BP 2006 Annual Report Download - page 42

Continuing response to Texas City incident and inquiries
During 2006, investigations continued into the March 2005 Texas
City explosion. There was also ongoing action on our part to apply the
lessons learned. BP settled a large number of civil suits arising from, and
established a $1.625-billion provision related to, the incident. In terms of
action at the refinery itself, having concluded our own inquiry during 2005
and reached a settlement with OSHA, we have launched a programme in
which we expect to invest an estimated $1 billion from 2006 to 2010 to
improve and maintain the site. At the end of 2006, changes made at
Texas City included: restarting the operations after the shutdown for
Hurricane Rita; extensive mechanical renovation; installing a new flare
system; moving temporary buildings away from specified areas; relocating
more than 400 Texas City workers into a new office building outside the
fence line; commissioning of plant, involving more than 15 million worker
hours to date, refurbishment and safe start-up of a 27-mile steam system;
and implementation of an enhanced total systems training programme.
In January 2007, the company received the report of the BP US
Refineries Independent Safety Review Panel (the panel), which was
chaired by former US Secretary of State James A Baker, III (see Report of
the BP US Refineries Independent Safety Review Panel on page 29).The
panel was established on the recommendation of the US Chemical Safety
and Hazard Investigation Board. Throughout 2006, the panel assessed the
effectiveness of corporate oversight of safety management systems at
BP’s US refineries and the corporate safety culture.
The panel’s report identified deficiencies in process safety performance
at BP’s US refineries and called on BP to give process safety the same
priority that it had historically given to personal safety and the reduction of
GHGs and promotion of alternative forms of energy. In making its findings
and recommendations, the panel’s objective was excellence in process
safety performance, not simply legal compliance. The panel specifically
noted 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 made 10 recommendations relating to: process safety
leadership; integrated and comprehensive process safety management
system; process safety knowledge and expertise; process safety culture;
clearly defined expectations and accountability for process safety; support
for line management; leading and lagging performance indicators for
process safety; process safety auditing; board monitoring; and industry
leader. The panel’s report in its entirety can be found at
www.bp.com/bakerpanelreport.
The panel acknowledged the measures BP had taken since the Texas
City incident, including dedicating significant resources and personnel
intended to improve the process safety performance at BP’s US
refineries. BP has committed to implement the panel’s recommendations
and will consult with the panel on how best to do this across the US
refineries and to apply the lessons learned elsewhere in its global
operations. As announced in July 2006, there was an increase in spending
at the five US refineries, from $1.2 billion to $1.5 billion a year, with
further increases to $1.7 billion a year for the period 2007 to 2010,
representing a step-up in scale as well as pace.
Alaska spills
During 2006, two incidents occurred in our operations at Prudhoe Bay,
Alaska. In March, an undetected leak led to a spill of approximately 4,800
barrels. In August, the eastern part of the field was shut down as a
precaution following the discovery of isolated pitting corrosion that
resulted in a spill of 199 barrels of oil from an oil transit in a pipeline.
Following inspection of the transit lines, production restarted in the
eastern part of the field in 44 days.
Using smart pigs, devices that are run through the inside of the pipeline
to inspect the pipe walls, we have now confirmed sufficient integrity for
current operations. Nonetheless, we have decided to replace the main oil
transit lines (16 miles) in both the eastern and western operating areas of
Prudhoe Bay. In addition, we plan to spend over $550 million (net) over
the next two years on integrity management in Alaska. We have retained
three of the world’s foremost corrosion experts, who will independently
review these programmes.
Action on process safety across BP
Throughout 2006, we continued to implement the improvements initiated
following the Texas City incident and supplemented them with new
measures as necessary. These included inspecting and investing in our
plants; training and development to ensure people have the right skills and
behaviours; and working to ensure we have clear, consistent and rigorous
processes for managing safety. We have earmarked $7 billion for safety
investments over four years to upgrade our US refineries and to repair
and replace pipelines in Alaska. We also appointed a new chairman and
president for BP America Inc. and announced the creation of an external
advisory board to provide expert advice in the US on compliance, safety
and regulatory affairs.
In particular, during 2006 a group-wide programme was introduced
known as the six-point plan to address the following points:
– Removing blow-down stacks and moving temporary buildings away
from potential hazards.
– Conducting major accident risk assessments at plants and acting on
their findings.
– Implementing new group standards that set detailed requirements
on control of work and integrity management.
– Ensuring compliance with applicable laws and regulations.
– Rapidly addressing findings from past audits.
– Building competence in safety and operations through training
and development.
During 2006, the total number of oil spills of one barrel or more from all
of our operations was 417, compared with 541 in 2005 and 1,098 in 1999.
The difference between the reported number of spills in 2005 and 2006 is
principally due to boundary changes, including the disposal of Innovene.
During 2006, we continued to expand our shipping fleet of operated
and time-chartered vessels in order to provide more protection against the
risk of a major oil spill. All vessels on BP business are subject to our
health, safety, security and environmental (HSSE) requirements. The fleet
transformation is ahead of the international requirements for phase-out of
single-hulled vessels. Our international fleet has grown from 52 vessels in
2005 to 57 in December 2006, all of which are double-hulled. We also
have 100 vessels on time charter, of which 83 are double-hulled and three
double-bottomed. In addition, we use spot charter, regional, specialist and
miscellaneous craft. In 2006, we launched SafeShips, an education and
information programme highlighting safety for our seafarers and shore
staff. It covers a wide range of safety-related topics, including risk
assessments, operations safety, best practice and safety by design.
Our operations and the environment
During 2006, we continued working to reduce the environmental impact
of our operations, primarily by reducing our emissions of greenhouse
gases (GHGs) and by implementing processes to drive continuous
improvements in a wide range of other environmental issues. In our
operations since 2001, we have been aiming to offset half of the
underlying GHG emission increases that result from our growing business
through operational efficiency projects. After five years, we estimate that
emissions growth of some 11 million tonnes has been offset by around
6 million tonnes of sustainable reductions.
Our 2006 operational GHG emissions were 64.4 million tonnes (Mte)
of carbon dioxide equivalent on a direct equity basis compared with a
reported figure of 78.0Mte in 2005, of which 11.2Mte related to Innovene
assets divested late in 2005. Our 2006 emissions were therefore some
2.4Mte lower than the comparable 2005 emissions of 66.8Mte (excluding
Innovene’s 2005 contribution).
Our track record of improvement from our ongoing efficiency
programme continues, with reductions of 1.2Mte. The remaining 1.2Mte
decrease comes from the balance of the growth of our business (1.3Mte),
the effect of acquisitions and divestments, temporary operational
variations and reporting protocol changes.
We have taken part in the EU Emissions Trading Scheme since its
launch in January 2005. We began 2006 with 18 participating installations
and, during the year, our BP Solar facility in Madrid also began
participating in the scheme. These 19 installations account for around one-
fifth of our reported 2006 global GHG emissions.
2006 saw the culmination of two years’ work with the launch in
November of a new group practice called the Environmental
Requirements for New Projects. Work on this practice began in 2004
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