In an interesting public relations and legal strategy, BP PLC admitted liability for its negligence in connection with the March 23rd explosion at its Texas City facility that killed 15 contract workers and injured more than 170 others. Here is the Houston Chronicle’s exhaustive coverage of the explosion, and here is the BP report and notes from its press briefing that were published on BP’s website.
In a detailed preliminary report on the blast, BP concluded that its employees committed “surprising and deeply disturbing” mistakes that led to the blast. The accident was only the latest in a series of serious safety and compliance lapses in BP’s North American operations. Not only do the report’s findings suggest that BP expects regulators to assess fines once their own investigations are complete, but they essentially turn the wrongful death and personal injury lawsuits resulting from the blast into a trial on the amount of damages that BP will have to pay. This Wall Street Journal ($) article quoted John Eddie Williams Jr., one of Houston’s best personal injury trial lawyers, as saying the following:

“My client’s husband trusted BP with his life, and now she’s supposed to trust that BP will fully compensate her for his death?”

BP’s report blames its supervisors and employees for making a series of operational errors and oversight lapses that caused the blast at the isomerization unit of the refinery. The explosion occurred during a start-up procedure after the unit had been taken off-line for routine maintenance when operators overfilled and overheated a processing tower at the unit that housed hydrocarbon liquid and vapor. The liquid and vapor mix was overpressurized and flooded into an adjacent stack before escaping into the atmosphere around the unit. The vapor cloud was then ignited by a still-unknown source.
“The failure of [the isomerization unit’s] managers to provide appropriate leadership and the failure of hourly workers to follow written procedures are among the root causes of this incident,” BP admitted in it’s press statement. BP is taking disciplinary action against an unspecified number of employees responsible for running the isomerization unit on the day before and the day of the blast, and has already replaced the plant’s manager. BP has also began a wide-ranging review of plant procedures.
Although its effectiveness is still uncertain at this point, BP’s strategy in quickly investigating the explosion and in admitting liability may be the best way to put the negative publicity from the blast behind it. BP realizes that the regulatory fines and damages it will have to pay on wrongful death and personal injury claims arising from the blast will be substantial, but even those amounts will be only a small fraction of BP’s net worth. The greater risk for the company is that prolonged publicity and uncertainty from the investigations would negatively affect the company’s stock price. Yesterday’s admission may be BP’s way of trying to minimize that risk.