As reported by a China Daily article (see Pages 2-6), the Dalian oil plant of CNPC had encountered 5 serious incidents over a 14 month period. The main objective for this case study is to assess the risks faced by the plant and the local residents.
- Suppose the Dalian plant employs 5,000 workers. The international standard accident rate for oil plants is 1 serious accident per 10,000 worker-year, which translates into an average of 0.5 serious accident per year for an “ordinary” oil plant with 5,000 workers. What is the probability that an ordinary oil plant with 5,000 workers can have 5 or more serious accidents over a 14 month period?
- Some officials claim that there is nothing wrong with the management of the Dalian plant (i.e., the plant is considered “ordinary”), and the incidents are merely the results of “bad luck” or “random events”. Based on the probability you found in part (1), can you support or reject their claim? How much risk (i.e., Type I or Type II error) are you willing to take in making your decision?
- Suppose 70% of all accidents (not limited to those at the Dalian plant) are caused by equipment failures and 30% are caused by human errors. If an accident is caused by equipment failure, there is a 80% probability that the accident is minor (e.g., minor injury) and a 20% probability that the accident is serious (e.g., explosion). If an accident is caused by human error, there is a 10% probability that the accident is minor and a 90% probability that the accident is serious. When a serious accident occurs, what is the probability that the accident was caused by human error? Why is this probability greater than 50% even though only 30% of all accidents are caused by human errors?
- Perform the 5-step risk analysis as given as below:
Step 1. Risk identification. Identify existing and non-existing risk factors(hazards) and their relations
Step 2. Measure the uncertainty and effect of risk factors separately and/or jointly by metrics such as mean, variance, VaR, Gini coefficient, ALARP, etc.
Step 3. Risk assessment. Establish a risk picture that connect all of the above and summarize the risk of main hazards.
Step 4. Risk treatment. Solutions for controlling, reducing, or transferring risk through means of finance, operation, strategy, etc.
Step 5. Decision under risk. Compare different solutions and alternatives while taking into account biases in personal judgment.
You should make use of your findings in previous parts. Moreover, in Step 1, find the causes and consequences of the risk factors you identify. In Step 3, explain which risk factors have the most impact in terms of effect and uncertainty. In Step 5, discuss what judgment biases the decision makers (CNPC, local government) may have and what they should do to avoid these biases.
Oil plants feel the heat
Updated: 2011-09-02
By Zhang Xiaomin and He Na (China Daily) It took 300 firefighters and 50 fire trucks three hours to conquer the blaze on Monday at the Dalian plant of the China National Petroleum Corporation (CNPC).
But despite the fact that the fire no longer posed a threat, Zhang Mo, a plant retiree, remained deeply concerned. "The fire erupted in the storage area where more than 40 oil tanks of different sizes are located. The smallest one holds 5,000 cubic meters," he said. "Some liquid gas tanks are not far away. It could have been disastrous."
Jin Yong, the son of a plant retiree, said: "It's the fifth major incident at the plant in just over a year. How many accidents will occur before the company improves plant safety? I am anxious because my parents live just across the street." He once planned to sell his parents' apartment and buy another but the selling price was too low. "Except for the people who work in the plant, who is crazy enough to move here?" he said.
The thick black smoke from the fire eventually dissipated but concerns over safety at petrochemical complexes linger.
Jiang Jiemin, CNPC's general manager, promised to thoroughly investigate the cause of Monday's fire. In a bid to show its determination, the company removed Jiang Fan as general manager of the Dalian plant on Tuesday.
"Every time after an incident, the company swears it will investigate thoroughly to prevent similar incidents," said Ma Jun, director of the nongovernmental Institute of Public & Environmental Affairs. "But the fact is, they never do, they never announce the real reason to the public. I do hope this time the case won't end up with 'nothing conclusive'."
Ma Zhong, director of the school of environment and natural resources at Renmin University of China, said, "It's time for the government to take harsh measures to brace for the environmental problems triggered by these State-owned monopoly enterprises, or else it will be too late."
The fire came just two weeks after 12,000 citizens protested in front of the city government building to demand closure of a paraxylene (PX) chemical plant operated by a different company.
"The frequent incidents at Dalian plant indicate it has serious problems in management and did not absorb the lessons from the former incidents," Ma Jun said. "The public has the right to know the truth of any incident that threatens their health or lives. There are no minor incidents in a high-risk industry. To raise the safety awareness of every member of the company is the most effective way to reduce safety hazards."