Solano County Says Valero Violated State Regulations in March Refinery Shutdown

Solano County inspectors documented a long list of shortcomings and inadequate procedures at Valero's Benicia oil refinery that contributed to a major pollution release from the facility earlier this year, newly released county documents show.

The county's Department of Resource Management documented violations of eight separate state regulations. The infractions included failure to fix important sensors in a refinery furnace unit, infrequent inspections of key equipment, and failure to have an operating plan in place to deal with unexpected refinery conditions.

Solano's probe relied in part on Valero's root cause analysis of the shutdown, which found that one of the worst refinery incidents in the Bay Area in years was caused by a mistake made months earlier.

Both reports focused on tubes in the refinery's furnace that heat up crude oil before it's routed to other parts of the facility for processing. County and refinery officials say those furnace tubes were damaged during maintenance work last November, which caused the devices to fail and contributed to the plant's malfunctions in March.

The Valero complex ended up belching out a massive amount of black sooty smoke, which led to health concerns for people living nearby.

The refinery's subsequent closure contributed to a statewide spike in gasoline prices and prompted investigations by several government agencies, renewing attention on the refinery two years after a power outage caused a major release of toxic sulfur dioxide in the area.

Valero spokeswoman Lillian Riojas declined to comment directly on the company's violations. Instead, she pointed to the company's May filing with the Securities and Exchange Commission in which it reported it's facing more than $342,000 in fines in connection with the incident. The company told the SEC it expects to face $242,840 in proposed penalties from Solano County and $100,000 from the Bay Area Air Quality Management District.

Valero's root cause analysis, completed in July, examines a series of problems that led to the refinery malfunctions.

Company inspections during the refinery shutdown found that furnace tubes were bulging and leaking. Valero says when the facility was restarting a unit last November, a safety valve improperly "lifted," allowing crude oil to bypass one of the refinery's furnaces.

Valero says "it was not appreciated at the time" that allowing the bypass "exposed the furnace tubes to elevated temperatures." Extreme heat gradually deformed the tubes and allowed a solid substance called petroleum coke to form inside. Valero's analysis concedes that the deteriorating conditions were "not timely identified and mitigated, leading to the tubes' subsequent failure" and the March refinery malfunctions.

Solano County's investigation reported that carbon monoxide and oxygen sensors in the refinery furnace were not operational for at least three years.

"Proper functioning sensors would have provided an indication that the furnace was malfunctioning to Valero staff, allowing them to act sooner to correct the condition and prevent additional release," said Terry Schmidtbauer, the county's assistant director of resource management, in an email.

"The issue with the furnace upset the system," Schmidtbauer said.

Those system issues became more evident in early March as two other refinery components experienced problems. One was a fluid coker, which heats up and "cracks" the thickest components of crude oil processed at the refinery. Another, a flue gas scrubber, removes fine particles before gases are released from the facility's smokestacks.

Malfunctions with those devices led to an increase in carbon monoxide levels, according to Valero, To reduce those levels, refinery crews ended up increasing the temperature on the furnace tubes, thus accelerating their deterioration.

There was little liquid in the tubes, which puts them at risk of damage, according to Professor Eric Smith of Tulane University's Energy Institute, who specializes in refinery operations.

"One result is thermal degradation of the metal tube," said Smith, who reviewed company and county findings. "Another effect is that the liquid that does make it through the tube is converted into petroleum coke."

That dynamic led to the release of sooty smoke and resulted in elevated levels of particulate matter and a health advisory.

County inspectors discovered several problems with lines that carry petroleum coke. On the day the refinery was shut down, one was leaking. Valero staff told Solano officials in April another line had failed five times in the last three years.

The county's Department of Resource Management has ordered Valero to make a series of changes, some of which it has already completed. They include orders to reduce petroleum coke releases, new procedures for preventing the overheating of furnace tubes and increased training.

Solano County's Schmidtbauer said the department was still assessing what penalties it will levy against the refinery.

Local air regulators issued 12 notices of violation against Valero. Ralph Borrmann, a spokesman for the air district, said the agency's probe is not yet complete.

An investigation by California's Division of Occupational Safety and Health, Cal/OSHA, is expected to wrap up in the coming weeks, according to agency spokesman Frank Polizzi.