BP’s Selling Its Troubled Refineries in Texas City and Carson
BP put out a “for sale” sign today when it announced intentions to seek buyers for its Texas City refinery and its Carson refinery near Los Angeles.
Selling the two refineries would cut BP’s refining capacity in the U.S. in half and enable the oil giant to invest more in its other refineries around the country. The company said in a press release today that it “expects significant market interest in the assets.”
Whether that ends up being true remains to be seen. As we’ve reported, both plants have had troubled pasts and run-ins with safety and environmental regulators.
The Texas City plant, in particular, has cost BP. After a 2005 explosion at the refinery that killed 15 workers, the Justice Department deemed it ineligible for federally funded contracts, meaning that oil products refined at BP’s largest refinery cannot be sold to the government.
As we’ve noted, four more workers at the refinery have died in the years since the Texas City blast. The last we checked, it was the nation’s deadliest oil refinery—and that’s saying a lot, given the safety record of U.S. oil refineries as a whole.
BP’s Texas City plant also remains under state and federal investigation for the more than 500,000 pounds of chemicals it released over a period of 40 days just prior to the company’s Gulf disaster.
The other facility BP’s selling, its Carson refinery, may be lesser known, but has also had its share of problems. As we reported in June of last year, when air-quality regulators noticed something seemed suspicious about the refinery’s inspection reports, BP blocked them from conducting their own inspections:
Between 1999 and 2002, BP's Carson Refinery had nearly perfect compliance, reporting no tank problems and making virtually no repairs. The district began to suspect that BP was falsifying its inspection reports and fabricating its compliance with the law.
The management district sent its own inspectors to investigate, but when they tried to enter BP's plant, the company turned them away. According to Joseph Panasiti, a lawyer for the management district, the agency had to get a search warrant to conduct inspections required by state law.
When the regulators did finally get in, they found equipment in a disturbing state of disrepair.
According to a lawsuit the management district later filed against the company, inspectors discovered that some tanker seals had tears that were nearly two feet long. Tank roofs had gaps and pervasive leaks, and there were enough major defects to lead to thousands of violations.
BP said that it hopes to complete the sale of both refineries by the end of 2012, subject to regulatory and other approvals, noting that it will “ensure that fulfillment of the current regulatory obligations associated with Texas City are reflected in any transaction.”
The company still owes $30 million in penalties to the Occupational Safety and Health Administration for new violations discovered in a 2009 investigation of the Texas City plant. Litigation over that fine is ongoing, OSHA said in August.