Refinery

Dave Johnson is an engineer at an aging refinery experiencing an increasing number of incidents. He gradually identifies the underlying causes and pushes for improvements. But fixing the problems would cost money, and executive bonuses, maybe even executive jobs. They promise to get to it just as soon as the bottom line allows.

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Dave Johnson is an engineer at an aging refinery experiencing an increasing number of incidents. He gradually identifies the underlying causes and pushes for improvements. But fixing the problems would cost money, and executive bonuses, maybe even executive jobs. They promise to get to it just as soon as the bottom line allows.

Tensions rise as disasters almost happen again and again. Then Bernard Jefferson, a local newspaper reporter investigates and publishes an article that stirs the public and workers to protest.

Things come to a head after a fatality. The union comes up with only one demand, to be safe in their workplace. But can it, will it, be implemented quickly enough to prevent the unthinkable from happening.

Chapter 1

Joe Morris, a fresh cup of coffee in hand, plopped himself on the rolling chair behind the shop desk. He kept his work neat but after decades of use in the Houston refinery’s instrument department, the desk was grimy with age-old dirt. The computer terminal wasn’t much better, but it was functional. Joe saw a half-full box of donuts on the desk and smiled. He selected half a plain donut, dunked it in his coffee, and took a bite. Joe logged in with his free hand and looked at his schedule for the day. A work order to replace a level transmitter would be an easy first thing to accomplish. He wrote the manufacturer and model number of the device on his small scratch pad, finished his donut and threw the Styrofoam cup into the wastebasket. He walked to the storage shelves and pulled a replacement sensor.

Joe put on his jacket and slicker, protection against the cool and drizzling March morning. He took his toolbox, a multimeter, and the transmitter, and walked out to one of the pickup trucks. The keys were in the ignition of the ten-year-old vehicle that had ‘wash me’ written by a smudged finger in the grime of the tailgate. The diesel came to life and he turned the heater on. He let the engine idle for a minute, and drove out to the tank farm.

The level sensor in question was used on tank 51A, a rarely used utility storage vessel located on the north side of Highway 225. Joe parked on the access road and took his equipment. He was grateful the sensor was located near the base so he wouldn’t have to climb the cold, wet, and slick metal ladder to the roof. He unscrewed the transmitter cover, connected the multimeter, and found there was no signal at all. The device did appear to be dead. He closed two isolation valves connecting the sensor to the process tubing, disconnected the wiring, and replaced the sensor. After reconnecting everything, he checked the operation using simulate mode. Everything appeared normal. He opened the isolation valves, picked up the old transmitter and his tools, and walked back to the truck.

The old transmitter produced an analog output signal in the 4-20 milli-ampere range and had no predefined failure mode. While the model number of the replacement sensor was the same, the internal software and operation of the device was subtly different. The default failure mode of the new transmitter was to fail-low—to 3.7 mA—if there were an internal failure. Joe, in his hurry to get of out of the cold rain, hadn’t bothered to check this detail. He was unaware the control system the sensor was connected to wasn’t configured to detect or alarm such an out-of-range condition.

One year later…

Lawson Ridley, Instrument Shop Foreman, checked his email. Word had come down from the refinery manager, through department managers, and now to him. Budgets needed to be cut ten percent.

Lawson muttered, “Oh, good grief. As if we haven’t done enough already.”

Lawson, who joined the refinery 20 years ago and had worked his way up the ranks, had been through budget cuts before. He had ideas of what might be cut, but it would be useful to bounce ideas off someone else. He looked out his office window and saw Tyrone Phillips, one of his most experienced technicians, talking with others at a workbench. Lawson walked up to the group. Eyes turned to him and their conversation stopped.

Lawson said, “Tyrone, you got a minute? I’d like to talk with you in my office.”

Miles replied, “Sure, boss.”

Lawson turned back to his office. Tyrone looked at the others, raised his eyebrows, and shrugged his shoulders. Lawson waited for Tyrone to enter. Tyrone sat and Lawson closed the door.

Lawson said, “We’ve been dealt an ugly hand. Word’s come down from above we have to cut budgets ten percent. I’ve got some ideas, but wanted to bounce a few things around with you.”

Tyrone sighed and said, “I guess you’re not firing me then, huh?”

Lawson chuckled and said, “No, I’m not. We’ve had to let people go in the past. We’re relying on contractors more. You know I’ve fought against staff cutbacks every time.”

“Yeah, I know. But times change, plant managers change, priorities change.”

Lawson nodded and said, “I hear you.”

Tyrone said, “Boss, you see the financials, I don’t. I wouldn’t know what to suggest.”

“I’m not asking you to. I’ve already got some ideas. I just wanted to bounce them off you.”

“What do you have in mind?”

“We’ve been testing safety devices to check they’re working.  Periodic testing’s a significant cost. What do you think are the lowest risk items?”

Tyrone thought for a moment. “We’ve been testing the transmitters in the tank farm every year. I can’t recall the last time one’s ever failed. Besides, the control system now calculates material balance in those tanks. The operators would be able to tell if a transmitter were to fail. Plus, there’re dikes around each tank to contain a spill. Overall, that sounds like a pretty low risk scenario. The tank farm’s certainly lower risk than the rest of the refining processes.”

Lawson nodded and said, “I agree.”

The two sat in silence for ten seconds. Tyrone didn’t want to offer any additional suggestions.

Lawson said, “We’ve already cut back on hiring. Our people know what we’ve got and how to work on it. We could cut back on our training. We could require the contractors document their people are qualified.”

“That’s no skin off our back. Vendors are happy to come in and do free dog and pony shows. They’ll even provide lunch. We could get some free training that way.”

“Good point!”

Lawson leaned back and said, “Thanks, Tyrone, I appreciate your time and input.”

Tyrone went back into the shop. A co-worker approached and asked, “What was that about?”

“Budget cuts.”

“Oh, crap.”

One year later…

Frank Carlberg left his home in Pasadena at 6:30 a.m. on a warm and sunny April day with a refreshing low humidity uncommon in Houston. There wasn’t a cloud in the sky. Traffic was light so he arrived at the refinery in fifteen minutes. He found an open space in the gravel lot to park his pristine white three-year-old Ford F150 pickup. The truck sported an empty gun rack in the rear window, a popular accessory in Texas. However, company policy forbid firearms on the property, including the parking lot. Frank picked his lunch bucket off the passenger seat.

As he walked toward the entrance gate, his boots crunched on the gravel. Frank was one of dozens to go through the security turnstile that morning. He pulled his electronic badge from his shirt and held it up against the card reader, heard the metallic click, and pushed through the turnstile. It was a five-minute walk to the control room. He slid lunch into a locker, picked up his mug, and walked to the machine where a fresh pot was brewing with a half-full carafe on top. He filled his cup and went into the control room.

The twenty by fifty-foot room smelled like a damp, oily rag. It was kept dimly lit because bright lights made the dark screens harder to read. Chris Davis was seated at the supervisor station near the entrance.

Frank walked to the other end of the room and wheeled one of the chairs over next to Bill Collins.

He sat and said, “Mornin’ Bill. What’s up?”

“Mornin’. It’s steady state. A tanker’s being offloaded into tank one-oh-one. We’re drawing from that same tank to feed the atmospheric distillation column.”

Frank said, “Sounds like a weird combination.”

“It is what it is. Other tanks already have product in them.”

“Any alarms?” He looked up at the annunciators on the wall.

“Beyond the typical number of standing alarms, not really.”

The annunciator panels were more than 40 years old. They consisted of rows of three by five-inch rectangular boxes with plastic covers each with different wording etched in it. When an alarm occurred, a light would turn on inside the box. Different colors represented different criticality of alarms. About a quarter of the nearly two hundred indicators were lit.

Frank said, “Same crap, different day, huh? I wonder what it must have been like back when the annunciators were the only indicators? Everybody could see them and there weren’t so many.”

Frank had been there twelve years, Bill ten more. Bill quipped, “What, you don’t like having ten times more alarms now? They’re essentially free. They’re built into the control system. Nobody sees them but us.”

Frank snorted, “No, I don’t. I don’t think you do, either. I know people meant well at the time but more isn’t always better. The alarm floods we get now are almost impossible to deal with. My complaints have fallen on deaf ears. I don’t want to be responsible for missing an important alarm and having an accident!”

“Nobody does. Look, we don’t have it so bad. Would you rather sit here in air-conditioned comfort, or be outside baking in the Texas sun running the refinery manually like our granddaddies did?”

“Point taken. It’s all relative.”

“We’ll get the alarms under control.”

“I hope so.”

Bill slid the logbook to Frank who spent a quiet minute glancing through it. Frank noted the distillation column primary pump motor was running warmer than usual. Now that the day shift was coming on, he made a mental note to call a maintenance technician to check it out. Frank remained next to Bill for five minutes to observe.

Bill asked, “You ready?”

“Yeah.”

“Okay, you’re in control.”

With that, Bill left the control room.

Fifteen minutes later Frank looked at the shift log to see who was in the area. He radioed Doug Franklin, a Maintenance Technician. “Doug, the atmospheric distillation column primary pump motor’s running hot. Can you check it out?”

“How bad is it? I’m working on a valve right now.”

“It’s not in alarm just yet, but it’s getting close.”

“Understood. That’ll be number three on my list. I’ll see what I can do.”

✽✽✽

Chapter 2

The following morning over two hundred people filled the auditorium at the Pasadena Town Hall. Television cameras on tripods lined the rear and sides of the room, which was noisy from all the conversations. At 8:00 a.m. a man and woman entered through two large open doors in back and walked up the center aisle to the stage at the front. The woman took a position behind the podium; the man stood behind her off to one side. She held her hand up to quiet the crowd.

“Good morning. My name is Susan Dougherty. I’m the Public Relations Officer at the refinery. With me today is Geoff Sammons, the Refinery Manager. We know you all have concerns and questions. There was a fire yesterday in our tank farm. It involved one tank only. That fire was put out within thirty minutes. Other than smoke, no toxic materials were released. There were no fatalities, and only one very minor injury. The refinery has shut down temporarily pending an internal investigation. Because there were no fatalities, no outside agencies have been called in. Employees will continue to receive pay and benefits.” After a pause, she added, “I’ll take your questions now.”

Multiple hands shot up.

Susan pointed to a reporter from KQRC who asked, “What was the cause of the accident?”

“It’s too early to tell. An investigation has already started. We’ll release information as it becomes available.”

A reporter from KPGT asked, “If no toxic materials were released, then why was there a shelter in place order?”

“That was a precautionary measure. We were not immediately aware of the nature of the fire or material.”

A Houston Herald reporter asked, “The refinery’s a hundred years old. Is it too old and unreliable to operate safely?”

“While the refinery opened for business one hundred years ago, it has been updated and modernized many times over the years. It would be inappropriate and unfair to categorize it as unsafe based on when it first opened. There are hundreds of refineries of similar age all over the world and they are operating safely.”

A reporter from the Sun asked, “How long will you remain shut down? And how long will you continue to pay your employees?”

“We’ll remain shut down until we understand the nature of the incident. Then we can decide whether it’s safe to return to limited or normal operation. We certainly intend to reopen. We will continue to pay our workforce. We wish to see our employees remain.”

A reporter from the Pasadena Public said, “You said no external agencies have been brought in since there were no fatalities. Who will oversee your investigation? What about your insurance carrier?”

“We’re self-insured. We’re a global organization with considerable resources and expertise. We’re capable of handling the matter internally.”

An NPR reporter asked, “What’s the name of the person who was injured?”

“To protect the privacy of our employees we will not release that name.”

She pointed to a reporter with KSRK who asked, “Mister Sammons, is there anything you’d like to add?”

Geoff said, “No. Not at this time. I believe Miss Dougherty has given you all the information you need.”

Susan said, “Thank you. That’ll be all for now.”

The two exited the rear of the stage to avoid the crowd and further questions.

✽✽✽

It didn’t take long for local residents downwind of the refinery to be contacted by lawyers, many of whom filed lawsuits. Internal company investigators were called in. Over the next several weeks they uncovered evidence of several near misses over the years that had not been reported up the corporate ladder. Geoff Sammons had made bonuses by hiding evidence of maintenance deferrals and near misses. Word leaked to the press and local residents were outraged. The reaction of company’s executive board was swift, Sammons was fired.

Now that evidence of the mishaps had been revealed, the board had difficult decisions to make. What to do with an aging facility that suffered from increased reliability, safety, and production problems, all amidst an industry downturn? The super-major had a reputation to uphold. The board decided there would always be interested investors. They announced the facility was up for sale.

Chapter 3

Carefield Group and Feinstein Energy Partners considered a joint venture to purchase the refinery. They spent weeks poring over income statements, balance sheets, inventories, and fixed assets. They considered the crack spread, which measured the prices of refined products compared to the cost of crude oil. However, valuations are more than just answers from a spreadsheet. Industry rules-of-thumb such as revenue, earnings, or profits are dangerous to rely on alone because they fail to consider specific characteristics of the business and may not deliver more insightful indications of value. Board members recognized that each business has unique characteristics and some asked to see the facility. Brad Ramsey, the Engineering Manager, would meet them at the refinery entrance, escort them on their tour, and answer any questions.

The group arrived in a full-size white van at the refinery security gate one hot, muggy, and cloudless July morning. Brad was waiting in his car. A skeleton security crew still kept watch on the facility and had been informed of the visit. The driver rolled his window down after seeing the guard.

“Good morning. May I have everyone’s driver’s license, please?”

While the guard checked off names on his list, Brad introduced himself. “Good morning gentlemen. I’m Brad Ramsey, the Engineering Manager. I’ll be your guide today. I’ll need to drive.” He backed away from the door so the driver could get out.

The guard pressed a button and the chain link gate slowly rolled open. Brad handed the licenses to the front passenger as he drove.

Someone said, “Mister Ramsey…”

“Please everyone, just call me Brad.”

“Alright. We appreciate your spending time with us this morning. We’re board members of Carefield or Feinstein. We’ve been through the financials, but wanted to have our own look at the place. We understand refining, but we’re not engineers, so we have questions for you.”

“I’m aware of the economics, but I’m not a finance guy. We can drive through some of the more interesting areas. Feel free to ask questions.” Brad didn’t bother with their names or look to see who spoke since they would only be there a short while.

“Do you have any concerns about the facility’s age?”

“Concern that the facility’s old, or that you’re aware of it?”

The others smiled and the person replied, “That things are a hundred years old.”

“Hold on, nothing’s actually that old. Everything’s been upgraded over the years. Some stuff’s relatively new. Granted, we still have some things people might consider obsolete.”

“Such as?”

“That answer would depend on who you talk to. Everyone has their own focus. From the engineering side, two things come to mind. One would be corrosion. This place is made of metal. In a harsh environment metal corrodes. We’ve had a rough time staying on top of that.”

Someone else said, “A lot of things do look pretty rusty.”

Brad said, “The facility’s clean, but yes, parts are rusty. Another item would be the age of the computerized system controlling all this. Refineries are designed to run on automatic. You could think of it like a plane on auto-pilot. The system’s unreliable now. It’s no longer even supported by the vendor. We’ve been cannibalizing parts of it. When there are failures, we run things manually. That’s not as efficient. You know how tight profit margins are.”

Brad stopped the van and said, “This is the atmospheric distillation column. Everything starts here.”

The men got out of the vehicle and walked around in relative silence. The refinery was not operational, yet the smell of oil and gasoline permeated the air. After two minutes of the heat and humidity, several took off their suit coats.

“Lord, it’s hot here!”

“Welcome to Houston! You get used to it eventually.”

“Can we see where the tank farm fire occurred?”

They got back in the van and drove off.

“You’ve had to downsize staff over the years. What’re your thoughts on that?”

Brad had difficulty hiding the agitation in his response. “It’s not been my decision to downsize staff. High level leadership made that call.”

“I’m sorry if I hit a nerve.”

“That’s alright. Everyone has their reasoning and defenses for their decisions. That’s just a call I’ve never agreed with.”

“Why’s that?”

“One example would be the Texas City accident back in two thousand five. That refinery cut their engineer staff of a hundred and fifty down to around a dozen. They were fined for not evaluating the management of change issues with that. They lost their tribal knowledge. Contractors will never know your facility as well as an employee, and more important, they won’t care about it as much. It’s like the difference between owning or leasing a car. If you own it, you take pride in it, you take good care of it. That’s not always the case with a leased vehicle. I ran across a guy who had a leased company car, and he hadn’t had the oil changed in forty thousand miles. In his mind, he was saving money! Things like that don’t show up in a financial analysis.”

A temporary fence was in place around the entire berm where the fire occurred. Warning signs read “DO NOT ENTER!”

Brad said, “The area’s roped off for security reasons. An investigation’s still going on. We can get out if you want, but we can’t cross the barrier.”

“No, this is good. Does anyone else want to see more?” Heads shook. “No? We can go back to the main gate now.”

“How will you deal with no longer having a corporate engineering office?”

“There’ll be pros and cons. We’ve relied on corporate for their expertise. They created many of our standards, facilitated safety studies, and helped us assure consistency. They knew our equipment and procedures. We couldn’t be expected to staff up and replace all that. Like others, we’d have to rely on outside contractors and consultants. While they’d be less expensive in the short term, those companies won’t be able to provide the same people each time. There could be potential inconsistencies. Like I said, pros and cons.”

“Could you deal with that?”

“The only possible response is, ‘of course’. We’ll have to deal with it. I’m an engineer. We’re trained to deal with challenges.”

The group arrived at the exit and the gate rolled open.

“Any last questions?” Head’s shook. “Feel free to contact me again if I can be of any help.”

Brad got out, waved to the guard, and walked to his car as the van drove off.

✽✽✽

A joint venture consortium was established between the Carefield Group and Feinstein Energy Partners. The venture would be headed by Peter Randolph and called Pasadena Energy Solutions (PES). Peter had been the head of five different companies and served on the board of profit and non-profit organizations.

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