BP said it plans to sell its Texas City refinery, unloading a plant that has been a source of consistent problems for the company for more than six years. Selling the plant is something I first suggested back in August, after a new round of environmental issues and litigation erupted at the refinery.
After BP acquired the refinery in its 1998 merger with Amoco, it repeatedly cut costs to squeeze some quick cash out of the place. But fatal accidents in 2004 were an early warning of a disastrous explosion in March 2005 that killed 15 people and injured more than 170.
Since then, BP has spent more than $1 billion making improvements to the refinery, and another $1.5 billion settling civil claims related to the 2005 accident. It paid a $50 million fine to settle federal environmental charges.
Last year, it paid another $50 million fine for failing to correct safety hazards at the refinery since 2005, and its still negotiating with the Occupational Safety and Health Administration over $30 million more.
Meanwhile, the Texas attorney general sued BP last year for illegally releasing contaminants from the plant. The release was the result of a fire at a unit that relates to some of the violations for which BP was cited five years ago.
As I pointed out in a column last summer, it certainly seems that BP can’t afford to keep operating the refinery, given that it seems unable to operate it safely.
Typically, asset sales raise concerns among employees about job cuts and other changes. Given the history of BP’s Texas City refinery, though, it seems unlikely a new owner would make anything other than improvements. BP already had been adding staff, having slashed its work force to the bone earlier.
While BP has made more than $1 billion of improvements in recent years, the new owners will have to recognize that they still need to invest in improving the safety culture at the refinery.