Invoking the memory of BP’s deadly Texas City explosion, ConocoPhillips refinery workers told the company’s top executives Wednesday that budget cuts may be compromising plant safety.
Charles Galatro, president of Teamsters local 877 in Linden, N.J. who works at ConocoPhillips’ refinery in Bayway, N.J., told CEO James Mulva at the company’s annual shareholder meeting that employees fear safety will suffer in favor of squeezing more profits from refining.
Mulva responded that 60 percent of the $1.7 billion earmarked to spend on refining and marketing this year will go toward safety and infrastructure. He said the company has not made across-the-board budget cuts.
On other matters, Mulva said ConocoPhillips, like five other American and European oil companies, is in talks with the Venezuelan government regarding compensation and future terms for recently nationalized heavy oil projects in the South American country’s oil-rich Orinoco River basin.
And he told representatives of South American indigenous people, who have attended annual meetings regularly to voice concern about potential drilling around their remote homes, that the company has no immediate plans for exploration in the areas.
In bringing the safety concerns to the annual meeting, Galatro said he wanted to speak to the CEO directly because worried employees who speak up are often ignored by plant managers.
“Budget decisions and overtime limitations put a strain on our trust,” Galatro said during the shareholder question-and-answer session. “Budgetary decisions will eventually lead to an incident similar to BP.”
An explosion at BP’s Texas City refinery in 2005 killed killed 15 workers and injured scores more.
Stephen Swader, who works at ConocoPhillips’ Santa Maria facility in Arroyo Grande, Calif., said that amid staff reductions, employees are increasingly expected to do the work of two people “and it’s becoming systemic.”
Mulva said any worker can stand up any time and express dissatisfaction, and he would ensure “no one is ever dismissed.”
Concerns about budget and staff cutbacks were among issues raised by federal investigators who probed the BP explosion. The U.S. Chemical Safety and Hazard Investigation Board said in its final report issued in March that 25 percent budget cuts in 1999 and 2004 siphoned maintenance and training and left the plant “vulnerable to a disaster.”
The board also said BP focused too much on personal safety — such as prevention of falls — while neglecting process safety, or proper handling of equipment and hazardous materials.
BP said when the report was released that the company accepted responsibility for the blast but had “strong disagreement” with some of the board’s conclusions about the role of budget cuts in the disaster.
Mulva rejected the comparison of BP and ConocoPhillips. “We don’t see our company or our facilities or assets in that situation at all,” he said.
He also said ConocoPhillips, which has a dozen U.S. refineries and seven in five other countries, takes process safety management seriously.
Mulva noted the company recently named a process safety manager for all ConocoPhillips refineries, and the company is recording process safety incidents as well as personal safety incidents to help enhance safety from lessons learned.
On the international matters, Mulva said that ConocoPhillips is in talks with the Venezuelan Oil Ministry about compensation for the country’s assumption of majority control and under what terms ConocoPhillips will participate in the projects in the future.
He declined to give details, citing “a sensitive time period” leading to a June 26 deadline, but said he hopes to reach an “amicable solution.”
Last week, under orders from President Hugo Chavez, Venezuela’s government-controlled oil company, Petroleos de Venezuela, or PDVSA, seized majority control of foreign-run projects involving ConocoPhillips, Exxon Mobil Corp., Chevron Corp., Total, BP and Statoil.
Of the six, ConocoPhillips has the most to lose. Its annual regulatory filing says the company’s has invested $4.5 billion in two Orinoco projects and an offshore project. UBS estimated the three ventures are worth $6 billion.
Also at the meeting, leaders of indigenous communities in remote areas of Peru and Ecuador where ConocoPhillips has interests reiterated their stance that no drilling should happen on the lands.
“We’re not thinking about what are the best ways to extract oil,” said Patricia Gualinga, of southeastern Ecuador, through an interpreter. “This goes beyond money, it goes to the heart of who we are as an indigenous people.”
Mulva told shareholders that the company wouldn’t proceed with any development without approval from the countries’ governments and support of constituents, including indigenous people.
He added that politics, environmental issues, and cost challenges have pushed any potential projects in those areas “quite far down on our priority list of what to do in the years to come.”