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Planned U.S. oil storage boom faces new scrutiny after tank-farm fire

[March 23, 2019] By Collin Eaton

HOUSTON (Reuters) - A three-day petrochemical fire that spread a cancer-causing chemical and thick smoke over Houston suburbs this week has spurred calls for tougher safety regulations that could affect a nearly dozen crude-export terminals proposed for the U.S. Gulf Coast.

Federal, state and local officials have begun investigating whether Mitsui & Co's Intercontinental Terminals Co (ITC) met safety and environmental regulations after the fire in Deer Park, Texas, spread quickly among rows of giant tanks that hold up to 3.3 million gallons of fuel each.

The blaze released toxic benzene which led five school systems with more than 108,000 students to shut for two days, and prompted two cities to tell residents to stay indoors.

It burned for three days and destroyed 11 tanks holding fuels used to make gasoline and plastics that sat along the nation's busiest petrochemical port and among nine oil refineries.

On Friday, a leak from a containment dike at the facility prompted new travel restrictions in the immediate vicinity of the plant.

Results from those reviews could affect proposed terminals that would add millions of barrels of oil storage capacity, to cater to a shale boom that has made the United States the world's top oil producer with more than 12 million barrels pumped each day.

There are already some 90 million barrels of oil storage capacity in above-ground tanks near Houston, estimates data provider Genscape.

Harris County, which oversees the ITC tank farm, plans to review the investigations and may propose changes to state regulations, said the county's chief executive, Lina Hidalgo.

Environmental groups said the fire and lack of notice to residents exposed Texas's weak oversight of energy and chemical storage sites.

"I would like to think there will be a huge push and elected officials would do their due diligence," said Elena Craft, senior director for climate and health at the Environmental Defense Fund. "We want accountability," said Bryan Parras, a spokesman for environmental group Sierra Club.

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Smoke rises from a fire burning at the Intercontinental Terminals Company in Deer Park, east of Houston, Texas, U.S., March 18, 2019. Jaimie Meldrum/@jamiejow/Handout via REUTERS

ITC, which had 242 storage tanks holding about 13 million barrels of fuels, is not required to comply with county fire codes because it was built before the county adopted codes in late 2014, said Rachel Moreno, a spokeswoman for the county Fire Marshal.

ITC adheres to fire-prevention guidelines set by industry group the National Fire Prevention Association and the American Petroleum Institute, said ITC spokeswoman Alice Richardson. A temporary loss of water pressure on the first day of the blaze contributed to its spread.

However, critics say the NFPA guidelines set minimum standards and the use of advanced fire-protection systems could have more quickly extinguished the fire before it spread and released millions of tons of carbon monoxide, and thousands of pounds of nitrogen oxides, sulfur dioxide and other pollutants.

The fire prevention group expects the investigations into the ITC fire could prompt changes to its guidelines, said Guy Colonna, NFPA's senior director of engineering. Its existing recommendation for petrochemical tanks, called NFPA 30, does not require fixed fire suppressants, Colonna said.

State and local governments "need to amend the minimum requirements to hold companies like ITC more accountable for building terminals in areas where the severity of the fire is going to cause a bigger disaster," said Marcelo D'Amico, a principal at Orcus Fire and Risk Inc, which designs fire-prevention systems for tank farms.

New storage regulations would face opposition in Texas. A state lawmaker recently filed a bill that would speed air-quality permit reviews for energy projects before environmental regulator Texas Commission on Environment Quality, one of the groups now investigating ITC.

Ryan Sitton, commissioner of Texas energy regulator, the Railroad Commission, said more fire-suppression equipment on ITC tanks could have led to greater releases of benzene, not less.

"The big fire was burning off the benzene," Sitton said. "If I start mandating things to put out fires, it could run the risk" of releasing more chemicals into the atmosphere.

(Reporting by Collin Eaton in Houston; Editing by Marguerita Choy)

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