Cost of Poor Hydrocarbon Process Safety Tops US$34 Billion

March 20, 2014
Losses Dominated by Upstream, Refining and Petrochemical Sectors

The combined financial loss from the 100 largest accidents in the hydrocarbon industry has been estimated at over US$34 billion in a new publication by insurance provider, Marsh.

The data was published in The 100 Largest Losses 1974-2013 Large property damage losses in the Hydrocarbon Industry, 23rd Edition, by Marsh, whose energy loss database holds almost 10,000 records of losses spanning a period of more than 40 years. The total accumulated value of the 100 largest losses between 1974 and 2013 is estimated by Marsh at over US$34 billion.

The losses are dominated by the upstream (34%) and refining sectors (29%), with the petrochemical sector accounting for nearly a quarter of losses (23%). Gas processing (9%) and distribution sectors (5%) accounted for over one-in-six of losses.

Marsh reported that eight new losses have entered the 100 largest losses list since 2011, including the Sendai refinery in Japan; the Geismar petrochemical facility, Louisiana, U.S; and La Plata refinery, Ensenada in Argentina.

The Piper Alpha Disaster in the North Sea, U.K., tops the list with estimated losses of US$1.8 billion, followed by the Pasadena petrochemical plant explosion, Texas, U.S., which incurred losses of US$1.4 billion.

The hydrocarbon industry is playing a leading role at Hazards 24 – widely regarded as the world’s leading process safety event for the chemical and process industries. Speakers from the hydrocarbon sector include representatives from BP, Shell and Oil and Gas UK.

Hazards 24, which is organised by the Institution of Chemical Engineers (IChemE), will feature more than 60 technical presentations from process safety experts to share the latest best practice and research.

Andrew Furlong, IChemE’s director of policy and communication, said: “Marsh’s latest report is another stark reminder of the sheer scale of financial loss resulting from process safety incidents. In reality, the financial loss is even greater with 10,000 incidents recorded by Marsh over the past forty years. In 2014 there are sobering anniversaries of major disasters from recent decades including Flixborough, Bhopal and Exxon Valdez.

“However, it is the elimination of loss of life and serious injury that should be the priority of everyone in the chemical and process industries. With over 100 recorded accidents so far in 2014 resulting in over 400 deaths and injuries, we all need to do more to improve safety for everyone involved in these hazardous but vital industries.”

Hazards 24 is being held on 7-9 May 2014 at Scotland’s Edinburgh International Conference Centre. Sponsors include ABB, Abbott Risk Consulting, BP, Petrotechnics, ABS Consulting, HSD Loss Prevention, MMI Engineering, DNV GL, BakerRisk and GexCon.