Introduction to Process Safety Management (PSM) of Highly Hazardous Chemicals Aimed at preventing unwanted releases of hazardous chemicals especially into locations which could expose employees and others to serious hazards Provides a systematic approach to evaluating the “whole process” Employers develop the necessary expertise, experiences, judgement and proactive initiative within their workforce to properly implement and maintain and effective PSM program Targets highly hazardous chemicals that have the potential to cause a catastrophic incident Why should you care about PSM? For our own personal safety and the safety of those who work around us.

Major Incidents 1984 - Mexico City 1984 - Union Carbide Corp, Bhopal India 1989 - Phillips Petroleum, Pasadena Texas 1990 - ARCO Petroleum, Channelview Texas 1991 - IMC, Sterlington Louisiana Let’s talk about the “why” of PSM. Unexpected releases of highly hazardous chemicals have been reported for many years. No matter the industry that uses these highly hazardous chemicals there is a potential for accidental releases anytime, they are not properly controlled. 1984 LPG explosion in Mexico City 650 deaths 1984 process leak at Union Carbide in Bhopal, India 2000 deaths 1989 explosion at Phillips Petroleum in Pasadena, TX 23 deaths and 132 injuries. Also just had an accident in June 1999 that killed 2 and in March 2000 that killed 1 and injured 71. 1990 explosion at ARCO in Channelview,TX 17 deaths 1991 explosion at IMC in Sterlinton, LA 8 deaths and 128 injuries. While these incidents have drawn national attention to the potential for major catastrophes, the public record is filled with information concerning many less notable releases. Though these incidents do give us some background on the need for PSM, they still allow us some distance from the problems. Take a minute to think of the potential for a catastrophic release here at MLI. OSHA looked at these incidents and new something needed to become a Federal Regulation. They looked at the companies that were successful and asked, what do they have in place to prevent or mitigate these releases that lead to these catastrophic events? The following slide shows some of their finding of successful programs.

14 Elements to PSM Employee Participation Process Safety Information Process Hazard Analysis Operating Procedures Training Contractors Hot Work Mechanical Integrity Management of Change Pre-Startup Safety Review Incident Investigation Emergency Planning and Response Compliance Audits Trade Secrets They found fourteen programs that helped prevent or mitigate the release of Highly Hazardous Chemicals. They are listed in this slide.

The 14 Elements System Wide Prevention Reaction Control Process Safety Information Process Hazard Analysis Employee Participation Hot Work OSHA requires that covered process comply by implementing and adhering to the fourteen elements of this standard. To help organize ones thinking, the fourteen elements can be grouped into four major areas. System Wide: To successfully establish an effective PSM system a process facility must plan effectively. Effective planning requires involvement from all employees within a facility Prevention: Incident reduction requires a determination of the current level of risk and then the implementation of controls to reduce that risk. Reaction: When an incident does occur, a facility must be ready to handle it quickly and effectively Control: To remain effective a PSM system must be evaluated and updated as changes occur within the facility. As you can see MLI has addressed the majority of these elements over the last year. Mechanical Integrity Trade Secrets Training Operating Procedures Contractors Reaction Control Management of Change Emergency Planning and Response Pre-Startup Safety Review Incident Investigation Compliance Audits

Employee Participation Everyone plays a part PSM is far and beyond just a “program,” it is the new way of managing process hazards. Meeting the requirements of this standard requires the dedication of everyone within a facility, from the top executive to the operator in the field. President/CEO Ultimate authority and decision-maker for PSM compliance Directors/Vice Presidents/General Managers Approve departmental objectives and allocate resources to achieve departmental PSM objectives Department Managers Establish departmental PSM objectives and develop an implementation plan to achieve PSM objectives Safety Department Develop, in cooperation with the operating units, specific program goals and expected outcomes to meet regulatory requirements and coordinate implementation of PSM with the operating units Every employee has the accountability, authority, and organizational freedom to Initiate actions to prevent the potential or actual release of any hazardous chemical Identify and record any process safety concerns Initiate, recommend, and provide solutions to process safety concerns, through designated channels and to then verify the application of solutions

You Make the Difference Your Participation is a critical part of PSM The participation of employees is required for an effective PSM system. The participation will, at a minimum, involve two-way exchange between a company and its employees and their representatives. During this exchange MLI will elicit and respond to employees’ concerns and suggestions regarding PSM. Employee participation may also involve active participatory duties in the various PSM related functions. What are the benefits of your participation? This participation is vital to promote ownership in any system, especially one as large as PSM. The broad base of knowledge and experience provides the best advantage for developing a system, within a facility, that will not only be usable but will also be used. How do employees currently participate? Conduct and development of process hazard analyses Development of employee training programs Program and operating procedure development and review Incident Investigations Pre-Startup Safety Reviews (PSSR) Unit safety meetings Nothing happens unless we pull together

Process Safety Information To provide an adequate database to support the required elements of a process safety management system it is necessary to compile and document information concerning process chemicals, technology, and equipment. This information is intended to provide a foundation for identifying and understanding the hazards associated with the process. Process Chemical Information - Includes toxicity, permissible exposure limits, physical data, reactivity, corrosion, and erosion effects, thermal and chemical stability, and the potential effects of accidental mixing of different chemicals. MSDSs provide this information Process Technology Information - Includes a block flow diagram or a simplified process flow diagram showing the flow of material and process chemistry, evaluation of the results of a change, inventories of chemicals to be used, and safe upper and lower limits for parameters such as temperature, pressure, flow, and composition. Process Equipment Information - Includes materials of construction, piping and instrument diagrams, electrical classification, design codes and standards used, safety systems, and relief and ventilation system designs. Documentation will verify equipment follows generally accepted good engineering practices. Process safety information is to be kept for the lifetime of the process and updated whenever changes, other than replacement-in-kind, are made. Provides the foundation for understanding the chemical, technical, and equipment hazards associated with the processes Retains basic research and development information to guide future efforts

Process Hazard Analysis PHAs are the cornerstone of an effective hazard management program and are aimed at reducing The PHA is the cornerstone of an effective hazard management program. It is an in-depth review of a process to identify it’s current level of risk. It can significantly reduce incidents through it’s orderly and systematic approach for identifying and analyzing the significance of potential hazards within processes involving highly hazardous chemicals. What is “RISK”? Risk = Severity + Probability - When you reduce either, you reduce risk. To ensure the PHA is consistent with the current process, PHAs will be updated and revalidated at least every five years. PHAs, updates, and revalidation for each covered process, with documented resolution of recommendations, for the life of the process. risk RISK = SEVERITY + LIKELIHOOD

Operating Procedures Ensures that all individuals The purpose of operating procedures is to ensure that facilities carry out all operations in a safe, consistent, and an efficient manner. The importance of having accurate and up-to-date procedures cannot be overstated. The procedures used within a facility provide not only instructions for completing a task but also are the foundation for a facility training program. Procedures also provide a basis for the employees thinking and reasoning. Procedures need to include: Steps for each operating phase Initial start-up and startup after a maintenance or emergency shutdown;Normal, temporary, and emergency operations;Normal and emergency shutdowns. Operating limits Consequences of deviations,Steps required to correct or avoid deviation Safety and health considerations Process chemicals’ properties and hazards,Necessary precautions to prevent exposure,Control measures if physical or airborne exposure occurs,Quality control of raw materials and control of hazardous chemicals inventory,Safety systems and their functions. Annual review and certification of the operating procedures ensure they are current and accurate. Ensures that all individuals are doing their job, the same way and in the safest manner possible

Awareness causes Action Training Training is your map through the maze. As part of a PSM system, training ensures that employees handle highly hazardous processes in a consistent and safe manner. The goal of training is to have a work force that understands the nature, hazards, and problems arising from process operations. The amount of training isn’t as important as the quality of the training While the program requirements are the same for all individuals operating or involved in a covered process, the contents may differ based upon the job functions of the position. A training program contains three requirements Initial Training Facility Safety Overview, Facility Process Overview, and Operating Procedures Refresher Training (for operators, every three years) Periodic training on unchanged processes, policies and procedures and the review of all accidents and near misses in the past three years. Supplemental Training (MOC) Training on new or revised process information, policies and procedures, introduction of new chemicals, process changes, installation of new equipment, etc. All initial, refresher, and supplemental training will be documented. This documentation will contain the identity of the employee, the date of training, and the method used to objectively verify that they understood the training Awareness causes Action

Contractors Contractors need to be informed of the Chemical 1 (ABC) Chemical 2 (123) Review (Hazards) As we find it necessary to have certain tasks done by contractors, these facilities need to ensure that the actions of these contractors do not lead to a catastrophic event. These facilities control these incidents through the selection, training, and continued evaluation of on-site contractors. Needing to keep everyone safe is one reason why we train contractors. - The more they know about our process the safer “we” are. Guidelines, to control the activities of on-site contractors, will include provisions for the following elements and responsibilities: Selection Review and evaluation of a contractor’s safety record, injury/illness rates, safety program, and training; Communication of known process hazards related to the contract work; Review of contractors work experience, practices, and qualifications Training Provide initial on-site training to contract employees covering safety rules, hazard communications, hazardous work permitting requirements, and emergency response; specific training that covers hazards and controls unique to the unit to be worked in Evaluation Periodic evaluation that the contract employer has provided training to their employees that is equivalent to a direct-hire employee, maintain an injury/illness log for each contract employer Contractors need to be informed of the potential hazards related to the Process

A Hot Work Permit is Required. This element establishes the criteria to ensure any work that may cause a source of ignition is done safely. This includes open flame, running combustible engines, running electronics and test equipment that is not intrinsically safe, grinding, drilling, or any other possible source of ignition. A Hot Work Permit is Required. One way to reduce the potential for a catastrophic event is through the control of non-routine jobs. These types of jobs, by their nature, offer the greatest potential for an unwanted incident because normal controls are usually bypassed and/or disabled so the work can be done. These permits are intended to ensure that unit managers, unit employees, and maintenance personnel are aware of the work being done and that they have ensured all safety precautions have been taken before the work starts. Maintenance of and adherence to these procedures, that control the performance of non-routine or hot work jobs, is required.

Mechanical Integrity Critical equipment is identified, designed, installed, and properly maintained A mechanical integrity (MI) program identifies required test and inspection needs on installed systems and equipment. In addition, it provides assurances that equipment has been fabricated, installed, or repaired according to generally accepted good engineering practices. The MI program will apply to pressure vessels and storage tanks, piping systems and components, relief and vent systems and devices, control systems, emergency shutdown systems, and pumps. Training of maintenance personnel An overview of process chemicals and associated hazards, Maintenance personnel will be trained in maintenance related procedures, and The program will identify crafts that require special training or certification, such as welders, machinists, NDE inspectors, etc. Correction of defects Deficiencies outside established limits must be corrected before further use of equipment, Justification requirements if repairs are not made before further use Quality assurance Fabrication, Installation, and Repair QA will ensure that materials, spare parts and equipment are suitable for the process intended Employees maintaining equipment are trained to do so Defects are resolved before continued use of equipment

Ensures changes are not made without due consideration Management of Change Ensures changes are not made without due consideration To remain effective the system must be continually evaluated and updated as changes occur within a facility. Why do we manage change? The safe operation of any process requires not only initial design, construction, operation, and maintenance considerations but also requires the control of changes to or within the process. Changes can be obvious (like the installation of a new sized pump) or subtle (like the changing of gasket material). Unintentional and unintended change can produce unpredicted events that may result in explosions, fires, and injuries. A Management of Change(MOC) system is set up to prevent these events by controlling change. “Replacement-in-kind” is exempt from this requirement. What is “replacement-in-kind”? MOC procedures will address the following areas before a change is made to the process: Time period for the change, Technical basis for the change, Health/Safety considerations, Changes to operating and maintenance procedures, Authorization requirements for proposed change All employees (operations and maintenance) and contractors involved in or affected by the process, are informed of and trained in the change as early as practical before the change Improves communications among facility employees affected by the change

Pre-Startup Safety Review The Pre-Startup Safety Review (PSSR) forms the final check for new or significantly modified processes. It requires that all actions required have been completed to ensure safe operation of the process. Several actions are confirmation that other sections (Process Safety Information updated, Management of Change completed) of the PSM standard have been accomplished. Gives different groups input for proposed changes Facilities will conduct a PSSR for: New facilities and Significant modifications that require a change in the process safety information The PSSR will ensure and confirm that: Process construction and equipment is according to design specifications Safety, operating, maintenance, and emergency procedures are in place and are adequate A risk analysis has been performed and recommendations have been resolved or carried out for new facilities Management of change requirements has been met for modified facilities Training of employees involved in or affected by the process has been completed. The final "thought stop" to make sure a new or changed facility doesn't contain any surprises

Incident Investigation Spotlights the chain of events leading to an incident, to avoid a future occurrence Even with the finest planned and implemented PSM system, the potential for a major or potentially major incident is ever present. If this potential becomes a reality it becomes necessary to investigate the causes that led to the incident. Why do we investigate? The focus of these investigations is to identify the factors leading to and causing the incident, and then using this information to develop corrective actions to prevent their recurrence. What is a near-miss? An undesired event that under different circumstances could have or if left unresolved may result in a serious incident. Investigation guidelines will address the following areas: Assemble an Investigation team Describe “What Happened”, determine “How” it happened, understand “Why” it happened, and provide suggestions for corrective actions that will prevent recurrence. Reporting Communication of results Near-misses also require an investigation. They are not minor incidents, they are free spins on the wheel

Emergency Planning and Response Small problems can become major if not handled properly So the unexpected happens, what do we do now? Emergency planning and response is key to reducing the consequences to such events. Planning and response systems will address: Alarm systems Response to emergencies Evacuation plans Emergency planning Written plans allow everyone to know what to do in the event of an emergency

Incre Compliance Audits Audits can verify if programs are in place and measure their effectiveness Auditing is a fundamental tool for ensuring that a PSM system is in place, working, and effective. Audits enable the identification of system weaknesses and provide a vehicle for the initiation of appropriate corrective actions. The only way we can see if it works, is to check Facilities are required to complete a compliance audit of their PSM programs at least every three years. These audits should ensure that effective PSM programs are in place and working. Incre ases the awareness of process safety throughout a facility, by reviewing documentation, inspecting facilities and interviewing employees

Trade Secrets Pssst! Any information needed to comply Top Secret All necessary information, despite trade secret status, needs to be made available to individuals involved in complying with the PSM standard. These compliance activities may include: Gathering process safety information Process hazard analyses Operating procedures Incident investigations Emergency response and planning Compliance audits MLI may take steps to protect against the unauthorized disclosure of information to third parties. These steps may include the signing of a confidentiality agreement. Any information needed to comply with PSM must be available "Sensitive" material may require the signing of a confidentiality agreement before it is provided

Benefits of PSM For the Employee reduces chances of being injured by catastrophic releases For the Environment reduces chances of loss of containment of Highly Hazardous Chemicals For the Community Creates a sense of security What are the benefits of PSM? A major benefit, beyond your safety, is the continued operation of this facility. Other benefits would be in the following areas Health and Safety-Reduction of minor incidents and injuries, improvements in ergonomics, reduction of chronic safety problems, and increased morale Economic - Enhanced production due to fewer process disruptions, integrated approach to design, construction and operation, better trained employees Environmental - Reduction and control of a major release that could potentially affect the public. For the Facility and Equipment... Increases reliability and reduces unscheduled downtime For the Customer... Provides a reliable, steady flow of product from a responsible supplier For the Industry... Contributes to overall reduction in catastrophic incidents