UPDATE 2-BP pays $13 mln to settle Texas refinery safety probe

Thu Jul 12, 2012 2:01pm EDT

* Agreement improves chances for refinery sale

* BP, OSHA still in discussion over 30 violations

* OSHA says no imminent dangers seen at refinery

By Erwin Seba

HOUSTON, July 12 (Reuters) - BP Plc on Thursday agreed to pay $13 million to settle safety violations at its Texas City, Texas, refinery, paving the way for a sale of the refinery by the London-based energy company.

The settlement struck with the U.S. Occupational Safety and Health Administration clears most violations safety inspectors found in 2009 in a follow-up inspection after a deadly 2005 explosion at the refinery, which killed 15 workers and injured 180 others. (See a timeline of violations at )

"We want the men and women who work at Texas City to go home at the end of the day," U.S. Labor Secretary Hilda Solis said a conference call to announce the settlement, which she said would abate "hundreds of serious hazards" at the refinery, which is located about 40 miles (64 km) southeast of Houston. The deal clears 409 outstanding safety citations, with 30 citations still under discussion, OSHA officials said.

The settlement should ease the way for BP's plan to sell the 400,780-barrel-per-day refinery, the sixth largest in the United States, by the end of the year.

"It clears the table for a sale," said John Auers, senior vice president of Turner, Mason and Co, a Dallas engineering consultancy. "Any buyer of a facility wants that cleared out as much as possible," he said, referring to potential liability for violations.

The March 23, 2005, explosion happened when a cloud of volatile hydrocarbon vapor ignited around portable work trailers after being released by an octane-boosting unit during a restart.

In 2009, OSHA announced it was seeking $87.4 million in fines from BP for alleged safety violations at the Texas City refinery. Some of the violations were conditions found in the 2005 blast that had not been corrected. Others were new problems identified by OSHA inspectors in 2009.

In 2010, as it was battling the gigantic Macondo oil spill in the Gulf of Mexico, BP agreed to pay a settlement of $50.6 million for conditions not abated after the explosion. BP on Thursday agreed to settle most of the new violations for a $13 million fine.

"BP is committed to workplace safety," said Iain Conn, BP's global head of refining and marketing. "Our aim is to be a leader in process safety, and we look forward to continuing our cooperation with OSHA to create an even safer workplace in BP and in our industry as a whole."

Since the 2005 explosion at the Texas City refinery, BP has paid more than $2 billion to settle lawsuits from the blast. It spent more than $1 billion from 2005 to 2009 on safety improvements and repairs following damage due to Hurricane Rita. The company agreed to spend another $500 million in its 2010 deal with OSHA.

Brent Coon, a Texas plaintiffs' attorney who led the massive civil litigation against BP from the explosion, said the federal government failed to hold BP accountable for the company's requirement to abide OSHA orders, a condition of its three-year term on probation between 2009 and 2012 for an environmental violation in the Texas City blast.

"The failure to prosecute management personnel individually has allowed the company to act with less haste than it would have otherwise," Coon said in a statement.

Three years has made a significant difference in safety regulators' view of the Texas City refinery. In 2009, Solis said the plant was still at risk of a catastrophe similar to the 2005 blast, which rattled windows five miles (8 km) away.

"There is nothing that is imminently dangerous at the refinery," Deputy Assistant U.S. Labor Secretary Jordan Barab said.

That statement should inspire confidence for a potential buyer that the plant is less at risk of breakdowns that could lead to downtime and lost production Auers said.

In February 2011, BP announced plans to sell the Texas City and 240,000 bpd Carson, California, refineries by the end of 2012.

In March, Conn said BP was shifting its focus to refineries in the northern tier of the United States, closer to cheaper supplies of Canadian crude oil.

BP faces an improving market for U.S. refinery sellers, Auers said. While he declined to put a price tag on Texas City, U.S. refineries, even on the Gulf Coast, can tap cheaper North American crude supplies, he said.

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