Texas explosion raises concerns about aging refineries

This week's deadly blast at an oil refinery south of Houston, the area's worst such disaster in 15 years, has put a fresh focus on questions about the age and safety of America's oil refineries.

The blast at the British Petroleum refinery rocked the Texas City area Wednesday, leaving more than a dozen dead and more than 100 injured. The explosion sent plumes of black smoke high into the air and shattered windows of nearby homes and buildings.

The industry seems to be holding its breath, and experts warn against premature conclusions until the cause of the blast is known. Whether it was worn-out equipment or human error could make a big difference in how the accident is perceived and dealt with.

"But either way, this is the accident we are always worrying about," says Robert Ebel, chairman of the Energy Program at the Center for Strategic & International Studies in Washington. "It shows the very, very slim balance between oil supply and demand right now."

It's important to note that chemical plants, even with all the careful safety procedures, are dealing with dangerous explosive materials and machinery.

They require annual or semiannual inspection and maintenance, but the newest are at least 25 years old - brought online during the oil boom of the mid-1970s. Many are even older. The BP plant, for instance, began operating as an oil refinery in 1934 under another owner.

But because of the 1990 Clean Air Act and the changing requirements for cleaner gasoline products, many of these refineries have been highly upgraded with new equipment and technology.

Even so, there continue to be sporadic accidents and problems at these plants. This is the second accident this year at the sprawling BP plant in Texas City, for instance. A September accident that killed two workers led the Occupational Safety and Health Administration (OSHA) to fine the company over $100,000 for safety violations. And last year, BP was fined $63,000 by OSHA for 14 violations following a March 2004 accident.

"We are coming to a very challenging period in the US industry," says Amy Jaffe, associate director of the energy program at Rice University in Houston. "We are now in a spell where we expect all refineries to be producing flat out and that is going to have consequences."

Ten years ago, America's refineries were running at around 70 percent capacity, but increasing global demand and tightening supplies has sent prices soaring and is taxing aging refineries. "The bottom line is, we are running our refineries today at over 90 percent capacity, and they were not really designed to run at that level," says Ms. Jaffe.

Wednesday's explosion was the area's deadliest since a 1990 explosion at Arco Chemical Co. killed 17 people. News of this latest explosion sent gasoline trading up while the industry waits to see how long the plant will be offline.

It is the BP's largest plant and America's third largest, and processes 3 percent of the nation's daily crude oil supply. That is significant, say oil experts, especially with today's tight supplies.

"I suspect the market will wait and see how long this oil refinery is going to be shut down for maintenance," says Mr. Ebel. "We may need to turn to imports, but can we import enough to meet our needs, especially as we enter the summer driving season? All sorts of bad things could happen."