Preparation work caused Bukom fire: MOM probe

Straits Times 4 Oct 11;
A FIRE that lasted 32 hours at Shell's refinery on Pulau Bukom was caused by preparation work for maintenance, which involved draining residual oil in a pipeline using a suction truck.

These are the findings thus far from investigations by the Ministry of Manpower's (MOM) Occupational Safety and Health Inspectorate, released last night in a statement by the ministry.

Although the statement did not explicitly say so, The Straits Times understands that in trying to clear the area of oil before maintenance work started, the truck could have caused a spark that ignited the oil.

A ministry spokesman said the fire 'subsequently spread and escalated into a major fire within the pump house area'.

A pump house is an open area within the refinery consisting of pumps and inter-connecting pipelines for fuel distribution.

MOM said investigations are ongoing, with its inspectorate starting work last Friday after the blaze had been put out.

The fire at Shell's biggest refinery worldwide started last Wednesday and was extinguished the next night.

Senior Parliamentary Secretary for Manpower Hawazi Daipi yesterday led a team of MOM investigators to the incident site, together with Mr Ho Siong Hin, the ministry's workplace safety and health commissioner.

Mr Hawazi, who was briefed on the progress of investigations, said his ministry would work closely with the Singapore Civil Defence Force (SCDF) to determine the cause of the fire.

'This is an unfortunate incident and, thankfully, no lives were lost. MOM is reviewing Shell's safety framework to prevent a recurrence of such an incident,' he added.

He urged both employers and workers to make safety a priority in their workplace. 'A comprehensive safety framework minimises risks and ensures every stakeholder is accountable for workplace safety and health,' he said.

Shell confirmed on Sunday that it had declared force majeure on some customers, which frees the oil giant from fulfilling its contractual obligations to them.

Force majeure, which means 'greater power' in French, is a common clause in contracts that frees both parties from liability when an event beyond their control occurs.

Petrochemical Corporation of Singapore confirmed yesterday that it was one of the customers affected, and that Shell had declared force majeure on naphtha supplies for delivery this month to the corporation.

The SCDF began a phased withdrawal of its fire-fighting team from Pulau Bukom on Sunday, but said it would retain about 50 firemen and 18 vehicles there until the situation is fully stable.

JENNANI DURAI

Bukom fire happened during preparation work for maintenance: MOM
Hetty Musfirah Channel NewsAsia 3 Oct 11;

SINGAPORE: Preliminary findings have shown the fire which broke out at the Shell oil refinery at Pulau Bukom last Wednesday took place during preparation work for maintenance.

In a statement, the Ministry of Manpower (MOM) said part of the preparation work involved the draining of residual oil in a pipeline and removing it by means of a suction truck.

The fire subsequently spread and escalated into a major fire within the pump house area.

Senior Parliamentary Secretary for Manpower Hawazi Daipi visited the scene at Pulau Bukom on Monday.

Mr Hawazi was briefed on the progress of MOM's investigations.

"This is an unfortunate incident and thankfully, no lives was lost," Mr Hawazi said.

"MOM has commenced investigations and we will work closely with the Singapore Civil Defence Force (SCDF) to uncover the cause of the fire.

"MOM is also reviewing Shell's safety framework to prevent a recurrence of such an incident.

"We urge employers and workers to make safety a priority in their workplace. A comprehensive safety framework minimises risks and ensures every stakeholder is accountable for workplace safety and health."

Investigations by MOM's Occupational Safety and Health Inspectorate (OSHI) commenced last Friday after the fire, which lasted 32 hours, was put out.

- CNA/wk/de

Shell fire broke out during preparation for maintenance work
Today Online 4 Oct 11;

SINGAPORE - Last Wednesday's fire on Shell's Pulau Bukom refinery broke out during preparation work for maintenance, which included the draining of residual oil in a pipeline.

Giving an update on the Ministry of Manpower's (MOM) ongoing probe into the fire, a spokesperson said yesterday: "Preliminary findings from the investigation showed that the fire broke out at a pump house during preparation work for maintenance.

"Part of the preparation work involved the draining of residual oil in a pipeline and removing it by means of a suction truck. The fire had subsequently spread and escalated into a major fire within the pump house area."

The fire at the refinery - Shell's largest in the world - took about 32 hours to be brought under control and led to a shutdown of the facility.

Yesterday, Senior Parliamentary Secretary for Manpower Hawazi Daipi, along with the Commissioner for Workplace Safety and Health, Mr Ho Siong Hin, led a team of MOM investigators to the scene of the fire. Mr Hawazi was later briefed on the progress of MOM's investigation into the incident.

During their visit, the MOM team wore respirators due to residual fuel vapour at the site.

Mr Hawazi said: "This is an unfortunate incident and thankfully no lives were lost. MOM has commenced investigations and we will work closely with the Singapore Civil Defence Force to uncover the cause of the fire. MOM is also reviewing Shell's safety framework to prevent a recurrence of such an incident."

He also urged employers and workers to make safety a priority in their workplace.

"A comprehensive safety framework minimises risks and ensures every stakeholder is accountable for workplace safety and health," Mr Hawazi added.

Shell taking no chances in restart of Bukom units
Govt says fire had broken out during preparation work for maintenance
Ronnie Lim Business Times 4 Oct 11;

(SINGAPORE) Shell does not expect to restart any of its Bukom units - shut down following a major fire - until a thorough investigation has been done and it is safe to do so. This is despite damage being limited to just the vicinity of a pumphouse, with other facilities and units unaffected, a Shell spokesman said.

She was responding to a BT query on Bukom's 'progressive shutdown' and whether the entire facility had now stopped running, and also when it expected Bukom to resume operations given industry speculation that it may be out of action for at least a month.

Meanwhile, the Ministry of Manpower yesterday said that preliminary investigations indicate that the fire broke out at a pumphouse during preparation work for maintenance. Part of the preparation work involved the draining of residual oil in a pipeline, and removing it by means of a suction truck.

The fire then spread and escalated within the pumphouse area, the ministry said, adding that investigations are still ongoing.

Industry sources said that refining margins have shot up by about 40 per cent, with product prices also rising some 10-15 per cent.

On Sunday, Shell Singapore chairman Lee Tzu Yang confirmed that the company had started declaring force majeure (FM) on some of its customers. It was in discussions with others to 'address their supply of product needs'.

Asked if this affected, for instance, feedstock supplies to Petrochemical Corporation of Singapore (in which Shell has a stake) on Jurong Island, the Shell spokesman said: 'We are not able to comment further as this is commercially sensitive information.'

An oil trader remarked that, in the interim, 'the market dynamics have changed, as Shell, usually a seller, turns buyer in the swaps market here'.

He added that 'Shell is probably assessing what percentage of its customer needs to buy from the market, and what percentage they have to declare FM on'.

'They will probably try to maximise their requirements by buying from the market as long as price increases don't go beyond 10-15 per cent.

'At the moment, the fire has impacted mainly middle distillates like kerosene and diesel produced by the hydrocracker plant, which was among the first which Shell shut down. Gasoline is likely to be next, if the catalytic cracker is also brought down.'

Shell had earlier said that it was progressively shutting down its entire facility, starting from the hydrocracker to its three crude distillation units which have a combined processing capacity of 500,000 barrels a day. Up next will be its catalytic cracker and ethylene cracker.

A refinery source said that 'Singapore refinery complex margins have meanwhile shot up to US$7-8 a barrel from around US$5 a barrel'.

'Regional refining margins are also up,' he said, explaining that 'oil is like a global swimming pool, where an incident in one area affects another'.

'So far, middle distillates have been affected (by Bukom's disruption), gasoline is still strong and fuel oil cracks are also up,' he added.

Most industry observers say that the complication in Shell's case arises because the fire, which started last Wednesday, occurred at a pumphouse area where there is a complex network of oil pipelines connected to tankage and plants.

Up till Sunday, traces of fuel vapour could still be detected in the affected area.

'This being the case, Shell can't commit as yet to how long the shutdown is likely to be, so as not to create panic,' an industry source said.

Added another industry observer: 'Refineries these days are very complex, and are operated by fully computerised process controls, so these have to be absolutely fail-proof before Shell wants to resume operations.'

Limited impact seen in refinery shutdown
Conrad Tan Business Times 4 Oct 11;

(SINGAPORE) The shutdown of the Shell refinery on Pulau Bukom will put further pressure on the Singapore economy but its impact is likely to be limited, analysts said yesterday.

A rough estimate puts the direct impact at no more than 0.2 percentage points of Singapore's economic output, OCBC economist Selena Ling said, though she stressed that this was based on coarse assumptions about Shell's market share and the duration of the shutdown.

'It's hard to quantify, but it looks like it's not going to be that significant,' she said. 'It depends on how long the shutdown is and whether there is a feed-through to downstream players.'

Manufacturing contributes about one-quarter of Singapore's gross domestic product (GDP). Within the manufacturing sector, the petroleum and petrochemical industries have a combined weight of 5.7 per cent, so a month-long shutdown of both industries would shave about 0.12 per cent off Singapore's full-year GDP, Citigroup economist Kit Wei Zheng said.

'If you further assume that Shell contributes one-third of this, the direct dent to full-year GDP growth is in the order of 0.04 percentage point, or 0.12 percentage point for Q4 GDP.

'This may not include indirect spillovers on other sectors tied to petroleum or petrochemicals - transport comes to mind - but the numbers just discussed suggest a small dent to full-year growth.'

Still, given that growth in other parts of the economy outside the biomedical sector is also slowing, the shutdown in the Bukom refinery would exacerbate the weakness in overall growth, said Wu Kun Lung, an economist at Credit Suisse here.

'The impact would depend on how long the refinery is closed. Usually, in disasters like this, production should resume in a few months' time, so any impact on exports or growth is likely to be temporary.'

Shell declared force majeure on some of its customers after the blaze last week at its Bukom refinery, the oil firm said on Sunday. Declaring force majeure allows a party with contracts that include such a clause to nullify its obligations, due to events that are beyond its control, such as war or flooding.

The Singapore Civil Defence Force began a phased withdrawal of its fire-fighting team from the refinery on Sunday, but will maintain a small presence on Bukom to support Shell and will fully withdraw once the situation is stable, Shell said.

The Bukom refinery, Shell's biggest processing plant worldwide with a capacity of 500,000 barrels a day, is expected to be shut for at least a month, according to a Reuters report over the weekend, which cited industry sources.

Shell also plans to shut its naphtha cracker at Bukom, Bloomberg reported yesterday, citing a person with direct knowledge of the matter.

Shell's force majeure declaration unnerves industry
Stella Lee Channel NewsAsia 3 Oct 11;

SINGAPORE: Shell's recent announcement that it will halt supply to customers is likely to cause even more anxiety.

While there is no indication yet of what the costs will be to Shell's customers, market observers said the move does not bode well for the petrochemicals sector.

Following the blaze at its refinery last Wednesday, Shell has declared force majeure - a legal clause which exempts Shell from fulfilling its obligations to some of its customers.

The cause of the fire has not been determined yet.

Generally, force majeure is declared over natural disasters or political upheavals.

Marcus Gordon, head of dispute resolution (Oil & Gas) at Watson, Farley & William LLP, said: "Companies do frequently insure themselves against force majeure claims, for example, war, adverse weather, lightning... not contracted negligence."

Also, while the clause may protect Shell against damage claims from the refinery's direct customers, it is less clear for other players downstream.

Mr Gordon said: "One problem you see is that there are frequently inconsistent force majeure clauses in chains of contracts. For example, at the top of the chain you have got a very well drafted force majeure provision, but further down the chain there isn't such a well drafted provision... The company at the top of the chain will be well protected but company at the bottom will not. "

The refinery shutdown adds more downward pressure on the already troubled petrochemical industry, which shrank by more than 26 per cent in the month of August in Singapore.

Alvin Liew, economist at UOB said: "It provides a lot of the downstream products. That would have implications on supply issues to these companies. Given that it is still unclear on the situation, we could see a short-term disruption."

Experts said the Pulau Bukom refinery could stay shut for at least a month.

However, no damage has been reported to have occurred within the processing unit.

- CNA/cc