Report of Working Committee 3. Study Group 3.1 "Liquefied Gases" Safety and environmental management in LNG plants. Rapport du Comité de travail 3

Transcription

1 22 nd World Gas Conference June 1 5, 2003 Tokyo, Japan Report of Working Committee 3 Study Group 3.1 "Liquefied Gases" Safety and environmental management in LNG plants Rapport du Comité de travail 3 Groupe d'étude 3.1 "Gaz Liquéfiés" Gestion de la sécurité et de l'environnement dans les usines GNL Coordinator / Coordinateur Alain GOY France PAGE 1/33

2 ABSTRACT The LNG industry, like other petrochemical industries, has implemented Safety Management Systems and Environmental Management Systems in the day-to-day operation of LNG plants, either in response to compulsory regulatory requirements, or on a voluntary basis as a result of the strategy of individual companies. The evaluation in SMS and EMS was performed regarding LNG import and export terminals worldwide. This report, based on the results of the answers of the companies themselves to a common questionnaire, does not intend to make a grading or a comparison between the practices of the companies. The report answers to the following points : Why are SMS and EMS implemented? How are SMS and EMS implemented? What are the benefits of both SMS and EMS? Every companies who participate already implemented EMS, following ISO And various examples of benefits in the organisation of the plants are described. As a result of this study, the report brings to the Natural Gas industry : a comparison between the different policies in safety or environment, a review of the existing management practices according geographical regions and according to the type of plant), a contribution to promote the best environmental actions already taken in LNG industry. RESUME L'industrie du GNL, comme le secteur des hydrocarbures, a implanté des systèmes de management de la sécurité et de l'environnement dans l'exploitation au quotidien de ses usines, soit sous l'impulsion de contraintes réglementaires, soit sur une base volontaire résultant de la stratégie de chaque compagnie. Une évaluation de ces SMS et SME a été menée sur l'ensemble mondial des usines d'exportation ou d'importation de GNL. Ce rapport, basé sur les résultats des réponses des compagnies elle-mêmes à un questionnaire commun, n'a pas l'intention d'établir de classement ou de comparatif entre les différentes pratiques. Ce rapport répond aux questions suivantes : Pourquoi un SMS ou un SME est-il implanté? Comment se déroule leur implantation? Quels sont les avantages retirés d'un SMS ou d'un SME? Toutes les compagnies ayant répondu ont déjà implanté un SME, sur la base de l'iso Et des exemples variés d'avantages de l'intégration de ces systèmes dans les modes d'organisation sont donnés. Comme résultat, le rapport fournit à l'industrie du gaz naturel : une comparaison entre les différentes politiques en matière de sécurité ou d'environnement, une revue des pratiques existantes de management en fonction des zones géographiques et du type d'installation, PAGE 2/33

3 une contribution à la promotion des meilleures pratiques dans le domaine de l'environnement déjà décidées dans le domaine du GNL. PAGE 3/33

4 Table of Contents Page 1. Objectives of the study Organisation of the study Collection of data by a questionnaire Preparation of the analysis of the significant trends and factors Diffusion of the data for the benefits of participating companies Global result of the collection of data Results for the Safety Management System (SMS) Why are SMS implemented? How are SMS implemented? What are the benefits of SMS? General Occupational Health Safety Benefit of SMS on plant productivity Benefit to customer relationships Benefit in training and human resource management Benefit of SMS in the management of modification Conclusions on SMS Examples from Indonesia in two different plants Introduction Benefit of Implementing SMS in PT BADAK Results the Environment Management System (EMS) General Results of the EMS Evaluation of Import Terminals Results for liquefaction plants Why are EMS implemented? What are the benefits of EMS? LNG Import Terminal as Environmentally Friendly Improvements from EMS in liquefaction plants Conclusions...24 Appendix 1 : Summary of the Questionnaire on Safety Management System and on Environment Management system in LNG industry Appendix 2 : Graphs and curves of results for Safety Management System Appendix 3 : Graphs and curves of results for Environment Management System PAGE 4/33

5 1. OBJECTIVES OF THE STUDY For many years the LNG industry, like other petrochemical industries, has implemented Safety Management Systems and Environmental Management Systems in the day-to-day operation of LNG plants, either in response to compulsory regulatory requirements, or on a voluntary basis as a result of the strategy of individual companies. Safety Management System and Environmental Management System are defined as followed : Definition of the Safety Management System (SMS) : Extract from the ILO /OSH-MS 2001 Set of interrelated or interacting elements to intended establish a safety and health policy and safety and health objectives and to achieve those objectives. Definition of the Environmental Management System (EMS) : Set of interrelated or interacting elements to establish an environmental policy and environmental objectives and to achieve those objectives. Second definition from the ISO14000 : The part of the overall management system that includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy This implementation, and the subsequent maintenance of the system at an acceptable level, is not an easy task and requires a great deal of effort. A worldwide review of the actual situation of LNG plants (liquefaction and export terminals, import and regasification terminals, and LNG peak-shaving plants) provides an accurate view of existing practices. There is no need to increase the safety record of the LNG industry, which is a mature one, and which has not suffered catastrophic accident or damage to external interests outside the plants, in over 20 years. Lessons are taken from past accidents and incidents, mainly through the evolution of the design of the plants, which have become safer and more reliable, and also in the accumulated experience of operating companies. LNG operating companies have a natural self interest to avoid accidents at their own installations for the safety and security of their own personnel and equipment. In addition, there is a good level of cooperation between LNG operating companies, because of a feeling of common interest. Indeed, even just one catastrophic event anywhere in the world at an LNG import or export terminal would have immediate consequences for every other company, with new constraints from the insurance companies, from regulatory authorities and from public perception. This is why every company is actively cooperating to avoid such situation. The issue of global warming is likely to be a major concern in our planet during the 21 st century, along with the need to provide sufficient energy for continuous social and economical development. Gas currently meets over 20% of the world s primary energy demand and has the lowest carbon content of any fossil fuel. In the coming century, energy demand is expected to rise steeply, to support continuing improvement in living standards, particularly for a fast-expanding global population in the developing countries. LNG has become one of the major energy sources for industry and the household. Particularly, LNG is environment and human-friendly, and hence has high potential as a cost effective energy source through a continuous development in the technology and will play a significant role as a future energy source. PAGE 5/33

6 As one of the required efforts, the evaluation in SMS and EMS was performed regarding LNG import and export terminals worldwide. Based on the result of the evaluation, our study confirms that LNG could become a means to reduce energy-related emission of greenhouse gases and provide affordable and sustainable energy service for continuous development in the world. Our aim is to help build a better future for the industry through the development of new and more effective LNG technology. This report, based on the results of the answers of the companies themselves to a common questionnaire, does not intend to make a grading or a comparison between the practices of the companies. As a result of this study, the report will bring to the Natural Gas industry : a comparison between the different policies in safety or environment, a review of the existing management practices according geographical regions and according to technical factors (principally the type of plant), a contribution to promote the best environmental actions already taken in LNG industry. PAGE 6/33

7 2. ORGANISATION OF THE STUDY The members of the study group dedicated to the review were : Mr Alain Goy coordinator France Mr Noureddine Benmoulai Algeria Mr Rob Klein Nagelvoort Netherlands Mr Yong-Ung Kim Korea Mr Djamaah Mahfud Indonesia Mr Kari Salminen Finland 2.1 COLLECTION OF DATA BY A QUESTIONNAIRE A questionnaire was sent in December 2001 to the companies that operate liquefaction plants, LNG import terminals, and peak shaving plants (the last list of addressees was based on the Gas Technology Institute updated data base). Answers from the companies were received by through July Main extracts of the text of the questionnaire are given in Appendix PREPARATION OF THE ANALYSIS OF THE SIGNIFICANT TRENDS AND FACTORS As a general result, we received responses from the main actors of LNG business, and the amount of data collected was sufficient to provide meaningful coverage of the main components of LNG activity. Using this raw material, members of the study group performed the analysis, each according to his own expertise. The results of the analysis of the statistics are given in Appendix 2 for Safety Management Systems and in Appendix 3 for Environment Management Systems. 2.3 DIFFUSION OF THE DATA FOR THE BENEFITS OF PARTICIPATING COMPANIES As announced in the policy defined prior to the collection of data by the questionnaire, the total file of the data collected was sent to each participating company that answered, at the beginning of 2003, using a customised form (which means that the study group deleted references to the names of the companies or their countries, and instead identified them by their geographical regions (such as Europe, America, Far East, Middle East ). The total file will give to each participant the full result of the work done and help participants to compare their current practices with those of similar LNG plants. PAGE 7/33

8 3. GLOBAL RESULT OF THE COLLECTION OF DATA We received 38 answers to our questionnaire. From LNG liquefaction plants, we had a 75% response rate, a very good percentage that shows the deep interest and strong commitment of these companies to safety and environmental management. From LNG import terminals, we had a 58% response rate: % of the existing European terminals answered, - one answer from a USA import terminal, - several answers from Far East import terminals (Japan, Korea and Taiwan). From LNG peak shaving plants, we had a very small response rate : - four answers from European peak shaving plants (among seven existing plants) and one from Russia, - no answers from the North American peak shaving plants, despite several contacts. We propose the following explanations for these different results : Analysis of the situation of liquefaction plants worldwide In each LNG liquefaction plant, management decided to implement an Environment management system (EMS), based on the ISO standard (100 %) and the situation is similar for the implementation of an integrated Safety management system (SMS), with 100 % of implementation, even if these systems are rather different. Analysis of the situation of LNG import terminals worldwide In each LNG import terminal, management also decided to implement an EMS, based on the ISO standard (100%), but the situation is different regarding the implementation of an integrated SMS. Four regional situations are described regarding SMS implementation: SMS are widely implemented in Europe (which is one reason for the 100% response rate from the European companies). SMS are also implemented at LNG import terminals in the USA and the Carribean. Nevertheless, we collected answers from only one of the five existing terminals in that region. Integrated SMS are not implemented in Japan. This is the reason we did not receive responses from Japanese companies : SMS are not part of their activity or their policy. The major companies (which operate several LNG terminals) responded that they do not have such an integrated system. SMS have been implemented in Taiwan and Korea, both companies answered. PAGE 8/33

9 Analysis of the situation of LNG peak shaving plants worldwide Unfortunately, the collection of data was insufficient to make a thorough analysis. We received few answers from the European peak shaving plants, and no answers from North American peak shaving plants. Several explanations for this situation can be proposed : There is currently a lack of representatives from these companies in the Working Committee 3, and they may lack an understanding of the purpose of the Committee. Managers of peak shaving plants, which are usually small plants with a small number of employees, could feel very far from the LNG maritime transportation activities. The recent cautious behaviour of these companies after September 11 th 2001 ; they are very restrictive and refuse to communicate on their safety policy and to give detailed answers about their activity, especially to foreign associations. (For statistical analysis, the responses from peak shaving plants were incorporated with the responses from receiving terminals) PAGE 9/33

10 4. RESULTS FOR THE SAFETY MANAGEMENT SYSTEM (SMS) Why are SMS implemented? How are SMS implemented in LNG plants? What are the benefits of SMS? To answer these questions, it will be necessary to distinguish between Export plants and Import plants, and to make distinctions among regional areas where necessary. A general agreement was first made about the definition of these systems : These concepts are shared by the large majority of the companies, and are the basis of a common understanding of these activities. SMS are implemented in 81% of the participating companies worldwide. 4.1 WHY ARE SMS IMPLEMENTED? LNG Import terminals In Europe, SMS are implemented as required by European regulation (this is a strict requirement from a recent European directive related to prevention of major hazards). In Taiwan and in Korea conditions are similar, since SMS are required, but by local regulation. In the USA and thus also in the Caribbean, no such legal requirement exists and a company that implements SMS does so in accordance with its own internal policy. In Japan there is no strict requirement for SMS, since the implementation and its control by authorities is not directly stipulated by law. Liquefaction plants In export plants, the system is widely implemented (100 % of respondents have SMS). They are usually not directly required by national regulations, but are mainly implemented in accordance with the internal policy of the shareholders. These are typically the major oil and gas companies, which have had SMS in place for many years. 4.2 HOW ARE SMS IMPLEMENTED? LNG terminals Every company reported needing the help of a management consultant, an expert in management systems. The consultant was able to bring the methodology for implementing the system, and also methods for measuring the progress of the system through periodic audits. The management consultants gained their prior experience through the implementation of various "progress commitments" in certain industries, for example in management of the safety of transportation of dangerous goods in the oil, gas and chemical industries, including LNG; or through the numerous actions taken by the owners of LNG tankers to meet the requirements of the International Safety Management Code, applied since 1996 to all tankers carrying dangerous goods. The LNG shipowners, who are also the partners of onshore LNG plants, shared their experience with implementation and the certification process. PAGE 10/33

11 In general, implementation required one year. The maximum was about two years between initial decision and certification. A peak number of implementations occurred in Implementation consumed manpower in the LNG terminal and from the consultant equivalent, on average, to more than 12 person-months. Once the SMS has been implemented, and the objective is to keep or to increase the level reached for the initial certification, the time needed for this activity is between 1 and 3 person-months per year. In accordance with the regulatory requirements, the companies are informed of the guidelines produced by the authorities to check the quality and the effectiveness of the SMS. Audits can be made either by external auditors (systematically) or by internal auditors, according to the existing guidelines and/or the quality system selected by each company. An average of three qualified auditors are available inside the companies to perform the audits and document the improvements and effectiveness of the system. For Liquefaction plants There is a common agreement among the responses regarding the definition of the SMS as proposed in the questionnaire, since 100 % express their acceptance and on the other hand, it is worth noting that 100 % of the liquefaction plants that responded have already implemented SMS. Liquefaction plants use a wide variety of systems, with the two most common systems, ISRS and DNV (SIES) each being used in only 10% of the cases. The main ways of implementing the system are to work with the help of headquarters (54 %), with plant personnel only (23 %), with the help of an external consultant (15 %), or finally with the action of a public sector certification body (8 %). For the selection of a consultant company, the choice is based evenly on its outside references (50 %) or inside (50 %) the company (the same is true of the LNG tankers shipowner's recent experience, with the additional fact that the main companies involved in onshore liquefaction plants are usually also involved in maritime transportation of LNG, and are able to share experience on the certification process and consultant efficiency). Concerning the implementation schedule of the SMS, the decision has been taken between 1993 to A peak of implementation occurred in The time between the initial decision and the final achievement is 12 to 24 months (50 %), less than 12 months (33 %) and 24 to 36 months (17 %). This phase consumed manpower in the Liquefaction plant and from the consultant, on average more than 12 man-months. year. Once implemented, the time needed for this activity is between 3 and 6 person-months per As with LNG terminals, this is proof of the strong commitment of management which agrees to pay for this additional activity. The implementation of SMS occurred in Export plants earlier than in Import terminals. The inspections to be carried out are mainly made by a third party and periodic audits are made in most of the cases. 60 % of the plants have their reference system imposed by the competent authorities of the country. However, 60 % of the answers stated that there are no guide lines issued by competent authorities. This reflects the present reality: the authorities accept the system proposed by the company, and then, they control the effectiveness of the implementation. PAGE 11/33

12 Most (90 %) of the internal audits are made by plant personnel after training and qualification to perform the audits, 20 % by a consultant selected by the company. Periodic reviews made by an independent third party will check the global performance of the system to help management in decision making. 4.3 WHAT ARE THE BENEFITS OF SMS? General LNG terminals An SMS is implemented to give to management a way to detect, correct and improve every dysfunction sequence. This is the only way to avoid a major hazard, including human injuries and destruction of equipment. defect. Major hazards can be produced by the simultaneous occurrence of human error and material The situation is especially sensitive in an old plant. The SMS helps management to ensure : that people are properly educated and authorised for their function (for example, the procedure of certification for control room operators, knowledge of adapted maintenance actions (both routine and exceptional) ; that the plants equipment is properly maintained. The example that many companies gave is the report of and the subsequent follow-up to "near miss" situations, reported to management by the plants personnel, and followed by traceable corrective actions. The second example is the "Byrd pyramid analysis" : one Major hazard is a result of several "near miss" situation, both on : operation behaviour ; equipment performances ( especially on protective safety devices which generally are never activated for many years, such as instrumentation for the detection of exceptional situations (high high level in tank for example), gas and cold detection, or pressure relief valves). In integrated SMS, the personnel of the plant are encouraged ( such reporting ) to report on theses "near misses" in a proactive attitude. Liquefaction plants The SMS implementation gave excellent safety results since 90 % of the responses stated that material damages decreased and 80 % of the responses reported a decrease in the number of human injuries. In terms of productivity, SMS implementation gave good results in the plant's availability and safety and a significant decrease in loss of product, which demonstrated a reliable LNG supply to the customers. These results played a major role in improving the relationship with the customers and the insurance companies. PAGE 12/33

13 However, and despite these excellent results in terms of plant safety, reliability and availability, the fees to the insurance companies remained significantly high and no reduction has been reported to date. In this respect, since the plants have a made significant efforts, invested in plant safety and reliability and obtained good results, it is expected that insurance companies will take these positive changes into consideration and take some measures to decrease the fees accordingly. 83% of the respondees from the LNG exporting countries confirm that the number of material damages decreases (even though not all of the LNG Plants recorded the evidence well). For example, one of the elements of the SMS, Mechanical Integrity, is synchronization equipment inspection activities (such as Pressure Safety Valves, Vessels, Tanks, Pipings), and maintenance activities (for instance instrumentation and electrical preventive maintenance) whether during operationor shutdown. This helps to minimize equipment failure during plant operation and also lengthen equipment life. Implementation of SMS also decreases the number of human injuries. 75% of the LNG exporting countries concur with that conclusion. The decrease can be a result of safety training or education, which builds safety awareness in all contract workers and employees and eventually decreases work accidents/near miss incidents. Some indicators used to quantify the results include Incident Rate, Lost Time Accident Severity Rate, Frequency Rate, the Number of Work Accidents, Safety Record, etc. LNG plants tend to have more staff whether employees or contract workers than other hydrocarbon industries. This may be because such plants are typically in isolated locations, and because of the strong emphasis placed on safety and reliability. The more recent plants show a reduction in staff numbers. The early plants were built more or less according to refinery standards, and included robust steam drive systems and water cooling. Later generation plants have benefited from the development of own LNG standards and practices, resembling more the lean designs that are customary in the gas industry, e.g. the use of gasturbines and air cooling. Safety awareness was and still is high, since any serious accident could have large repercussions for this relatively young industry. Most of the LNG production growth comes from expansion of existing sites; some repeat their older designs, while others have introduced new concepts. Rejuvenation of the older facilities is becoming an important business, often linked to the renewal of supply contracts. The older plants have ageing employee populations, and maintaining staff experience can be an issue : the processes usually run quite uneventfully for long periods of time, and maintaining staff alertness presents a challenge Occupational Health The LNG industry is relatively clean compared with the rest of the hydrocarbon industry. The plants usually appear clean, maintain good housekeeping, and are virtually free of smells. Typical occupational illnesses are similar to the ones found in refineries. The two main contributors to occupational illness cases are Mental Stress Disorders and Repetitive Trauma Disorders. The latter have shown a steady rise over the last few years. Most of the Repetitive Trauma cases are related to working with computers, indicating the need for attention to ergonomics. Factors that may contribute to higher mental stress are the drive for higher on-stream times, faster maintenance turn-arounds, an ageing employee population, isolated locations, etc. It is important to keep staff motivated e.g. by cross postings to other operations, use of plant simulators and giving them extra operational targets like a reduction in fuel consumption. The next most common Occupational Illness categories are Noise Induced Hearing Loss (typically caused by noise from rotating equipment and pressure reduction stations) and Skin Disease Disorders. PAGE 13/33

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15 4.3.3 Safety The number of fires and explosions in LNG plants is similar to or lower than those in refineries. Most occur during normal operation in the process area. More than 50% of fires and explosions can be attributed to equipment failures and leakage, which indicates potential areas for improvement in the technical integrity of equipment, and the adequacy of equipment maintenance and inspections. The number of leak and spill incidents is similar to that experienced in refineries. Again these incidents relate mostly to equipment failures, complementing the observation made regarding the causes of fires and explosions. Some sites use the concept of the Incident Triangle to help drive down the number of accidents. It is predicted that, on average, for every Lost Time Injury (LTI) case recorded, there are some 10 underlying potential Reportable Cases and First Aid Cases and below that some 2,000 near misses, unsafe acts and conditions etc. Learning from the latter incidents is a great help in driving down the LTI number Benefit of SMS on plant productivity LNG exporting countries agreed that SMS implementation improves plant productivity (75% of respondents), improves the availability of the send-out equipment (75%), and decreases product losses (75%). It seems rather difficult to directly relate the success of SMS implementation with plant productivity, but with consistent implementation of some elements of the SMS, such as Mechanical Integrity, and Operating Procedures, the unplanned down time can be minimized, meaning that product losses can be reduced and plant productivity can be improved. With good follow-up and administration of Accident/Incident investigation reports, the repetition of such accidents/incidents can be avoided, which eventually improves the plant productivity. SMS also cover Process Hazard Analysis, and Operating Procedures elements, which protect equipment from being operated incorrectly, and which help to maintain equipment reliability. This results in high equipment availability, thus the send out equipment can be well managed Benefit to customer relationships 83% of the respondents from the LNG exporting countries observed that implementing SMS increases the confidence level of their existing customers. Some countries reported that existing customers were already adequately satisfied with their plant performance. By implementing SMS consistently in areas such as Mechanical Integrity, Operating Procedures and Safety Work Practices, unplanned shutdowns could be minimized. As a result, the plant s reliability and safety can be maintained or even improved, which ultimately demonstrate reliable LNG supply to the customers. 75% of the respondents also agreed that implementing SMS can improve access to new customers. A good safety record (such as minimum rates of work accidents/near-miss incidents, and plant down time) is one factor that can attract new customers, since this indicator reflects well on a plant s capability to supply LNG reliably. PAGE 15/33

16 4.3.6 Benefit in training and human resource management LNG terminals A main function of management is to select and train employees. Implementation of SMS increases the control of effectiveness of training programs, including internal training. The majority of companies reported that it is difficult to decide on the appropriate indicators to use to track changes in the level of protection of the plant against Major hazards. The usual indicators (human injuries, stoppage of the plant, equipment failure) are only a part of the process. This is why methods that incorporate audits based on a detailed screening of several hundred questions provide better results. Indicators become : awareness of the personnel, number of reported anomalies, number of internal inspection, number of corrective actions, number of analyses of near-miss by the personnel. Liquefaction plants As part of their implementation of SMS, all the plants have put in place a training organisation to insure safety and to improve the level of the employees. These provide periodical employee training at both the theoretical and practical level. The time for theoretical training varies between 30 and 50 hours per year and for the practical training it varies between 10 and 50 hours minimum per year. 80% of the facilities have a system of individual certification for the operating personnel. The domain of application of the SMS training is mainly for the operating and maintenance staff as well and we find that the training is an obligation to be conducted by qualified trainers, both in the classroom and on site Benefit of SMS in the management of modification Liquefaction plants All the plants that have answered the SMS questionnaire made efforts to implement the system, but sometimes difficulties are encountered in updating plants with older designs to the requirement of the newer codes. One example from Algeria : in the LNG-1 plant, the feed and outlet LNG piping lines from the storage tanks are located on the bottom side of the tanks, as per the old design. At present the codes require that all the feed and outlet lines should be located on the top side of the tanks. This code was followed in the LNG-2 plant after the revamping process. 4.4 CONCLUSIONS ON SMS The analysis of the results shows clearly the advantages obtained from the application of the Safety Management System and its effect in terms of safety improvements, reduction of production losses, fewer accidents, material damage and human injuries, and hopefully a gain of confidence on the part of the insurance companies. PAGE 16/33

17 In addition to this, the results obtained bring to the whole natural gas industry a way to benchmark between different policies applied in safety, and give a good review of the best management practices grouped according to regional and technical factors. It is important to point out that the survey results can be considered as a way to promote the best safety actions taken in the LNG industry. In addition, it is strongly recommended that all types of industries apply SMS to their processes, and that they develop training programs in order to increase the level of safety and knowledge of their employees. 4.5 EXAMPLES FROM INDONESIA IN TWO DIFFERENT PLANTS SAFETY MANAGEMENT SYSTEM (SMS) IN PT BADAK AND PT ARUN Introduction The PT Badak LNG Plant started in operation in 1977, while the PT Arun Plant started in From the beginning of their operations, both plants implemented most elements of the SMS (in both plants was implemented a wide variety of actions : Process Safety Management or PSM) such as Training, Operating Procedures, Safe Work Practices, Accident/Incident Investigation, Management of Change etc... From time to time those elements were modified and improved in accordance with regulatory requirements, and also in accordance with the increasing safety consciousness of all employees and contractors. A formal SMS Program was put in place in PT Badak in 1996 and in PT Arun in PT Badak performed the first SMS audit in A serious effort implementing and integrating all SMS elements was started in 2000 through the appointment of a full time SMS Coordinator Benefit of Implementing SMS in PT BADAK Management of Change and Mechanical Integrity Before implementing SMS, the plant formed a multi discipline group of qualified engineers under the Maintenance Department called the Reliability Engineering Group (REG). The task of this group is to improve the plant s reliability by selecting the top ten reliability issues every year under the Reliability Improvement Program (RIP) (for example, repetitive cooling water pump impeller failure). The issues selected for the RIP are discussed and evaluated/studied to find the root causes of the problems, then the REG develops and issues recommendations to eliminate the problems. Further, the REG facilitates discussion among related departments in conjunction with implementation of the recommendations. In conducting such studies the REG uses a Projects Procedure Guide. After implementing SMS the plant combined the two elements, ie. Project Procedure and Management of Change, as one element in the SMS Program to make the procedures more comprehensive. With the new procedures, the implementation of such projects or modifications will be safer, and will comply with the technical requirement. For example, an equipment or unit modification that was developed based on a Request of Engineering Service can not be executed or operated or closed unless all requirements in the Management of Change are complied with. Management of Change ensures that implementation of every modification in the Plant has an approval in accordance with the correct level of authorization. Another example is the development of the Mechanical Integrity (MI) Manual, an element of the SMS. The aims of the MI Program and Reliability Improvement are similar. Therefore the implementation of Mechanical Integrity Program is also handled by the REG. PAGE 17/33

18 The Mechanical Integrity Manual for PT Badak was completed and has been in use since January This manual covers 24 documents to ensure that there are no hazardous materials to be released to the environment, and also to ensure that the plant is operated reliably. These documents describe how to maintain the plant through preventive and predictive maintenance, inspection and breakdown maintenance, and how to conduct quality assurance, which includes equipment design, manufacturing, and installation, as well as assembly and disassembly of components/parts. Another document in the MI Manual defines the methodology or procedures for continuous improvement and effective measurement. By implementing these procedures consistently, the number of reactive maintenance incidents can be minimized, and ultimately maintenance costs can be reduced. Incident Investigation The current practice is that when a fire or safety incident occurs, the Operation Department issues a report within 24 hours, which mainly focuses on the timing of the incident. Based on that report, the Maintenance Department issues another report within 48 hours that includes the repair work and possible causes of the incident without deep analysis. Both reports are used as a basis for the Technical or Engineering Department to develop a comprehensive report, which can take weeks or months. If the Engineering Department thinks that the incident report requires an engineering study, the study can be incorporated in the project list. Several months later, when the project is completed and operated well, the project should be closed. There is no mechanism to give feedback to the originator who made the first Incident Report. Therefore tracking a complete document related to an Incident Report is difficult. The plants are now improving their Incident Investigation system. Whereas previously the team only investigated incidents related to fire and safety, and are now including in the Incident Investigation Report any repetitive failures of such process or equipment that affect production (for example, the repetitive failure of the LNG product pumps.) In addition, the team also include a Fault Tree Analysis as an important tool for conducting the investigation. PAGE 18/33

19 5. RESULTS THE ENVIRONMENT MANAGEMENT SYSTEM (EMS) 5.1 GENERAL Results of the EMS Evaluation of Import Terminals Our Study Group sent out questionnaires to the import terminals worldwide and received replies from 20 import terminals 100% of the terminals responding have implemented EMS. The system chosen by the majority (84%) is ISO standard; the rest have used other references. A large majority selected the ISO standard. This is a universal standard for industry and services; there are very few alternatives, and the choice is easier than for the SMS. EMS are easier to implement than SMS and their benefits are more easily measured. Ever since the drafting of the Kyoto Protocol, many governments have paid more attention to the prevention of air pollution to avoid climate change, which may lead to implemention of EMS at all the terminals that responded. EMS are implemented in LNG terminals : 36% by plant personnel themselves, 33% with the help of headquarters, 28% with the assistance of a consultant, 3% with the assistance of a certification body. Almost 70% of the companies implemented their EMS themselves: the required skills already exist inside the companies, and thus there is no need for the assistance of a consultant. In cases where a consulting company provided assistance, the choice of the company was based 64% on its references (both outside and inside the company) and 36% on the price. As with SMS, consultants are selected based on their relationship with the company. Even though the LNG industry is only 40 years old, environmental protection and safety have been emphasized from its inception, and existing internal systems were able to be modified to meet ISO 14000, a system that is recognized worldwide. Concerning the EMS implementation schedule, it is clear that the decisions were taken from 1996 to 2001, and the time between the initial decision and the final implementation was less than 12 months in 46% of the cases, between 12 and 18 months in 27% of the cases, and between 18 and 24 months in 27% of the cases. The time required for EMS implementation is shorter than for SMS implementation. This again is due to the relative easiness compared to the SMS implementation, and certainly also because LNG industry is already relatively clean and the people involved are sensitive to environmental questions. The peak of implementation occurred in 1998, which is interesting considering that the Kyoto Protocol was adopted in 1997 (COP-3) even though the discussion of the climate change started seriously in 1995 (COP-1). PAGE 19/33

20 It is also interesting to know that even though all the terminals implemented EMS, there were no requirements from the customers to do so. This may represent that EMS are being implemented voluntarily, to meet each company s own internal requirements for environmental protection and safety and to enhance the company s name value. However, anticipating that in the near future all environmental issues will become regulatory issues, we cannot emphasize enough the value of EMS implementation Results for liquefaction plants 100 % of the liquefaction plants that responded have implemented EMS, and the types of reference systems chosen are mainly local types and the ISO standard. EMS are implemented in liquefaction plants : 47% by plant personnel themselves, 40% with the help of headquarters, 13% with the assistance of a consultant. Consultants were chosen mostly based up on their references outside the company (80 %), rather than based on their references inside the company (20 %). Concerning the implementation schedule of the EMS, the decisions to proceed were made between 1992 and 2001, and in most of the cases the time between the initial decision and the final achievement was between 18 and 24 months. 5.2 WHY ARE EMS IMPLEMENTED? A systematic approach to environmental issues is believed to prevent the greatest reduction in pollution, whereas prior environmental efforts focused on gas related hazards. Companies implement EMS not only to prevent hazards but also to demonstrate to their customers their commitment to the environment. The objective is to find and analyze possible hazards at the earliest stage, and to protect the environment around the plant totally and systematically against these hazards. That is, the aim of EMS is prevention, and the system concentrates not only on the maintenance of facilities but has as its goal a total systematic management system which encompasses management policy, environmental organization, and its audit. The analysis of the results presented below in Section 5.3 clearly show the advantages obtained from the application of Environment Management Systems and their effects in terms of environmental improvement. The reference to ISO is necessary for companies that intend to develop a new plant, where there is usually a strong concern from the surrounding population about environmental issues. For that reason, companies are forced to bring the right answers to these questions, even at the early stage of feasibility studies for a new terminal. 5.3 WHAT ARE THE BENEFITS OF EMS? The implementation of EMS improves the overall environmental impact of LNG-related industries throughout the world. PAGE 20/33

21 5.3.1 LNG Import Terminal as Environmentally Friendly The biggest impact of an LNG terminal on its surroundings is the visual impact, and companies reported that practical actions are taken to implement green belts or green areas around the plants. In LNG import terminals, much care is taken to adopt and install a variety of equipment to ensure safety and to protect the environment. Generally, An LNG import terminal serves four main functions : Receiving LNG tankers and unloading LNG, Storing the LNG in one or more cryogenic tank(s), Handling and regasifying the LNG, Sending out the natural gas. During unloading of LNG, the LNG carrier comes under the control of the plant, and becomes a part of the terminal equipment. Emergency shut off valves and other security measures are equipped with systems to allow their remote control. Many companies answered that flaring gas directly from LNG tankers in industrial harbours is presently forbidden and provisions are taken to recover boil-off gas from the ship under all circumstances (especially in the case of delayed access). Terminals also mentioned the use of floating protective devices used while bunkering the LNG tanker at berth. To safeguard the environment and to ensure safety, security devices are installed within the diked area and the surrounding areas to monitor for and protect against LNG spillage. These devices include flammable gas detectors, low temperature detectors, water spray equipment and highexpansion foam facilities, etc. Most importantly, these devices are tested periodically to ensure their functioning and readiness, to ensure strong counter-measures against any emergency case. The operators are thoroughly trained to operate the terminals manually and to face any emergencies. Some companies answered that the periodic testing of foam generators is a source of soil pollution, and efforts are made to reduce this adverse effect on the environment. Regasifying LNG using seawater is preferred where possible, because no fuel is used, which is more economic and also avoids air emissions from combustion. Because of these advantages, terminal operators prioritise the use of their ORV systems and tend to keep their SCV systems for back up or peak demand. Also, the seawater used for the purpose of regasifying of LNG never comes into direct contact with any substance in the process, to rule out completely the danger of contamination by hydrocarbons and the production of waste water. However, companies are also aware that they will be required to reduce the amount of chlorine added to regasification seawater in the future. Many examples were given of cooperation with other industrial facilities, for example by mixing cold water rejected from ORV units and warm water discharged by a thermal power station close to the terminal. PAGE 21/33

22 Much care is taken during construction of an LNG import terminal to adopt low-noise-level machines and any source of noise is located in a concrete structure [if possible] to minimize the noise level. Buildings and screens are usually implemented around the main noise-producing machines (boil off compressors and high pressure pumps) Improvements from EMS in liquefaction plants Many examples of improvement are given by the companies, with many indicators (reduction in solid waste, CO2 emissions, fuel consumption). Once again the effects of EMS are easier to establish than those of SMS. LNG liquefaction has the image of using a great deal of energy, and indeed the first generation plant designs featured a thermal efficiency of only 85%. Some sites managed to push this close to 90% thanks to stringent operating practices and improvements. Second generation designs of the early nineties have a design efficiency in the range of 90-92%. Current designs have a thermal efficiency of 92-94%, and thus are energy competitive with long distance gas pipelining and medium complexity refineries. Air Emissions CO 2 emissions represent the main emissions to air, and thus give the highest global warming potential. The total is directly related to the CO 2 extracted from the feed gas and to the CO 2 in the flue gases from the gas turbines and boilers. So far all CO 2 is being vented, although one project under construction is now planning to re-inject its feed CO 2. The CO 2 from fuel combustion can be reduced by improving the overall plant thermal efficiency. The best plant in operation has a specific fuel CO 2 emission of 0.25 tonnes of CO 2 per tonne of LNG. Methane emissions can be minimized through such measures as overall emission measurement campaigns, better housekeeping, using nitrogen for purging, application of flare meters, acid gas incineration, etc. Nitrogen Oxide emissions can be reduced below the most stringent standards by choosing low NO X gas turbines and using low NO X burners in furnaces. LNG plants usually co-produce rather light condensate fractions, which are typically stored in floating roof tanks. Application of double seals and tank cooling may be necessary to reduce tank breathing losses. Waste In general, LNG sites either landfill most of their waste or recycle it. Very little waste is incinerated or stored. Some LNG liquefaction plants receive sour gas and therefore coproduce elemental sulphur. The outlet for this solid product is becoming a problem since the sulphur market is over-supplied and prices are very low. Fallback options being considered are landfill or sour gas re-injection. PAGE 22/33

23 Modification of the plants The implementation of EMS is a priority for new plants. When a plant is built, the design of that plant is in accordance with the engineering standards or codes available at the time. A consequence of EMS is to push LNG companies to select the best available practices throughout the life of the plant Example : Flare design In the 1970s, there was no obligation for a Plant to install a smokeless flare. However, according to the ISO standard (used as a basis of EMS), a smokeless flare design is currently required. No distinction is made between old and new plants. For a new plant, the cost can be incorporated in the construction cost, but for old plants the cost of modification will be significant. Example from Indonesia For PT Badak, modification of the flares of the existing eight trains (trains A through H) will cost about US$9 million and take about one year. The plant is now still discussing this matter with our share holders. PAGE 23/33

24 6. CONCLUSIONS The number of responses collected is large enough to find some meaningful statistical trends regarding the safety management systems and environment management systems that are currently used. We are confident that the report reflects the present "state of the art" on the subject and will be of value to the LNG industry : to show general trends with explanatory factors, to compare export and import plants, to compare geographical differences, to compare SMS and EMS (purpose, results ), to emphasize the good results in safety records, to emphasize the universality of EMS. Currently, many industries must protect against potential hazards and have environmental emissions. Thorough implementation of Environment Management System can help to insure that an LNG facility : is Environmentally-friendly in operation practices thorough monitoring and inspection of waste disposal receives public consensus on construction The layout criteria for LNG import terminals relate to general environment practices and concerns as well as to safety. LNG plants are equipped with independent disaster prevention systems. These systems monitor the entire works around the clock. Most LNG import terminals obtained ISO14000 certification between 1986 and The terminals have been engaged in environmental conservation activities pursuant to ISO LNG is a very clean fuel emitting no sulfuric oxides from burning and lighter than air and immediately diffuses in the atmospheres. Also, free of hazards of explosions, it is called safe source of energy. But, the LNG industry faces a future of continuous technological development and innovation in technology. With implemention of SMS and EMS, the LNG industry can continue to play a key role in maintaining good environmental conditions not only in the LNG industry but also in our daily life. PAGE 24/33