In February, five people died in a massive explosion at a gas power plant in Middletown, Connecticut. Fires raged and black smoke filled the air. Even people up to 30 miles away in New Haven felt the shock. Ambulances and helicopters rushed to the scene to rescue as many workers as possible. In addition to the five casualties, 11 others were injured.
A natural gas leak caused the explosion, and the disaster highlights one of the ever-present dangers facing many companies in the energy industry. Fortunately, such tragedy is not the norm, and one company in the Caribbean has embraced enterprise risk management principles to bring its safety to new heights.
Phoenix Park Gas Processors Limited, a Trinidad and Tobago-based natural gas plant, processes 1.6 billion cubic feet of natural gas per day, which equates to 23,000 barrels of butane, propane and other refined products. To help ensure disasters never occur on its site, Phoenix Park practices emergency response plans quarterly and has modeled a catastrophe in which a huge vapor cloud is released and ignites-a threat it identifies as a worst-case scenario.
"The impact to neighboring communities would not be significant, but there could be significant casualties," said Eugene Tiah, president of Phoenix Park. "Obviously, equipment and property damage would be widespread."
To its credit, Phoenix Park has not had an employee miss a single day of work for an accident-related reason in 17 years. And it has not even had anything that OSHA would classify as a recordable incident in 15 years.
But even with its impressive track record of safety, the company realized in 2004 that it could do better. Management was pleased with the results but believed that a more formalized approach was needed to make sure that the streak was more than just good luck. "We said that we need to bring all this together, and we started a crude risk register to weigh impacts and likelihoods [for our risks]," said Tiah.
But even after the companywide risks were identified, assessed and prioritized, Phoenix Park was not seeing major ERM benefits. "The awareness level wasn't sustained the way we wanted it to be sustained," said Tiah.
So in 2008, Phoenix Park brought in Aon to help improve its program results "from shop floor to the board room," according to Tiah. "You have to have buy-in from those at the top of the pyramid."
Safety and security protocols to ensure that no explosions or other catastrophic accidents occur are clearly the plant's first priority. But since the gas sector maintains stringent standards for engineering, construction and virtually every other facet of operations within the plant, much of this was already well-established. The plant's main control room, for example, has 18-inch-thick concrete walls.
Still, some additional measures were taken, such as moving nonoperational employees to an off-site location several miles away from the areas that would be most damaged by an explosion.
As with any good ERM plan, contingencies were also introduced to raise business continuity. Redundancy has always been a core strategy for Phoenix Park, which maintains three processing plants so that there is virtually no realistic scenario that would knock production off line. The company also maintains two product tanks where its customers can dock their ships to retrieve the gas products. If one is compromised, the other can remain accessible to continue delivery. And since the company also fosters an increasingly diverse customer base, gas sales could continue.
One thing that the company has no control over, however, is market risk. But the ERM program has been so successful that Tiah does not have to worry about the fluctuating price of gas. "We operate at such margins that even in a tough market, we are still an industry leader."
And in addition to being an industry leader in the gas sector, Phoenix Park is now a leader in the world of ERM.
Explosive Potential
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