Put safety first, and profits will follow

Last month, the U.S. Chemical Safety and Hazard Investigation Board (CSB) issued its report on the deadly blast at BP’s Texas City refinery in 2005. The industrial accident, the largest since 1990, killed 15 people and injured many more.

The report called attention to safety and process management improvements as a way to prevent such tragedies. I couldn’t agree more, and wanted to add a critical point I’ve learned from my years in the field.

Cost-cutting and poor planning during project management costs operators dearly in the long run. Refineries, like any other business, want to spend less and save more. But employee and building safety shouldn’t be sacrificed to reach the goal.

Tighter regulations and stricter test/inspection mandates are important for keeping workers safe, and running facilities smoothly. So make certain you follow them, and stay updated on all safety requirements.

Yes, keeping your employees and facilities in line with all safety standards can cost a pretty penny. But running damage control, rebuilding the refinery, and settling claims' with victims' families will require even more financial and emotional capital.

It’s better to be proactive with upfront expenditures -- and reduce the chance of tragedy -- than be reactive after a deadly event, and dig the company into a financial hole.

The lesson: Address safety and operations issues on the front end. Procrastination leaves companies open to accidents with disastrous consequences, a situation no conscientious organization wants to face.

Stepping up for the environment

Here's a very interesting article I recently read concerning the Baku-Tbilisi-Ceyhan pipeline (BTC), which transports oil from the Caspian Sea to the Eastern Mediterranean. The pipeline started pumping oil in 2005, but since its proposal almost 10 years prior, the region's environmentalists have roundly criticized it.

To add fuel to their fire, BP, whose troubles in Alaska continue, leads the consortium that built BTC. This raises a legitimate concern: If BP is facing corrosion problems at its most modern pipelines, such as the Northstar oil field, how can it stop them in older ones?

Thankfully, BP is addressing this problem by making its pipelines environmentally friendly -- an approach it extended to its work with BTC. From conception through completion, the BTC consortium took great care in addressing issues ranging from emissions to corrosion prevention.

The result: The BTC pipeline is coated with a three-layer polyethylene system to help guard against corrosion. This coating is one of several options for corrosion control, which pipeline designers now realize is essential for pipeline longevity and safety.

Without these safeguards in place, pipelines will corrode and leak harmful chemicals into the ground, causing irreparable damage. And though no one likes to root for the perceived 'bad guy,' BP deserves applause for making the environmental effort.

BP hits another kink in the pipeline

BP might have thought this year couldn’t be worse than last. But it's hit another oil slick with news about the shutdown of its Northstar oil field -- six miles from the Prudhoe Bay site -- hitting media outlets around the country.

This time around, an employee discovered a sputtering leak in a gas line, forcing the suspension of 40,000 barrels a day. That sounds almost exactly like what BP faced last summer. As of this posting, BP couldn’t say when the Northstar oil field will be up and running again.

It makes me wonder about the economic effect of repeated oil field shutdowns. Fortunately, oil prices haven't been affected by this latest pipeline corrosion problem. But any prolonged closure would surely mean skyrocketing oil prices, and an edge toward the $3 mark once again.

With pipelines aging and corroding at an alarming rate, the implications are clear. Further disruptions could spell an environmental and economic disaster.

Bottom line: Companies that use pipelines should take steps to make sure they're safe for the sake of the economy.