Iris Cross Director, Community Relations Bp Galveston County and Texas City 340., Famer HWY, Rm 4458 Texas City, TX 77590 409 949 3122 October 31, 2006 Dear BP Retiree: Recent events including Tuesday's press conference by the U.S. Chemical Safety Board and Sundays 60 Minutes segment have created much interest in BP's position on events at BP Texas City. We want to keep you informed in response to reports in the media about what happened at BP Texas City and of our progress at the facility. The attached fact sheet addresses key issues raised in media reports. BP has accepted responsibility for the mistakes made and apologized for what occurred. We have made substantial changes and improvements at BP Texas City and are in action on a program of multiple recommendations contained in BP's final accident investigation report and other sources. As we have stated before, BP has acknowledged that it was aware of infrastructure and safety culture problems at the refinery prior to it/larch 23, 2005 and we have been in action in response. BP is working to improve plant integrity, safety culture and process safety management at all BP--operated facilities in order to prevent such accidents in the future. For more detailed information, you can also find the complete results of BP's own internal investigation into the incident on our web site at: We are also pleased to enclose a copy of our recent newsletter, "the pIanet," published to keep you informed of our progress and highlight our employee and community initiatives. We hope you have the opportunity to review the newsletter and share it with your family. If you have any further questions, please contact me at 409-949-3122. Sincerely, BP Texas City Facts and Response BP has accepted responsibility for the explosion and fire on March 23, 2005. BP is deeply sorry for what occurred and has apologized for it and for the suffering it caused. BP has acknowledged it was aware of infrastructure and safety culture problems at the refinery prior to March 23. BP is working to improve plant integrity, safety culture and process safety management at all BP-operated facilities in order to prevent incidents like this in the future. The BP investigation team found no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk. Statements by Chemical Safety Board BP agrees with CSB that the March 23, 2005 explosion and hre was a preventable tragedy. BP does not agree with the characterization of some of the facts by the . CSB. We have and will continue to discuss our concerns with the Board. We are not going to comment publicly on CSB statements until the board issues a final written report that we hope will include documentation explaining the basis for their statements. Spending at BP Texas City The Texas City site budget for capital expenditure (capex) and operating expenditure (opex) had steadily increased over 10 years. Capex averaged less than $50 million/year from 1996 to 2000, but increased significantly to an average of $125 million/year from 2001 to 2004. Maintenance spending also was higher than the industry average per barrel of throughput. Fixed cash costs, including wages, maintenance and turnarounds increased from $300 million per year to $540 million in 2004. Specific expenditure on maintenance turnarounds averaged $40 million per year from 1998 to 200 and had increased markedly to an average of $1 15 million per year from 2001 through 2004. Management Awareness and action about Safety Issues While BP acknowledges that it was aware of safety risks at Texas City, it is not accurate to say that BP was not addressing these issues. BP acknowledged in December 2005 with publication of the BP Fatal Accident investigation Report that the company was aware of infrastructure and safety culture problems at the Texas City refinery prior to the March 23, 2005 explosion and tire. The report makes clear those problems were "many years in the making," and that the company was working to address those problems prior to the incident through 1 increased spending on operations, maintenance and plant integrity concerted efforts to reduce the number of workplace accidents and injuries, The company engaged in many efforts to improve safety culture and safety performance at the Texas City refinery. Site management completed a Major Accident Risk Assessment, had set several "t000 day goals," and implemented a new "control of work" audit program to ensure adherence to procedures during maintenance and repair activities in the facility. Although the company achieved a 70 percent reduction in work place injury rates at Texas City, the investigation team determined those efforts were not sufficient. There was a lack of adequate focus on process safety, which we are now addressing at our sites worldwide. Previous Releases at Texas City BP's review of documentation of previous incidents involving vapor releases from the blow clown drum did not identify an incident that suggested the possibility ofthe scenario which occurred l\/larch 23, 2005. Use of Blowdown Stacks At Texas City, BP has and will continue to commission the plant without use of blowdown stacks in light hydrocarbon service. We are replacing blowdown stacks with flares. Two new flares have been constructed and two others are in design and construction. Placement of Trailers The number of deaths and injuries was greatly increased by the presence of workers in temporary trailers near the blow down stack. The decision to place the trailers near the blow down stack was preceded by hazard reviews that did not recognize the possibility that multiple procedural failures could result in such a massive flow of fluids and vapors to the blow down stack, BP policy now prohibits office trailers within 500 feet of blow down stacks used for light hydrocarbons, At Texas City, BP has simplified the organization, clarified accountabilities and removed hundreds of workers from process areas. BP will spend more than $1 billion at Texas City over the next five years to refurbish and rebuild key gasoline production units, install modern process control systems, transition to a more powerful maintenance management system, improve worker training and implement the other recommendations contained in our final report. The company also has stepped up the scale and pace of spending at BP's five U.S. refineries on maintenance, turnarounds, inspections and staff training. BP's final report on the Texas City explosion and fire can be found at: 2