By Laila Kearney
PHILADELPHIA (Reuters) - How did a piece of piping installed when Richard Nixon was U.S. president go without once being checked before leading to a fire that devastated the East Coast's largest and oldest oil refinery?
That's a question safety experts and activists are putting to regulators after the devastating fire at the Philadelphia Energy Solutions (PES) refinery in June, worried more disasters are waiting to happen in an industry reliant on old equipment.
Last year, U.S. refiners processed nearly 17 million barrels of crude oil every day, the most in the country's history as it cashes in on a boom in shale oil.
But many have decades-old infrastructure, risking outages that could cost the industry billions.
The PES refinery is one of nearly 30 in the United States that are more than a century old, while a Reuters review of over 100 operating U.S. refineries that process more than 10,000 barrels of crude oil a day showed they are on average 80 years old. [GRAPHIC: Aging U.S. refineries: https://tmsnrt.rs/33guhA8]
Refineries frequently update their systems and replace old parts, but the PES fire, along with incidents in Washington state and California earlier this decade, stemmed from equipment installed in the 1970s that had been allowed to run to failure, according to U.S. Chemical Safety Board (CSB) reports.
The suspected cause of the PES explosion has raised fears about future incidents because of the leeway given to refiners for inspecting parts, and because some older equipment is exempt from more stringent standards for newly installed parts.
"A lot of these refineries around the U.S. are quite old now," said former CSB managing director Daniel Horowitz, who left the agency last year. "That doesn't mean that every single piece of equipment dates back to the founding, but they are old and eventually all sorts of components can fail."
The June 21 Philadelphia blaze was linked to corroded piping that had not been checked since it was installed in 1973, according to the CSB's initial findings. The fire is still under investigation by the CSB and other public agencies.
It caused a fuel leak and explosions that sent toxic hydrofluoric acid (HF) into the air and hurled debris the size of a tractor-trailer across a nearby river, the CSB's report said.
Shortly after the fire, PES filed for bankruptcy protection.
Failing, decades-old equipment also sparked a 2010 Tesoro refinery explosion in Anacortes, Washington, that killed seven people, and a Chevron (NYSE:CVX) refinery blast in Richmond, California, two years later, according to past CSB reports.
In all three cases, the failed equipment contained metal components or designs that were no longer up to industry standards, but their use did not necessarily violate regulations. Regulators offer exemptions for older components, and do not require all pieces of plant machinery to be checked.
"That's a huge problem in this sector, that a lot of codes allow grandfathered equipment to be used even if later standards would have prohibited it," said Horowitz.
The CSB report spurred a letter from top law enforcement official in 13 states, including Pennsylvania, to the U.S. Environmental Protection Agency (EPA), arguing against a proposed rollback of regulations aimed at preventing accidents involving chemicals such as HF.
GRANDFATHERED IN
Regulators overseeing U.S. oil refinery safety, primarily the U.S. Occupational Safety and Health Administration (OSHA) and the EPA, and code-setting industry groups allow some refinery components to keep being used even if they don't meet newer standards.
The EPA and OSHA were not available for comment.
The ruptured PES pipe contained levels of nickel and copper that were permitted when installed, but not under recommendations made two decades later by the American Society for Testing and Materials, now called ASTM International, that still stand, according to the CSB. That pipe elbow corroded at a faster rate than other pieces of the system.
Oil industry group the American Petroleum Institute (API) has about 175 recommended codes that act as the refinery industry's standards. The API inspection standards for HF alkylation units used in about one-third of U.S. refineries do not call for every piping component to be inspected.
API spokesman Scott Lauermann said that its standard for HF units was recognized as the safest way to operate those units, having been recommended by the CSB.
PES said it monitored other parts of the piping system according to industry standards, including an examination of a metal elbow near the one that ruptured, and the testing did not show high levels of corrosion.
"PES would not have expected the piping to corrode at different rates because the elbows were installed at the same time and the construction specifications indicated that they were the same materials of construction," PES vice president of strategy and business development Mark Brandon said via email.
The CSB findings added to existing concerns by workers about maintenance at the PES refinery, which was already struggling financially, and in January cut back the scope of a planned large-scale maintenance project days before it was scheduled to begin.
PES business agents and managers told union officials and major contractors the work would require between 1,500 and 1,800 contract workers, but that was slashed to just 300 contractors, according to five sources familiar with the plan, while pipes and other materials delivered to the plant were never used.
A VACUUM
Maintaining and inspecting equipment at refineries is required by the OSHA and EPA, but those agencies don't tell refineries how or when to inspect. Those details are filled in by industry standards that may not have the enforcement of law.
The CSB found that prior to the California and Washington fires, as well as the BP (LON:BP) Texas City blast in 2005 that killed 15, internal and external instructions for keeping plants operating safely were either ignored or not followed correctly.
That regulatory approach makes rules difficult to enforce and allows problems at refineries to go undiscovered, said Jeff Ruch of environmental advocacy group Public Employees for Environmental Responsibility.
In the aftermath of the Washington explosion, a judge dismissed $2.4 million in fines against Tesoro because the state could not prove the refinery failed to comply with enforceable rules for inspection and maintenance of equipment.
"In terms of, are we making sure in some sort of holistic way that these refineries are safe, there's nothing there," said Ruch. "There's sort of a vacuum."