Valve Magazine - Fall 2011

Continued Recovery of the World Economy

or how it is determined might be described in the following simplified sequence: (Percent change) (Real GDP, percent change)

- 6 - 3 0 3 6 9

Essentially the HAZOP procedure
involves taking a full description
of a process and systematically
questioning every part of it to
establish how deviations from the
design intent could arise. Once
identified, an assessment is made
whether such deviations and their
consequences can have a negative
impact upon the safe and efficient
operation of the plant. If consid-
ered necessary, action is then
taken to remedy the situation. In a
sense, this is based upon Murphy’s
law: Anything that can go wrong,
WILL go wrong. What the
HAZOP team attempts to deter-
mine is: What will go wrong? The
team might be comprised of
process design engineers, opera-
tions personnel, maintenance and
instrumentation engineers, etc.

; A decision is made that a process plant needs to comply with the international standards for process safety systems, usually

1974 1979 1984 1989 1994 1999 2004 2009 2014

Real GDP Industrial Production

IEC 61511.

; The plant forms a HAZOP ( Hazard and Operability Study) team.

; As part of the HAZOP, all instrument safeguards, i.e., SIS, are identified and validated for their primary capability to prevent an incident from occurring or to mitigate the consequences of an accident. SIL classification of an SIS is the next step after the HAZOP to ensure that the SIS provides sufficient risk reduction.

; Consequences of failure might

- 9

Emerging Markets Will Lead the Global Expansion

- 4 - 2 0 2 4 6 8 10

1990 1993 1996 1999 2002 2005 2008 2011 2014 Advanced Countries Emerging Markets

; Essentially, the HAZOP team identifies which systems will create the highest level of risk if the SIF fails and then determines the impact of the failure, i.e., the consequence of failure.

Source: IHS Global Insight

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THE GLOBAL PICTURE:
FIGHTING BLACK SWANS
Despite significant headwinds that arose
last year, the global economic expansion
will continue on course in 2011 and
2012, according to Sara Johnson, senior
research director of IHS Global Insight.
“Certainly we will be at a more mod-
est pace [than some economic recoveries
have been], but that is to be expected in
the aftermath of such a severe economic
challenge,” Johnson said. Households
are still cautious and trying to rebuild
their retirement assets while govern-
ments that provided massive stimulus
are having to wind down that support.
“We’re projecting world GDP [gross
domestic product] will slow from 4.1%
last year to 3.1% this year,” she said.
However, part of that slowdown is a
direct result of what Johnson called black
swans: “a number of events that had low
probability but high impact,” she said.
For example, because Japan makes up
8% of the world’s economy, 40% of the
global deceleration can be tied to after -
effects of Japan’s earthquake and tsuna-
mi. Also, geopolitical instabilities are
affecting areas of North Africa and the
Middle East, causing events such as a
major disruption in Libyan oil production
(and a drop of 40% to 50% in that coun-
try’s GDP), she added.
And in many areas of the world,
including the U.S., developed countries
are discovering that the recession’s
effects were deeper than originally
thought.
“So instead of having this cycle [of
past recessionary periods] where house-
holds spend more and employment rises,
we are in a more stagnant position” with
a loop of weak hiring and weak spend-
ing, she pointed out.

Confidence in policymakers has not helped, she said—not just in Washington, DC, but also in most parts of Europe after the spread of the sovereign debt crises to Spain, Italy and even France.

“European policymakers seemed to be a couple of steps behind the market,” Johnson observed.

She said the major driving force in
the global economy now is the emerging
markets, and this two-speed world
include escalating examples, but
the possibilities are endless. In
other words, the list might
address: “If the system fails…:”

• The plant will lose $15,000 per day.

• The plant will lose $1 million per day.

• The plant will become damaged and will shut down for three weeks.

• A high degree of probability exists for injury or loss of life to company personnel in the immediate area.

• A high degree of probability exists for explosion and loss of life to non-company personnel outside the parameter of the facility.

Ultimately, it is up to the plant owner and operator to determine what level of risk is acceptable based on their own criteria (best practice, company philosophy, insurance rates and requirements, budgets, etc). Therefore, risk tolerance is subjective and site-specific.