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The Tension Between Profit and Safety at Galveston Bay Refinery

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Leo Gonzalez

May 15, 2024 - 21:25 pm

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A Harrowing Ordeal: The Tragedy at Marathon Petroleum's Galveston Bay Refinery

On a fateful day one year ago, the Marathon Petroleum Corp.'s Galveston Bay oil refinery was shaken by an alarming explosion. Rigoberto Guillen, an employee, found himself trapped on a metal platform 75 feet above the ground. Engulfed in thick, black smoke, he lost sight of both his colleague and the daylight above. The desperate escape that followed left Guillen and his co-worker with harrowing burns across their bodies—their boots practically melting as they descended the ladders to safety. Guillen recalled the horrific sight of his co-worker's nose, severely damaged by the intense heat.

This explosion was the deadliest incident at the Galveston Bay site since the infamous 2005 catastrophe, where an explosion claimed 15 lives and injured many others. This latest blast was traced to a faulty pump that had previously been flagged for maintenance—an action that was postponed in Marathon's push to enhance production.

Marathon, the behemoth of American fuel production, had been deferring maintenance at its refineries for years, a decision driven by historically profitable refining margins. They were not alone in this approach; with a resurgence in gasoline consumption post-pandemic, multiple refiners delayed essential maintenance as profits soared to an unprecedented peak.

Daniel Horowitz, with experience as a managing director at the U.S. Chemical Safety and Hazard Investigation Board, insightfully linked skyrocketing margins to delays in maintenance. The financial pressures to keep operations running without pausing for upkeep, he suggested, often culminate in accidents.

Marathon has opted not to comment on the incident, citing ongoing litigation. Yet, their spokesperson has publicly expressed the company's condolences for the loss and emphasized their commitment to employee and community safety.

Galveston Bay Refinery

The situation at Galveston Bay is indicative of the broader challenges facing American fuel producers. The refining system is stretched thin—exacerbated by pandemic-triggered closures and a surge in fuel demand—creating a reliance on aging plants that are in dire need of extensive, but costly, overhauls. Even as plants prioritize production and shareholder profits, the safety of workers can fall by the wayside, a delicate balance that many in the industry struggle to maintain.

Deferring maintenance, a notorious cause of deadly incidents, has been highlighted by a Swiss Re report from 2006. This pattern of putting off repairs is disturbingly familiar in the industry, yet the oversight in the United States is failing—data on incidents is inconsistent, and penalties often amount to a drop in the ocean for refinery companies' finances.

Before the explosion, an internal Marathon investigation discovered the root cause—a cracked pump near a gasoline unit. These warnings went unheeded as the maintenance was deferred, and to compound the risk, a nearby fire sprinkler system was discovered to be inoperative during an OSHA inspection.

Marathon publicly suggested that such internal investigations are integral to their commitment to continuously improving safety. They champion a workplace environment where taking necessary measures for an injury-free workplace is the goal.

Even so, not long before the catastrophic explosion, Marathon's then-CFO, Maryann T. Mannen, praised the postponement of maintenance as beneficial decisions that were helping the company meet the burgeoning demand in the post-pandemic era. Nevertheless, these actions took place in a year where the refinery saw record-high profits and net income.

A Legacy of Tragedy and Cost-Cutting

Tragically, the Galveston Bay refinery has been no stranger to fatal incidents. Its history of calamities dates back well before Marathon's acquisition in 2013, with the 2005 Texas City explosion during BP Plc's ownership being one of the nation's worst refinery disasters. BP's checkered safety record led them to sell the refinery to Marathon in the aftermath of another catastrophe—the Deepwater Horizon disaster.

Upon taking over, Marathon embarked on enhancing the refinery's safety measures. However, the efforts waned in the wake of the pandemic as the company, looking to cut costs, reduced operator positions and merged operations units—increasing the workload on individual operators.

The cuts occurred during a time when the industry already faced a worrying trend of senior operators retiring early. The scramble to replace them, coupled with postponed maintenance and a lack of experienced workers, has significantly escalated the risk of severe accidents.

To bridge this experience gap, refiners like Marathon have turned increasingly towards third-party contractors. Contractors are preferred for cost reasons but often work under riskier conditions. Guillen himself, employed by contractor Mistras Group, exemplifies the vulnerability of these staff members.

Despite efforts to improve, the Galveston Bay refinery led in emissions events among Texas refineries last year, a likely result of frequent breakdowns creating precarious worker conditions. Engineering consultant Norman Lieberman ominously noted that persistent breakdowns could inevitably lead to loss of life.

The Shortcomings of Oversight

Refinery fatalities might be rarer than in other fields, such as logging, yet the records can be misleading. Jordan Barab, a former deputy director of OSHA under Obama's administration, emphasizes the unreliability of such data. For example, the Bureau of Labor Statistics failed to account for the 15 fatalities from the 2005 Texas City explosion in their records.

Issues with enforcement also handicap the effective management of refinery safety. OSHA's outdated regulations and fluctuating industry oversight between administrations compound the problem. Fines levied against violators are often so insignificant that they do little to encourage compliance or change operational behavior.

Marathon's refinery was one of the most fined by OSHA last year, yet the penalties seemed to make little impact. After an initial fine of $62,500 for the deadly fire, Marathon’s dispute led to a reduction in penalties by half. Prior to this, the refinery had not faced a fine since 2018.

Returning to Work Amid Fear

The legal avenue for Guillen and his injured colleagues to seek justice is a rarity. Texas law typically prevents litigation under workers’ compensation, but Guillen’s employer had not yet signed the insurance agreement with Galveston Bay, granting them the opportunity to seek damages in court.

Following the explosion, Marathon's Mannen briefly acknowledged the impact on an earnings call, focusing on the operational consequences rather than the human toll of the event. Though Marathon experienced a dip from the record margins, their profits remain high and margins elevated.

Today, Guillen is yet to fully recover, plagued by both physical and psychological trauma. Despite the daunting memories and persistent fear, he contemplates a return to refinery work—driven by the financial imperative to provide for his new family.

As this painful narrative unfolds, the labor force within the refining industry continues to face an uncertain future—torn between personal safety and economic necessity.

©2024 Bloomberg L.P., with assistance from Mia Gindis and Lucia Kassai, has provided crucial insights into the harrowing event that occurred at the Galveston Bay refinery. The report highlights systemic issues within the industry and the complex interplay between safety practices, operational decisions, and regulatory measures.

In conclusion, the explosion at Marathon's Galveston Bay refinery stands as a stark reminder of the potential consequences when safety becomes secondary to production. As the industry seeks a path forward, the hope is that lessons are learned, and a balance struck that upholds the wellbeing of those powering our fuel production.