Accidents, Although Rare, $20B Annual Cost

The largest petrochemical plant disaster in U.S. history (not due to natural causes) was a $1.6B explosion at a petrochemical plant in 1989. This accident represents an extreme in a gamut of minor to major process disruptions, collectively referred to as abnormal situations. On the average, a petrochemical plant will have a major incident every three years. Based on data from insurance reports, we estimate the cost of lost production due to accidents to be at least $10 billion annually in the U.S. Costs of equipment repair, replacement, environmental fines, compensation for human casualties, investigation, litigation, etc., represent another $10 billion.

ASM Accidents
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Unexpected Disruptions Cost 3-8% of Capacity, $10B Annual Lost Production Cost

Most abnormal situations do not result in explosions and fires but are costly nevertheless, resulting in poor product quality, schedule delays, equipment damage, and other significant costs. The histogram below illustrates a typical annual production curve where the area shown in red indicates the impact of abnormal situations on plant production.

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The histograms below display actual plant production data obtained in ASM Consortium site studies. This kind of data demonstrated that operations practices can lead to costs of 3-8 per cent of plant capacity due to unexpected events. Based on these data, we estimate the cost of lost production due to abnormal situations is at least $10 billion annually in the U.S. petrochemical industry.

Summarized Production Data
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