 15 people were killed and scores more seriously injured.

BP spokesman Scott Dean confirmed that an outage happened a few days before Christmas but said that all units were brought down and restarted safely and without incident.

"Regardless of someone's opinion of how people appeared, they did react, followed procedures and took action in a professional and safe manner," Dean said. "No one was injured, and there was no significant environmental impact apart from the flaring that was reported and standard practice when you have a power failure."

Spreading the blame

Nonetheless, in its scathing report, released after a 15-month investigation, the panel lambasted BP's training programs not only at the Texas City site but also at four other refineries the company operates nationwide saying that a lack of knowledge among workers, supervisors and managers was at the root of many safety woes.

"The panel believes that the effects of widespread deficiencies in process safety training and education have manifested themselves in a number of ways at BP's U.S. refineries," the report states.

BP has acknowledged training shortfalls at Texas City, and the Baker report notes several steps that the company already has taken to beef up its education programs nationwide.

Among the encouraging moves is that a new company vice president in the Safety and Operations Group told panelists that better training for supervisors "is one of the first programs" that would be implemented, the report says.

Further, the company has said it has implemented a new "leadership development" program and other enhanced training initiatives at Texas City.

"During the past 18 months, BP has made significant progress in implementing a comprehensive program at its Texas City refinery that includes investment in people, plant and process," Dean said.

But the Baker panel's report indicates that the oil giant whose refineries have the capability of processing roughly 1.3 million barrels of crude a day into gasoline, jet fuel and other products has widespread training problems to fix.

Inexperienced trainers

According to interviews with workers, newly hired operators sometimes were trained by inexperienced supervisors, the report said. Operators were promoted to supervisor positions without being required to demonstrate that they understood the units they were overseeing. And engineers "routinely indicated that they believed they were not given sufficient training to do their jobs."

Outdated manuals were being used, and workers often asked in vain for more mentoring, the report says.

At Texas City, more than one in three hourly operators or 35 percent agreed in a survey done by the panel that "the training that I received does not provide me with a clear understanding of the process safety risks at my refinery."

There and elsewhere, training too often has meant requiring workers to take self-administered computer courses while mentoring and so-called "gun drills" designed to simulate emergencies don't happen often enough, the report said.

"At most of BP's U.S. refineries the implementation of and over-reliance on BP's computer-based training contributes to inadequate process safety training of refinery employees," the panel found.

Computer training seemed to be preferred, the panel found, because it provided a quick and easy way to prove compliance with federal training regulations to inspectors. But what on paper was adequate training in reality was not, it added.

The report indicates that Texas City workers agree.

"In operations, it can't be like that," said the experienced operator who witnessed the recent power outage. "It has to be hands-on. You have to have face-to-face training. One operator is responsible for thousands of valves, and you can't have a computer explain all of that."

Training funds decline

Part of BP's training problems, the panel concluded, stems from a lack of financial backing and work force.

That was especially evident at Texas City, where the training budget plummeted from $2.8 million in 1998 to $1.7 million in 2005, the year of the blast, the report stated. Full-time employees devoted to training also dipped from 28 to nine in the same period. Even then, some of those training coordinators spent as little as 5 percent of their time actually training, the report said.

Steve Erickson, executive director of the Gulf Coast Process Technology Alliance, said BP isn't the only oil company that has reduced training positions in recent years as more training has been done by computer.

Erickson, whose alliance advocates the hiring of degreed process technicians, said computer training is a good alternative to classroom training when it comes to "general" instruction. But computers should not take the place of well-qualified people who know the peculiarities of a specific plant's equipment, he said.

He said simulators, similar to those used in the aviation industry, are very helpful because they teach workers how to react in emergency situations. Simulation technology had been "horrendously expensive" but has become more affordable in recent years, Erickson said.

Union officials hope to finalize new training agreements with BP at a meeting at the end of this month, said Kim Nibarger, coordinator of the United Steelworkers' Triangle of Prevention Program.

He said the union safety trainers have long favored a more hands-on approach to training than the use of computer programs and testing.

"We train on the small-group level," he said. "That's the way adults learn."

anne.belli@chron.com

Wall Street Journal
January 18, 2007
Afternoon

Refining Industry Grapples With Baker Findings On BP
DOW JONES NEWSWIRES
January 18, 2007 5:33 p.m.
By Beth Heinsohn and Jessica Resnick-Ault
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--BP PLC (BP) has vowed to implement recommendations contained in this week's independent safety report of its refineries, but it isn't clear yet how much impact the report will have on the industry as a whole.

Some industry consultants predicted the report, commissioned in the wake of a fatal BP refinery accident in March 2005, would prompt dramatic change in the industry.

But the report, which suggested that BP's problems may be shared by other refiners, has raised a tricky question for industry officials, who say they are taking its findings seriously, even as they defend their operations.

The suggestion that BP's deficiencies may exist elsewhere in the industry "may be an unfair statement," said NPRA executive vice president Charlie Drevna, but the industry still needs to take heed. "If you're ever satisfied, you've lost the game," he added.

Industry Stands Up For Safety Programs

As expected, the long-awaited Baker report harshly criticized the British oil giant, concluding that BP has "material process safety deficiencies" at all five U.S. refineries and lambasting BP for excessive cost-cutting at the plants.

Process safety involves steps companies should take to reduce the inherent risk of working with explosive chemicals, heavy machinery and other industrial hazards arising from events outside the control of workers.

BP's focus on improved personal injury rates distracted the company from looking at indicators related to process safety at its U.S. refineries. The company's reliance on this data "combined with an inadequate process safety understanding created a false sense of confidence that BP was properly addressing process safety risks," according to the report.

But Baker also suggested that BP is not the only company with problems.

"We are under no illusions that the deficiencies we have identified are unique to BP," said Baker, who declined to elaborate on BP's performance relative to peers during a news conference Tuesday in Houston. Baker was commissioned to lead the panel in the wake of a deadly March 2005 blast at BP's Texas City refinery that killed 15.

Besides NPRA's Drevna, who hailed the refining industry's "commendable history" of safe operations, its sister group, the American Petroleum Institute, also defended the industry. In 2005, the refining industry saw 1.4 occupational injuries and illnesses per 100 full-time employees, compared with a rate of 6.3 for all U.S. manufacturing employees, API said.

But a consultant who contributed to the Baker report warned that almost every refiner has reduced personnel and technical resources at the same time that the public is demanding fewer incidents.

"You can't just keep rolling along with fewer resources and hope for these incidents not to occur," said Jack McCavit of Texas-based J.L. McCavit Consulting LLC.

McCavit is a former chemical company operations manager who has urged professional groups in the industry to come up with process safety guidelines.

In a forthcoming book based on work he did at Celanese Chemical Co. McCavit's suggestions include greater frequency of safety system checks between audits done every three years.

"We hope we've got some ways to help people evaluate their (safety) culture, and things they can do to improve their culture," he said.

Safety Changes Seen Ahead

Changes to oil companies' safety systems are likely on the way, possibly for bottom-line reasons, said industry consultant George Pilko, chairman of Houston-based Pilko and Associates.

"This is one of those watershed events, particularly considering the threat of criminal prosecution that hangs over BP," Pilko said.

Given the scrutiny BP executives came under as a result of the Texas City accident, top management at oil companies will likely review environmental, health and management systems as well as safety regimes, he said.

Pilko's group has advised top U.S. energy companies, including BP, Valero Energy Corp. (VLO), ConocoPhillips (COP), ExxonMobil and Marathon Oil Corp. (MRO) on environment, health and safety.

"They'll do some extensive benchmarking and senior executives and outside directors will want to know," Pilko said, referring to oil companies with refining operations.

-By Jessica Resnick-Ault, Dow Jones Newswires; 713-547-9208; jessica.resnick-ault@dowjones.com

-By Beth Heinsohn, Dow Jones Newswires

201-938-4435; beth.heinsohn@dowjones.com

Wall Street Journal
January 18, 2007

Report Shows Downside Of BP CEO's Refinery-Light Strategy
DOW JONES NEWSWIRES
January 18, 2007 7:30 a.m.
(This article was originally published Wednesday)
By John M. Biers
Of DOW JONES NEWSWIRES

HOUSTON (Dow Jones)--In July 1999, BP PLC's (BP) Chief Executive Lord John Browne announced a bold plan for improving returns at BP that included a "strategic decision" to sharply reduce global refining capacity in the expectation of persistently weak profit margins.

Browne's agenda, which included a plan to reduce refinery capacity by about a third, was generally praised by industry watchers at the time, generating headlines like "BP Amoco stays step ahead in oil super-league."

But with Tuesday's release of an independent report harshly critical of BP's U.S. refining division, the focus returned to the operational downside of Browne's downstream-light approach - a strategy that also misread the recent surge in refining assets that has generated talk of "the golden age of refining" after a long slump.

The report, by former Secretary of State James Baker's commission, faults a corporate culture that viewed refining as a "tolerated cousin," in the words of some BP refining officials quoted in the report, indicting a pattern of underinvestment that marred employee morale. BP commissioned the report after a March 2005 Texas refinery accident killed 15 workers.

"BP has not always ensured that its U.S. refineries had sufficient staff and capability to promote strong process safety performance," the report said.

The effect of ongoing staff cuts was "a collective loss of human expertise in the refining business, both in the line and in supporting functions," it said.

The Baker report noted that BP's two most senior executives over refining, Browne and Global Downstream Chief John Manzoni, came from the exploration and production wing of the business and had no prior refining experience. Although the Baker panel "would not necessarily" expect those two officials to have been process safety experts, it called the lack of a senior advocate for refinery process safety "a corporate blind spot."

Browne announced last week that he will step down in July, more than a year ahead of schedule. Although he has been credited with a number of landmark strategic moves, his last years with the company had been plagued by accidents and governance problems in the U.S.

Refining "has never had high visibility within the company under Browne's term," said James Halloran, who holds 4.3 million shares of BP at National City Private Client Group in Ohio. The Baker report "gives (BP) cover for things they should have done (including) a decent process for how they invest capital."

"I don't think BP has adapted to the greater earnings power for refining, in terms of placing greater emphasis on it," Halloran said.

BP spokesman Ronnie Chappell said BP is investing aggressively in refining, noting the company's commitment to boost annual U.S. refining spending by $500 million for the next four years. Although the company sold some refineries after its Amoco and Arco acquisitions, BP began increasing investment in refining soon after that, "well in advance of refinery margins being as healthy as they are today," he said.

"These are businesses we are investing in and working to keep viable and competitive," Chappell said.

On Tuesday, Browne categorically denied that the company put profits over safety.

Regarding the report's observations on senior leadership, Chappell said John Mogford has been appointed a senior vice president with authority over process safety issues. Browne and Manzoni are both "talented, skilled and capable" executives seasoned in many key facets of oil and gas, a vast and complex industry, he said.

In identifying "material process safety deficiencies" at all five of BP's U.S. refineries, the Baker report notes that BP's Texas City refinery faced persistent budget pressure. The accident-plagued Texas plant moved aggressively to meet a post-merger 25% cut in the capital budget, even after a period of lean spending while the plant was still owned by Amoco. The plant faced more pressure in 2002, the report said.

In keeping with its charter with BP, the Baker panel didn't weigh in on whether cost-cutting caused the March 2005 explosion at Texas City. The U.S. Chemical and Hazard Investigation Board has alleged this causality, while BP has contested it.

Many of these issues came together in BP's Ohio refinery, where employee surveys commissioned by Baker showed that frequent refinery management turnover and anemic spending left workers thinking that "Toledo was merely a training ground that did not fit into BP's long-term plans, and this damaged the general morale of the Toledo workforce," the report said.

-By John M. Biers, Dow Jones Newswires; 713-547-9214; john.biers@dowjones.com

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Alaska Gov Emphasizes Need For Natural Gas Pipeline
DOW JONES NEWSWIRES
January 18, 2007

JUNEAU, Alaska (AP)--Gov. Sarah Palin told lawmakers Wednesday to soon expect legislation outlining the process for a natural gas pipeline.

In her first State of the State address, Palin minced no words about her priorities for this year's legislative session, which began on Tuesday.

"This gas line, it's going to fuel our homes, our economy, and careers for Alaskans - for generations," she said. "This gas line is critical not just for our future, though, but for the nation's future."

A statewide gas line is considered to be a potential boon to the state's economy, somewhat akin to that of Prudhoe Bay's oil production at its peak.

But the pipeline would also take on national importance as the country works to lessen its dependency on foreign energy supplies.

In calling for lawmakers to consider her legislation, Palin is asking them to revisit one of the most contentious issues left over from Frank Murkowski's administration.

Murkowski reached an agreement with BP PLC (BP), Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) to build a pipeline from the North Slope through Canada and into the Midwest.

The line would ultimately have delivered 4.5 billion cubic feet of natural gas a day, which is about 7% of the current U.S. demand.

But lawmakers felt the deal gave too many considerations to the big firms, including locking in tax rates for several decades.

That will change, Palin told lawmakers.

"The deal was a 'no deal,"' she said. "And our Legislature was handed a plan that even exceeded the administration's authority. Remember, in exchange for those unnecessary concessions, the producers didn't have to commit to preparing applications, much less build a gas line."

Palin's solution: a bill that will re-establish project criteria which energy companies must meet in exchange for inducement incentives from the state.

Palin calls it the Alaska Gasline Inducement Act, or AGIA.

Successful passage essentially means replacing the Stranded Gas Act, the foundation for Murkowski's deal, though it would not represent a repeal.

"The centerpiece of this is to induce construction of the gas pipeline. A gas line constructed on our terms, without selling Alaska's sovereignty," Palin said.

"This law allows transparent and competitive processes," she said. "It jump starts progress with incentives, and it strikes the right balance on a project for the state, the nation, the project proponents and the producers. It will be good for all."

The bill will be introduced this session, and right now is being scrutinized for its legality, strategy and efficiency, she said while imploring lawmakers to be diligent.

"We must be realistic about the complexity of this. It won't happen with the snap of a governor's fingers. It can't happen overnight," she said.

Energy analysts have estimated there to be about 35 trillion cubic feet of proved natural gas reserves in the North Slope, but they believe that figure will rise in the future.

Palin's AGIA plan requires whoever builds the pipeline to ensure long-term exploration that includes more development on the North Slope.

The proposed gas line has implications on the nation's growing dependency on imported natural gas supplies, which stand at about 15%, according to the Energy Department.

That figure could grow to about 25% by the time any Alaskan gas line gets built within the next 10 to 12 years, analysts said.

For now, most imported natural gas comes from Canada with a small percentage arriving in tanker carrying liquefied natural gas, also known as LNG.

"It would be a critical component to our supplies," said Ed Kelly, vice president of North America Gas & Power for consultant Wood Mackenzie in Houston.

"It would allow natural gas to remain an economic source of power generation and heat in the economy-at-large," he said.

Kelly weighed in on the pipeline prospects without knowing of Palin's plans, but it's been a topic he and other energy analysts have carefully watched for several years.

Several years ago, natural gas prices were too low to justify the massive investment required to move fuel from the North Slope to the Lower 48.

Today, prices are in the $6-plus range per thousand cubic feet, well below the December 2005 peak of $15.38 but still nearly three times that of five years ago.

Thus, a successful pipeline development in Alaska represents a "secured energy source," Kelly said.

"I think prices will keep on creating a signal for this development," Kelly said. "It would reduce our need for LNG."

Financial Times
January 18, 2007

http://www.ft.com/cms/s/1298cc02-a699-11db-937f-0000779e2340.html

Satisfying BP investors will be hard
By Ed Crooks and Carola Hoyos
Published: January 18 2007 02:00 |
Last updated: January 18 2007 02:00

As James Baker was delivering his politely excoriating verdict on BP's safety culture and leadership, analysts were judging its qualities as an investment.

Many of their views were positive. Citigroup, UBS and Deutsche Bank were among those making or reiterating "buy" recommendations on the shares. After a period of sustained underperformance, on many yardsticks BP's shares now look cheap, they believe.

The problem for the company's cheerleaders is timing. BP's strategy - getting safety and operations right and steadily increasing production - is unlikely to pay off fast enough to satisfy investors.

One BP shareholder told the Financial Times that Tony Hayward, the new chief executive from the summer, "won't have the luxury of a year".

That pressure has inspired a variety of ideas for a dramatic move to transform negative perceptions of BP.

Use of its strong balance sheet to buy back a block of shares or pay a special dividend, a merger with another oil major or even a break-up have all been suggested. For their proponents, these ideas are more appealing than the long, hard slog that lies ahead.

The immediate financial cost of responding to Mr Baker's recommendations is modest for a company of BP's size. It is to raise spending on its US refineries from $1.2bn in 2005 to $1.7bn (£863m) a year during 2007-10 to improve their integrity and reliability. An extra dollar on the price of oil would be enough to pay for all that.

However, that may under-state the trauma BP has undergone, not just from the Baker report but from everything that has happened since the Texas City explosion in March 2005. Everything it does is now under scrutiny.

Like other big oil companies, BP sits on much ageing infrastructure. As the oil price has risen and technology has improved, squeezing the last drops of oil out of declining fields has become profitable. Rigs, pipelines and other hardware have been pushed to last for longer than intended when they were built.

Replacing that hardware will take time, during which the dangers of a repeat of problems such as the corrosion discovered in Alaska last year and accidents such as the explosion at Texas City will remain.

Wherever there is a marginal call to be made, managers will feel pushed towards the safer, more expensive option. Mr Hayward made that explicit last year when he questioned BP's "mantra of more for less": trying to do 100 per cent of a job with 90 per cent of the resources.

Other problems also overshadow BP. Like every other oil company, its shares are highly dependent on the price of crude, which fell sharply on Tuesday after Saudi Arabia, the dominant member of the Organisation of the Petroleum Exporting Countries, said it saw no need for the oil producers' group to cut its output any further.

There are persistent fears over the future of TNK-BP, the 50 per cent-owned Russian joint venture which was BP's greatest success in the first half of the decade.

Most recently, investors have worried about its disappointing production performance. Since 2004, BP's output has been stuck at about 4m barrels of oil equivalent per day and it has several times fallen short of analysts' expectations and its own targets.

Eventually, perhaps towards the end of the year, the good news is likely to start to flow. Production will start rising visibly, as new projects in Azerbaijan, Angola and the Gulf of Mexico come on stream and ramp up output. But BP's recent history is an object lesson in what can go wrong between finding oil in the ground and turning it into money.

Hence renewed calls for a quick fix. BP has been advised either to get bigger, by merging with another "super major" oil company, or smaller, by splitting its downstream business such as refineries from its upstream exploration and production activities.

But both those routes are fraught with difficulty. A mega-merger with Royal Dutch Shell, for example - which was contemplated by BP in 2005 - would run into competition problems in Europe and the US. Disposals might get round that obstruction, at the cost of losing much of the benefit of the merger.

Break-up of the company, as suggested by Cazenove analysts, would be a gamble. Oil companies like to be able to extract the profit from the value chain between the oil well and the petrol pump wherever it can be found. If BP were the only super-major to split itself up, it could expose itself to rough treatment from competitors.

Financial solutions would be easier. Awash with cash thanks to the high oil price, BP has been buying back its shares. In the past two years it has spent more than $27bn on buy-backs, apparently to little effect.

Jonathan Wright of Citigroup argues that, rather than making steady purchases, it should announce a single tender offer for a significant quantity of its shares, or pay a special dividend.

If returning $27bn to investors has been ineffectual, however, there can be no guarantee that returning similar sums in a slightly different way will be any more successful. It seems that on the slow and steady road to recovery, the short cuts are all blocked off.

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http://www.ft.com/cms/s/60ca6944-a699-11db-937f-0000779e2340.html

BP'S OPTIONS - PROS AND CONS
Published: January 18 2007 02:00 |
Last updated: January 18 2007 02:00

*Tender offer for 10 per cent of its share capital

Pro

Would be a high-profile event and answer investors' concerns about undergearing

Con

The buy-back programme so far has appeared ineffectual: would this do any better?

*Special dividend

Pro

May be a better way to return cash to shareholders and would appeal to income investors

Con

Would create tax problems. The special dividend might have to be cut or dropped if oil prices fall further

*Mega merger

Pro

Another high-profile move that could change investors' perceptions. Opportunities

for large cost savings

Con

BP's record does not create confidence that integration of a merger would be successful. A deal with a another 'super major' such as Royal Dutch Shell would run into serious competition problems

*Break-up

Pro

BP's current value is less than the sum of its parts. Separate upstream and downstream businesses would be valued more
highly by the market

Con
Purely upstream company could have more volatile earnings. Opportunities for synergy between upstream and downstream would

be lost

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http://www.ft.com/cms/s/385d072e-a698-11db-937f-0000779e2340.html

BP COMES IN FOR TOUGH CRITICISM AS US OPERATIONS FAIL TO LEARN LESSONS FROM GRANGEMOUTH INCIDENTS
By Ed Crooks
Published: January 18 2007 02:00 |
Last updated: January 18 2007 02:00

Some of the toughest criticism in James Baker's report on the safety of BP's US refineries comes from the company's failure to learn from a series of three incidents at its petrochemical complex at Grangemouth, Scotland, in 2000, writes Ed Crooks.

Between May 29 and June 10 of that year, the complex (pictured right) - which has since been sold by BP - was hit by a power distribution failure, a medium-pressure steam main rupture and a fire in an operating unit that tookmore than seven hours to put out.

No-one was killed or seriously injured, but the Health and Safety Executive concluded that was only due to "good fortune". BP was fined £1m as a result of two charges related to the fire and the steam main rupture.

In its report on Grangemouth, published in 2003, the HSE said it "seeks to reassure the public" by demonstrating that "a number of lessons have been learned both by BP and by the regulators".

But those lessons were missed by BP's similar businesses in the US.

For example, one of the problems at Grangemouth was found to be that the management was too focused on safety indicators based on personal injuries and not on the risk of serious incidents: exactly what the Baker panel found in the US.

Its report said: "The panel believes that in its response to Grangemouth, BP missed an opportunity to make and sustain company-wide changes that would have resulted in safer workplacesfor its employees and contractors."

Houston Chronicle
January 17, 2007

http://www.chron.com/disp/story.mpl/business/4475794.html

Workers in U.S. felt lack of trust, survey says
By BRETT CLANTON
Copyright 2007 Houston Chronicle

PHOTO
http://images.chron.com/photos/2007/01/16/4819192/311xInlineGallery.jpg

FULL BAKER Report
http://www.bp.com/bakerpanelreport

BP's failure to create a "positive, trusting and open" culture at some of its U.S. refineries may have contributed to broader safety problems, a highly critical report on the British oil giant said Tuesday.

Indeed, some BP workers said they feared being punished for reporting safety incidents, while others said inconsistent or unwieldy reporting procedures kept them from coming forward, according to a survey of nearly 7,500 BP refinery employees and contractors in the U.S.

The survey was part of a sweeping review of BP's safety practices at its U.S. refineries. An independent panel, which was recommended by the U.S. Chemical Safety and Hazard Investigation Board and led by former Secretary of State James A. Baker III, conducted the review after the March 2005 accident at BP's Texas City refinery killed 15 workers and injured scores more.

The survey's results underscored one of the panel's key findings: That BP did not establish effective or reliable ways to track "process safety" procedures across its five U.S. refineries.

Process safety in a refinery involves the prevention of leaks, spills, equipment malfunctions, corrosions and other potential hazards that can lead to catastrophic accidents.

BP Group Chief Executive John Browne said Tuesday the company supports the panel's recommendations and will implement them soon.

"We will use this report to enhance and continue the substantial effort already under way to improve safety culture and process safety management at our facilities," Browne said.

The report by the panel also said that "the single most important factor in creating a good process safety culture is trust."

Labor and management

Yet when the panel reviewed survey responses, read thousands of company documents and interviewed BP employees, it found that the culture within several of BP's U.S. refineries often discouraged open and honest communication between labor and management.
That is much less so at BP's Cherry Point, Wash., and Carson, Calif., refineries, based on the panel's research. But the positive culture at those plants was likely in place before they were acquired by BP from Arco, the panel said in its report.

BP has not established positive, open and effective safety cultures at refineries in Whiting, Ind., Toledo, Ohio, and Texas City, according to employees there, the report said.

In the survey, 44 to 60 percent of operators and maintenance and craft technicians in Toledo and Texas City said they believed management was more concerned with "assigning blame or issuing discipline" than correcting hazards.

About 72 percent of BP's U.S. refinery work force of 10,300 responded to the survey, which was conducted in May.

When BP has tried to foster more openness in safety-reporting procedures, it has not worked, according to refinery employees. A computer-based system is not used frequently enough to be relevant and is not user-friendly, while an anonymous hot line run by a third party is rarely used and often not trusted by workers, the report said.

Not sharing information

In addition, BP is not communicating investigation results to employees and it is not sharing important safety information among other U.S. refineries, the report said.

That may change under a new agreement in principle worked out between the United Steelworkers and BP and announced by the union Tuesday.

The two sides will craft a comprehensive joint safety initiative, said the union, which represents 4,300 workers at BP's U.S. refineries.

"Nothing can mitigate the 2005 tragedy," said United Steelworkers President Leo Girard, referring to the Texas City accident in a statement. "But our new agreement with BP shows the company's willingness to work with the union to address the root causes of the explosion, not just in Texas City, but throughout the corporation."

brett.clanton@chron.com

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http://www.chron.com/disp/story.mpl/front/4475824.html

BP flaws unattended for years, report says
Baker panel says safety lapses found at all five U.S. refineries
By ANNE BELLI
Copyright 2007 Houston Chronicle

Near catastrophes went uninvestigated.

And known equipment problems such as thinning pipes and vessels went unrepaired for up to 10 years.

These are just some of the bleak discoveries detailed in a highly critical report released Tuesday on BP's five U.S. refineries.

Although some of the plants had more woes than others, a Houston company specializing in so-called "process safety" which concerns equipment and operations found what it called serious lapses at all of the refineries, not just in Texas City where 15 people were killed in a March 2005 explosion.

The findings by ABS Consulting are the backbone of Tuesday's report made public by the BP U.S. Refineries Independent Safety Review Panel, chaired by former Secretary of State James A. Baker III and charged with evaluating the oil giant's commitment to safety.

The panel was formed by BP last year at the urging of federal investigators looking into the root cause of the Texas City blast, the worst in the U.S. in more than a decade.

In unveiling the panel's findings and recommendations, Baker said the panel found that BP focused more on personal safety issues, such as slips and falls and vehicle accidents, rather than process safety. Because the company's personal safety record improved in time, management had a "false sense of confidence that it was properly addressing process safety," Baker said.

In addition, the panel found a general lack of emphasis on process safety on the part of BP's London-based senior management including outgoing Chief Executive John Browne.

"Browne is generally noted for his leadership in various areas, including reducing carbon dioxide emissions and developing the use of alternative fuels," the 300-page report states. "In hindsight the panel believes that if Browne had demonstrated comparable leadership on and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process safety performance in BP's U.S. refineries."

Safety underfunded

Baker and other panel members also said at a morning news conference held at the downtown Hyatt Regency that while they found no evidence BP executives intentionally underfunded safety improvements, they nonetheless failed to dedicate enough of the company's vast profits through the years in that area.

BP "did not always ensure that adequate resources were effectively allocated to support or sustain a high level of process safety performance," the report states.

That should change, Baker said.

"We believe that if BP implements these recommendations fully that they could become a leader in the industry," Baker said.

In a video news conference at the nearby Hilton Americas shortly after the panel released its report, Browne said he took responsibility for the company's oversights and had already begun to implement changes.

"If I had to say one thing which I hope you will all hear today it is this: BP gets it. And I get it too. This happened on my watch, and as chief executive, I have a responsibility to learn from what has occurred," he said.

Under pointed questioning by reporters, Browne denied that he or any official put production and profits above personal safety, or that he or any senior manager rejected any specific request for funding of process safety. He also said that his decision to move up his retirement from 2008 to this summer had nothing to do with the Baker report.

He vowed that BP would implement all of the panel's 10 recommendations, including the most strict that the oil giant appoint an independent monitor to report back to the board on the status of the its implementation of the panel's recommendations.

He noted that the company has committed an average $1.7 billion a year for the next four years to improve safety at its U.S. refineries.

"As the report acknowledges, BP has made significant changes to its process safety systems and culture since the accident at Texas City," Browne said. "But we can do more. And we will do more."

Indeed, "there is still much work for BP to do in order to achieve process safety excellence," said the report filed by ABS, which was hired by the Baker panel as its technical consultant.

In addition to Texas City, BP's U.S. refineries are located in Carson, Calif.; Whiting, Ind.; Toledo, Ohio, and Cherry Point, Wash., and when fully operating they process roughly 1.3 million barrels of crude oil a day.

ABS teams visited each of the refineries except Texas City.

In that case, the consultants reviewed another company's outside review of the plant conducted as part of the BP's settlement with the U.S. Occupational Safety & Health Administration.

Among the consultants specific findings:

•In the Texas City, Carson and Whiting plants, known equipment problems such as thinning pipes and vessels went unrepaired for months, even years. In Texas City, nearly 200 thickness defects were unaddressed for up to eight years, for example.
•In all refineries except Texas City, the consultants found that BP's tests of critical alarms and "emergency shutdown devices" were either improperly conducted or overdue.
•"Action items" resulting from audits or near-miss investigations intended to improve safety often went uncompleted for months or even years, or were overlooked altogether at all five refineries. For example, in Carson about half of the action items generated between 2001 and 2004 remained open at the time of the team's visit last spring. At Toledo and Whiting, some items were left uncorrected for more than a year.
•At all refineries, BP did not adequately inspect important refinery process equipment, resulting in extensive backlogs. "Some of these backlogs included hundreds of items overdue for long periods (i.e years)," the report said. In Texas City, nearly 400 pressure vessels, piping, relief valves, storage tanks and other pieces of equipment were overdue, for example.
•After discovering dangerous problems in the pressure relief systems in Whiting, the team found similar problems in Carson, Texas City and Toledo, as well as a lack of understanding of the risks involved.
•Near misses at all five refineries were not properly investigated, and in some cases not even reported. The team found that "BP was systematically missing opportunities to learn from near misses."

Report draws praise

BP's failure to learn from near misses in Texas City has been a concern of federal investigators at the U.S. Chemical Safety and Hazard Investigation Board, which urged creation of the Baker panel. Investigators have said that the equipment that exploded there had had previous upsets in the months and years before the blast.

CSB Chairman Carolyn Merritt applauded the Baker panel's report. "Safety culture is created at the top, and when it fails there, it fails workers far down the line," she said. "That is what happened at BP."

Officials with the United Steelworkers said they also applaud the report and are hopeful it paves the way for a better relationship between the plants' hourly workers and BP management. After Browne's news conference, the union announced that it had reached a pact with management on a new safety initiative.

But union officials and others said that the real proof of whether BP makes process safety a priority will come months and years from now.

Safety review panel member and retired U.S. Navy Admiral Frank "Skip" Bowman said that's why the panel recommended that BP's board appoint a monitor for the next five years.

"Of course, we will all be watching," he said.

anne.belli@yahoo.com

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http://www.chron.com/disp/story.mpl/business/4475793.html

British press slams company on issues raised in Baker report
By GREGORY KATZ
Copyright 2007 Houston Chronicle Europe Bureau

LONDON The London-based multi- national oil giant BP suffered one of its darkest moments Tuesday as British press commentators focused on safety shortcomings spotlighted in a report issued Tuesday.

The study of BP's U.S. refinery operating procedures was viewed as a major setback for BP, one of Britain's leading companies, and for outgoing CEO Lord Browne, who had been hailed as one of the country's most successful businessmen until a series of setbacks that began nearly two years ago with a deadly explosion at BP's Texas City refinery.

A banner headline on the Web site of the usually pro-business Telegraph newspaper screamed "BP's Day of Shame" and chronicled the many criticisms of the company, which has greatly expanded its range of operations during Browne's tenure.

The BBC called the report issued by a panel chaired by former Secretary of State James A. Baker III "extremely savage" in its portrayal of BP's handling of its five refineries in the U.S., and the widely viewed Sky News cable channel said the report constitutes a "devastating blow to the oil giant's reputation."

There was widespread speculation in the press that Browne had announced last week he would be retiring 17 months early because of the negative impact the Baker report would have on his ability to run the company, but analysts cautioned there was no proof of this theory.

"It's difficult to know if he retired early because of this report," said Jonathan Wright, an oil analyst with Citigroup in London. "There are suspicions about that, but nothing in the report makes it seem that he had to go. No one's been singled out."

"It's probably not as damning as some people might have feared. They are not blaming people, they are making recommendations for improving performance and they are saying it's not just BP at fault and that other companies could benefit as well."

He said the financial community is generally comfortable with the announcement that Tony Hayward will replace Browne as CEO, but pointed out that Hayward as BP's chief of exploration and production has not been able to meet targets for development of new oil fields in the Gulf of Mexico.

"Hayward is not untarnished," Wright said. "We've had problems on his watch, with the Alaska issues, and with the Gulf of Mexico fields. He hasn't really delivered on the growth promises of the company. But he's certainly competent, and he's used to responsibility. He may have a different style than Browne and listen more."

Despite the panel's findings and the harsh reports in the British press, BP's standing in the financial community will remain fairly high, said Robert Mabro, retired director of the Oxford Institute for Energy Studies in England.

He said BP's standing with the public affected by the explosion had fallen dramatically but its status in Britain's business community remained high.

"The people who are unhappy are the people who had relatives who died, the people who were wounded, of course they are angry, but the financial sector doesn't care about that," Mabro said. "BP's reputation in the financial world is undamaged."

gregory.katz@chron.com

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http://www.chron.com/disp/story.mpl/business/4475931.html

BP chief's earlier departure is progress
By LOREN STEFFY
Copyright 2007 Houston Chronicle News Service

Last week, before the Baker-led independent panel released its assessment of BP, Browne announced he would move up his departure as the oil company's chief executive by more than a year. At a news conference Tuesday, he insisted the two events are unrelated.

Nevertheless, the Baker report, released Tuesday, is a referendum on Browne's leadership. On the one hand, the Browne era built BP into a global energy powerhouse and repainted it "green."

On the other, Browne's achievements rested on a corporate hierarchy blind to one of the most fundamental elements of refining petroleum: making sure it doesn't blow up.

Talking to reporters, Baker stressed that the panel didn't find that BP cut funding for safety programs, a point reiterated later to me by Bob Malone, head of BP's U.S. operations. The money was available, Malone said, but it wasn't always spent properly.

A consultant's report accompanying the panel's findings outlines problems that show how the money wasn't spent equipment deficiencies, a backlog of inspections for key pieces of machinery and alarms that weren't tested.

BP has already taken steps to address many of the issues and has vowed to embrace all of the panel's suggestions.

The report called for a more fundamental shift as well. BP needs to change its attitude about safety. It needs to emphasize process safety as much as it did personal safety. The latter is basically worker injury reports, a quantifiable statistic that, the Baker panel found, BP tracked faithfully. But the process safety, the overriding plan to avert catastrophes, got short shrift.

In other words, BP needs a cultural change.

"Culture is forever," said former Sen. Slade Gorton,
R-Wash., a panel member. "Complacency is a great danger. This is a job that's literally going to last forever."

Later, Browne spoke to reporters about the Texas City explosion for the first time, almost two years after the blast killed 15 people and injured scores more.

"As chief executive, I have a responsibility to learn from what has occurred," he said via video link from London. "BP gets it, and I get it, too."

Those are strong, well-scripted words, but as Baker panel members noted, we won't know if BP gets it for years to come. Browne successor and protégé Tony Hayward wasn't at the news conference, so we didn't get to hear his commitment to change.

One aspect of BP?

Baker's report focused only on the refining business. Browne reinforced that point, noting that "this report is about an aspect of BP."

We are left to extrapolate from the panel's findings whether the inattention to safety at refineries points to some larger pattern, a systemic failing across all BP's divisions.

Browne and Malone insist safety problems at refineries don't, for example, correlate to pipeline corrosion in Alaska.

Both, however, have a common denominator in maintenance. If the company tolerated a backlog of inspections at its refineries, would it have demanded timely ones on its pipelines?

Both require a vigilance that, in reading the Baker report, seems to have been lacking at BP. That's not to say it didn't care about safety or maintenance. It merely had other priorities.

Perhaps those priorities were growth, perhaps they were international expansion, perhaps they were the much-hyped environmental commitment.

Regardless, Browne's legacy, his accomplishments and innovations, will be shrouded by the failures that surfaced at the end of his tenure.

Blueprint for industry

The Baker report's findings weren't surprising. Its recommendations were sound. Baker himself suggested they could become a blueprint not just for BP, but for the entire refining industry.

First, though, BP has to follow them. It will be years before we know if that's happening. The signs, Malone told me, are largely intangible to outsiders.

Last week, though, before the recommendations were even public, came the strongest sign of BP's commitment to change. The man ultimately responsible for the shortcomings that spawned the Texas City disaster hastened his exit.

Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy@chron.com. His blog is at http://blogs.chron.com/lorensteffy/ .

Anchorage Daily News
January 17, 2007

http://www.adn.com/money/industries/oil/story/8568661p-8462276c.html

BP ignored big safety issues at fatal Texas blast site
15 DIED: Baker group says company fixated on individuals, not processes, at its refineries.
By JOHN PORRETTO
The Associated Press
Published: January 17, 2007
Last Modified: January 17, 2007 at 02:07 AM

HOUSTON -- British oil company BP failed to emphasize safety at its U.S. refineries before the 2005 Texas City explosion that killed 15 people, according to a report released Tuesday by an independent panel led by former U.S. Secretary of State James A. Baker III.

The panel, in a statement summarizing its 300-plus page report on BP's operations, said the company had made strides in personal accident prevention but came up short on the bigger picture.

"The panel maintains a central theme that prior to the Texas City tragedy BP emphasized personal safety and had achieved significant improvements in personal injury rates, but the company did not emphasize process safety," the statement said. "BP mistakenly interpreted improving personal injury rates as an indication of acceptable process safety performance at its U.S. refineries."

The 11-member panel made 10 recommendations, including that an independent monitor report to the company's board of directors for five years.

"BP gets it, and I get it too," BP CEO John Browne told reporters by video link from London. "I recognize the need for improvement."

Browne, who got the report from Baker on Sunday, called the report a "hard-hitting and critical analysis that focused on deficiencies and negatives."

Browne defended the company's overall safety record, which the Baker report acknowledged was sufficient in terms of personal injury prevention and environmental safety.

But on so-called process safety, "it wasn't excellent enough," Browne said. "And the standard is excellence."

The chief executive said the company would implement the panel's recommendations, including the independent monitor. But he said the company needs to compare Baker's report with a companywide safety examination that began soon after the Texas City explosion; he gave no time frame for making the changes Baker's group suggested.

Baker has led the panel investigating corporate management at Houston-based BP Products North America following the March 2005 blast that killed 15 people and injured more than 170 others.

The U.S. Chemical Safety and Hazard Investigation Board, known as the CSB, urged BP in August 2005 to hire outside experts to look at the company's oversight of safety management systems and make its findings public -- similar to an investigation at NASA following the space shuttle Columbia tragedy.

The panel, announced in October 2005, has traveled to BP's five U.S. refineries and interviewed hundreds of employees.

"BP tended to have a short-term focus in its U.S. refining operations, and its decentralized management system and entrepreneurial culture delegated substantial discretion to U.S. refinery plant managers without clearly defining process safety expectations, responsibilities or accountabilities," the panel said in the report.

Baker, a senior partner at the Houston-based Baker Botts law firm, was White House chief of staff and treasury secretary in the Reagan administration and secretary of state in the first Bush administration. The release of the BP report was twice delayed because of his work with the Iraq Study Group, which made its recommendations to President Bush last month on how to revamp U.S. policy in Iraq.

The release of the report comes less than a week after London-based BP said that Browne, its chief executive, would step down by the end of July, more than a year ahead of schedule.

John Manzoni, the company's head of refining and marketing, said Tuesday he had no plans to resign.

The 2005 explosion has so far cost the company around $2 billion in compensation payouts, repairs and lost profits. BP has settled hundreds of lawsuits related to the accident, putting aside $1.6 billion just to resolve legal disputes.

Based on its investigation, the CSB has criticized BP for its safety systems at Texas City, about 40 miles southeast of Houston, finding the company fostered bad management at the plant and failed to fix problems.

In September 2005, the U.S. Occupational Safety and Health Administration found BP committed more than 300 willful violations of its rules and fined the company $21.3 million.

BP's own December 2005 report blamed failures by management at the refinery, saying it didn't make safety a priority, tolerated risks and failed to communicate. But BP added it "found no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk."

The CSB has credited BP for cooperating with its investigation, making sweeping changes in how it recognizes potential hazards and hiring the Baker panel.

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http://www.adn.com/news/environment/story/8568696p-8462286c.html

Tug will help ships cope with Inlet ice
PRESSURE: Standby boat has been recommended to avoid catastrophes.
By WESLEY LOY
Anchorage Daily News
Published: January 17, 2007
Last Modified: January 17, 2007 at 02:22 AM

A powerful tugboat is headed to Cook Inlet to help shepherd oil tankers in dangerous, ice-choked waters.

The move by Tesoro Alaska Co., which has a refinery and tanker dock at Nikiski, drew applause from U.S. Coast Guard officers and oil industry watchdog groups.

All say a tug could help avert a catastrophic shipwreck and oil spill by standing by to corral a distressed or runaway ship.

Watchdogs called for a tug and other measures after a Jan. 9 incident in which lines securing the tanker Seabulk Pride to the Nikiski dock were strained -- with one snapping -- when heavy, tide-driven ice pushed up against the ship.

It was the same tanker that broke away entirely from its moorings in similar icy conditions last February, allowing the powerless ship to drift onto a beach just north of the dock. Rescuers using tugs brought from Anchorage and elsewhere mounted a frantic and ultimately successful effort to refloat the 600-foot tanker, which was loaded with nearly 5 million gallons of petroleum products.

British consultants who studied Tesoro's dock and mooring procedures reported in December that "ships using the berth have an unacceptably high risk of breakaway." They suggested increasing the number of mooring lines and having a tug stand by as ways to improve shipping safety.

Coast Guard Capt. Mark DeVries said Tuesday he's pleased that Tesoro is bringing in the tug. He said the company told him the tug would be in Cook Inlet at least through the winter when shifting ice can blanket parts of the Inlet.

The 5,500-horsepower tractor tug, operated by Crowley Maritime Corp., is coming up from Seattle and is due in Cook Inlet this week, ahead of the next oil tanker scheduled to arrive at the Tesoro dock late this month, DeVries said.

"I'm quite excited," he said. "We all can sleep a little bit easier knowing that if something goes wrong, we've got that extra asset down there."

Jim Butler, a Kenai representative for Seabulk Tankers Inc., operator of the Seabulk Pride and other ships calling in Cook Inlet, said the company supports Tesoro's move to bring in the tug.

"It's an important tool," Butler said.

Whether a tug remains in Cook Inlet in future years is part of a larger debate now going on about shipping safety, he said.

Tesoro spokesman Kip Knudson said his company is paying for the tug, named the Protector, but he didn't know the cost. The contract is for this winter only, he said.

"It's certainly going to add another layer of protection to our marine operations," he said.

Officials with the Cook Inlet Regional Citizens Advisory Council, a Kenai-based oil industry watchdog group, praised the decision to bring in the tug.

"Tugs play a role everywhere that oil tankers port in the U.S., and it's time Cook Inlet saw similar safeguards, especially during winter months when ice becomes such a hazard," said Michael Munger, the group's executive director.

The tug is expected to be used at the Nikiski dock and possibly at the Drift River dock on the west side of Cook Inlet, the council said.

While Cook Inlet has tugs based in Anchorage and other ports, the one Tesoro is bringing in is much more powerful, said the Coast Guard's DeVries. The tug is similar to Crowley tractor tugs used to escort the larger oil tankers in Prince William Sound, he said.

Bob Shavelson, with the Homer-based environmental group Cook Inletkeeper, also hailed the tug's coming.

"This is a huge step for industry because historically they have denied tugs make things safer," he said

Wall Street Journal
January 17, 2007

Safety Report Will Test BP's Incoming CEO
By CHIP CUMMINS
January 17, 2007; Page A14

LONDON -- BP PLC'S effort to minimize damage from a critical independent safety review of its U.S. operations presents the first big test for BP's next chief executive, Tony Hayward.

The London-based oil titan, reacting to the review released yesterday by an independent panel, promised to embrace a number of sweeping changes at its U.S. oil refineries, including engaging an independent body to monitor safety practices at the company. The panel, led by former U.S. Secretary of State James Baker III, sharply criticized practices at BP's American refineries, saying the company lacked strong leadership on safety.

The panel said it found significant problems at BP's five U.S. refineries. BP commissioned the panel after an explosion at its plant in Texas City, Texas, killed 15 workers in March 2005. "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 report said.

Mr. Baker, in a news conference in Houston yesterday, said BP appeared to take safety seriously. But he said the company focused on "personal safety" improvements, for instance tracking statistics such as frequency of accidents and days lost to injuries. Such statistics led to a "false sense of confidence" in the company's safety culture and didn't enable the company to develop adequate, corporatewide safety procedures, Mr. Baker said.

The report also cited BP for not always ensuring that adequate funding and manpower were devoted to safety. But the panel never found that BP "purposefully withheld resources" that shortchanged safety, Mr. Baker said.

BP itself has issued stinging self-critiques of its Texas City plant after the accident. The U.S. Occupational Safety and Health Administration and the U.S. Chemical Safety and Hazard Investigation Board have both alleged specific safety shortfalls in Texas. Officials at the chemical-safety board, for instance, said that BP's cost cutting there played a direct role in causing the accident, an allegation BP has denied and that the Baker report said it couldn't substantiate.

The report is the most recent rebuke to longtime BP CEO John Browne. Last week, Lord Browne said he would step down about a year and a half earlier than expected. It comes amid other major problems for the company in the U.S., from oil spills and corrosion in Alaska to alleged improper energy trading, a charge BP denies.

Still, the Baker report contained little in the way of dramatic revelations, and its findings weren't as blistering as many BP executives and industry experts had anticipated. Thus, the publication of the report could provide the company an opportunity to show investors and regulators that it is acting quickly to shore up what has become a big American liability: safety.

The effort will be the first big test for a new management team led by Mr. Hayward that is gearing up to take over from Lord Browne. Currently BP's head of exploration and production, Mr. Hayward will take over as CEO in August.

Mr. Hayward will have to deliver on BP's promises to improve safety and make the structural and cultural changes pushed by the Baker panel. BP said yesterday it had already moved to shore up safety at its plants and was spending more money on its refineries.

The company said it would embrace all of the panel's recommendations, including agreeing to an outside body to monitor safety for five years. That recommendation was reported over the weekend by The Wall Street Journal. The Baker panel said that the outside body should report periodically to the board about how well the company is living up to its promises to improve safety and that BP should make those findings public.

Write to Chip Cummins at chip.cummins@wsj.com

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As BP's Hayward Takes Helm,
His Priorities Should Be Clear
January 17, 2007

Dealing with a damning report on your company's operations is hardly the best way to start life as a chief executive-in-waiting. But that is precisely the situation facing Tony Hayward, whose appointment at BP to succeed Lord Browne came on the eve of the Baker report on the oil giant's safety record in the U.S.

Mr. Hayward's priorities should be clear. First, improve safety. The oil giant has been sweating its assets in order to boost returns. That helps explain the problems at the Texas City Refinery and its Alaskan pipeline. In a letter leaked from BP's intranet just before Christmas, Mr. Hayward admitted that getting 100% of the task completed with 90% of the resources doesn't always work. BP has already upped spending on improving safety at U.S. refineries to $1.7 billion, but the figure could still rise.

Throwing money at the problem probably won't be enough. BP's culture needs to change, too. The oil giant became increasingly dominated by a "Yes, Lord Browne" culture. The scale of change isn't as big as that confronting rival Shell after its reserves debacle in 2004. But it isn't trivial.

Third, Mr. Hayward needs to address the problem of falling production. As the current head of the exploration-and-production division, pumping barrels is presumably something he should be good at. Here, Mr. Hayward should benefit from Lord Browne's legacy: BP has a strong foothold in Russia, and a few juicy projects in the pipeline. Some big ones, like Atlantis in the Gulf of Mexico or various fields in Azerbaijan, are due to come on-stream in late 2007 and 2008. Although he's set up reasonably well, there may be operational or political slip-ups for Mr. Hayward to manage.

What about something more radical? That may not be Mr. Hayward's priority now. BP has looked at more extreme options in the past -- such as a merger with Royal Dutch Shell, or even breaking itself up into two smaller and more manageable companies. But even BP, which has a deserved reputation for being responsive to investor concerns, hasn't gone that far. Yet.

---- Fiona Maharg-Bravo, Simon Nixon and John Christy

For a complete set of BreakingViews comments, see www.breakingviews.com.

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BP Seen Little Damaged By Baker Report On Safety-Analysts
DOW JONES NEWSWIRES
January 16, 2007 12:36 p.m.
By James Herron
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--U.K. oil and gas giant BP PLC (BP) will suffer little further damage to its reputation and share price from the Baker report into safety at its U.S. refining operations, industry analysts said Tuesday.

The report, led by former U.S. Secretary of State James Baker and released Tuesday by BP, said investigators found "significant" problems at five BP refineries in the U.S. and said company goals, such as cost-cutting, often overrode safety concerns at its plants.

"Maybe it could have a short-term negative impact on the share price and reputation, but it won't make people more reluctant to invest in BP," said Antoine Leurent, analyst at KBC Peelhunt in Paris, referring to the Baker report.

BP shares closed down 1.46% at 541 pence Tuesday, but said shares in Total SA (TOT) and Exxon Mobil Corp. (XOM) fell by a similar proportion. "There is a huge weight on the oil price, and everything is going down in the sector," he said.

"It looks like a non-event," of the report. "The stock market doesn't care, apparently."

Peter Hitchens, an analyst at Teather and Greenwood in London, said that BP has already implemented many of the safety improvements suggested in the Baker report. The company's promise of increased expenditure on refinery safety to $1.7 billion from $1.2 billion is "money that would have been spent anyway," he said.

"As expected, the report is effectively saying toughen up safety, and that's it," Hitchens said.

But BP won't emerge totally undamaged, said a U.S.-based industry analyst. The Baker report's findings probably were what prompted BP CEO John Browne's early retirement, the analyst said, and it could also put pressure on John Manzoni, head of refining and marketing at the company.

Browne said Friday he will retire at the end of July, 17 months earlier than expected. BP said current Head of Refining and Marketing Tony Hayward will then succeed Browne in the top post.

Browne said Tuesday, however, that the Baker report was unrelated to his retirement date, which he had decided in early December to advance.

"It will take years (for BP) to have their reputation cleaned," said Leurent of KBC Peelhunt. It took two or three years for ExxonMobil to restore its image after its big Alaskan oil spill in 1989, he said. There is also potential for outstanding complaints related to BP's 2005 Texas City, Texas, refinery explosion to "revive the bad news" for BP this year, he said.

None of the analysts above changed their ratings or target prices for BP based on the Baker report.

The Baker report was prompted by a huge explosion at BP's Texas City refinery in March 2005, which killed 15 workers and injured more than 170. The blast occurred after gases spewed from an overfilled refinery unit and ignited.

The U.S. Chemical Safety and Hazard Investigation Board said cost-cutting had compromised safety at the refinery and urged BP in August 2005 to hire outside experts to look at the company's safety management.

BP asked Baker to chair a panel to investigate safety at BP's five U.S. refineries in October 2005.

Company Web site: http://www.bp.com