BP Agrees to Settle Suit Over 2 Refinery Blast Deaths
|
|
Expat
Village is edited and published by Iain Williams in Caracas, Venezuela.
A Bloomberg story by Margaret Cronin Fisk and
Laurel Brubaker Calkinsl at www.bloomberg.com
BP Plc, the world's third largest publicly traded oil company, agreed to settle a lawsuit brought by a woman whose parents died in a Texas refinery explosion that killed 15 and injured hundreds more.
BP will pay as much as $38 million to community groups and charities and an undisclosed amount to Eva Rowe, 22, whose parents, James, 48, and Linda, 47, died after a spark ignited gasoline vapors at the refinery. The settlement was confirmed by Rowe's attorney, Brent Coon, and Jim Galbraith, a lawyer for BP. The Rowes worked for a construction company at the site.
BP set aside $1.6 billion to resolve claims arising from the refinery explosion. The company faced unlimited damages and harm to its reputation if the trial had gone forward. The March 23, 2005, explosion at its Texas City, Texas, refinery led to more than 1,300 suits, a record fine from the U.S. Occupational Safety and Health Administration and a finding by another safety agency that BP endangered workers by cutting costs.
``It's almost like cleaning house -- you want to take care of all these things, you want to make sure you start the new year, 2007, with a clean slate,'' said Fadel Gheit, an analyst for Oppenheimer & Co. in New York who owns shares of BP and rates the company a ``neutral.''
``Whether it's the refinery explosion, or other factors, it really weighed negatively and heavily on the stock for the last 12 months, or 18 months, even, and this is not what John Browne wants,'' Gheit said.
Cost BP $2.5 Billion
Browne, BP's chief executive officer who's due to step down at the end of 2008, ``doesn't want to leave on a down note,'' Gheit said. He said he ``wouldn't rule out'' Browne making share buybacks or more acquisitions to boost BP's shares before he leaves the company.
On the overall impact of the accident, Gheit said, ``This deal cost BP, when all's said and done, over $2.5 billion. All the legal settlements were trivial compared to the lost opportunity costs and the repairs.''
London-based BP, which acknowledged safety shortcomings at the plant, settled about 1,000 suits, including all death claims except the two filed by Rowe. She had refused to settle unless BP agreed to change safety procedures and equipment.
``We're very proud and pleased to have reached this resolution,'' Galbraith said. ``We're working hard to see nothing like this ever happens again.''
Internal Study
The trial was set to begin with jury selection today. The evidence to be introduced, including an internal study showing the company ignored safety problems at the Texas City refinery, could have produced sizable punitive damages.
Under terms of the settlement, the donations by BP will include $1 million to the St. Jude Children's Research Hospital in Memphis, Tennessee; $12.5 million to the University of Texas hospital burn unit in Galveston; $12.5 million to Texas A&M University's Process Safety Center; $1 million to the schools Eva Rowe attended in Hornbeck, Louisiana, and $5 million to College of the Mainland, a Texas City school, for safety training, according to Coon.
BP will also match up to $2 million each any donations made to the University of Texas, Texas A&M and the College of the Mainland, he said.
Coon told jurors, who were present in court for the announcement of the settlement, that the matching amount was up to $2 million and clarified this later with reporters, explaining that the company would give as much as $6 million, with $2 million in matching donations to each of three organizations.
Spark Ignited
The March 2005 accident happened after workers started up the refinery's octane-boosting unit and excess gasoline spilled into a vent system. The unit vented through a blow-down drum, which overflowed and let escaping vapors form clouds or pools at ground level.
Vapors gathered underneath a trailer where Rowe's parents were attending a contractors' meeting. The Rowes, who worked for a construction company, were killed when a spark ignited the vapors.
Eva Rowe had refused to settle her suit unless BP agreed to replace all blow-down and open-vent equipment with a safety flare system, Coon said. Blow-down drums are an inferior technology compared with safety flares, which burn off leaking vapors, the U.S. Chemical Safety Board said last week. The federal board investigates chemical plant accidents.
Rowe appeared on the CBS television news magazine ``60 Minutes'' in October and said she was determined to go to trial.
``I want everyone to know what they did,'' Rowe said.
`Rearview Mirror'
Browne, seeking to restore BP's reputation, has already replaced the head of the company's U.S. operations and the manager of the Texas City refinery. Employees accused of participating in alleged attempts to manipulate U.S. propane and oil trading have also left.
BP's output growth was hurt by shutdowns and delays at U.S. fields, including a partial closure in August at Alaska's 400,000 barrel-a-day Prudhoe Bay, the country's largest oilfield, because of pipeline corrosion. Equipment failures postponed the start of BP's Thunder Horse oil and gas platform in the Gulf of Mexico.
James Halloran, who has almost 300,000 shares of BP among the $33 billion he helps manage at National City Private Client Group in Cleveland, said the settlement in the refinery case wasn't a surprise.
``These things often get to the early stages of trial before they settle, especially when you're talking high-profile cases,'' he said.
The agreement represents a success for BP, which was seeking to ``get a lot of this headline stuff behind them as quickly as possible,'' Halloran said. The Prudhoe Bay pipeline leak and the delay in Thunder Horse ``should be somewhat in the rearview mirror by the time they start to deal with a new leader for the company,'' he said.
Expat
Village is edited and published by Iain Williams in Caracas, Venezuela.
© Copyright 2003 by Expat-Village.com
[an error occurred while processing this directive]
Top of Page
|
