The latest edition of the Marsh report on ‘The 100 Largest Losses’ revealed that safety failures have cost the hydrocarbon industry more than US$ 34 billion in the last 40 years. Here, Clive Jones, managing director of thermal transfer fluid specialist, Global Heat Transfer, calls for the industry to tighten control barriers within process and safety management procedures.
The Marsh report covers the top 100 largest property damage losses that have occurred in the hydrocarbon extraction, transport, and processing industries between 1974 and 2013. The losses originate from explosions, fires, flooding, blowouts, and the sinking of offshore structures. The 100 Largest Losses report, which is now in its 23 edition, has been created for managers and practitioners to help integrate new methods in design, operation and maintenance of process facilities.
However, the staggering scale of financial loss is only the tip of the iceberg, because, strictly speaking, it only reflects property damage. The picture is even grimmer when analysing loss of production, resources and even loss of life.
Since 2011, eight new incidents have entered the 100 largest losses list. This reflects an obvious inadequacy of risk management, maintenance and safety procedures. This can be proven by the entrance of eight new losses, which have come from a multitude of failures. There is not one single dominant factor.
The complaint that health and safety, ‘has gone mad’ is so clichéd that it has become a common media trope. However, as long as major accidents still occur because of failing control barriers within process and safety management systems, there is still more work to be done.
A recent quote from the chairman of Marsh’s Global Energy Practice, said that whilst the industry is becoming increasingly more sophisticated in its approach to risk management, these incidents occur because of failure in a number of aspects. For this reason, the author believes safety and loss prevention barriers must be maintained at a high level. The 100 Largest Losses report is the best way to warn companies not to let their safety barriers deteriorate.
Working in the hydrocarbon environment, engineers are faced with handling hazardous materials and managing large amounts of energy daily. Because of this, when something goes wrong at a petrochemical processing facility, it can lead to catastrophic consequences.
The phrase ‘this is not a black swan event’, indicating a rare occurrence, is prominent in the report and for good reason. The industry simply cannot accept that these incidents were just unexpected. The only way to defeat the risk is to predict it. Using reliable maintenance methods, as well as efficient design and operational tactics, we can predict the problem beforehand and put a stop to the significant loss before it happens.
To achieve this, auditing and regular inspection should be at the top of the senior management agenda. As a supplier of thermal fluids and heat transfer system management services for the petrochemical sector, Global Heat Transfer has found that the best way to prevent accidents is the proactive management of safety processes and regulations.
Senior management needs to implement advanced risk management strategies and ensure company culture and daily routine are deeply rooted in health and safety laws. This can truly help minimise loss, whether it is financial, a loss in production, property damage, or, in extreme scenarios, loss of life.
Maintenance methods are not only important for hazardous purposes, when a plant is properly maintained it is also cost effective and more productive. In the petrochemical sector, where thermal fluid systems are present, the replenishment of thermal fluid should be essential to help prevent debris build up.
A range of system cleanse services are available, which remove carbon deposits and light ends and filter out contaminants. Thermal fluid condition can be managed either reactively or proactively in order to avoid high capital expenditure and loss of production. In this industry, the five Ps (prior preparation prevents poor performance) are critical to maintaining a safe and hazardless environment.
In the Marsh report, an anonymous UK company in the upstream sector sits at the top of the top 20 damage losses list. The company made a property damage loss of US$ 1 810 000 000 during an explosion in 1988.
There are also at least ten more occurrences of explosions on this list, with the smallest loss at US$ 490 000 000 in Malaysia. In the report, property damage is divided in to five plant types, upstream, which takes up 34% of the list, refining, which takes 29%, gas processing with 9%, terminals and distribution, 5% and petrochemicals, 23%.
Major losses in the hydrocarbon industry may have decreased over recent years but we still see at least one loss per year in the sector. That number is not enough to just stop improving altogether.
Dr Sam Mcmannan, regents professor and director of the Mary Kay O'Connor Process Safety Center said we can no longer rely on the NIMBY (Not in My Back Yard) excuse because, in our fast developing environment, your backyard may as well be your neighbour’s.
In other words, any incident in the world can have global ramifications. He also mentions that, BANANA (Build Absolutely Nothing Anywhere Near Anyone) is not acceptable. The industry must bear in mind that the population is growing and in consequence, all will continue to face an increasing amount of demand for living space and food.
Once all have thrown out the strangely abbreviated excuses, the industry will be at a stage where progress can finally be made. However, it is not enough to just learn from these incidents in the book, all must then implement learning in design, procedures, training, maintenance, and other programmes. And, here is the hard part, all must stick to the implementation.
The 100 Largest Losses report aims to help beat the silo mentality, the belief that only one country or area of work is responsible for losses in the hydrocarbon sector. The author believes that the individual losses provide valuable lessons for all hydrocarbon engineering businesses, regardless of circumstance.
Written by Clive Jones, Managing Director, Global Heat Transfer.
Edited by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/11082014/better-safe-than-sorry-special-report/