An explosion and fire that ripped through ARCO Chemical Co.'s Channelview, Tex., petrochemical complex early this month has jolted U.S. petrochemical and gasoline markets.
The July 5 accident killed 17 workers, raising anew concerns over safety practices in the Houston area's vast petrochemical/refining infrastructure.
It was the second major disaster involving significant loss of life at a Houston area petrochemical plant in less than a year.
An explosion and fire at Phillips 66 Co.'s Houston Chemical Complex at Pasadena, Tex., killed 23 workers and injured 130 Oct. 23, 1989.
The earlier accident spurred federal efforts to tighten plant safety practices (OGJ, Apr. 30, p. 46). Occupational Safety & Health Administration plans to publish its proposed new rules in the Federal Register early this week.
INDUSTRY REPERCUSSIONS
The ARCO complex produced almost 15% of U.S. styrene monomer supplies and was the world's largest producer of the key gasoline octane component methyl tertiary butyl ether at 20,000 b/d. It is expected to be shut down for several months.
Analysts expect styrene markets, tight since last year, to be scrambling for supplies with prices likely to stay firm through the fall. They expect less significant effects from the loss of supplies of propylene oxide, the plant's other primary product.
Only a week before the accident, ARCO broke ground for an expansion project to double Channelview's PO/SM capacities (OGJ, July 9, p. 36).
Gasoline prices jumped more than 1cts/gal on the New York Mercantile Exchange early last week on the prospect the loss of so much MTBE would squeeze U.S. gasoline supplies sharply.
Meantime, OSHA investigators were searching the plant area last week to determine cause of the blast. Jack G. Johnson Jr., president, ARCO Chemical Co. Americas., said OSHA expected its investigation to be complete in about 1 week.
ARCO also is investigating the accident but has been slapped with a Texas district court judge's temporary order barring it from removing explosion debris. That injunction arose from a lawsuit filed by a blast victim's widow charging negligence by ARCO and contractor Austin Industries Inc., Houston, in the accident.
STYRENE LIGHTNESS
Interruption of the Channelview plant's SM production will take about 1.4 billion lb/year of capacity from the market at a time when styrene markets still are tight.
"It just couldn't happen at a worse time in the styrene business," analyst Bill Urquhart, Bonner & Moore Associates, Houston, said of the accident.
As a result of the accident, ARCO Chemical last week declared force majeure and began allocating some products to customers, based either upon contractual commitments or historical volumes of purchase.
"We are doing everything we can to try to locate supplies for our customers," ARCO official Arthur Zadrozny said.
A worldwide ARCO business management group in Philadelphia was working to begin moving supplies from Europe.
Urquhart said the loss of Channelview styrene capacity, even for a few months, would be very significant because tight markets had prevented stockbuilding in recent months.
"Some people are just going to have to do with less styrene that they would like to have to run their derivative plants," he said.
Urquhart said a series of problems in the styrene business caused the market to tighten, even before the deepfreeze hit much of the U.S. late last December.
"When that happened, most of the petrochemical industries along the Gulf Coast were shut down, including styrene units, and the market went from tight to short."
Since then, Urquhart said, styrene supplies have never caught up with demand. With the Channelview shutdown market tightness could persist until yearend, when Chevron Corp. is expected to start up another 625 million lb/year of capacity at its St. James, La., plant, boosting capacity there to 1.5 billion lb/year, he said.
Industry forecasts had estimated U.S. styrene demand this year at 7.7 billion lb, with production at 8 billion lb and net exports of 300 million lb.
During 1989, Urquhart said, net U.S. styrene exports totaled 900 million lb. According to preliminary figures, U.S. styrene production last year reached 8.3 billion lb. U.S. styrene capacity in 1989 averaged 8.7 billion lb/year. Urquhart estimates it at 9.2 billion in 1990.
Urquhart noted that spot styrene prices were likely to at least maintain current levels of 45cts/lb.
OTHER MARKET EFFECTS
It was uncertain at presstime just how severely the loss of MTBE supplies would squeeze the U.S. gasoline market.
Regular unleaded gasoline for August delivery jumped 1.01cts to close at 57.86cts/gal July 9 and July 10. Although MTBE is used mainly to build octane for premium unleaded, there is typically a price spread relationship between the two grades that in turn affects futures prices.
Loss of the additive also could mean an increase in crude runs to make enough octane to meet demand while still complying with gasoline volatility limits in parts of the U.S. (see story, p. 36, and OGJ, July 9, p. 21).
Further, American Petroleum Institute last week said U.S. gasoline stocks fell 1.7 million bbl and crude stocks fell 3.7 million bbl.
At Channelview, ARCO also produces 560 million lb/year of PO, 1.77 billion lb/year of ethylbenzene, 3 million lb/year of phenyl ethyl alcohol, and 125 million lb/year of urethane polyols.
Channelview PO production represents 17.5% of U.S. capacity, but Urquhart said PO markets were not as tight as styrene.
ARCO also produces 1.2 billion lb/year of PO at its Bayport, Tex., plant where the coproduct is tertiary butyl alcohol. Dow Chemical Co. accounts for the balance of PO capacity in the U.S.
ARCO also produces PO at Rotterdam, Fos sur Mer, France, and Kaohsiung, Taiwan.
SAFETY CONCERNS
The Channelview blast followed a string of lesser accidents in recent weeks, flaring anew the controversy over worker safety at refineries and petrochemical plants in the Houston area.
A fire erupted in the fin fan cooler of the crude unit at Crown Central Petroleum Co.'s Pasadena, Tex., refinery, injuring one worker July 3. That occurred when a charge cup blew a seal.
There were fires at two plants June 8. At the Pearland, Tex., chemical plant of Solvents & Chemicals Inc., a forklift driver punctured a barrel, touching off a fire that burned for 20 hr, causing multiple explosions and injuring two workers.
At the same time, a fire broke out at Phillips' Pasadena plant, sending eight persons to the hospital with minor injuries.
"As far as we know at this time, there is no common thread," said Sherrie Moran of OSHA's Dallas regional office. "Each of these accidents have involved a unique set of circumstances."
Officials of the Oil, Chemical and Atomic Workers International Union have complained about the use of nonunion contract workers at refineries and petrochemical plants.
With the recent string of accidents, OCAW renewed its charges that contract workers often are poorly trained and unfamiliar with processes of facilities where they are employed, increasing risk of death or injury.
Moran said concerns raised by the ARCO accident are the same as those raised by the 1989 Phillips accident.
OSHA is awaiting completion of a study by John Gray Institute about the use of contractors in the petrochemical industry. Moran said when that study is complete, OSHA will organize a conference of refining and petrochemical company executives and safety specialists to consider its implications.
ARCO DISPUTES CLAIMS
ARCO officials disputed OCAW's suggestion that the accident was linked to extensive use of inadequately trained contract workers at the plant.
Contract workers are trained and treated the same as ARCO employees, Johnson said. He said contract workers were used for periodic fluctuations in Channelview's work force.
"To accomplish a major turnaround, you might have 500, 600, or in some cases 1,000 additional people at the site," said Harold Sorgenti, ARCO Chemical's chief executive officer.
The Channelview plant employs about 350 ARCO Chemical workers and 150 Austin workers. Fifty ARCO employees and 15 Austin employees were at the plant the night of the accident.
ARCO said contract workers at Channelview perform daily maintenance and janitorial work and take part in capital projects.
Sorgenti defended the safety record of the Channelview plant and the petrochemical industry in general, noting that Channelview employees had worked for 1.4 million man-hr without a lost time accident until July 5.
ARCO Chemical expects its losses resulting from the accident and shutdown will be met by a combination of business interruption insurance, liability insurance, property insurance, and self-insurance. Johnson offered no estimate of the accident's ultimate cost to the company.
WHAT HAPPENED
The July 5 explosion and fire occurred between 11:15 and 11:30 p.m. in the utilities area in the southern end of the 564 acre ARCO complex.
The explosion hurled the top of a 900,000 gal waste water storage tank into a parking lot about 100 yd away and leveled an area the size of a city block.
ARCO reported that the fire was confined to the waste storage and treatment area. Firefighters from ARCO Chemical, ARCO affiliate Lyondell Petrochemical Co., and area mutual aid teams doused the blaze by 4 a.m. July 6.
By the morning of July 7 OSHA had sealed off the accident area and was allowing no one to enter.
Five ARCO employees, 11 Austin contract workers, and the driver of a Waste Processor Industries Inc. vacuum truck were killed. ARCO Chemical said the accident was the worst in its history in terms of loss of life.
Early reports indicated employees were conducting maintenance work on a compressor in the utilities area at the time of the explosion, but officials would not speculate about how or whether the compressor was involved in the accident.
The vacuum truck was at the plant to remove rainwater that had accumulated in a sump near a train loading dock.
The truck had entered the waste area to dump the rainwater into another storage tank.
The driver was found inside the cab, but the plant manager, Earl McCaleb, couldn't say whether he had begun dumping water when the accident occurred.
THE AFTERMATH
ARCO plant staff last week made sure the plant was stable enough to shut down before being ordered from the scene.
Within 36 hr of the accident, ARCO workers had restored nitrogen to most areas of the plant and were attempting to restore water and steam service. Houston Lighting & Power was providing electrical service.
Teams were checking integrity of plant lines, vessels, pumps, and instruments. Also, McCaleb said, they were moving fluids through processing systems to ensure all were operating properly.
Sorgenti noted the only process equipment damaged by the explosion and fire was a cooling tower used by several plant systems.
Process systems will be returned to service one by one, as employees determine they are functioning properly.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
