Hell on rails: the Industrial Accident Scenario: fires spread from a tanker car and jeopardize the facilities of Texas' largest city. "Houston, we have a problem," is the understatement of the day

The Hypothetical Scenario:

The fire begins in a rail tanker car loaded with gasoline in the railyards within the international port serving the petrochemical refineries along the shipping channel in Houston.

The yards are unusually crowded with a three-month backlog of tanker cars and other rolling stock following a labor dispute and above-average summer demand.

Fanned by strong onshore winds, the fire spreads from tanker to tanker, incinerating the power lines so that the emergency water systems fail and emergency responders are unable to contain the blaze. The railcar tankers are temporarily parked along sidings adjacent to a tank farm, and despite the best efforts of the firefighters, flames reach to first one and then several 10-million gallon oil-storage tanks.

The flames from these tanks reach 100 feet into the sky, and as the sides of one of the tanks ruptures, a river of burning oil gushes across into the neighboring liquefied natural gas facility, the site of a series of giant pressurized tanks.

The fierce heat causes the first tank to explode. The blast, equivalent to 100 tons of TNT, destroys buildings and equipment within a radius of half a mile. Windows break in buildings up to three miles away. Two other tanks explode before the fire is over.

However, alongside the gasoline tankers are two rail tankers containing 90 tons of liquid chlorine, destined for the water treatment plants of Houston.

The fire ruptures the first of these tankers, releasing a poisonous cloud of gas, lolling three emergency workers and forcing firefighters back half a mile.

Fire captains order breathing equipment to be worn and order the evacuation of everyone within two miles of the rail yard. Choking chlorine gas billows out from the fire and envelops several streets and a hospice before the evacuation can get underway.

An estimated 180 people are killed in their homes, while several hundred are rescued and sent to the hospital with breathing difficulties and burning throats.

Concentrations of chlorine gas--as dense as 500 parts per million--form a lethal cloud that extends over an area of more than two square miles. Concentrations sufficient to cause breathing difficulties extend for several miles downwind. Police begin to evacuate populations in Galena Park and Jacinto City, close to the toxic cloud.

The next day, four million residents of Houston awake from the force and the noise of the explosions as dawn breaks over the threatened city. The smoke from the fire is visible as a pall rising in the distance.

Emergency services from five counties are attending the fire, and the sounds of their sirens, trucks and aircraft can be heard for several blocks. TV news channels provide uninterrupted coverage, and broadcast the pleas from Houston authorities for people to stay home.

Roads leading out of the city to the southwest become choked with ears as people try to leave. Emergency vehicles continue to move toward the fires as the acrid stench of yellowish chlorine descends over the stricken metropolis.

Many people are coughing. Some exhibit mild-to-serious breathing difficulties as they evacuate the area. Medical teams treat thousands of people with respiratory problems.

As the morning winds pick up, rescue teams become increasingly concerned about the possibility of the smoke and chlorine gas being blown across the city.

Air quality monitoring shows that chlorine levels are rising over a large area. Nearly a million people are already on the move. Roads are choked with traffic. The exodus proceeds slowly.

Air conditioning systems in cars provide no protection against the chlorine fumes. Officials move through the traffic jams encouraging people to pull their cars over and walk. By mid-afternoon, hundreds of thousands of people are walking out of the city to rally points where buses and volunteer drivers ferry people to shelters outside the city. Most of the chlorine gas is evaporating in the afternoon heat or dissipating in the breeze.

By evening, the fire is still burning but the levels of chlorine contamination, monitored within the urban areas, are falling as the chlorine becomes diluted in the breeze.

The fire at the port continues to burn throughout the night as firefighters bring the flames under control. It will continue to smolder for several days. City authorities finally declare an end to the emergency after three days. People begin to return to their homes but many complain of lingering chlorine smells and leave again to stay outside the city.

In the fire, explosion and toxic fumes, 600 people die--the most lethal industrial accident in United States in 100 years. Nearly 7,000 people are hospitalized, most of them suffering from chlorine gas or smoke inhalation. Paramedics and medical volunteers during the evacuation treat another 250,000 people. Because the fire occurs in the early hours of the morning, few injuries are caused to people at work keeping workers' comp claims relatively light.

Major parts of Houston's port and nearby refinery have been destroyed. Two ships in the channel are badly damaged and parts of the port remain closed for more than a month.

Operations resume, but only at reduced capacity. It takes more than a year before all the facilities are back in operation. Many businesses are disrupted by the damage to the port. Property loss is extensive: A commercial business center about half a mile from the port is badly damaged with most of its 300 commercial offices, hotels and retail buildings suffering severe structural damage from the blast of the LNG tank explosions.

Hundreds more buildings further away in Pasadena and South Houston suffer broken windows and other minor damage, requiring engineering inspections before they can be reoccupied.

Smoke densities overwhelm intake filters on air conditioning systems in many of the high-rise buildings in the eastern part of downtown Houston, resulting in minor smoke damage to interiors and spoiling of sensitive electronic equipment.

The evacuation of the city means that most businesses in the city are closed for at least three days, while some closest to the scene remain closed for a week or more, as damage assessments continue. Workers and managers are reluctant to return while the city's air quality remains poor. It takes more than 10 days to return to normal.

Dying plants in many areas show chlorine contamination in the soil and the water table. U.S. Environmental Protection Agency divisions have been monitoring contamination levels and cordoning off areas that remain above their safety guidelines. No one is allowed to return to live or work in the hardest-hit areas until the cleanup is completed. Property prices plummet as businesses and residents relocate out of the contaminated areas.

The costs to property and infrastructure are estimated at more than $5 billion. Workers' comp, life and health insurance payouts amount to around $1 billion. Business interruption losses are estimated at $10 billion to $15 billion. Only $3 billion to $5 billion is likely to be recovered from insurers. The longer-term economic impact of the disruption and consequential losses to other businesses is impossible to quantify, but is likely to exceed the direct loss costs.

Losses from a Hypothetical Industrial Accident in Houston

Type of Loss                               Total Loss    Insured Losses

Property and infrastructure damage           $5 billion      $3 billion
Workers' compensation, life and
  health costs                              $1.5 billion      $1 billion
Direct costs of business interruption    $10-15 billion    $3-5 billion
Other costs (e.g. emergency response)      $500 billion              --
Total Direct Costs:                      $17-22 billion    $7-9 billion
Estimated Human Losses/Injuries
Total number of people killed:                  600
Total hospitalized with serious
  injuries:                                   7,000
Total treated for light injuries:           250,000

Source: Risk Management Solutions

RELATED ARTICLE: Industry's killer legacy.

In the early morning of April 16, 1947, as the French Liberty ship the SS Grandchamp, was being loaded with Marshall Plan ammonium nitrate fertilizer, a small fire erupted in the hold.

The captain ordered the doors to be closed and the hold filled with steam, but at 8:45 a.m. the doors of the hold burst open and the billowing clouds of orange smoke brought crowds to gather and watch on the neighboring Texas City quayside. The 26 members of the local firehouse turned up to douse the vessel with water. Flames began to rise into the sky.

But then, at 9:12 a.m., the vessel and its 2,200 tons of fertilizer exploded. A steam turbine, weighing as much as one ton, was thrown three quarters of a mile. A mushroom cloud and shock waves pierced the sky and brought down two planes flying overhead. The explosion destroyed much of the port, created a 15-foot tidal wave and set fire to a neighboring Monsanto refinery. In neighboring Galveston, the explosion blew pedestrians off their feet and shattered windows. The blast was felt 75 miles away in Port Arthur. An adjacent Liberty Ship, the High Flyer, laden with a 1,000 tons of fertilizer, detonated 16 hours later, in another colossal explosion.

The disaster killed 576 people, injured several thousand, devastated 50 giant oil storage tanks by explosion and fire and destroyed one third of the 1,500 houses in Texas City.

The SS Grandchamp incident still counts as the most lethal industrial accident in the United States.

Worldwide, however, the most deadly industrial accident occurred in Bhopal, India, on December 2, 1984, when a toxic cloud of methyl isocyanate, was released from a Union Carbide plant and rolled into a highly populated shantytown in the valley below, killing more than 3,000 people.

An average of 5,000-6,000 work-related fatalities occur each year in the United States. While the occupational death toll for those aged 25-64 has declined by 57 percent since 1912, the rate of decline lags behind similar metrics in the areas of hurricane casualties or aircraft accidents.

The most dangerous industries, those with the highest fatality rates per worker, are mining and oil and gas extraction. It is in these industries where there is the greatest potential for major incidents. A catastrophic industrial explosion affecting a city occurs somewhere in the world every few years, as at the Toulouse AZF fertilizer plant explosion in France in 2001 and the LNG compression plant explosion at Skikda, Algeria in January 2003.

The U.S. Environmental Protection Agency maintains a record of U.S. facilities containing hazardous materials. This so-called "HazMat" register contains thousands of dangerous locations, and 300 of these plants have a million or more people living within 10 miles of them, many located in the industrial belts fringed around the major cities.

This example used Houston to illustrate how an industrial accident event could cause losses on the scale that is likely to occur with a 1 percent annual probability somewhere in the United States.

Risk managers operating businesses in any of the major cities in the United States should be aware that this type of accident could occur. For any given city, the chances of an accident on this scale happening is far lower than 1 percent per annum--the 1 percent probability of loss is arrived at by considering the chances of an accident anywhere across all the cities of the United States.

--David Miller

DAVID MILLER, PHD., is a principal research engineer at Risk Management Solutions Inc. His research includes catastrophe simulation and loss estimation for industrial accidents and potential terrorist attacks.

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