Keeping pipelines running smoothly

O&G. What are the main challenges that the oil and gas companies face today in terms of tackling corrosion, especially with pipelines?

NT. The International Energy Agency (IEA) estimates that the global energy demand will increase 25 percent between 2005 and 2015 with fossil fuels continuing to be the dominant source of energy. The growth in pipeline construction projects is very evident throughout the world. “The World Onshore Pipelines Report 2008 – 2012” predicts that US$180 billion will be spent on onshore pipelines with 75 percent of this in China, Eastern Europe, and North America.

Due to operational practices, the challenges of the corrosion engineer vary greatly worldwide. In many regions, the pipeline asset has suffered from lack of attention to corrosion mitigation procedures resulting in pipelines with significant corrosion both internal and external. The demands of supply are increasing for almost all systems and the requirement of continued operation and even increase in throughput are significant.

The challenges for the corrosion engineer have two primary perspectives: new construction and operation of pipelines beyond their design life. The challenges can be divided into the following three general categories: first to implement new and innovative design practices and operating plans to minimize the effects of corrosion over the lifetime of the pipeline. Secondly, to establish the integrity of the existing pipeline, and, finally, to implement practices for existing pipelines that allow continued safe operation while mitigating corrosion to permit life extension of the pipeline.

Also, the aging workforce within many companies holds a vast majority of operational experience necessary to solve problems and to maintain pipeline operation. Over the next ten years a significant challenge will be the replacement of this experience within an overall environment of expected limiting engineering resources.

Criticality of corrosion control to the oil and gas industry and in particular to pipelines is not questioned, especially following several high profile failures over the past 10 years. However, because corrosion control is not the core business, key programs have often times been past over in the budgeting process due to other more core business related programs. In high-pressure transmission pipeline operations, this is not as critical a problem as in other oil and gas systems, but corrosion awareness and the consequences poor corrosion asset management still remains a challenge for the corrosion engineer.

O&G. How difficult is this issue when it comes to maintaining and replacing worn out parts in hostile environments – which all adds to the corrosion of equipment?

NT. Pipeline challenges are different for gathering lines in production fields versus transmission pipelines and for onshore versus offshore pipelines. Most often hostile environments are associated with offshore pipelines and facilities. As production goes deeper, the environments of production almost always become more hostile (temperature and pressure) and often with higher concentrations of aggressive species (e.g. H 2S, CO 2, solids, water). Selection of materials that will provide the intended performance becomes more critical because replacement due to corrosion, cracking, and erosion is extreme costly. Therefore, the design phase is critical and corrosion control often is a question of material compatibility with the environment.

O&G. If you had to estimate, how much would you say corrosion costs the oil and gas industry every year, worldwide?

NT. The most complete estimate of the cost of corrosion to the oil and gas industry was that included in the “Corrosion Cost and Preventive Strategies in the United States”. Summing up the industry, it found each sector were as follows: Gas and Liquid Transmission Pipelines (US$7.0 billion), Gas Distribution (US$5.0 billion), Oil and Gas Exploration and Production (US$1.4 billion), and Petroleum Refining (US$3.7 billion). A total estimate for the US back in 2000 was US$17 billion. Extrapolating this worldwide can be done by the following assumptions:

Using calculations in relation the US’ share of the market shows that worldwide cost of corrosion to the oil and gas industry is approximately US$80 billion. Recall that these costs are direct costs and the cost estimates are for 2000. Furthermore they are scaled based on US energy production and pipeline operation. I would estimate that US$100 billion is a very conservative worldwide estimate for 2008 costs of corrosion in the oil and gas industry.

O&G. What effect does this have on the companies’ projects and how could this figure be reduced in your opinion?

NT. Certain costs of corrosion are built into the project costs, but often they come later during operations as a result of unexpected corrosion due to planning or operational deficiencies. Although an estimate of cost savings were not performed in the Corrosion Cost and Preventive Strategies study, significant discussions have taken place since the study. It is generally accepted that costs associated with corrosion can be reduced by one third through better implementation of current technology and that the cost of such implementation would be 10 percent of the savings. Of course, these estimates are generalities and not specific to the oil and gas industry, but I would guess apply to the general oil and gas industry as well.

It is typically presumed that the largest savings can be achieved by implementing corrosion control practices at the design stage; this includes pipeline integrity management and risk assessment. It is much more cost effective to include “asset risk management” practices, including best practice mitigation, at the start of the asset life cycle as opposed to waiting until failures lead to enhancement of practices requiring costly maintenance and repairs.

O&G. How is technology helping to tackle the problem, especially in the area of pipelines?

NT. Three areas where technology has made significant advances and where continued improvement is expected are: (1) condition assessment, (2) risk management, and (3) data management and analysis. Another area where the application of advances has been slower, but where significant advances are expected in the future is monitoring and sensor development. Advances in ILI are continuing and further improvements expected in tools for detection of crack flaws, manufacturing defects, and mechanical damage.

The “direct assessment” approach for external corrosion, internal corrosion, and stress corrosion cracking threats have been introduced and added to recommended practices fairly rapidly since 2000. Validation of DA continues while procedures for specific applications like cased crossings are being developed. In many instances reassessment utilizing current technology is just now being performed for the first time. Analysis tools for addressing multiple ILI runs are still being improved and new methodologies developed.

Risk management for pipelines remains in the development stages. Risk rating systems are common for pipeline applications, but the rating systems are often very simple or the number of factors is overwhelming. Discussions over the best approach continue between a subject matter expert approach versus a data driven model. A quantitative risk model based on a probability of failure of all possible threats and a careful evaluation of consequences of failure and that is understandable to the user is still very much needed.

Data management when properly handled is better described as knowledge management. The amount of data available to the pipeline operator is incredible. Turning this data into knowledge and utilizing that knowledge to optimize pipeline operation remains in the early stages. Integrated analysis packages that fully utilize the data available are not yet available. Systems to help optimize business decisions or minimize risk within a business model or to perform life-cycle-cost analysis will be available in the near future.

O&G. And how do integrated risk assessment and integrity management programs help?

NT. Integrity management is often associated with reducing the probability of failure of selected pipeline threats. This is half of the risk equation, with the consequence of failure the remaining half. Risk management always includes integrity management. In the US, risk management is most often dealt with through Federal Regulations handling of high consequence areas (HCA). A comprehensive risk management would include the safety aspects of HCA, as well as, security of supply and business risks. In the future integrated risk management with the continuing supply of integrity data will permit risks to be updated periodically, if not continually. Identifying risks as soon as possible is an obvious benefit of an integrated system.