Refinery will not be relocated despite fire

business July 05, 2012 00:00


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Energy Minister Arak Chonlatanon ruled out any plans to relocate Bangchak Petroleum's refinery complex from Bangkok's densely populated Phra Khanong district, despite the fact that its distillation unit caught fire early yesterday, the second such incid

“Relocation could cost as much as Bt80 billion to Bt90 billion,” he said.

It is believed that a spark set fire to Bangchak’s third crude-distillation unit at around 7.20am yesterday, with authorities ordering a week’s closure of the complex and a month-long suspension of the distillation unit. No casualties were reported.

A similar blaze occurred at around the same time in the morning on January 14 last year.

Arak held an urgent news conference yesterday to assure consumers that oil supply would not be disrupted even though the 30-day suspension of Bangchak’s refinery complex would cut output by 80,000 barrels a day. He explained that six refineries in Thailand were churning out at least a million barrels a day, and Bangchak’s daily capacity of 90,900 barrels only accounted for 9.9 per cent of the total.

“At this ratio, the missing barrels would not have a serious impact on overall output, as Thailand’s actual refining capacity is 1.1 million barrels [per day]. Moreover, we have sufficient reserves, which can accommodate a shortfall,” he told reporters.

Meanwhile, the Public Health Ministry said people living in a 4-kilometre radius might have to be evacuated if the level of toxic sulphur dioxide in the air went beyond the 5-parts-per-million safety standard, and 100 families in a 1-kilometre radius had already been advised to prepare to evacuate. However, as of press time, no evacuation orders were issued.

Four schools nearby, namely Phra Khanong Pittayalai School, Pipattana School, Poonsin School and Bopit Wittaya School, suspended classes and sent their 4,300 students home.

Deputy Public Health Minister Surawit Khonsomboon said officials were monitoring the impact the smoke may have had on residents in the area, especially those living in tall buildings. He also said the thick black smoke posed three threats.

First, hydrocarbon and other solvents in oil vapour could irritate the respiratory tract and might also contain carcinogens.

Second, soot could cause cancer after prolonged exposure as well as obstruct breathing and irritate the skin, and last, people might be exposed to three harmful gases, namely sulphur dioxide, carbon monoxide and nitrogen oxide.

If air in a 4km radius of the site were found to have more than 5ppm of sulphur dioxide, people would need to be evacuated, he said, as he encouraged people living in high-rises to keep their windows closed, cover their noses or move out temporarily.

Pollution Control Department chief Wichien Jungrungrueng has sent two teams to the accident site to collect air and water samples to check for contamination.

At the news conference yesterday, the energy minister also outlined the three measures taken to cope with the situation.

The first measure is to get Bangchak to release its petrol reserves, which will last for 16 days; diesel reserves, which should be enough for nine days; and bunker oil for 24 days.

Second, other refineries such as Thai Oil’s and IRPC’s will be ordered to boost their output by 35,000 barrels daily. And last, retailers that rely on Bangchak, such as PTT, Chevron and ICP Chemicals, will be allowed to use up their current reserves.

The minister also promised that the oil supply would not be disrupted.

Meanwhile, Bangchak Petroleum said it did not expect to suffer financially from yesterday’s blaze because its insurer was ready to cope with the claims.

In its report to the Stock

 Exchange of Thailand, Bangchak said the refinery was fully insured and that it also had a business-continuity insurance policy. It also does not expect an impact on the retail oil business from the refinery’s suspension.

Separately, Dhipaya Insurance president Somporn Suebthawilkul said Bangchak’s assets – refineries, stocks and machinery – were insured for Bt23.5 billion, while it had a Bt1.5-billion coverage for business disruption and third-party claims.

“Dhipaya is the sole insurer of Bangchak, but this incident will not dent our financial position as this policy has been mostly reinsured by foreign insurers,” Somporn said.

Officials from the insurance company will inspect the site and should come up with a final figure on damages within a month.