Texas Oil Refinery Explosion: Lessons

March 2005

In the last week of March news flashed around the world of a catastrophic explosion in a Texas oil refinery owned by industry giant BP. Fifteen workers lost their lives and it is reported that over seventy more were injured, many seriously. Clearly this was a major incident for a public company with a worldwide reputation.

The Lessons

What lessons can be learned here by companies involved in travel and tourism? In docleaf®’s view, plenty.

Immediate Reaction

Firstly, chief executive Lord Browne of Madingley immediately flew to Texas to see matters for himself and to face the media. This demonstrated unequivocally how important it was that the company should be seen to be showing top-level care and concern. Meanwhile the company’s PR bosses had swung into action, issuing a press release in the form of a personal, caring, statement from the refinery’s manager, who was named. The release was also instantly available worldwide via the BP website.

By taking the initiative in this way, even when all the facts were not entirely clear, the company showed a caring image in the face of what could have been difficult and embarrassing circumstances. Such openness also meant that no one in the media could make allegations of, or even imply, incompetence, corporate mismanagement or a cover-up.

Insurance Decisons

As it happens, the disaster could still have extremely serious repercussions for the company. BP took a conscious decision some ten years ago to discontinue insurance cover for major catastrophes, believing that they were strong enough to absorb the risk. Now the bill for repairs to the refinery, workers’ compensation issues and potential litigation could, in the view of some analysts, exceed £500 million. This could prove to be a heavy burden on the company’s balance sheet, demonstrating once again the value of consistent and professional risk assessment and comprehensive insurance.

As we at docleaf® believe this incident to have valuable lessons for us all, we have provided links to the news item in the Daily Telegraph’s Business section of 26 March here and to BP’s initial press release of 24 March here, in our view an excellent example of a well-written and timely company statement in the aftermath of disaster.

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