Tesoro Refinery Blast Kills 5, May Be Worst Since 05 (Update3)
By Aaron Clark, Jessica Resnick-Ault and Peter Robison
April 3, 2010 (Bloomberg) — Two of Tesoro Corp.s top executives traveled to Anacortes, Washington, to survey the damage in what may be the second deadliest refinery accident at a U.S. plant. The fire and explosion killed five and injured two.
The Good Friday holiday blast rattled windows more than a mile away and has the most recorded fatalities since 15 workers were killed in a BP Plc incident in 2005 at that companys Texas City, Texas, operations.
Chief Executive Officer Bruce Smith and Chief Operating Officer Everett Lewis have come to Anacortes to focus on those touched by the tragedy, company spokesman Lynn Westfall said in an e-mail. The entire management team will be devoting our time to employees.
Smith steps down as chief executive next month to be replaced by Gregory Goff, a senior vice president at ConocoPhillips.
The Tesoro incident occurred as members of a seven-person crew were cleaning a heat exchanger in a unit handling naphtha, a volatile liquid chemically similar to jet fuel, Westfall told reporters.
All seven suffered burns and the two workers injured remain in critical condition today, according to Valerie Calogero, nursing supervisor at Harborview Medical Center in Seattle, where both are being treated.
The accident hasnt been cleared for investigations to start, and its too soon to know the cause, Westfall said in an e-mail today.
Investigation Pending
An investigator from the United Steelworkers, the union that represents the plants workers, and representatives from the state Department of Labor & Industries viewed the site yesterday, from a distance, said Joe Solomon, president of the union local that represents about 200 of the plants workers.
They couldnt get real close, because there were some concerns about exposed asbestos on insulation, Solomon said. The plant started operations in 1955, when the use of asbestos in insulation was more common, he said.
A four-person team from the U.S. Chemical Safety and Hazard Investigation Board, an independent U.S. federal agency that investigates industrial chemical accidents, arrived today. In addition, officials from the U.S. Environmental Protection Agency, and the Washington state Department of Ecology are to visit the site, the company said.
The accident appears to have the most fatalities of any accident since BP Texas City, Daniel Horowitz, a spokesman for the CSB, said in a telephone interview yesterday.
Production Cuts
Besides the 15 killed, another 180 were injured in the BP accident, which occurred when an octane-boosting unit overflowed as it was being restarted. Gasoline vapors spilled into an inadequate vent system and ignited a blast that shattered windows five miles away.
San Antonio-based Tesoro has pared production of fuels like gasoline and diesel at Anacortes to a third of normal levels, or about 20,000 barrels a day, Westfall said. Crude throughput at the refinery, 70 miles north of Seattle, was cut to about 70 percent of normal capacity, or about 80,000 barrels a day.
Tesoro will boost production at some of its six other refineries to help make up for the gap and doesnt expect a significant impact on West Coast supplies of refined products, a company statement said.
Before the accident, the plant was operating at about half its capacity of 120,000 barrels a day, Westfall said.
Record of Violations
Tesoros 58,000 barrel-a-day Salt Lake City, Utah refinery is also under investigation by the CSB after an Oct. 21 fire occurred when flammable liquid overfilled a flare stack and ignited, Horowitz said. The agency said last year it was investigating the incident amid similarities with BPs Texas City accident.
The Anacortes refinery received 17 serious violations last year from the Washington State Department of Labor & Industries. Fourteen of those violations have been deleted and an $85,700 initial penalty was reduced to $12,250.
Yesterdays fire charred wires, pipes and equipment around the heat exchangers, which are usually about a foot-and-a-half wide, Westfall said. The crew, near the end of a 6 p.m. to 2 a.m. shift, had just finished cleaning one of six exchangers in the area and was putting it back online when the fire started at 12:30 a.m., Westfall said.
The exchanger work is considered minor maintenance, he said.
Serious Burns
The accident is the worst in Tesoros history, according to Westfall. Under the companys ownership, the last fatality at the plant was a 2002 elevator mishap involving a contractor, he said. Yesterday, an electronic sign urging safety at the plant still flashed the date of the last reportable injury: Nov. 25, 2009.
The employees who died were Daniel Aldridge, Matt Bowen, Darrin Hoines, Kathryn Powell and Donna Van Dreumel, the company said. The two workers who remain in critical condition, Lew Janz, 41, the crews supervisor, and Matt Gumbel, 34, have burns over the majority of their bodies.
Lissy Nelson, 20, who can see the refinery complex from the drive-through window of the coffee shop where she works, said the blast shook windows in her house a few miles away.
It sounded like a jet plane taking off, she said.
The plant is adjacent to a separate facility operated by Royal Dutch Shell Plc, which sold the plant to Tesoro in 1998, company officials said.
Prices May Rise
Unplanned and planned outages can increase prices for petroleum products as refiners turn to spot markets to help them meet supply contracts. Operational disruptions can also depress prices for crude oil because less feedstock is needed.
For the units involved in the fire, that could be several weeks before they return, said Andy Lipow, president of Lipow Oil Associates LLC, a Houston-based consulting company. In the Pacific Northwest, prices are liable to rise.
The plant in Anacortes manufactures gasoline, jet fuel and diesel for markets in Washington and Oregon. It receives oil by pipeline from Edmonton, Alberta, and by tanker from Alaska and foreign sources, according to the companys Web site. The plant also processes intermediate feedstocks such as heavy vacuum gas oil that are produced by other Tesoro refineries or purchased in the spot market.
Feedstocks
The discount to futures for conventional, 87-octane gasoline widened 0.5 cent to 6 cents in Portland on April 1, according to data compiled by Bloomberg. The prompt delivery price gained 0.87 cent a gallon to $2.2637.
Regular gasoline at the pump in Seattle, Bellevue and Everett, Washington, rose 0.3 cent to an average $3.003 a gallon, AAA, the nations biggest motoring organization, said on its Web site.
Tesoros stock rose 49 cents to $14.39 on the New York Stock Exchange April 1. The shares have risen 6.2 percent this year.
Tesoro said it will post updates on the incident to a Web site, http://www.tesoroalert.com
To contact the reporter on this story: Aaron Clark in New York at aclark27@bloomberg.netJessica Resnick-Ault in New York at jresnickault@bloomberg.net. Last Updated: April 3, 2010 15:23 EDT