Asset-performance management helps US refiners comply with Baker Report

Jan. 28, 2008
To be successful, refiners must be profitable while maintaining safety performance that is more than just acceptable.

To be successful, refiners must be profitable while maintaining safety performance that is more than just acceptable.

This article shows how a top-down approach to managing the performance and reliability of assets can help refiners effectively respond to the findings and recommendations of the Baker Report.

Baker Report

Norms in the industrial world have evolved to the point that workplace injuries are unacceptable, and companies have learned that better safety leads to greater efficiency and production.

Manufacturers have also learned that emphasis on process safety will lead to better personal safety but the reverse is not necessarily true. Yet many companies still struggle to achieve the level of safety and production to which they aspire.

This struggle also puts negative pressure on safety performance in these plants, as evinced by the incident at BP’s Texas City refinery on Mar. 23, 2005, in which 15 people died.

The January 2007 report of the BP US Refineries Independent Safety Review Panel (“Baker Report”) emphasizes the key difference between personal and process safety: “Personal or occupational safety hazards give rise to incidents that primarily affect one individual worker for each occurrence. Process safety hazards can give rise to major accidents involving the release of potentially dangerous materials, the release of energy (such as fires and explosions), or both.”

Fundamentally, the Baker Report concluded that BP had placed too much emphasis on personal safety to the detriment of process safety. The review panel and subsequent recommendations, therefore “focused on deficiencies relating to corporate safety culture, process safety management systems, and performance evaluation, corrective action and corporate oversight.”

Safety, production

Productivity in manufacturing has steadily improved for decades, placing demands on the industry to compete by increasing production at lower costs and with fewer people.

But there is an inherent, positive link between safety and production. One solution is better asset performance management (APM) that addresses three areas through process safety—leadership, management processes and systems, and expertise.

Leadership sets the stage for direction and expectations. Without it, programs are destined to fail because of insufficient funding, lack of consistency, failure to persist through difficult financial times, and inability to find and retain the right expertise to get the job done.

Management processes and systems provide the necessary record keeping, risk analysis of alternative solutions, and tracking to produce results in a manufacturing setting. People with the necessary knowledge and expertise ensure positive results and program success.

Refining safety

Fig. 1 shows that the US refining industry had much better safety performance than all private industry during the last decade. In the 1970s and 1980s many operators, particularly industry leaders, had good personal safety programs and a strong safety culture. But the prevalent attitude among some refinery workers and management was that workplace injuries were a natural part of the business.

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Getting the job done and keeping units operating and production rates up required doing “whatever it takes.” Only a few documented procedures were readily available and, therefore, successful operations largely depended on the memories of the most experienced hands in the company, at the site, or on a given shift. Often those individuals and others in leadership felt their presence during unit start-up or shutdown was absolutely necessary for a successful operation. It was common for a process to reach a critical stage while these key individuals were completing 24, 36, or more continuous hr of work.

Although many factors affect the safety results of a manufacturing site, this mentality and the failure to take time to document good procedures (then insist that people follow them) were undoubtedly contributors to the poor safety record of these facilities.

Manufacturing safety pioneers like E.I. du Pont de Nemours & Co. led the way for US industries to embrace the concept of an injury-free workplace.1

Early forms of safety initiatives were largely based in negative motivation with punitive measures for failure to comply with safety rules. Although it was common for corporate safety programs to include some incentives in the form of recognition and inexpensive gifts, these initiatives were less successful than later philosophies with emphasis on overall behavioral safety.2

Workers could accept the notion that a company was in business to make money; however, they were not motivated to alter their behaviors because they did not believe their own management put a priority on safety. The real motivator for employees was for management to demonstrate that its commitment to worker safety was as great as that for profits.

This 20-year period also saw a severe rationalization of the number of refineries in the US. Those that survived did so because of acceptable financial performance and much-improved safety records.

Improved personal safety

For decades, manufacturing plants struggled with balancing plant safety against meeting cost and profit demands.

As recently as the 1990s, annual injury rates per 200,000 hr worked were reported to be in the high teens for some refineries, and “days away from work” rates were commonly in the 4-5 range. Fatalities were simply too many.

In 1995, all private industry in the US experienced an average injury and illness incident rate of 8.1 with petroleum refining at 3.2 and chemicals and allied products at 5.5 (Fig. 1.) Workplace injuries accounted for 92% of these incidents.

By 2005, the overall US rate had dropped to 4.6 (a drop of almost 50%), while the portion due to injury had risen to 94%. Refining’s incidence rate dropped by more than half to 1.4 and the chemical manufacturing sector improved at the same rate.3 The US manufacturing industry (in particular, the hydrocarbon processing industry) has made vast improvements in the last decade.

Many, however, recognized the need for a deeper commitment to safely operating facilities with highly hazardous chemicals. This recognition is represented in the US Department of Labor, Occupational Safety & Health Administration’s (OSHA) promulgation of regulation number 1910.119: Process safety management of highly hazardous chemicals (PSM) in June 1992.

Although industry’s performance in personal safety has improved, some recent safety-related incidents show the need for improved process safety. To accomplish this, the Baker Report challenged other US processing industries to heed their findings and recommendations.4

Companies that implement APM or asset optimization initiatives have experienced a simultaneous increase in production uptime and improved safety performance while reducing spending.5

Better process safety

Process plant operators were already trying to ensure the safety of their employees and those around their facilities before the BP Texas City tragedy of 2005. The incident and subsequent recommendations from the US Chemical Safety and Hazard Investigation Board and the Baker Report accelerated the changes in approach and standards as well as enforcement of those standards.

API also initiated an immediate review of its facility-siting standard, with an emphasis on temporary buildings. API and National Petrochemical & Refiners Association members reviewed their compliance with existing PSM regulations. OSHA stepped up its review and enforcement of the PSM law.6

The underlying message of the Baker Report is that companies can focus on circumstances and conditions that result in fewer employees being injured in the workplace but can still leave a host of potential mechanical failures ready to occur and cause great harm to many people and much damage to equipment. The solution to this problem (or correction of the inherent issues that create the potential for disaster) is embodied in the proper application of OSHA’s PSM regulation.

The Baker Report summarizes this point: “The Panel believes that as process safety is embedded in all aspects of corporate culture, management systems, and operations relating to US refineries [the] refining business will benefit.”

The Baker Report supports three keys to successful, safe production: leadership, management processes and systems, and people.


The report contains a wealth of information about what should be looked at and emphasized in an organization’s quest for better process safety. But the report leaves it to industry and its operators to decide how to achieve those objectives.

The Baker Report indicates that to demonstrate leadership in process safety, a high-level reliability and process safety position should be established and employee perspective of PSM elevated. The position and subject must both be viewed as one of great importance to the company.

Executive management should conduct frequent, periodic reviews (at least annually) of key results that reflect the effectiveness of the PSM program. Reviews should include third-party audits that have measured a large percentage of the company’s assets for PSM performance annually.

PSM coordinators at company sites must be given authority to ensure compliance with the many requirements in the regulation and should have deep expertise related to maintenance, operations, engineering, or reliability. These coordinators must become more than recommendation monitors; they should be integrally involved with the plant management team in reviewing equipment reliability and recommending changes for mechanical integrity improvement.

Management, executive, and board-level leaders should be kept informed of both the existence and effectiveness of the company’s PSM program.

Moving toward better process safety requires a commitment from the highest levels in an organization, but that commitment must be expressed in terms of day-to-day, ongoing operational goals and expectations.

Short-term profits and return on capital may look quite attractive. This approach, however, is almost certainly destined to fail in the long run. A much better model, used by Marathon Petroleum Corp., acknowledges an implied “manufacturing license to operate,” which a plant and corporation must earn as a prerequisite for conducting a profitable business (Fig. 2).

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Costs and production must then be optimized to determine if the business is viable and profitable enough to satisfy all the stakeholders. The University of British Columbia, Applied Ecosystem Services, Inc., and others developed and refined the concept of a license to operate.7 8

The license to operate includes providing a safe work place for employees, being a responsible corporate citizen, and clearly meeting (with a comfortable margin for error) all the regulatory and compliance requirements. It is only after each of these prerequisites is met that a refiner can generate profits in an ongoing, sustainable way.

Although the other two are important, only the first element of the license (a safe work place) is directly addressed in this article.

Many key factors influence the success of the manufacturing process: personnel, raw materials, equipment efficiency, and the nature of the marketplace. More importantly, company culture will govern the degree of success in safety performance.

Actions, more so than words, of leaders determine the results. In the case of the BP Texas City incident, BP’s executive management believed profits never superseded spending on safety, but some employees surveyed felt that safety programs were underfunded.

The Baker Report noted that, even though BP Texas City reduced maintenance and capital spending during 1992-98, another 25% cost-reduction target was set by BP management after its takeover of the refinery from Amoco in 2000.9 There were also indications that employees and managers received conflicting messages that had a negative impact on their safety culture.

One successful approach (used by Marathon Refining to achieve safe, profitable manufacturing results) is “design it right, operate it right, maintain it right.” This article stresses this philosophy and describes how one can apply it in concert with the Baker Report, which emphasizes the need to have the right corporate safety culture that leads to better process safety.

The emphasis in this article is on the “maintain it right” principle.

Applying an asset optimization program is key to increased effectiveness due to improved reliability, which results in major gains in corporate profitability. Companies can maintain and reliably operate well-designed equipment by:

  • Operating within its defined physical capabilities.
  • Performing maintenance recommended by manufacturer’s guidelines.
  • Identifying good maintenance strategies using advanced, risk and statistical-based analytical techniques, or other proven methods.

    An effective APM program ensures that every piece of equipment is operated and maintained within prescribed limits. With the right information (statistically derived and risk-adjusted), one can make informed decisions about the production plan. The resultant equipment and unit reliability ensures safety of the process.

    Processes, systems

    Many processes are needed to achieve equipment reliability in a plant effectively. Key to managing a facility is knowing the status of the organization in terms of process maturity.

    In today’s business environment, every US operator of a hydrocarbon processing facility has a PSM system of some kind. The rigor with which that system is capable of monitoring the equipment, generating maintenance strategies, and managing them will dictate the system’s effectiveness.

    With any asset-intensive business, it is also vitally important to track the equipment data and history.

    Using multiple software packages to collect disparate data (from enterprise asset management or computerized maintenance management systems) is difficult to coordinate, represents a large training problem, increases administrative costs, and may suboptimize the solution. The obvious approach is to have an integrated enterprise APM system reinforced with good work practices that allows organization, analysis, and presentation of the right data and results to the right people at the right time.

    Comprehensive programs also must be in place to monitor and maintain fixed and rotating equipment, power systems, and instrumentation. In multiple-site companies and in large facilities, it is unreasonable to attempt to manage such a detailed information system with manual data collection and analysis.

    These systems will include life-cycle design criteria, positive material identification of existing and new components, rigorous piping and vessel inspection routines, a corrosion-under-insulation program, safety instrumented systems compliance, instrument calibration monitoring, vibration programs for rotating equipment, and power management programs.

    The critical nature of instruments in process safety has been assumed for quite some time. Because the Baker Report highlighted the fact that a number of failed instruments contributed to the BP incident in 2005, it is even more apparent that companies must emphasize instruments by installing an instrumentation performance management (IPM) system, a critical component of any comprehensive reliability program.

    IPM is a system for managing and improving the performance of process instrumentation as well as safety instrumented systems through the integration of tools, processes, and workflows for calibration management, safety instrumented system life cycle management, and reliability management tools.

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    Figs. 3 and 4 show the results for one company with an efficient, effective APM system, but are typical for many plants.

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    In a generally profitable business, it is difficult for a modestly capable manager to spend more on safety than a site would return in productivity and gross revenue. If, however, leaders were to find themselves in such a situation, the conclusion should be to cease operations rather than compromise safety. The skill is to know the difference between a safe operation and one that has failed to achieve that necessary level of performance.

    A system to ensure better equipment reliability and overall process safety is therefore needed in addition to programs that foster good personal safety. The most effective system will:

    • Provide a solid foundation for gathering all pertinent asset information, keeping track of equipment data, and doing advanced analytics on the data.
    • Make the organized data and maintenance strategy recommendations readily visible on a near-real time basis to all who need them.
    • Conduct risk-based analysis via advanced analytical techniques that result in optimized maintenance strategies.
    • Facilitate these principles across a plant and multiple sites.
    • Ensure continuous improvement using current information from an integrated platform that provides an integral way to continuously improve asset strategies and keep them evergreen.


    To maintain a safe, efficient, and profitable plant, companies must seek and retain personnel with the necessary knowledge and expertise to ensure success of the program and positive results. Equipping those people with the right tools and data is equally important.

    Companies must collect in an easily retrievable place all the pertinent information about each piece of equipment and have the capability to analyze initial data as well as changes that routinely take place to create appropriate maintenance strategies for the equipment within a defined operating envelope.

    Having the data and capability to analyze it will produce good results only if the organization includes individuals who are competent in using the information. Finding, hiring, and retaining people with the right skills in reliability and safety have always been difficult but will be even more so as the experienced work force in the US and other regions of the world ages and retires.

    The Society of Petroleum Engineers estimates that the industry will experience a 44% attrition rate among petroleum engineers by 2010.11 These attrition rates are common amongst professionals in all fields related to reliability and must be addressed through improved procedures and training.

    Data storage media are readily available and affordable for capturing good procedures, but the work processes associated with retrieval of those data by the right person at the right time have yet to mature and become readily available to manufacturers. Many attempts have been made to come up with an effective knowledge-management system to address this need, but none has been widely accepted in the industry.

    Most systems have approached the issue from the perspective of finding ways to move information from function to function in an organization, perhaps by establishing communities of practice.12 Engineers, operators, and craftsmen, however, have more tasks to keep them busy in a work day than hours to complete the work.

    The effort to communicate with a colleague is therefore usually relegated to slow times or lulls in the action, if at all. That colleague may be hard to find at just the right time. A search of documentation for the needed information may likewise turn out to be an exercise in futility as its location in the company’s archives is probably not well known.

    The success of this approach is better ensured by linking important or required information to individual pieces of equipment.

    When applied well, these APM initiatives result in world-class reliability and the accompanying process safety.

    Improved APM

    Safely operating equipment in asset-intensive manufacturing settings is complicated. Whether that business is petrochemical, mining, power generation, or the manufacture of consumer goods, many of the problems are the same.

    An intimate knowledge of each piece of equipment being operated—from conceptual design through construction, operation, maintenance, and redesign—gives an owner the opportunity to affect safe use and remain within mechanical limits of the equipment.

    The Baker Report charged the refining and chemical industry to heed lessons learned from the 2005 BP incident. Implementing an APM system provides an effective approach to achieving world-class reliability based on enterprise-wide asset management concepts and practices.

    These practices require exemplary executive leadership, establishment of comprehensive PSM systems with proper underlying work processes, and the capture, retention, and transferal of knowledge and expertise.


    1. “DuPont—Thumbnail History,”
    2. Tim Bryce, “How do we Manage?,”
    3. US Labor Department, Bureau of Labor Statistics.
    4. The Report of the BP US Refineries Independent Safety Review Panel, January 2007.
    5. Mitchell, John S., Physical Asset Management Handbook, Fourth Edition, Houston: Clarion Technical Publishers, 2007.
    6. OSHA Instruction, Directive Number: CPL 03-00-004, Petroleum Refinery Process Safety Management National Emphasis Program, June 7, 2007, US Department of Labor, Occupational Safety and Health Administration.
    7. Keevil, Norman, B., Institute of Mining Engineering, University of British Columbia,
    8. Applied Ecosystem Services Inc.,
    9. Mufson, Steven, “BP Failed on Safety, Report Says,” Washington Post, Jan. 17, 2007.
    10. Pinto, F.W., “Excellence in Stationary Equipment Reliability,” presented at the 2004 NPRA Maintenance and Reliability Conference, San Antonio, May 25-28, 2004.
    11. Scotchman, A.D., et al., “Certification Process Built on Required Engineering Competency Standards Ensures Consistent Performance Levels and Defines Employee Development,” presented at the 2007 SPE Annual Technical Conference and Exhibition, Anaheim, Nov. 11-14, 2007.
    12. Denning, Steve, “Communities for knowledge management,”

    The author

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    Roy Whitt ([email protected]) is a vice-president for Meridium Inc., Roanoke, Va. He has more than 30 years’ experience in the refining industry including various positions in engineering, operations, and management, most recently with Marathon Petroleum Corp. While at Marathon, Whitt managed a 220,000-b/d refinery and held roles as manager of refining engineering and vice-president of business operations. He holds a BS in chemical engineering from Rensselaer Polytechnic Institute, Troy, NY, and an MBA from Morehead State University, Morehead, Ky. He is a registered professional engineer in Kentucky and a member of AIChE.