TEXAS CITY, Texas—BP Products North America Inc. is making sweeping changes to its safety processes in the wake of a deadly explosion last year that prompted a heavy fine from one federal agency and findings by another that the oil company's "risk blindness" contributed to the accident.

The company has created new health and safety positions and has established standards for work processes at its U.S. locations as a result of the accident, among many other changes. BP says it will spend more than $1 billion over the next five years to make sure its operations are safer.

BP admitted several weeks after the accident that mistakes by its workers were responsible for the March 23, 2005, blast that killed 15 workers and injured more than 170 people. The Texas City, Texas, unit of London-based BP P.L.C. said in a report that the explosion occurred because managers and operators overfilled a distillation tower and its attached blowdown drum with combustible fluids at a unit that produces components of unleaded gasoline. A vapor cloud at the unit ignited, causing the blast.

The oil giant faces scores of claims related to the explosion. It recently settled for an undisclosed total with a woman whose parents were killed in the accident (see story, page 19).

The settlement, which came just as legal proceedings had begun, includes at least $32 million in donations to be made by BP to universities, health care facilities and other organizations. Part of that money will be used to improve educational programs on process management and safety education at the schools.

BP has set aside $1.6 billion to settle claims, an amount it will pay from self-insurance funds, a spokesman in BP's Houston office confirmed.

Regulatory scrutiny

Since the accident, BP's safety culture has come under intense scrutiny. Its loss control at the Texas City plant was deficient, according to recently released findings by the U.S. Chemical Safety and Hazard Investigation Board, or CSB.

The Texas City explosion--which the CSB said was the worst industrial accident in the United States since 1990--was partly the result of corporate cost-cutting at the refinery, "where maintenance and infrastructure deteriorated over time," Carolyn Merritt, the agency's director, said in a news conference in late October.

"What BP experienced was a perfect storm, where aging infrastructure, overzealous cost-cutting, inadequate design and risk blindness all converged," Ms. Merritt said.

The CSB plans to release a final report on the accident in March 2007.

The CSB report follows a $21.3 million fine levied against BP by the Occupational Safety and Health Administration in September 2005.

Among the changes BP has agreed to are several called for by OSHA. Those include hiring an outside firm to improve process safety management and conduct an audit and analysis of the company's process management systems. BP is also required to hire an expert to assess communications between management, supervisors and other employees and to report on how communications impact safety practices.

The BP spokesman acknowledged that while the blowdown drum where the accident occurred had been modified over the years, it was functioning properly. Human error caused the explosion at the unit, he stressed, and "no one envisioned that what happened that day could have happened."

Still, BP decided to replace the drums by 2008 at all its U.S. refineries where they are used, the spokesman said.

BP takes issue with the CSB charge that cost-cutting led to the accident.

"In our own investigation, we looked at a whole range of things, including cost decisions," the spokesman noted. "Our investigation showed that cost decisions had not played a part. In fact, in the years running up to the accident, there was an increase" in operating expenditures, he said.

A spokesman for the CSB said last week that the agency's investigation found there were cuts to "fixed costs that impacted preventative maintenance at the plant."

Ms. Merritt warned in the news conference that BP's experience "should serve as a cautionary tale to every oil and chemical company that hears this message. The problems at BP are not unique to one refinery, to one division, or to one corporation."

BP makes changes

At BP, several changes have been made at the Texas City facility and other U.S. operations as a result of the accident and the ensuing investigations. The company said it has established a program called Focus on the Future that takes into account around 600 recommendations and 1,000 specific actions to be taken based on findings in its internal investigation and those of OSHA and other organizations.

Since the accident, BP has created a new position of group vp for health, safety, environment and technology in its refining and marketing segment. It also named a group vp of safety and operational capability to enhance safety operations.

The company has clarified and reinforced responsibilities for personnel involved in startup, operation, maintenance and evacuation procedures at its facilities. A newly established U.S. program office will coordinate the changes across BP's refining system in the United States.

In Texas City, BP has isolated or removed all the blowdown drums, installed a new system to perform the operations previously handled by those drums, introduced new maintenance and inspection procedures, heightened supervisor oversight and made several other changes.

The company also has appointed an independent panel under the direction of former U.S. Secretary of State James Baker III to make recommendations as to how safety management systems and the company's corporate safety culture can be improved.

"Certainly there are a number of positive things under way," said the CSB spokesman. "Whether it will make BP safer, time will tell."