Property Types

Refineries

Petroleum refineries transform crude oil into fuel, including liquid petroleum gas, gasoline, kerosene, jet fuel, diesel fuel, and fuel oils. Refineries are exposed to many environmental risks through their operations, materials stored on-site, and waste generated. They typically have numerous large storage tanks and complex process systems. Wastewater treatment systems are also often present. Both aboveground and underground piping may be present. Gradual leaks or sudden and accidental spills could occur from any of these systems, resulting in on-site and off-site environmental impacts. Accidental discharges of pollutants into on-site drains and drywells or outside of secondary containment could contaminate surface waters and drinking water sources, including rivers, lakes, streams, and groundwater. Fuels, chemicals, and additives used in refineries and produced by the processes emit hazardous fumes that can contaminate the air. Wastes generated also pose environmental risks related to their storage and disposal practices. Many of the chemicals and fuels handled are flammable. Fires, explosions, and process reactions that run out of control could produce numerous environmental liabilities.

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Environmental Exposures May Include

Storage Tanks
Secondary Containment Failures
Stormwater Run-off
Subsurface Leak Hazards
Wastewater Management
Accidental Releases During Transport
Air Emissions
Non-Owned Disposal Sites
Historical Waste
Flammables
Natural Resource Damage

Storage Tanks

Refineries often store large volumes of chemicals, crude oil, and petroleum products in aboveground storage tanks (ASTs). Catastrophic failure of an AST caused by an accident or rupture of the tank could cause its contents to enter and breach the secondary containment or exceed the capacity of the secondary containment structure. These catastrophic failures can cause severe on-site environmental damage or migrate off-site, impacting third-party properties or surface waters.

Secondary Containment Failures

Tank bottoms may also leak from corrosion or other causes, and if the secondary containment for ASTs has become damaged or cracked, leaks and spills could be released from the containment structure. These releases could result in environmental impacts on-site or off-site.

Stormwater Run-off

Stormwater run-off captured in secondary containment structures and from other areas of the refineries could come in contact with chemicals, debris, waste, and other outside storage. Contaminated stormwater could impact soil, groundwater, or surface water if not properly monitored or contained.

Subsurface Leak Hazards

Underground storage tanks, oil water separators, underground piping systems, and wastewater collection systems can also be present at refineries. They can be subject to leaks or spills if they become damaged or cracked if not adequately monitored or properly maintained. Spills or releases to the subsurface can migrate to groundwater and impact drinking water sources, such as public water supply wells, private potable wells, or surface waters. Releases to soil and groundwater can also produce toxic vapors that can migrate upward and into buildings causing indoor air issues.

Wastewater Management

On-site wastewater treatment plants often treat wastewater generated at refineries and stormwater that has come in contact with chemicals. Refineries generate wastewater from processes, cooling water, condensate blowdown, raw water treatment, laboratories, and equipment cleaning. Wastewater holding or treatment tanks, piping systems, treatment chemical storage areas, or waste storage areas can have leaks or spills, creating environmental risks. Sludge may be generated that could be classified as hazardous waste. These waste materials would need to be taken to a non-owned disposal facility approved to take such wastes. Improper waste disposal could lead to environmental liability or legal consequences for violating regulatory requirements.

Accidental Releases During Transport

Accidental releases during the transportation of chemicals, fuels, or wastes due to vehicle accidents, improper cargo securement, or a broken or loose valve can result in a release on the roadway. Depending on the extent of a release and where it migrates, it could trigger emergency response costs, cleanup costs, third-party claims, and natural resource damage claims.

Air Emissions

Air emissions emanate from refining processes, storage tanks, loading/unloading racks, and other sources within refineries. Permit violations and improper control of emissions can result in civil fines, third-party bodily injury, and property damage claims.

Non-Owned Disposal Sites

Solid, regulated, and hazardous wastes are generated in petroleum refineries. Releases or spills can occur during waste handling, storage, or transport, creating environmental risks. Additionally, these wastes may be taken to non-owned disposal facilities. Improper waste disposal could lead to environmental liability or legal consequences for violating regulatory requirements. As a waste generator, the refinery can be responsible for pollution incidents at non-owned disposal facilities where their waste was sent.

Historical Waste

Past disposal of wastes could have occurred on the refinery property in surface impoundments, land treatment units, waste piles, etc. These units may not have undergone clean closure, and environmental liabilities may remain from past on-site disposal practices.

Flammables

Due to the flammability of the chemicals handled at petroleum refineries, fires, and explosions can occur at these facilities. Firefighting foam containing per-and polyfluoroalkyl substances (PFAS) may be used on fires, past or present. Fires and explosions can release toxic chemicals into the air, soil, groundwater, or surface water. Third parties can be impacted by exposure to toxic chemicals in the air, shock waves from explosions, or migration of contaminants in groundwater or stormwater. Drinking water sources can be impacted, and chemicals can be released into surface waters, damaging natural resources.

Natural Resource Damage

Refineries are often located next to water bodies, and large volumes of crude oil are delivered by ship to the refinery. Leaks or spills can occur over water or land from piping systems, tank overfills, pump failures, etc. Releases can result in many environmental liabilities on-site and off-site, including natural resource damage claims.

Environmental Pollution Liability Can Provide Coverage For

On-site cleanup of new and pre-existing pollution conditions

Off-site cleanup of new and pre-existing pollution conditions

Third-party claims for bodily injury, property damage, and cleanup costs arising from on-site or off-site pollution conditions

Defense of third-party claims

Both sudden and gradual pollution conditions

Aboveground and underground storage tanks

Loading and unloading

Emergency response costs

Civil fines and penalties

Business interruption resulting from pollution conditions

First and third-party transportation pollution liability

Crisis/reputation management

Non-owned disposal sites

Natural resource damage claims

Claims Scenarios & Examples

A refinery hired a contractor to clean sludge from its chemical tanks. During cleaning, an employee with the tank cleaning company opened the wrong valve, causing a release of hydrogen sulfide. Several employees of another contractor performing maintenance at the site were severely injured, and two died due to the exposure. Bodily injury claims were brought against the cleaning contractor and the refinery.
Rising floodwaters at a refinery caused the overflow of a crude oil holding tank. Seventy-five thousand gallons of crude oil were released, causing extensive damage to local businesses, farms, and residences. A class action lawsuit for third-party damages was filed.
A faulty pipe elbow failed, allowing flammable fluid and other chemicals to escape. The released vapor cloud ignited, setting off three explosions at the refinery. The explosions caused a vessel containing highly flammable hydrocarbons to rupture, hurling fragments into the air. A cloud of deadly hydrofluoric acid was also released during the fire and explosions. Surrounding businesses and residences were evacuated. The resulting claims for third-party bodily injury, property damage, business interruption, and cleanup costs caused the plant to file for bankruptcy.
An over-pressurization of a reactor/drier resulted in three rupture disks opening, releasing methylene chloride and other chemicals into the air. The materials settled over a 300-yard area immediately near the process. Soils were impacted and had to undergo remediation.
Sparks from hot work on a catwalk above a sulfuric acid tank at a refinery entered the tank through a corrosion hole, igniting flammable vapors and causing the tank’s collapse. An estimated 660,000 gallons of acid were released into the environment, with a large quantity entering a nearby river and killing thousands of fish and other wildlife. The refinery operator was ordered to pay $58 million for cleanup and natural resource damages.
Over the weekend, when a refinery was not in operation, someone broke into the facility and stole a brass valve from the bottom of a storage tank partially filled with toluene. Over 3,000 gallons of toluene were released. The spill flowed off-site into a ditch that ran through a wetlands area. The refinery was responsible for cleaning up the toluene on-site and off-site and restoring the wetland area.
A leak in a slurry filter released slurry oil and diesel oil 200 feet in the air. The oil mist coated vehicles and pavement southwest of the refinery. Approximately 3000 insurance claims were filed by community members from damages.
Hundreds of complaints and many people became ill, with one person passing out, from sulfur compound-related odors from a refinery after a flare line flange was opened inadvertently while process gases were still flowing through. Several bodily injury claims were filed against the refinery.
A hurricane hit a refinery, and a crude oil storage tank and surrounding dike were damaged in the storm, releasing 25,110 barrels of oil. The oil impacted the site and flowed off-site onto an adjacent property. On and off-site cleanup costs were incurred.
Over fifty years of operating a former refinery, an estimated 5 million gallons of gasoline and diesel were released into the groundwater aquifer beneath the site. Soil contamination was found in solid waste management units and other areas of concern, primarily from wastewater solids. Remediation required excavation of over 600,000 tons of soil, pumping, and treatment of over a billion gallons of contaminated groundwater, and construction of a horizontal vapor extraction system to prevent vapors from entering nearby residences.
A refinery practiced firefighting at an onsite location. The firefighting foam contained PFAS, which seeped into the soil and groundwater at the site. The PFAS migrated in groundwater, impacting public drinking water wells.

Final Consideration

Your business can be faced with the cost to defend itself against allegations or legal action from pollution related events, regardless if you are fault or not. Having the proper insurance coverage in place will help fund the expenses incurred to investigate or defend against a claim or suit and provide you with environmental claims handling expertise.

This environmental risk overview offers a general understanding of potential risks and may not reflect all risks associated with your business. Environmental Risk Professionals has compiled this overview for informational purposes only. This overview does not constitute legal opinion or advice, nor does it establish a consultant-client relationship. This overview is not intended to guide project parties in interpreting specific contracts or resolving disputes; such decisions may require consultation with counsel and depend on various factors. © 2025 Environmental Risk Professionals, LLC

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