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PLANTS TURNING TO PREVENTION TO KEEP LOSSES UNDER CONTROL

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Chemical and petroleum plants are finding success in a new approach to extinguishing the risk of fires and explosions.

"The focus is not so much on mitigating losses, but preventing them," said Carmen D'Angelo, vp and director of the Chemical and Pharmaceutical Group of Arkwright Mutual Insurance Co.

Driven largely by the Occupational Safety and Health Administration's Process Safety Management Regulations, plants are taking more preventive measures rather than trying to control losses after a fire or explosion.

Process safety management has become the accepted method of loss control in the chemical and energy industries. Simply put, it is a way of preventing losses by implementing stringent standards of ongoing maintenance, inspections, hazard analyses and training.

Technology has helped hold down the threat as well, with improved systems available to detect and eliminate the possibility of a fire or explosion.

But insurers, engineers and oil and chemical industry risk managers agree that focusing on prevention has helped most.

The OSHA regulations "have probably had the biggest impact on loss control in the industry," said Jay J. Jablonski, program manager-chemical, oil and gas at HSB Professional Loss Control in Houston.

Mr. D'Angelo said most fires and explosions result from mechanical failures, such as equipment breakdowns or pipe ruptures, that result in the release of a flammable chemical. "That's why it's important to prevent the release in the first place."

"If you don't have a release, you don't need fire protection," he emphasized.

The OSHA regulations coupled with conscientious risk management efforts have led to a decrease in fires and explosions in recent years, according to data recently released by J&H Marsh & McLennan Inc.

Information compiled by the broker in its 17th edition of Large Property Damage Losses in the Hydrocarbon-Chemical Industries, A Thirty-Year Review,

shows 18 losses-nearly all from fires and explosions-cost $1.48 billion from 1992 through 1996. That compares with 31 losses amounting to $2.83 billion in the previous five-year period, from 1987 through 1991.

Process safety management procedures have helped ZEON Chemicals Inc. keep on top of preventive maintenance, according to Mark E. Bell, safety engineer at the Louisville, Ky.-based company.

"The chemical industry has done a lot of things around process safety management anyway," he noted. "It's just that the documentation wasn't there. (The OSHA-mandated procedure) forces you to do the documentation" called for in the federal regulations, he said.

The paperwork has helped turn what was largely an informal loss control review into a more structured one, Mr. Bell explained.

"It requires a lot of time by a lot of people, but we believe it's time well spent," he said.

ZEON suffered a $1 million loss two years ago when a unit that dries liquids into powder exploded. While OSHA regulations did not apply to the unit, Mr. Bell said the dryer had been scheduled to be checked as part of the process safety management procedure.

Chemical manufacturer Rohm & Haas Co. also wants to eliminate rather than mitigate losses, according to Henry Good, director of insurance at the Philadelphia-based company.

"We as a company tend to spend more of the money on the preventive side than designing fire protection" systems that will be used after a fire starts, he said.

Mr. Good said Rohm & Haas had to have long talks with its insurers to convince them that their inspections needed to focus more on prevention. "Part of the problem with insurance inspections is they focus on putting the fire out after it happened."

After several discussions, Rohm & Haas told property insurers they were not allowed back until it was clear inspections were focusing on more than just the interest of the underwriters and reviewing the preventive aspects important to the company.

As a result, a new inspection system designed to focus more on preventing fires and explosions is being developed by the company and its insurers and will be in place sometime during the fourth quarter of this year, Mr. Good said.

An advantage to the document-intensive preventive maintenance approach is that it gives risk managers an idea of when during its lifespan a piece of equipment is likely to fail, said Kenneth Mosig, vp and chief engineer with the AIU Energy Division of American International Group Inc.

That's important to petrochemical companies and refineries that can't spend thousands of man- hours constantly checking equipment and miles of pipe, he pointed out.

Mr. Mosig explained that historical records of equipment performance may reveal that the machinery can reliably function to a certain number of months beyond a manufacturer's recommendation for maintenance. "It may show that you only need to look at it one time a year," instead of every six months, he said.

There may be instances where equipment fails ahead of the manufacturer's projection, Mr. Mosig said, "but most of the time the idea is to spread out the inspections. . . .Ideally, you would like to install a pump and not have to worry about it for a long time."

New technology also is playing a role in reducing the threat of fires and explosions.

"There is much better process control with computer technology" than 10 years ago, explained Mark Tschiegg, vp and managing director of field services at Industrial Risk Insurers in Hartford, Conn.

Computers in place in plants today can quickly detect a potential release of vapors, for example, and shut down systems so an accident does not occur, Mr. Tschiegg noted.

Also, new equipment is available to douse flames if they do erupt.

Mr. Jablonski of HSB Professional Loss Control pointed out that new water mist systems are replacing Halon systems since that chemical is no longer manufactured.

"They've been around, mainly in Europe," he said of the mist systems, and have arrived in U.S. plants in the past few years.

Infrared systems also are becoming widely available to detect gas releases, Mr. Jablonski said, and manufacturers are consistently upgrading equipment such as sprinkler systems to make them more responsive.