The ups and downs of being a consultant are well known and accepted by those in the services field. Only after actual experience does one learn the harsh reality that success often means having to play the game as dictated by the clients. Yes, there is an ethical line, but it becomes easily blurred by money. The fact that consultants are being paid by the companies that they are assisting is well understood by companies. Many are happy to dangle the carrot in front of unscrupulous consultants in the form of continued contracts. This is alleged to be part of Lehman Brothers issue with their accounting auditors.
The practice is most deadly when it applies to safety. Individuals and companies consulting in the area of safety also must maintain clientele, but often their findings could expose their clients to increased liabilities if uncorrected. While camouflaging safety critical issues may guarantee additional contracts, the long term effects can be disastrous.
The consultant that remains unpersuaded by the carrot has far fewer clients and is a vanishing breed. This is not projected as theory, but based on actual experience. Being unbiased sometimes requires rendering unflattering opinions. While done with the intent of enhancing safety; it often polarizes the messenger. The overall effect is a sharp reduction in clientele. Although avoided by most, I sleep just fine at night.
Do not believe anything simply because you have heard it. Do not believe in traditions because they have been handed down for many generations. Do not believe in anything because it is spoken and rumored by many. Do not believe in anything simply because it is found written in your books. Do not believe in anything merely on the authority of your teachers. But after observation and analysis, when you find that it agrees with reason and is conducive to the good and benefit of one and all, then accept it and live up to it.
Buddha provided this advice thousands of years ago, yet it is still applicable.
Believing is blind and constitutes a false sense based on the belief. The old adage that if it sounds too good to be true applies; often a belief is merely a wish for something to be true.
Engineering ethics dictates that as professionals we conduct sufficient observation and unbiased analysis prior to forming opinions. Engineers should review the Buddha’s advice as a calibration before speaking, writing, or taking action.
The following is an exert from the July 25, 2008 report prepared by Mike Sawyer of ASC, Inc. in regard to the BP TC Refinery. OSHA has reached the same conclusion after it has been auditing BP for over an additional year.
“I have been asked to evaluate information presented in the Process Safety Management Systems Compliance Audit Report for the Texas City Refinery [Ref 1] and its subsequent progress reports [Ref 2, 3, 4].1 After
thorough examination of the documents it is my professional opinion that:
1) BP presently continues to violate Federal law with respect to major process safety management (PSM) requirements, including the same and similar violations as those which resulted in the March, 2005 explosion;
2) BP has failed to comply with its contractual obligations to OSHA under its agreement following the March, 2005 explosion; and
3) There is no valid engineering or practical excuse for such continued violations.
The continuing violations of Federal law are critical to plant safety. They are life-threatening. They include the same violations which caused the March, 2005 explosion, 15 deaths and hundreds of injuries. If the existing unsafe conditions are allowed to continue, further deaths, injuries, fires, explosions and releases of hazardous chemicals into the atmosphere will probably occur in the future, as, in fact, they have occurred in the recent past. They could result in another major explosion comparable to that of March, 2005. The danger will continue until the plant is brought into compliance with the law.”
1 These voluminous reports have been copied onto a CD and are being filed separately with the Clerk’s office.
By Holly Rosenkrantz
Oct. 30 (Bloomberg) — BP Plc will be fined a record $87.4 million by the U.S. for failing to correct safety shortfalls at a Texas refinery after a 2005 explosion that killed 15 workers, the U.S. Occupational Safety and Health Administration said.
“This administration will not tolerate disregard of our laws,” Labor Secretary Hilda Solis said today on a conference call, announcing the proposed penalties. If additional safety violations are not addressed, “it could lead to another catastrophe.”
OSHA this month rejected BP’s request for more time to comply with a settlement over the blast, which left 170 people injured. London-based BP, Europe’s second-largest oil producer, said in a statement that it’s “disappointed” with the penalty.
“The size of the fine will draw attention to the fact that OSHA is more serious than they have been in the past about insuring compliance for safety issues,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Other refiners are looking at their situation and making sure they are in compliance.”
The Texas City refinery is the fourth-largest in the U.S., counting a plant in the U.S. Virgin Islands, and has a capacity of 470,000 barrels a day, according to data compiled by Bloomberg.
BP is formally contesting the decision by OSHA. “We continue to believe that we are in full compliance,” Texas City Refinery Manager Kevin Casey said in an e-mailed statement. “We look forward to demonstrating that.”
The company had 15 days to pay the penalties and take corrective action, or contest the fines through a hearing process. The previous largest fine by OSHA was $21 million in 2005, also against BP.
OSHA said it has issued 270 notifications to BP for failing to correct hazards at the Texas City refinery over a four-year period after the explosion. OSHA is issuing a $56.7 million fine for those transgressions. OSHA also identified 439 new “willful and egregious” violations of safety-controls at the refinery. That will lead to $30.7 million in additional fines.
The company has “serious systemic safety problems,” Jordan Barab, the acting assistant labor secretary for OSHA, said on the conference call. “I think the fact that there are so many life-threatening problems indicates they have a systemic safety problem at this refinery,” he said.
The 2005 Texas City blast “in part, was caused by defective pressure relief systems,” Solis said. “BP still lacks important information about the hazards of its pressure vessels and the company continues to lack clear operating procedures that could prevent another disastrous explosion.”
The refinery resumed full operations at the end of last year after running at reduced rates following Hurricane Rita and the explosion. The company spent $1 billion to upgrade production units and improve safety at the plant, where the restart was part of BP’s plans to close an earnings gap with competitors.
BP failed to take necessary steps to resolve faults in pressure-relief systems or address “residual risks” as the settlement required, Mark Briggs, director of OSHA’s Houston office, said in a letter to the company dated Oct. 15. BP didn’t provide a valid reason for the delay, according to the letter.
“It’s like divorce court,” said Lipow. “BP is claiming they are fully in compliance, OSHA is saying they are not. We have two statements that are diametrically opposed and without seeing more specifics it’s hard to tell what the exact situation is.”
Mike Wright, head of health and safety for the United Steelworkers union, which represents as many as 30,000 U.S. refinery workers, said he hopes the penalty sends a message to other companies.
“Our people are telling us there are a lot of problems through the industry,” he said.
To contact the reporter on this story: Holly Rosenkrantz in Washington at email@example.com.
Last Updated: October 30, 2009 13:38 EDT
By Sheila McNulty in Houston
Published: October 22 2009 03:00 | Last updated: October 22 2009 03:00
A US government agency yesterday rejected BP’s request for more time to comply with its settlement agreement over a fatal explosion at its biggest refinery, opening the door to possible further action against the UK oil company.
Mark Briggs, director of the Houston Occupational Safety & Health Administration (Osha) office, said in a letter to BP that the company had not given a valid reason for the delay.
“BP has failed to demonstrate that its failures to comply are because of factors beyond its reasonable control,” Mr Briggs said in a letter to Keith Casey, business unit leader of BP’s Texas City refinery.
The company had failed to commit itself to take measures that would cure problems in pressure relief systems or address identified residual risks as agreed in the settlement agreement, he said in the letter, dated October 15.
BP’s compliance with Osha was one of the terms of its probation , set by the Department of Justice in 2007, when BP agreed to three years’ probation and to pay fines totalling $380m to US authorities to settle violations linked to the refinery explosion, oil pipeline leaks and fraud in energy trading.
Andrew Ames, spokesman for the justice department, told the Financial Times the department would take “all appropriate steps to ensure BP complies with all conditions of its probation”.
The probation dates back to the 2005 explosion at the refinery, which killed 15 people and left hundreds injured.
Osha found more than 300 “egregious, wilful violations” in Texas City after the blast. While BP did not admit guilt, it agreed in a settlement with Osha to a maximum allowable $21m fine and to spend $1bn on the refinery over the next five years, bringing it into compliance.
See FT.com for additional information
Return on investments for production capital expenditures is typically calculated based on materials, energy consumption, production rates, etc. ROI made on intangibles associated with process safety represent more complex calculations. The following provides some insight into assessing ROI for process safety.
Risk reduction worth is perhaps the most straight forward approach when attempting to correlate ROI for safety improvements. Most improvements have various options for achieving a predetermined level of safety or operational risk. Each option has an associated initial cost (purchase) and maintainability cost. Likewise, each should have some risk reduction factor designed to improve safety; if not, the option is unacceptable and should not be considered.
The concept of risk reduction worth is simple, the solution providing the most reduction of risk or conversely the highest “assessable” level of safety, at the lowest overall cost (initial and maintenance) is the best choice.
For example, a process hazard is assessed as unacceptable using standard HAZOP qualitative methods. Evaluation of the hazard and potential resolutions is conducted by the engineering staff. A total of three potential fixes are identified. Therefore, the ROI may be correlated as follows.
Basis: hazard severity assessed as major, i.e., losses in excess of $1MM; probability of occurrence assessed as medium, i.e., loss may occur within 2 – 5 operating years. Therefore, what present day dollars should be spent in order to save $1MM within a maximum of 5 years; assuming an average interest rate of 6% to compensate for unknowns. Approximately $747,000 present dollars would equal $1MM in a 5 year period based on a 6% rate. Therefore, options below this basis will be considered.
Option I Cost = $730,000 + yearly projected maintenance = $12,000; total for 5 years = $790,000 [unacceptable]
Option II Cost= $190,000 + yearly projected maintenance = $22,000; total for 5 years = $300,000; approximate ROI = 60%
Option III Cost= $445,000 + yearly projected maintenance = $3,000; total for 5 years = $460,000; approximate ROI = 38%
If both options II and III provide the same reduction of risk, then option II would be selected. Using LOPA or other risk assessment techniques the risk reduction can be determined. This is often much less exact than the example above and many analyst stop after calculating total project cost.
Within all industrial operations incidents occur. All, save a very few, have occurred before and are preventable. Some industries seem to have more than others; not because of the risk involved in operations, but for a lack of learning or an intentional indifference to safety.
Numerous examples of incidents occurring within an organization can be cited. In fact, multiple examples of similar incidents occurring within the same plant have been documented. Most all incidents resulted in unnecessary cost in terms of lives, property, and business profit; with many totaling several million US dollars.
This prompts any rational being to ask, WHY? It is not because the details and root causes of the incidents are hidden; most are purely obvious and have been repeated more than once. The simple fact remains, many corporations are indifferent to risk and operational safety because they do not understand risk and its effect on profits.
Additional information is available at http://www.apexsafety.com regarding maximizing profits through proactive risk assessment.