Seasons Greetings From Manufacturing Viewpoint

Manufacturing Viewpoint will be taking a short break during the holidays and will return in early January.

We wish all of our readers and contributors a happy Christmas and a happy and successful new year 2010.


BP To Appeal New Texas City Damages Award

photo : BP

BP is set to appeal a $100M award for safety infringements at its Texas City refinery. The Texas Court made its ruling on Friday 18th December and ordered BP to make payments to ten workers after an incident in April 2007 that involved an unplanned release of toxic chemicals at the site.

The affected workers claimed that breathing in benzene and other harmful chemicals released from a sulphur recovery unit had caused dizziness, sore throats, and one worker to pass out. No long-term or permanent injuries were caused.

BP has denied that the release occurred and indeed environmental agencies could find no evidence to support the claims.

This case is one of a number of lawsuits brought against BP involving more than 140 workers and local residents in relation to alleged gas releases from the Texas City Refinery

This blog is very much an advocate of excellence in all matters relating to Process Safety Management (PSM) and believes that all organisations should have the very best policies and procedures in place.

It is also correct that transgressions, where proven, should be punished via the courts but the punishment must fit the crime. In this example, the judgement is extremely severe considering that there is uncertainty about whether a release actually occurred and, most importantly, the fact that no-one suffered any long term effects.


Weekly News Round Up

This week's round-up of news and updates on previous stories
  • The Thai Government has formally ordered construction work to stop at the Map ta Phut petrochemical complex. There is no clear information regarding a likely restart date at this time.
  • The new Boeing 787 Dreamliner made its first test flight on Tuesday. Each 787 contains carbon fibre and adhesives to the value of $1M, with the carbon fibre coming from polyacrylonitrile. Boeing has already received 840 orders for the new aircraft.
  • Following recent shale gas discoveries, the American Natural Gas Alliance (ANGA) now believes that the US now has approximately 100 years of natural gas reserves. If correct, this could significantly impact future petrochemical investment in the USA. This news follows the recent announcement of ExxonMobil's acquisition of  major US natural gas producer XTO Energy.
  • According to reports, the bankruptcy court in New York has adjourned the hearing to consider the LyondellBasell's proposed reorganisation plan, until January 12th. The outcome of the hearing is of much interest for Reliance Industries which has made a preliminary non-binding offer for a controlling interest in LyondellBasell.


ACC Expresses Concerns About EPA Emissions Regulation

photo : theage.com.au

The President of the American Chemistry Council (ACC) has expressed serious concerns over the recent changes to emissions regulations announced by the US Environmental Protection Agency (EPA)

In announcing the“endangerment finding", the EPA has classisfied CO2 and other greenhouse gases as "atmospheric pollutants", allowing it to regulate such emissions under the existing authority granted by the Clean Air Act.

ACC believes that this will create a significant level of uncertainty, which will stem investment in new facilities and modifications to existing facilities at a time when the industry is in a very fragile recovery period.
Under the EPA rules and regulations, any facilities making new investments would need to obtain a permit. To do this it would be necessary to demonstrate implementation of 'best available control technology', however rules for determining what is required to satisfy this crierion do not yet exist.
ACC suggests that some time out is required to "put together a comprehensive policy that reduces emissions in our country whilst ensuring that our manufacturing sector can continue to invest".
This blog fully supports the approach proposed by ACC. A clear and well defined plan is required to address questions of sustainability and a coherent approach is required to understand and deal with the issue of climate change. Serious consequences for the chemical industry could result if an ill-considered approach is taken for the sake of political expediency.


ExxonMobil Develops Shale Gas Business With XTO Acquisition

Photo : Energy Tribune

ExxonMobil has clearly signalled its intent to develop a global shale gas business with the acquisition of XTO Energy, the Texas-based 'unconventional' gas producer.

The deal, which cost some $41bn, gives ExxonMobil a strong global position in the fast growing shale gas market, with assets throughout the world.

Shale gas extraction has become increasingly attractive as extraction techniques have improved and costs have fallen. Estimates of the potential gas supply are being revised steadily upwards as new reserves are located. The involvement of the majors such as ExxonMobil will further increase the amount of new exploration and production. It is unlikely that the 'unconventional' tag will last much longer.


Buncefield - Process Safety Leadership Group Publishes Final Report

photo : metro.co.uk

The UK Process Safety Leadership Group (PSLG) has published a report that specifies minimum standards of safety and environmental protection for all UK sites storing large volumes of gasoline.

The PSLG was set up following the explosions at fire the Buncefield fuel depot in December 2005.

The PSLG consists of expert representatives from the industry and regulatory bodies. In the course of its work, the group has established a set of 'Principles of Process Safety Leadership' as follows:

  • Clear and positive process safety leadership is at the core of managing a major hazard business and is vital to ensure that risks are effectively managed
  • Process safety leadership requires board level involvement and competence. For companies with boards located outside the UK then the responsibility to show this leadership rests with the most senior UK managers.
  • Good process safety management does not happen by chance and requires constant active engagement
  • Board level visibility and promotion of process safety leadership is essential to set a positive safety culture throughout the organisation
  • Engagement of the workforce is needed in the promotion and achievement of good process safety management
  • Monitoring process safety performance based on both leading and lagging indicators is central to ensuring business risks are being effectively managed
  • Publication of process safety performance information provides important public assurance about the management of risks by an organisation
  • Sharing best practice across industry sectors, and learning and implementing lessons from relevant incidents in other organisations, are important to maintain the currency of corporate knowledge and competence.
The principles are backed up by recommendations on organisation and resources. This blog's view is that this document is a 'must see' for all managers in the chemical industry, irrespective of location, as it provides an excellent checklist for measuring your organisation's current performance against best practice in process safety management.


Weekly News Round Up

This week's round-up of news and updates on previous stories

  • Numerous reports suggest that Reliance Industries is moving quickly in its efforts to aquire LyondellBasell , with executives from the two companies meeting recently in Houston. Reliance is believed to be preparing to make a binding offer for LyondellBasell.
  • The Chemical Engineer reports that the European Union has approved a substantial amount of funding for a number of green energy-related projects. The EU had previously set aside €4 billion for green energy projects and has now allocated €1.6 billion for carbon capture and storage projects and €0.6 billion for offshore wind energy projects.
  • Shell has opened a state-of-the-art mono-ethylene glycol (MEG) plant in Singapore. The plant uses Shell's OMEGA process, which is claimed to have lower construction and operating costs and maximises the yield of MEG (producing less di and tri-ethylene glycols), when compared with other processes.
  • BASF chairman Juergen Hambrecht has spoken positively about his company's fourth quarter results, which were above expectations. 2010 is expected to be 'difficult' given the volatility of global recovery and the fact that central bank interest rates are expected to rise.
  • Ineos Bio, together with its partner New Planet Energy, has been selected for a $50M grant for its advanced bioenergy facility in Florida, USA. The facility to use INEOS Bio’s advanced BioEnergy technology to produce bioethanol and power from a range of feedstocks, including forestry waste, agricultural waste, sustainable energy crops, construction waste and municipal solid waste.


Hope for Teesside as £60M Investment Package Announced

photo : BBC

The UK Government has announced a £60M investment package to support the rejuvenation of industry in the region. and to develop it as a centre of excellence for low carbon and advanced manufacturing technologies.

Teesside, in the North East of England, has long been at the heart of the UK Chemicals industry, with the skyline dominated for many years by the (ex) ICI plants at Wilton, North Tees and Billingham.

The industrial base has significantly declined in recent years, however. ICI no longer exists and there have been multiple chemical plant closures in the region. The situation was exacerbated further with the recently announced closure of the Corus steel plant in the region, with the loss of 1700 jobs.

The £60M investment package will be used in a number of ways. Firtsly, to provide immediate support in the aftermath of the Corus closure. Secondly, there will be investment to help the region establish itself as a low carbon base; with investment to establish bio-based materials, to develop low energy technologies, for development of carbon capture and storage and to develop new business practices.

Very positive news. The region has the skills, the infrastructure and the desire to become this centre of excellence for low carbon technologies. With the political will, a strong and coherent plan and some targeted investment, this dream can  become a reality.


GCC to Supply 20% of Global Petrochemicals by 2020

photo : GPCA

According to estimates by the Gulf Petrochemicals and Chemicals Association (GPCA), the GCC will meet 20% of the world's petrochemical demand by 2020.

The growth of petrochemicals in the region continues to be very impressive. Current petrochemical output in the region is some 63 million tonnes and this will almost double between now and 2015, with a number of large scale projects projects underway throughout the region.

The annual GPCA Forum is now underway and the agenda has a strong focus on sustainability issues and on achieving success in the post-recession environment.

In implementing such a huge investment programme (estimated at approximately $170 billion between now and 2015), producers in the region will face a number of challenges and issues but these will be overcome, given the right skills and resources. There is little doubt that over the coming decade, the region will develop into the global petrochemicals hub.


As Copenhagen Summit Opens the Impact on Chemical Industry Remains Unclear

photo : Scandinavia Travel

With a huge political fanfare, the UN summit on climate change is opening today in the Danish capital Copenhagen, with delegates from 192 countries attending.

According to UN Climate Chief Yvo de Boer " The Copenhagen climate negotiations beginning Monday must yield an ambitious, sweeping agreement to capitalize on pledges by countries to fight global warming".

In the days and weeks leading up to this summit, there has been much political rhetoric but also an increasing level of heated debate, stirred up significantly by the leak of the so called "climategate" e-mails from the Climate Research Unit at the University of East Anglia in the UK.

If a deal is reached, the requirement to reduce CO2 emissions will have significant consequences for industry, both from a cost point of view (cap and trade and other proposed legislative changes) and a technology point-of-view (energy efficiency, carbon capture and storage and other green technologies).

At this stage, it is difficult to see whether an agreement can be achieved. There are major concerns in many countries, in-part relating to the scientific issues (particularly post "climategate") and partly about the impact on industry and consequently employment in those countries.

This blog's view is that the industry must vigorously implement a "sustainability agenda" looking to reduce energy consumption wherever possible and as quickly as is possible, using both energy efficiency programmes and new technologies. This is the right thing to do irrespective of the AGW debate.

Regarding climate change and AGW, a rational and open debate is needed as soon as possible. The 'science is settled' argument can only be finalised when all of the concerns have been discussed and addressed openly.

The current name calling tactics coming from both sides in the debate are totally unproductive and will only serve to polarise views further, making it even harder to achieve universal agreement and agree an implementation plan. Once a broad consensus is achieved, that is the time to decide on legislated targets and sequestration technologies such as CCS.


Weekly News Round Up

This week's round-up of news and updates on previous stories

  • In an interview with The Times, Jim Ratcliffe has indicated that Ineos will consider some asset disposals in the future. The company has to make substantial debt repayments in 2011 and has indicated that some asset sales could be a possibility. Ineos currently has debts of approximately €6.5M.
  • The Thai Supreme Court has upheld an injunction issued in September halting development of $12bn of petrochemical and power projects at the Map Ta Phut Industrial Estate in the eastern province of Rayong. This ruling, which could delay the start-up of several petrochemical plants, including a large cracker, has led to the involvement of the Government, in order to seek a resolution.
  • An explosion occurred at the Valero refinery in Texas City, Texas, on Friday 4th December, killing one worker and injuring two others. Few details are currently available but the blast is reported to have occurred following a boiler failure, according to a company spokesperson.
  • In another incident, three people were killed and two injured in a chemical plant explosion in Yongin, South Korea. According to reports, the blast followed a fire at the plant. An investigation is underway to identify the causes.


25 Years on From Bhopal - Have The Lessons Been Learned?

The Bhopal disaster was almost certainly the worst incident in the history of the chemical industry. 25 years on from Bhopal, we must take a step back and assess whether the lessons have truly been learned.

The incident took place at a Union Carbide pesticide plant in the Indian city of Bhopal, Madhya Pradesh. On 3rd December 1984, the plant released 42 tonnes of toxic methyl isocyanate (MIC) gas, exposing more than 500,000 people to toxic gases.

The first official immediate death toll was 2,259. A more generally accepted figure is that 8,000- 10,000 died within 72 hours, and it is estimated that approximately 25,000 have since died from gas-related diseases.

The causes were multiple.
  • Capital expenditure was minimised
  • General cost cutting had led to poor working conditions and an inadequate inspection regime
  • Safety rules were inadequate and operators were instructed to ignore them
  • Training was cut back drastically to cut costs
  • Workers were forced to use manuals in English, even though very few could understand the language
  • Some safety features had been dismantled or disabled
  • Safety systems were inadequately designed
  • Supervision was reduced to save cost
  • Poor morale led to an exodus of skilled personnel to better and safer jobs
There is no doubt that the chemical industry has improved significantly since Bhopal. I would very much doubt  that such a severe set of issues can exist at any modern-day facility. In general, awareness of process safety is generally much improved throughout the industry.

In spite of this, however, we can not and must not be complacent. The current recession has hit the chemical industry hard and finances are under severe pressure - meaning that cost cutting is essential to survival. This is real life and has to happen - but at the same time, we must ensure that the safety and integrity of our plants is never compromised.


Canada Rail Strike Hurts Chemicals Manufacturers

photo : life.com

With 70% of the production volume of the Canadian chemical industry being moved by rail, the current rail strike has the potential to severely hurt chemicals manufacturers.

The dispute, by the locomotive engineers, is not currently impacting freight, as positions are being covered by managers, but this isn't considered sustainable in the long-term, especially as weather conditions deteriorate.

As a response, the government introduced legislation this week to order 1,700 unionised employees back to work and send the dispute to binding arbitration. It claims the strike could have "serious repercussions" for a still-fragile economy.

Canadian Chemical Producers' Association president Richard Paton has commented that the the strike could threaten the economic recovery, with manufacturers potentially forced to scale down production and lay off workers.

As this blog has noted, the post-recession 'new normal' is chracterised by a very fragile recovery with sustained periods of lower volumes and reduced margins but punctuated by periods of high volatility caused by oil and currency markets.

So for the Canadian Chemical Industry, a significant problem with logistics would be a disaster. This issue, on top of all of the other challenges that the industry is facing, may be enought to push some manufacturers over the edge. Hopefully a solution will be found quickly.