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API Process Safety Group

API Process Safety Group. Report to CRE Presenter: Mike Lubcyik May 18, 2011 Seattle, WA. RP 751 – Safe Operation of HF Alkylation Units. RP 751 Committee undertaking accelerated review/revision of this document “Kick-off” conference call and 2 working meetings held to date

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API Process Safety Group

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  1. API Process Safety Group Report to CRE Presenter: Mike Lubcyik May 18, 2011 Seattle, WA

  2. RP 751 – Safe Operation of HF Alkylation Units • RP 751 Committee undertaking accelerated review/revision of this document • “Kick-off” conference call and 2 working meetings held to date • Still planning a 2-pronged approach for update process • Review and update RP from a technical basis • Strengthen RP in specific areas to reduce risk tolerance - signals that industry is “raising the bar” for safety of HF alkylation operations • Revision committee includes both API and NPRA members • Completion target is Year End 2011

  3. RP 754 – Process Safety Performance Indicators • Continued implementation leveraged through the API/NPRA Metrics & Analysis subgroup • Drive consistency in data collection, reporting and messaging • API Data Collection – Preliminary Results (as of 4/28/11) • 15 companies reported • 145 facilities (incl. int’l sites): 94 refineries & 51 petrochemical • Approximately 70% U.S. refining capacity • 188 Tier 1 (160 for refineries) & 204 Tier 2 (169 for refineries) • Conducting quarterly conference calls; developing and posting FAQs on API website • RP 754 Metrics Workshop – May 9th – Fort Worth, TX

  4. RP 755 – Fatigue Risk Management Systems 4 • Established RP 755 Implementation Team to assist with implementation issues • Draft charter covers areas such as: • Share implementation challenges, lessons-learned, etc. • Provide input to API on responding to interpretation requests • Host workshops, conference calls etc. to share information to help share implementation learnings • Gather information to be considered in next edition • “Kick-off” meeting held April 21st; next meeting June 7th • Team drafting workplan for discussion at June meeting • High level of interest - 13 companies and API & NPRA • Process Safety Group and Refining Subcommittee will be kept apprised of activities of the Team

  5. RP 756 – Safe Location of Tents & Fabric Structures 5 • RP 756 Committee reworked document to address concerns • References RP 752 where practical • Contains simple work flow diagrams / pictures / tables • Introduces alternative work process for TA tents • Seek funding for Baker Risk Tent Explosion Testing (Mar – Aug) • Process Safety Group (PSG) agreed to postpone ballot until after test data available (Fall 2011) • PSG recommends testing on tents for blast response to vapor cloud explosions be conducted in support of new RP 756 • Testing will provide data on response to tents to various blast loads, identify failure modes for different tents and obtain data to estimate vulnerability of tent occupants • API is awaiting testing proposal from Baker Risk while evaluating funding alternatives

  6. Facility Safety Workshop/Forum • Facility safety workshop held in October 2010 to establish stronger working relationship among stakeholders & identify areas for further constructive dialogue. • Topic agreed to by all stakeholders was sharing of best practices of joint Health & Safety Committees • Planning Committee established to develop program • Call for presentations went out in late March • Companies currently evaluating who to send to workshop and what subjects they might propose for the program • Workshop will be held on July 26 in The Woodlands, TX 6

  7. Refinery Alkylation • API study on “Potential Gasoline Market Supply & Cost Impacts of Restricting HF Alkylation” revised due to underestimated impacts • Final draft of messages & findings related to the study to be presented and endorsed by Refining Subcommittee • Study results incorporated in final draft of “white paper” • Draft short papers derived from “white paper” being reviewed by Process Safety Group. Topics include: • Considerations Associated with Alkylation Technologies • Conversion of HF alkylation unit to Sulfuric Acid alkylation unit • Management of Alkylation Safety & Risk • Technology Development – Use of Solid Acid Catalyst • Reconvene member company lobbyists to share latest advocacy & educational materials 7

  8. Refinery Alkylation – Draft “General” Messages • Legislative/regulatory activity resulting in reduction/ban of refinery HF alkylation production could result in: • Loss of well paying jobs due to refinery closures • Loss of local tax revenue from property, sales and income tax reductions • Unnecessary increased refinery investment and annual operating costs, threatening the economic viability of refineries • Remaining refinery system operating at or near maximum capacity and vulnerable to unforeseen refinery outages • Increased the dependence on gasoline imports – a potential national security concern VG - 8

  9. Refinery Alkylation – Draft Findings by Scenario • Scenario 1 – Shutdown of all HF alkylation units • Potential closure of nine refineries, four of those being in the Rocky Mountain region. • Loss of over 1/3 (35%) of the U.S. summer gasoline blendstock supply and about 1/3 (30%) loss of gasoline and distillate supplies in the Rocky Mountains • Loss of almost half (45%) of the aviation gas production in the U.S. - a significant negative effect on private and some commercial aviation operations. • Significant surplus of LPG would need to be transported and consumed in alternate markets VG - 9

  10. Refinery Alkylation – Draft Findings by Scenario • Scenario 2 – Mandated use of vapor suppression technology • Potential closure of 3 refineries • $3.3 billion would need to invested to enable remaining refineries to use of vapor suppression technology • $139 million of increased aggregated annual operating costs • 4 to 6 cents per gallon of gasoline - increased incremental compliance costs VG - 10

  11. Refinery Alkylation – Draft Findings by Scenario • Scenario 3 – Mandated conversion to alternate technology (i.e., sulfuric acid alkylation) • Potential closure of 3 refineries • $6.3 billion would need to invested to enable remaining refineries to switch to alternate technology • $289 million of increased aggregated annual operating costs • 7 to 9 cents per gallon of gasoline - increased incremental compliance costs VG - 11

  12. Refinery Alkylation – Draft - Other Findings • Aggregate capital spending costs would have been higher had the study used the CERA Downstream Capital Cost Index (DCCI) rather than the Nelson-Farrar (NF) Construction Inflation Index • Scenario 2: $3.5 billion vs. $3.3 billion • Scenario 3: $7.8 billion vs. $6.3 billion • Aggregate capital spending cost for Scenario 3 would have been higher had the study used the higher of the 2 references for ISBL investment costs • $6.8 billion ($8.5 billion using DCCI) vs. $6.3 billion • For Scenario 3, additional sulfuric acid regeneration capability would be needed to handle the increased volume of spent acid • 5 new facilities and 11 expanded facilities would be needed • 248 million ton-miles per year of increased sulfuric acid transportation by road or rail would result; presents a safety/risk transfer issue • For Scenario 3, acid regeneration costs will increase • Increase in industry annual regeneration expenses: $298 million/year (NF) or $338 million/year (DCCI) VG - 12

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