Monday, May 28, 2018

Current Situation and Development Trend of Petrochemical Industry Emergency Logistics

With the fast development and strategic layout of the petrochemical industry in recent years, the infrastructure
of petrochemical logistics also achieved rapid development. The complicated and changeable international
situation, climatic anomaly and social harm highlighted the demands of petrochemical emergency logistics.
The reserve, transportation and information system, security system and mechanism analysis of
petrochemical emergency logistics indicate: China needs to further strengthen the petroleum reserve system
construction including refined oil and increase the layout of the supporting dangerous chemicals warehousing
of the park; man-made sabotage has become the primary cause for the leakage, fire hazard and explosion
accident of domestic long-distance pipelines, so HSE management philosophy and integrity management
remain to be strengthened; the regulatory focus of road transportation should transfer to the “soft” security
investment of the enterprise, such as tightening employee access conditions and improving employees’
overall quality; the information degree of petrochemical emergency logistics is low and a unified emergency
information issue and sharing platform is lacking; the laws, regulations, standards and mechanism of
emergency logistics remain to be established and perfected. At last, the paper describes the development
prospect of petrochemical industry emergency logistics.
1. Analysis on development situation and layout of the petrochemical industry
The petrochemical industry is the basic industry for the national economy and occupies an important position.
China has become a major production and consumption country of petrochemical products in the world.
During the 12th Five-Year Plan, the annual growth rate of industrial added value was 9.0%, mainly operating
income was 9.19%, and its actual investments reached 14.03%, and the economic volume of China’s
petrochemical industry continued to rank at the forefront in the world. In 2015, the total output of national oil
and gas was 329 million tons oil equivalent; the output of natural gas reached 127.14 billion cubic meters in
2015 on the basis of first breaking 100 billion cubic meters in 2011; the output of ethylene reached 17.6 million
tons. However, China’s oil supply and demand contradiction is still prominent and the degree of dependence
on import is on the rise.(Qian and Jiang, 2016)
As China gradually became the world processing center and a consumption power, the all-round large-scale
investments of transnational petrochemical enterprises in China and the influence of petrochemical product
import trade on China’s petrochemical industrial layout emerged increasingly. China’s petrochemical
enterprises have three typical location layout patterns – raw material places, consumption places and ports.
Through analyzing the evolution characteristics of China’s petrochemical industrial locations, it indicates that
China’s petrochemical industrial distribution shows the trend of large scale space dispersing coexisting with
regional spatial agglomeration and the overall arrangement transforming from inland to ports(Dong, 2011).
China has formed three most port Petrochemical Industrial centre, namely the Huizhou-Guangzhou-ZhuhaiMaoming-Zhanjiang
Pearl River Delta petrochemical industrial belt, the Shanghai-Nanjing-Zhejiang Yangtze
River petrochemical industrial area, and the Dalian-Qingdao-Tianjin-Cangzhou circum-Bohai-Sea area, as well
as the traditional northwest petrochemical base represented by the Northeast and Lanzhou-Dushanzi. The
port chemical industry base is the key area of the spatial strategic transformation of China’s petrochemical
industry space during the 12th Five-Year Plan. China’s petrochemical industry base and park development pattern has taken shape. Due to the difference of regional advantages, industry basis, construction time and
investment pattern, the development level in various regions is unbalanced. Some have begun to take shape.
It is still at the development initial stage overall, but has huge potential.
2. Analysis on characteristics and development situation of petrochemical logistics
2.1 Characteristics of petrochemical logistics
The petrochemical supply chain is a complex large system. Compared with other industries, the logistics
activity of the petrochemical industry is featured by the commonness of general logistics activities and its
uniqueness. The total quantity of the logistics activity of the petrochemical industry is very large, and foreign
and domestic crude oil exploitation, long-distance transportation, the diversity of carriers and other factors
determined petrochemical logistics is characterized by many sites, long lines, large areas, complex operation
and higher security requirement. Particularly the flammable and explosive chemical materials require stricter
technical specification and higher equipment specialization degree. The upstream and downstream products
of the petrochemical industry are highly relevant, and international political situation, social product supply and
demand changes, social energy fluctuation and the cooperative relationship among enterprises all affect
petrochemical logistics whenever and wherever possible. The petrochemical logistics system is a dynamic
system that meets social needs and adapts to environment capacity.
2.2 Development status of petrochemical industry logistics
China’s petrochemical logistics infrastructure construction has achieved rapid development in recent years.
With the increase and strategic layout of petrochemical product import, the supporting port and dock
construction has achieved rapid development. China’s ports remain the first place in the world in the total
cargo throughput and the number of big ports above 100 million tons. Relying on the stationing of
petrochemical enterprises, the specialized oil unloading docks based on 100,000-300,000 tons and the
petroleum transportation system matched with small and medium oil and gas transfer terminals are taking
shape. However, “national oil transportation” ships are of weak transportation capacity, backward technologies
and external overdependence. At present, many ports have established converge and evacuation system and
basically realized paralleled three ways based on waterway and road transportation. But there exists the
mixture of converge and evacuation traffic and urban transportation and the role of railways and inland water
transportation was not fully played; the functions of ports are singular; the turnover efficiency of cargos is not
high and the logistics cost is higher.
Centering on the strategic layout of oil import and petrochemical industry, China has achieved rapid
development in oil and gas pipeline construction in recent years. At the end of 2014, the total lengths of the
crude oil pipeline, the refined oil pipeline and the natural gas pipeline reached 27, 000 kilometers, 21, 000
kilometers and 69, 000 kilometers. The backbone oil transmission pipeline has begun to take shape, and the
key fields built during the period of the 12th Five-Year Plan were mainly regional pipeline and supporting
facility construction.
Due to the development of the industry and the refining of market labor division, international petrochemical
enterprises are almost seldom engaged in the chemical logistics but outsource the business to the third-party
logistics service provider (3PL). In China, due to the restriction of traditional management concepts and
industrial development, the domestic petrochemical logistics industry lacks a sophisticated integrated logistics
service network platform; the outsourcing risk is very high, so the self-running petrochemical logistics business
becomes the main logistics pattern at present. Many ports are not fitted with supporting logistics parks and
large logistics enterprises, and the third-party logistics are small, scattered and weak. Many small and medium
petrochemical logistics enterprises are insufficient in the investment in technological equipment, low in
automation and information degree. They also cannot achieve information sharing with upstream suppliers
and downstream consumers, and the information feedback speed is low and affects the operation efficiency of
3. Analysis on current situation of emergency logistics of petrochemical industry
3.1 Conceptual meaning of petrochemical emergency logistics
Emergency logistics refers to special-type logistics activities caused by sudden factors for the purpose of
pursuing maximum time efficiency and minimum casualty loss, including emergency logistics demands
generated by sudden factors and emergency logistics supply activities for meeting these logistics demands.
Emergency logistics is featured by abruptness, uncertainty, non-conventionality and weak economic
efficiency. The author thinks petrochemical emergency logistics refers to special-type logistics activities that
minimize losses and conduct effective management on the destruction or interruption of the potential
petrochemical supply chain system or caused by factors like sudden natural disasters, social harms (traffic, fire disaster, oil and gas leakage accident, pipe network destruction and technological hazard), and major
sudden events (war, international political disputes, oil crisis, terrorist event, etc). Building and perfecting the
petrochemical emergency logistics system is of important significance to ensure energy supply and social
3.2 Petrochemical emergency logistics – storage
With the development of the economy and the constantly increasing foreign trade dependence of China’s oil,
strategic oil reserve construction is an effective means to prevent and respond to major sudden events (largescale
reduction or supply interruption of oil caused by war, international political disputes, etc) and natural
China’s oil strategic reserve started late. At present, the national strategic reserve system is still based on
crude oil reserve. China started building strategic bases in Zhenhai, Zhoushan, Huangdao and Dalian from
2003. In 2015, the phase I and II reserve bases in full reserve operation could basically meet the domestic
crude oil demands for 60 days, still with a large gap with the future reserve target of 90-120 days. So the
construction of the phase II and III oil reserve bases should be accelerated. The more scattered the strategic
oil reserve bases, the higher secure they are. The radiation range of oil reserve bases should be considered.
In recent years, the earth has been in the high-incidence period of natural disasters such as earthquake and
tsunami. When the disaster occurs, the huge natural destructive power impacted the production and supply
capacity of petrochemical products in the disaster area; on the other hand, the social rescue work for disasters
also forms the intensive incremental demands for oil and gas in short term. In 2008, China’s Wen-Chuan
earthquake struck, and the Lanzhou-Chengdu-Chongqing pipe and the Baoji-Chengdu Railway that
transported 90% of refined oil to Sichuan were damaged. Due to the great demands for power generation and
disaster relief transportation, the refined oil consumption for the earthquake stricken area increased more than
40% in May and June. PetroChina had about 140, 000 tons of commercial reserve in Sichuan, sufficient for
about 15 days of need. If without the National Reserve Bureau’s urgent transfer of refined oil strategic reserve
in Chongqing and Gannan, the refined oil supply was likely to be interrupted.
From disaster relief practice and international experience, China needs to set up a perfect and powerful oil
reserve system to respond to the attack of emergent natural disasters. China’s refined oil reserve is
insufficient at present, still not really included in the national oil reserve system so far, so it is necessary and
urgent to strengthen refined oil reserve during the 13th Five-Year Plan.(Zhao and Chen, 2011)
China’s oil and gas storage and transportation facilities will continue to be in an important development period
in the future. According to the Identification of Major Hazard Sources of Dangerous Chemicals (GB18218-
2009) and the Guiding Opinions on Major Dangerous Source Supervision and Management Work (AJGXTZ
[2004] No. 56), the regulations of the National Reserve Bureau, oil and gas storage and transportation
facilities can easily constitute major danger sources. The identification of the danger sources of the oil reserve
base suggests fire and explosion are the two main unsafe factors in the oil storage and transportation process.
(Zhu, 2010)In recent years, many large oil depot fire and dangerous chemical warehouse accidents have
taken place. Particularly, the“7.16” oil depot fire accident of Dalian in 2010 and the“8.12” dangerous goods
warehouse fire explosion accident at Tianjin Port in 2015 warned the security management of oil, gas and
dangerous goods storage and transportation: China should improve the security conditions of large oil depots,
set up four-level oil leakage preventive system, implement step-by-step prevention strategy, lower the
probability of accident occurrence, increase necessary emergency equipment, improve the security and
reliability of important facilities (including emergency power supply, urgent valve shutoff and pump houses),
expand firefighting water and foam liquid reserve, set up the zone defense system, and strictly comply with the
Oil Reserve Base Design Specification (GB50737-2011) (Han, 2012) implemented from May 1, 2012.
3.3 Petrochemical emergency logistics – transportation
(1) Current situation and countermeasures of oil and gas pipe network
China’s crude oil import mainly comes from Middle East, Africa, etc, very far in distance, and sea
transportation is a relatively reasonable way. About 80% of China’s imported oil is transported through the
Strait of Malacca, and it faces many risks such as war, anti-government armed forces and organizational
crimes, petroleum transportation accidents, and international politics and competition. The oil import source
and oil transportation line are relatively singular, which increased the risk of national energy security. The
construction of China-Russia, China- Kazakhstan and China-Burma oil transmission pipelines improved the
security coefficient of the existing crude oil purchase way and transportation mode.
The completion and operation of the West-East natural gas transmission pipeline and the construction of
large-scale pipe laying (network) made the research on several key scientific problems involving the
geological security of the energy supply system more important and urgent. The assessment and division of
regional geological disaster risk levels need to be strengthened, and the short-term, mid-term and long-term
plan should be conducted according to the risk level. The social dangerous factor (man-made sabotage) has become the main cause for the leakage, fire and
explosion accidents of domestic long-distance transmission pipelines in China. According to statistics, the
main cause for China’s oil and gas pipeline accidents is the third-party damage, and punching oil stealing is an
important factor, with the accident proportion up to 40%, followed by pipe corrosion, pipe quality, construction
quality and sudden natural disasters. (Qian, 2012)The design, construction and operation managers of the
pipeline projects should fully recognize the importance of pipeline security.
We should recognize the potential risks that affect the safety of pipelines, set up the new concept of HSE on
the basis of the oil and gas pipelines featured by “many sites, long lines and wide areas”, take effective
security protection measures in project establishment, design, construction and operation management,
enhance operation pipeline monitoring.
Integrity management refers to comprehensive integrated management on all factors influencing pipeline
integrity. Through integrity management, the management level of pipelines can be improved, to ensure the
operation security of pipelines. The integrity management remains to be strengthened.
(2) Current situation and causes of dangerous chemicals road transportation
China has strengthened the supervision on dangerous chemicals in recent years. In 2011, there occurred 66
dangerous chemical accidents, of which, there were 10 accidents occurring in transportation and storage. The
absolute quantity was not large, but it would cause baneful influence once occurred.
The concentrated production and diffused demands of dangerous chemicals and the serious shortage of
railway capacity increased the freight volume of road dangerous chemicals. Its transportation radius often
exceeded the economic radius of road transportation. There exist many limitations on the transportation and
assembling of dangerous chemicals, making it difficult to choose transportation means of appropriate carrying
capacity in the transportation process and causing and generating potential risks caused by serious
China still fails to adopt international dangerous goods transportation standards in domestic transportation and
many standards are not rectified and adjusted in time. For example, according to the Road Dangerous Goods
Transportation Management Regulations, The requirement on enterprises engaged in road dangerous goods
transportation is low, which leads to the small enterprises scale and poorly equipped.
The detailed rules in transporting dangerous chemicals on the road are relatively indistinct and weak in
technicality and operation.
In addition to the reason of hardware facilities, the main cause is the low professional quality of practitioners.
At present, those that are engaged with dangerous article transportation are mainly private and joint-stock
companies, featured by strong mobility of drivers and escort personnel, uneven personnel quality and difficult
management.(Xiao and Guo, 2012) We should tighten the access conditions of employees of dangerous
chemicals enterprises, improve the overall quality of practitioners, perfect the security education training
system of dangerous chemical enterprises, strengthen emergency plans and drills, and reinforce the design of
dangerous chemical security incentive mechanism.
3.4 Emergency logistics – information system
The information system is the nervous system of emergency logistics and the important condition for modern
emergency logistics to survive and develop. The emergency logistics management organization is an
integrated comprehensive information system that comprehensively uses the computer and network
technology, geographic information technology, communication technology, electronic data interchange
technology, automatic identification collection technology, etc, to get and dispose logistics information in real
time and accurately and effectively control logistics activities. It can monitor resource information, demands
information and the logistics guarantee process.
China’s dangerous goods logistics is characterized by low information degree and insufficient sharing of
information, which leads to large stocks, transport capacity waste and high logistics cost. Petrochemical
enterprises of various scales and types are not balanced in the development of ERP and e-commerce system;
the establishment of database is incomplete. The application of modern logistics technologies like the radio
frequency identification (RFID), global positioning system (GPS) and geographic information system (GIS) is
still very limited to dangerous goods transportation enterprises. Only areas like Shanghai, Jiangsu and
Zhejiang enforced the application of the GPS system for dangerous goods transportation vehicles. But the
GPS monitoring platforms are independent respectively, not linked to the internet nationwide, which made
trans-regional transportation vehicles and drivers hard to be supervised and the emergency department in the
local area difficult to be deployed at first time to dispose. The transportation accident information, material
character and rescue data are hard to make clear. A unified sudden event logistics information release and
sharing platform is lacked, which makes information decentralized and the emergency commanding
institutions unable to accurately grasp the detailed information of sudden events and the production and distribution of materials needed, so that the analytical judgment is inaccurate and correct logistics decisions
cannot be made.
3.5 Emergency logistics security system and mechanism
(1) Laws and regulations remain to be established and perfected
The promulgation and implementation of China’s Act on Tackling Emergency Affairs marked the initial
establishment of the emergency legal system, the publicizing and implementing are far from satisfaction and
the standards for the operational supporting laws and regulations also remain to be perfected. Local laws and
regulations are urgent to be researched and formulated.
(2) Deficient standards cause mutual fight
The International Chemical Manufacturer Association set up the quality assessment system for chemicals
road security and uniformly assessed logistics service providers in quality, security, environment and other
aspects. European road transport dangerous articles mainly comply with the Autorisation Dangerous Road
(ADR). Compared with European and American developed countries, some domestic standards are obsolete
and lack the access qualification assessment standards for dangerous chemical logistics service, checking
standards and the management standards and systems. The application approval of new standards is
featured by many links, complex procedures and low work efficiency. The regulations and standards related
with dangerous chemical logistics are from multiple departments, which not only greatly increased the
management cost of enterprises but also often made enterprises at loose ends.
(3) Mechanism remains to be perfected
In China, the three-grade management system is used for oil reserve, with macro management, administrative
management and operation department mutually disconnected. The emergency linkage mechanism for
China’s strategic oil reserve has been set up; China has practiced the dangerous chemical registration system
and the dangerous chemical accident emergency plans. Due to the lack of pre-warning assessment
mechanism on sudden events, the extent of damage lacks sensitivity. The regional emergency logistics
commanding centre that breaks the system was not established, the departments lack efficient coordination,
so low in emergency efficiency; the national cross-regional dangerous chemical road transportation joint
control mechanism remains to be set up.
Besides, the publicity for dangerous chemical security knowledge is insufficient and people panic when talking
about dangerous chemicals. The emergency report and information release mechanism and the whole people
joint supervision mechanism should be established.
4. Development trend of petrochemical emergency logistics
(1). With the sustainable development of the national economy, China’s petrochemical industry will maintain
long-term rapid growth. With the gradual implementation of “logistics industry adjustment and revitalization
plan”, the importance of petrochemical emergency logistics is gradually highlighted in the national economy
and will be greatly developed.
(2). With the construction of the phase II and III reserve bases, China’s petroleum strategic reserve will reach
the goal of 90 days in 2020; as an important constituent part of the petroleum reserve system, China will
increase the refined oil reserve starting from the 12th Five-Year Plan, and the integrated logistics system of
park will be accelerated relying on the base and park industrial layout.
(3). Regional pipe network and supporting facility construction will be further perfected and the national scale
pipe network will gradually take shape. The marine pipeline technology will see the development acceleration
period; the pipeline technology for pipeline security, HSE management philosophy and the integrity
management technology will be greatly promoted.
(4). The appearance and large-scale use of internet of things technology represented by RFID equipment and
some other intelligent data collection and transmission equipment provided strong guarantee for the fullcourse
monitoring of the petrochemical supply chain and the cross-regional emergency logistics management
(5). Refer to the experience of developed countries, The standard systems of petrochemical industry
dangerous chemical storage and transportation standards including petrochemical products and the logistics
service access qualification auditing standards will attain international standard in the future.
(6). The early-warning and risk assessment mechanism for the natural disasters and sudden events of
petrochemical logistics and the national cross-regional petrochemical emergency logistics joint control
mechanism will be established; with the establishment of the emergency report and information release
mechanism, people’s cognitive level will be significantly improved and the linkage supervision mechanism
participated by all people will take shape.
(7). Based on scientificity and advancement, various regions research and formulate regional emergency laws
and regulations, gradually set up perfect emergency legal system from the central government to local areas,and guarantee the smooth realization of emergency logistics. Related laws and regulations will be further
revised and perfected.
(8). With the perfection of storage and transportation laws and regulations, the qualification requirement for
petrochemical logistics practitioners will be stricter, and governments of all levels and enterprises will perfect
the safety education training system for dangerous chemicals, strengthen emergency plans and drills and
training for employees, and enhance the design of dangerous chemical safety incentive mechanism.
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