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Philadelphia refinery explosion (2019)

June 21, 2019: a corroded elbow fails in the hydrofluoric acid alkylation unit of the largest refinery on the East Coast. Explosions, 750 million dollars of damage per the CSB, site closure and bankruptcy a month later.

Definition

Philadelphia, June 21, 2019, around 4 a.m.: in the alkylation unit of Philadelphia Energy Solutions (PES), a pipe elbow ruptures and releases a cloud made up mostly of propane, laden with hydrofluoric acid. It ignites two minutes later, at 4:02 a.m. Several explosions follow; a vessel fragment weighing more than seventeen metric tons lands across the Schuylkill River. More than 5,000 pounds of hydrofluoric acid are released, a few minor injuries, no deaths. The Chemical Safety Board's final report, published in October 2022, puts property damage at about 750 million dollars. The elbow, installed in 1973, contained more nickel and copper than the neighboring piping and had corroded faster; the standard of the time set no limit on their content. No remotely operated isolation valve could cut off the hydrocarbon sources, and the water mitigation pumps, whose controls had burned, were started by hand only about forty minutes after the release began. The CSB asks EPA to require a safer technology analysis for hydrofluoric acid alkylation. PES announces the closure of the site five days later and files for Chapter 11 the following month, its second filing in eighteen months. The complex is sold in 2020 to a developer, Hilco Redevelopment Partners, for 225.5 million dollars, with no restart. On the insurance side, the known figures come from the bankruptcy docket. In November 2021, the liquidating trust settles the business interruption claim for 270 million dollars with twenty-seven insurers; the property claim settles later for an undisclosed amount. Business interruption for a site that will not reopen is always argued over the theoretical rebuilding period, and underwriters now ask every HF unit about its remote isolation valves.

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Example

Textbook case, in numbers. A refinery is insured for property and business interruption at 1,000 million dollars combined, with a 10 million property deductible and a 60-day business interruption deductible. The explosion causes 600 million of damage; gross margin is 1.2 million a day and the theoretical rebuild takes 400 days. The operator closes the site. Business interruption over the theoretical period: (400 - 60) x 1.2 = 408 million. Property at replacement cost: 600 - 10 = 590 million. Total: 998 million. If the policy grants replacement cost only on rebuilding, property is settled at actual cash value, 360 - 10 = 350 million, and the total falls to 758 million.

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Also known as

PES refinery explosion, Philadelphia Energy Solutions fire, Girard Point explosion, PES 2019

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