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You are permitted to view the material on-line and print a copy for your personal use until 24-Mar-2021. Purchased for use by Alan Owen on 24-Mar-2020. Order ref F378754. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F378754
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5 the largest industry mergers ever. 9 The deal was valued at US $48.2 billion and propelled BP Amoco to be among the largest multinational oil companies. The merger combined different industry skills as BP was good at exploring for oil reserves, whereas Amoco had a more substantial business in oil refining and chemicals. These complementary activities provided a basis for more consolidated spending on oil exploration projects that could help extend their essential upstream business activities in the energy industry. Although the transaction was announced as a merger among equals, analysts tended to see it as an acquisition by BP, who controlled 60 percent of the new company. The merger moved the company into the top of the industry with substantial business synergies and administrative savings. Amoco’s President William Lowrie argued for operational synergies with cost savings of at least $2 billion annually and benefits from a streamlined corporate staffing with potential savings of $1 billion. 10 The BP Amoco merger was followed rapidly by acquisitions of ARCO and Burmah Castrol with the possibility to gain further scale economies through the daunting task of consolidating 100,000 people into one single organization within a lean and efficient corporate infrastructure. TEXAS CITY REFINERY On March 23, 2005 a hydrocarbon vapor cloud exploded at the ISOM isomerization process unit at BP 's Texas City refinery in Texas City, Texas , killing 15 workers and injuring more than 170 others. The Texas City Refinery was the third-largest oil refinery in the United States and became part of BP in connection with the Amoco merger. The hydrocarbon cloud was formed by liquid overflow from the F-20 blowdown stack where the raffinate splitter pressure protection system overfilled and overheated the tower contents. The incidence was caused by numerous technical and organizational shortcomings at the refinery and within BP. These comprised the continued use of an insufficiently dimensioned and outdated blowdown drum, lack of maintenance on safety critical systems, inoperative alarms, etc. It also included corporate cost-cutting, inadequate training, poor communications between operators and department managers, failure to invest in plant safety measures and a wanting corporate safety culture. The US Chemical Safety and Hazard Investigation Board looked into the circumstances around the incident (led by former US Secretary of State James Baker III) and was scheduled to release its report in July, 2007.
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