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A disastrous 2006 fire led Huntsman Corp. to take a new look at its safety procedures.
Brian W. Merkley, global director of corporate risk management for the Salt Lake City-based chemical manufacturer, was driving his son back from Boy Scout camp in April 2006 when he learned of the major fire at the company's Port Arthur, Texas, facility.
“We were driving down the canyon when we got the call that this massive fire and explosion had occurred,” he said. It happened when a pipe that had become corroded, but could not be visually inspected because of its location, severed and released its contents, and found an ignition source nearby which resulted in a massive fire.
The fire, which had a direct loss impact of more than $600 million, continued to burn for several days. Fortunately, nobody was hurt. Company personnel had already detected something was wrong and evacuated personnel from the area.
“That was a testament” that controls had been in place, “but we recognized it had the potential to be much worse,” Mr. Merkley said.
Consultants along with Huntsman's The Woodlands, Texas, corporate office and plant personnel worked together and developed an action plan.
“I got out, and I walked some of the affected neighborhoods. I was visiting some of the residents, hearing about their issues.” These were immediately addressed, in some cases by power washing houses, getting cars cleaned and repairing homes.
On several occasions, said Mr. Merkley, he discovered he was just ahead of, or behind, plaintiff attorneys canvassing the neighborhood in an effort to find clients.
Shortly after the fire, Huntsman also organized a community meeting that included plant management and environmental experts. “In the back of the room, we had our claims management folks right there, ready to take residents' complaints,” Mr. Merkley said.
In addition, “We set up a 24-hour call center, and the ground team stayed in place for several weeks while we addressed every legitimate concern,” he said.
All that attention paid off, because not a single lawsuit in connection with the fire was filed, which was “remarkable” and a “real testament to taking a proactive approach to getting things fixed,” Mr. Merkley said.
There were long-standing effects of the fire as well, according to Mr. Merkley, who had been at Huntsman less than a year when the fire occurred. While Huntsman had had safety standards already in place for a number of years, before the fire “it was left to each facility to come up with, or develop, their own approach and procedures as to how they would meet these standards, and what we found is, we needed to do better. We needed to up our game.”
Over a period of about a year and a half, “we developed a set of process safety procedures that spelled out in great detail exactly how plants should go about process safety and meet environmental and safety standards.”
“We began rolling these out, first to our high-hazard sites, and then our medium-hazard sites,” Mr. Merkley said. At the same time, “our process safety experts were doing gap analyses,” developing action plans to close any gaps between existing situations and the new standards.
This was coupled with audits that were measured against those standards, which included verifying those gaps were closed, he said.
These procedures were also translated into its workers' principle languages, Mr. Merkley said.
“You can't expect someone in Hungary or Thailand or Malaysia, China or even France or Germany” to know English, he said. “We needed to make sure people were trained in their own language, that they understood the procedures.”
Huntsman Corp.'s risk management philosophy is to retain risk when it makes good economic sense, and to transfer it to insurers when that makes sense, said Brian W. Merkley, global director of corporate risk management for the Salt Lake City-based firm.