Phillips Provides Update On K-Resin Plant Incident; Assistance to Employees and Families Continues.

Business Editors

BARTLESVILLE, Okla.--(BUSINESS WIRE)--April 14, 2000

A Phillips investigation team mobilized to help determine what caused the tragic incident at the company's K-Resin plant within its Houston Chemical Complex (HCC) on March 27 has been focusing on a storage tank which had been taken off line and may have played a role in the incident.

"The most plausible scenario at this point is that a dry butadiene tank -- taken off line, believed to be empty and in a purge mode -- had sufficient `popcorn' polymer and butadiene in the tank to react," said Jim Ross, General Manager of HCC. "We also believe the popcorn polymer plugged the purge lines so that an effective purge was not taking place. Under those circumstances, it appears that a reaction of residual popcorn polymer and butadiene could provide enough heat to overpressure the vessel, resulting in vessel failure."

The investigation into the incident at the K-Resin plant is not yet complete and will not be complete until a review and analysis of the tank, residues and blast damage can be accomplished. However, these preliminary findings have been shared with the Occupational, Health & Safety Administration (OSHA), which is also conducting an investigation. "We are working closely with the investigating agencies, local officials, union leadership and our employees to fully understand exactly what happened and take corrective actions," said Ross.

Meanwhile, the company continues to offer a wide range of assistance to employees, contractors, family members and others. "Our primary concern is for the well-being of those who were affected by the incident," said Ross. "We are continuing to provide support in the form of financial assistance, counseling, communications and, where needed, temporary accommodations for family members of those who remain in the hospital."

Of the 69 people who received medical attention, four Phillips employees and one contract worker remain hospitalized and all are listed in stable condition.

The Phillips investigation team, which was deployed immediately following the incident, consists of corporate personnel, representatives from HCC's unions (PACE and IBEW), its contractors, Brock and Zachry, and ECRC, a firm specializing in safety audits and services. The team has also retained the services of Wilfred Baker Engineering, Inc., of San Antonio, Texas, which specializes in industrial incidents.

"We remain absolutely committed to operating this facility safely," said Ross. "We will not restart the K-Resin plant until we are certain that it is safe to do so. To that end, we have intensified our efforts to review our equipment, procedures and processes, working closely with third party experts and government authorities to thoroughly scrutinze our operations."

Ross noted that Phillips has made considerable progress and completed a number of responsible actions since the incident, including:

- Phillips has provided a wide range of benefits and

support to affected employees, contractors and their

families since the incident. Services provided include

interim financial assistance, ground transportation,

hotel accommodations for family members of those still

in the hospital, and trained counselors.

- Cooperation and assistance have been provided to each of

the government agencies participating in the response to

the incident and the ongoing investigation, including

OSHA, the Environmental Protection Agency (EPA), the

U.S. Coast Guard, the Texas Natural Resource

Conservation Commission (TNRCC), the Texas General Land

Office, and Harris County Pollution Control.

- Soon after the incident, structural engineers from an

outside contract firm were brought in to complete an

assessment and ensure the integrity of facilities and

equipment adjacent to the incident site.

- Within the complex, the Phillips' plants not involved in

the incident suspended production. Operations and

maintenance personnel and outside experts then verified

the integrity of the safety and process systems. The

polyethylene and polypropylene plants were put back into

production after a thorough safety check and discussions

with employees, union leadership and OSHA. The K-Resin

plant will remain closed indefinitely.

"On behalf of all members of the Phillips team, I want to again express my sincere thanks and appreciation to the many local organizations, agencies and individuals who responded or rendered assistance with relief efforts," emphasized Ross.