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The New PSM Normal (6) — Alternative Energy Reality Check

A bright idea for replacing oil reserves

I would like to take a break from talking about this virus this week. (Wouldn’t we all?) Instead, let’s take another long-range look as to where the process industries may be going, and how safety management programs may have to adapt.

There is much talk in the oil industry to do with the current low oil prices and how the loss of revenue will lead to a cutback in investment, something that is already happening. Those oil producers that need high margins, such as the tar sands in Alberta or shale oil in the U.S., are already shutting down much of their capacity. The pandemic (which I promised not to talk about) has led to a further reduction in consumption with a consequent fall in prices.

But, as we discuss in The New PSM Normal (3) — Peak Oil, the fundamental problem that the oil industry faces is to do with the cost side of finding and producing oil. The concept of low ERoEI (Energy Returned on Energy Invested) was introduced in that post. An ever- increasing fraction of the oil that is produced has to be expended on finding and developing new sources of oil. When ERoEI falls below about 5:1 it is questionable if the effort is worthwhile any longer.

A frequent response to these difficulties is that we need to switch to alternative energy sources. The following quotation is from Joe Biden’s current political campaign is an example of this way of thinking. (I am not being partisan here; many people in many walks of life are making similar statements.)

I guarantee you we’re going to end fossil fuel . . . Before 2050, God willing.

The logic is as follows:

  • Fossil fuels (coal, oil and natural gas) generate CO2 and other greenhouse gases when burned.
  • The climate is changing quite quickly as a result and the consequences of those changes look increasingly dire.
  • We have about 30 years to take action before it’s too late.
  • Therefore, let’s use those 30 years to make a transition to alternative energy sources.

All this sounds quite reasonable until we run the numbers.

Here is a back-of-the-spreadsheet calculation, just for the United States. (All numbers are very, very approximate, but they give us a feel as to what can be achieved.)

  • Annual United States energy consumption 1.0E+17 Btu/yr
  • Capacity 3.0E+06 megawatts (MW)
  • Required conversion from fossil fuels to alternative energy over 30 years: 1.1E+05 MW per year.

To summarize, we need to convert about 112,000 MW of capacity every year for the next 30 years just to provide the energy that we use now.

Broadly speaking there are two types of alternative energy: nuclear power and “renewables”, i.e., wind and solar. Let’s say we decide to switch to nuclear power. A representative single reactor plant has a capacity of about 1.7 MW. Therefore we would need to build 67 nuclear power plants a year for each of the next 30 years, starting now. At the end of that 30 years the total number of new plants would be about 2,000. Yet, the actual number of nuclear plants in the U.S. is around 108, and that number is going down — more are being decommissioned than being built.

We can carry out a similar reality check for solar and wind. Currently they provide something like 3% of the nation’s overall energy. Therefore, were we to build out a new energy system built on them we would be effectively starting from scratch. One of the many factors to consider is that now they have the advantage of being the first supplier. When the sun is shining or the wind is blowing, they add energy to the national grid. When it is dark or not windy, conventional power plants pick up the slack. But, if  all of our energy comes renewable sources then we would need enormous backup capability (presumably batteries), or else we would have to keep the conventional plants to be used when needed.

The point of calculations such as these is not to throw cold water on alternative energy projects. They are needed, and they deserve out full support. But they are not going to come close to meeting all of our energy needs in the specified time frame.

What does all this mean for the process industries? It seems likely that the energy needed to run those industries will become increasingly expensive and/or unreliable. But, there is another factor to consider. Something like 10% of a barrel of oil is not burned as fuel; instead it provides the feedstock that is converted into petrochemicals. These in turn are used in the manufacture of the thousands of products that our civilization needs. Therefore, priority should be given to making sure that these feedstocks are available, even if the overall supply of oil is declining.

This type of discussion also highlights the contribution that technical people can make to discussions to do with climate change and other divisive issues. By analyzing ideas and proposals using the basics of math, physics and thermodynamics we can help sort out which of those ideas make the most sense.

The New PSM Normal (5) — Standards

Face mask over a globe symbolizes the COVID-19 pandemic

We are writing a series of posts to do with the ‘New Normal’. They discuss what the world of industrial safety may look like once the current pandemic dies down and business activities resume. Previous posts on this topic are:

In this post I would like to consider how those of us who work in industrial and process safety can help the community at large? The subject came to mind when I was discussing the eventual return of people to church services with a colleague. Our Episcopal diocese has organized a four-phase program for the re-opening of the churches (we are currently in Phase One).

Phases Two and Three require everyone to wear a face mask while on church premises. But the guidelines do not specify what type of mask. Right now, due to the unavailability of commercially-made items, many people are wearing home-made cloth masks. These are good for protecting other people, and they set the right tone — people who wear masks are sending a message that they care. However, there is no control over the design or effectiveness of these masks. Any type of mask offers substantial benefits, so they should always be worn. However, the effectiveness of the individual masks is bound to be quite variable.

I suggested to the church leaders that we should specify that masks should meet an industrial standard such as ASTM Level 2, as shown in the following chart.

ASTM Standards for Face Masks

The suggestion was not taken up. Maybe the reason for the pushback was that most people are not used to a culture of safety standards. Yet such a culture is taken for granted by readers of posts such as this. Were one of us to show up at a chemical plant or refinery wearing a home-made hard hat we would be shown the exit immediately.

So part of the ‘New Normal’ may be for safety professionals to urge the use of standards such as those provided by ASTM when it comes to responding to the crisis.


ASTM standards for use in COVID-19 pandemic

The following information was taken from the ASTM web site.

ASTM International is providing no-cost public access to important ASTM standards used in the production and testing of personal protective equipment – including face masks, medical gowns, gloves, and hand sanitizers – to support manufacturers, test labs, health care professionals, and the general public as they respond to the global COVID-19 public health emergency.

 

The New PSM Normal (4) — Automation

Dog offshore platform

If you fly over the offshore platform of the future in a helicopter and look down you will see just two living beings: an operator and a dog. The operator’s job is to feed the dog; the dog’s job is to make sure that the operator doesn’t touch anything.

This is the fourth post in our series to do with the ‘New Normal’ as it applies to industrial safety. The series is written on the assumption that the current pandemic is so severe and so sudden that we cannot go back to the ‘Old Normal’. All aspects of our lives, including the way in which we manage safety, will change.

Of course, none of us know what the future holds. We are still in the middle of this pandemic; it is still growing and there seems to be no end in sight. Still, now is the time to consider what the future may hold and what opportunities may present themselves.

Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.

Milton Friedman

Some of the ideas that are “lying around” have been discussed in previous posts.

  • In The New PSM Normal (1) — Deflation we suggest that our economy is entering a time of deflation, which is defined as a situation where there are more goods and services available than there are people with money to purchase them.
  • In The New PSM Normal (2) — Do Less With More we consider the vulnerability of our “lean and mean” supply chains — a vulnerability that the virus has exposed. An effective industrial policy may be to install lots of spare equipment and redundancy to take care of surprises.
  • Although the pandemic is a crisis that is up front and center, we may find that the changes that are taking place in the oil industry will eventually have a greater impact. There has been considerable discussion to do with the low price of oil. What gets less attention, but which is actually more important, is the cost of finding and developing new sources of oil. This is an important but complex issue that will be discussed in a series of posts, starting with The New PSM Normal (3) — Peak Oil.

In this post we start to think think about automation. A steady and consistent trend in all industries over recent decades has been the installation of sophisticated control systems that provide tighter control of the processes that they are operating than can be achieved by human operators. These systems are also less costly than skill labor.

As we emerge from the pandemic we are likely to see two conflicting points of view. The first is that the economic incentives for installing these systems have not changed. Indeed, one advantage of an electronic systems is that they do not need to keep a social distance from one another. With regard to employment, it will be argued that efficient systems grow the overall business, and so allow for people to be employed in new areas.

On the other hand, with over 30 million people unemployed in the United States alone, there will be intense political pressure to put people to work, right now.


For those of you who have an interest in the ‘New Normal’ for people of faith, this week’s post is Pontius Pilate and Truth.

SEMS Audits

BSEE-1

BSSE (the Bureau of Safety and Environmental Enforcement) has published an overview of “Common Operator Deficiencies Discovered by Safety Environmental Management System (SEMS) Audits”. It is Safety Alert No. 381 at https://lnkd.in/eGRunKt.

Safety Moment #65: Personal Protective Equipment (PPE)

PPE process safety management

We are writing a series of posts to do with the ‘New Normal’ and the effect of the current pandemic on industrial safety, particularly process safety. (We also have a series for people of faith and the New Normal. This week’s post is The Parable of the Green Car.)

This week we will take a break from that discouraging topic and publish another Safety Moment. You will recall that these Safety Moments can be used for those situations where you may be called upon to start a meeting with a few words to do with safety. The first 52 Safety Moments (one for each week) were collected and are available as an ebook. We are working on a follow-up ebook, 52 More Process Safety Moments. These are temporarily available at no cost here. The most recent of these are,

This week I would like to look at an important safety topic, one that is currently in the headlines, Personal Protective Equipment (PPE).

PPE is the last line of defense for keeping a person safe. Every effort should be made to protect the wearer ahead of time. (We see a simple example of this approach today when we visit a doctor’s office; before entering the office they check our body temperature. If the temperature is too high then the patient is denied entry, regardless of the PPE that everyone is wearing.)

The Irish Health & Safety Authority provides the following precautionary statements with regard to PPE.

  • PPE only protects the wearer.
  • It is ineffective if not working or fitted properly.
  • Theoretical levels of protection are seldom reached in practice.
  • The use of PPE always restricts the wearer to some degree.
  • The psychological effect of PPE may be such that the individual wearing the PPE feels more protected than he or she actually is.
  • In Europe the PPE should carry the ‘CE’ mark.

It is generally the responsibility of the employer to provide, maintain and repair the PPE that workers need. In the United States, for example, OSHA’s 29 CFR 1926.95 OSHA states,

. . . the protective equipment, including personal protective equipment (PPE), used to comply with this part, shall be provided by the employer at no cost to employees.


Further information to do with PPE can be found in the book Plant Design and Operations.

Book Plant Design and Operations

The following is an extract from Chapter 14 of that book.


Standard PPE typically includes:

  • Hard hat.
  • Full cover shoes. They should have non-slip soles. Many companies require that shoes always have toe protection — often in the form of a steel toecap.
  • Safety glasses with side shields.
  • High visibility clothing that may also be fire resistant in areas where flammable materials are being handled.
  • Life jackets when working around ships or on docks.

Gloves and hearing protection should be readily available, even if they are not used all the time.

The second type of PPE is situation-specific. For example, if a worker is catching a sample of a hazardous chemical he or she must wear protective gloves that are resistant to that particular chemical.

There are many regulations and standards to do with PPE. Some of them are listed in Table 14.1 of the book, the first page of which is shown below.

PPE for process safety management PSM

The New PSM Normal (3) — Peak Oil

Energy Returned on Energy Invested

This post is the third in a series in which we consider how our approach to industrial safety, and process safety in particular, may change in response to the COVID-19 pandemic. It is early days — no one knows what the ultimate health and economic effects of this frightening event will be. But it seems likely that we are entering a ‘New Normal’. So much has happened so quickly that it is hard to visualize how we can return to the ‘Old Normal’. All of us wish for a quick, V-shaped recession, after which the economy comes roaring back, more vibrant than ever. But, as discussed in the first post, The New PSM Normal (1) — Deflation, it seems more likely that we are entering a period of long-term deflation, possibly leading to a Depression such as took place in the 1930s.

There has rightly been much discussion in recent weeks to do with the pandemic and its direct effects. Not only have many people died or suffered from severe illness, we can be sure that more suffering is on the way. The actions that we have taken so far, particularly physical (not social) isolation and distancing, have helped slow down the rate at which the disease is spreading. But such actions cannot actually stop the spread; unless and until a vaccine and/or a cure is found, more and more people are going to be stricken. We are all vulnerable — no exceptions. It’s not a question of “if”, it’s a question of “when”.

But people in the process industries are also aware of a second change that has been creeping up on us, but that has suddenly (and ‘suddenly’ is the operative word in our New Normal) become its own crisis. I refer, of course, to the collapse in the price of oil.  For the last five years a barrel of light, sweet crude has been in the $50-60 range. But now it is down to $12, and we hear stories about traders actually paying to have the oil taken away.

At first, it all seems to be quite simple. The low price of oil is directly related to the pandemic. The logic is as follows,

  • The pandemic has led to an enormous and startlingly quick decline in economic activity.
  • Therefore, transportation of all types (trucks, trains, cruise ships, barges) has drastically reduced its use of refined oil products such as diesel, gasoline and bunker fuel.
  • Cutbacks in manufacturing have led to a significant reduction in the use of plastics and other petrochemicals that are derived from crude oil.
  • Hence there is an oversupply of crude oil.
  • Hence the price of crude falls to unimaginably low values, with some futures being in negative territory.
  • It all happened very, very quickly.

There are complicating political factors. The Russians and Saudis are seemingly engaged in a price war in order to control market share. But their real agenda — to drive the U.S. shale oil industry out of business — seems to be going according to plan.

It also means that the concerns that were expressed about ten years ago to do with Peak Oil were wrong. We are not running out of oil — indeed the opposite seems to be the case. There is a surplus of crude oil; only if we return to the ‘Old Normal” will prices rebound.

Not so fast.

Most of the discussions to do with the economic woes of the oil business have been to do with the fall in revenues linked to low prices. But it is the cost side that should receive more attention. What is hurting the oil companies just as badly is that the cost of finding and developing new sources of oil is high and is steadily rising. These costs are not driven by political or social issues such as the Russian/Saudi agreement; they are driven by the laws of physics and the realities of geology.

What we are learning is that

Peak oil does not mean that we run out of oil. Peak oil means that we run out of affordable oil. We will never run out of oil.

Crude oil is a finite, non-renewable resource. We have picked the easy, low-hanging fruit and now exploration and development costs are rising inexorably. Consider the two pictures shown below. The first is of a Texas oil well about 100 years ago. The oil was near the surface, under pressure and easy to extract. All you had to do was “stick a straw in the ground”. The second picture is of a modern offshore oil platform — it operates in very deep water, and the oil is thousands of feet below the mud line. Needless to say, finding and extracting this oil is very expensive. Eventually there comes a point where the energy company cannot make a profit.

Blowout Texas oilfield

Offshore platform low ERoEI

It might be thought that the energy companies, as their costs increase, could simply raise the price of their products such as gasoline and petrochemical feedstocks so as to ensure that they make a profit. The catch is that energy, particularly the energy provided by oil, is utterly fundamental to our entire economy. If the prices of oil products are increased too much, people cannot afford those products, demand falls, and so prices fall. We need to find a Goldilocks price for crude oil. That price is not too hot, and not too cold. It needs to be high enough for the oil companies to make a profit, but it needs to be low enough for the economy to function properly. But we are having trouble finding that Goldilocks price, as discussed by Richard Heinberg in his 2015 post Goldilocks is Dead.

To summarize:

  • The costs to do with finding and developing new sources of energy are steadily increasing.
  • The energy companies cannot raise prices because, if they do, the overall economy deteriorates, so prices fall due to reduced demand.
  • There is no longer a Goldilocks zone.
  • Profits are inexorably squeezed.

If the above logic is correct then the process and energy industries will be facing particularly severe economic challenges. Process safety professionals will need to adapt to those challenges.

A more fundamental way of looking at the oil price conundrum is to use the concept of Energy Returned on Energy Invested (ERoEI). It takes energy to find and develop new sources of energy. If we use most of our energy simply finding and developing those new sources of energy then the oil companies cannot make a profit. They are constrained not by political and social events, but by the basics of geology.

As time permits, we will discuss ERoEI in greater detail in future posts. We will also look at the “ERoEI Cliff” — the point at which there is no longer any justification for developing new sources of oil.


Boeing 707 and the start of low cost air travel

We are publishing another set of weekly posts for people of faith and the New Normal.  This week’s post is The New Normal (5) — Change Is In The Air.

 

The New PSM Normal (2) — Do Less With More

Manager and Just in Time philosophy

The COVID-19 pandemic has changed everything. When more than 22 million people in the United States alone lose their jobs in just a few weeks we have entered a new and different world. There is no going back to an ‘Old Normal’. In the first post in this series, The New PSM Normal (1) — Deflation, I suggest that we are entering a time of deflation, which is defined as a situation where goods and services are available but people do not have the money to purchase them. Even people who do have secure jobs or who have savings hold back on purchases, particularly large purchases such as automobiles; they adopt a “let’s wait and see attitude”. Consequently the companies that provide those goods and services have to cut back, which means that they lay off more people, which means that that there are even fewer customers, which means that — well, you get the idea.

Deflation may lead to lower prices. On the other hand, the financial authorities may decide that the only way they can reduce the massive amounts of debt that they have incurred will be through high inflation.

Last week I said that I hope that this analysis is incorrect. It would be great if we are merely in a V-shaped recession in which we can quickly find a vaccine and/or cure for the disease so that the economy can come roaring back. But I am dubious. The ‘Old Normal’ is in the rear view mirror.

Deflation and the Depression

A defining image of the Depression of the 1930s is the anecdotal story of dairy farmers producing milk that they wanted to sell. There were plenty of hungry people who wished to purchase the milk, but they could not do so because they were unemployed and so they had no money. Hence the farmers wound up pouring the milk down the drain. (I was put in mind of this story when I read about farmers in our time dumping milk because demand from restaurants has collapsed.)

Milk pouring down drain represents deflation

Pouring milk down the drain

In a parallel series of blogs to this one I am trying to determine what the ‘New Normal’ may look like for people of faith and for churches in general. I suggest that key features of their ‘New Normal’ will be Community, staying out of Debt and practicing Thrift and Frugality. The same general philosophies are likely to apply to companies in the energy and process industries.

For the process safety community it all creates a very different world. Means of improving safety will change while funds for safety projects, no matter how well justified such projects may be, will be ever more scarce.

In this post I would like to consider another feature of the ‘Old Normal’ that may be changing, and that is the philosophy of, ‘Do More With Less’. There are many aspects to this philosophy and, as time permits, we will discuss them in future posts. Let’s start with the fact that the virus has exposed problems with our global supply chains that may not go away and that will affect the way in which we manage industrial safety.

Just-in-Time Management

One feature of the ‘Do More With Less’ strategy is Just-in-Time (JIT) management. JIT calls on managers to “squeeze fat” out of the supply chains by reducing intermediate inventories and by delivering products to the customer “just in time” to meet his or her needs. This strategy forces managers at both ends of the supply chain to be ruthlessly efficient — they have to optimize their processes so that they operate without any glitches or hiccups. The fundamental value of JIT is not that it reduces the working capital needed for intermediate storage, that is a side benefit; the real value is that every manager in the chain is forced to make his or her process more efficient.

Note: The following example is to do with an onshore process plant. But the way of thinking that it discusses can be used in a much broader range of industries such as manufacturing.

Consider the following simple example. A chemical company operates two facilities: Units ‘A’ and ‘B’. Unit A manufactures an intermediate chemical used by Unit ‘B’ whose product is sold to the company’s customers. The intermediate chemical is a liquid, so an Intermediate Storage Tank, T-100, is provided between Units A and B. The chemical is pumped from T-100 to Unit B by Pumps P-101 A/B, each of which has 100% capacity — while one is operating the other is on standby. The pumps are identical; this allows the maintenance manager to minimize the spare parts needed, it reduces the number of operating and maintenance procedures that have to be written, one training program can be used for both pumps and management of change issues are minimized.

Intermediate Storage Tank illustrates process safety reliability

T-100 has a one-hour capacity, and is normally operated 50% full. This means that, if Unit A has an operating upset then Unit B can continue normal operations for 30 minutes while the upset is taken care of. Similarly, if B has a problem, A can continue normal operations for 30 minutes. It is this “fat” that needs to be “squeezed”.

The JIT philosophy calls for the managers of both facilities to tighten up their operations such that T-100 is no longer needed and can be taken out of service. The removal of T-100 is a forcing function that compels the managers of Units A and B to tighten up their operations. The reduction in operating costs resulting from the removal of the tank and its associated pumps is merely a side benefit.

The company’s process safety professionals support this strategy for three reasons.

  1. If the tank is out of service we have one less item that can go wrong. (“If a tank’s not there, it can’t leak”.)
  2. The potential for process upsets such as tank overflow or pump seal leakage is removed.
  3. The absence of the tank and the pumps reduces the work of the operating and maintenance teams, thus reducing the chance of error in other parts of the facilities.

What I have just described is the world of the ‘Old Normal’. But the pandemic has taught us is that our single-source, lean supply chains are vulnerable. If the spare parts used in Units A or B are manufactured at a single location on the other side of the globe then any widespread disruption, such as a disease that shuts down whole sections of the country where those parts are made, can cause serious interruptions to our chemical plant. Maybe the ‘New Normal’ requires a new way of thinking.

In this new environment the managers at A and B need T-100 and the buffer capacity that it provides. Indeed, they request that an additional storage tank, T-101, be provided. But they are still vulnerable to single-source vulnerabilities at the identical pumps, P-101 A/B. So they call for the two pumps to be totally different. Maybe P-101A is an electrically-driven centrifugal pump from Asia, whereas P-101B is a steam-driven reciprocating pump from Europe.

This is what the new operation looks like.

Intermediate Storage Tank illustrates process safety reliability

From a process safety point of view the new operation appears at first to be less safe and more vulnerable. There are more equipment items that can leak, and activities such as procedure-writing, training and management of change all become more burdensome.

But the new arrangement does provide one important safety advantage. Shutting down and then restarting continuously operating facilities without proper planning is often hazardous; experience shows that these are often the times of greatest risk. Therefore the process safety professional has to balance the risks associated with events such as tank overflow from a second tank with the risks to do with unreliable operations.

There has always been a trade-off between efficiency and resilience. If someone wishes to make a facility more resilient, he or she can face pushback, often on the lines of, “We’ve run this way for the last 10 years and nothing has gone wrong, aren’t you being over-cautious?” In coming months and years it is likely that this tension will increase.

A further difficulty is that proposals to install additional equipment items will be made in an uncertain and challenging economic environment. If forecasts to do with deflation turn out to be correct, the additional capital and operating costs will be incurred at a time when revenues are reduced and/or unstable. None of this is easy. Nevertheless,  the new safety mantra becomes,

Do Less With More

Welcome to the ‘New Normal’.

 


Home-made masks

If you are making masks, we found the plan provided in the New York Times (and other newspapers) to be useful. We used old pillow cases for the fabric. Medical-quality masks have a metal strip at the top. The NYT design does not. But we found that a pipe cleaner inserted at the top does the job well. (If you don’t smoke a pipe but do have children you may find that they used pipe cleaners in some of their projects.)

Rumor has it that there was a Virginia law that prohibited anyone from wearing a mask when entering a bank, and that they had to change the law. It turns out that the rumor is not true; nevertheless it is still a good idea not to be masked like this when entering a bank.

Because masks such as these are not of surgical quality people wonder if they are worth the trouble. The cloth is not of a tight enough weave to trap the tiny virus germs. This is where the process safety way of thinking comes in. First, the masks protect other people more than the wearer. They trap droplets that the person emits when speaking or even just breathing normally. But the masks will also trap some of the incoming germs and therefore reduce the chance of infection. It’s the way of thinking that lies behind Layers of Protection Analysis (LOPA) or Fault Tree Analysis in which the mask is an AND Gate..

Let’s say, for sake of argument, that keeping a distance of two meters away from other people reduces the chance of infection by 95% over a given period of time. (The numbers in this example were created merely for illustrative purposes.) The probability of infection is (1.00 – 0.95), or 5%. Let’s make a second assumption that the masks catch 50% of the virus germs that enter them. So now the probability of infection drops to ((1.00 – 0.95) * (1.00 – 0.50)), or 2.5%. In other words, the mask does not offer complete protection — risk can never be zero. But it does offer useful protection and so it is worth wearing.