At 6:11 p.m., Sept. 9, 2010, everything that could have gone wrong, went wrong. A defective weld in a 30-inch-diameter gas pipeline ruptured, ignited instantly and tore a hole in the earth 72 feet long by 26 feet wide. The explosion in the San Francisco suburb of San Bruno, Calif., killed eight people, injured 66 and forced much of the Crestmoor neighborhood to evacuate. Thirty-eight homes were destroyed that evening, another 70 were damaged.

Firefighters at a nearby station arrived within two minutes of the initial eruption, which flung a 28-foot, 3,000-pound section of broken pipe 100 feet. Operations to gain control over the conflagration would continue for two days.

But the gas-fueled inferno would rage for 95 minutes until the operator, Pacific Gas and Electric Co. (PG&E), was able to arrest the flow and shut it off, “a response time that was excessively long and contributed to the extent and severity of property damage and increased the lifethreatening risks to the residents and emergency responders,” the National Transportation Safety Board (NTSB) concluded.

“The consequences of failure in this business are horrific,” an industry expert expressed to Midstream Business. “San Bruno was a watershed event in the industry.”

Surpassing standards

The expert noted his own personal experience of a pipeline rupture: “You think about people with kids who have nightmares for years about, ‘is there going to be another pipeline explosion?’ And that’s why we work so hard every day trying to prevent that type of thing where people are traumatized and killed. We do it for the public safety.”

That “not on my watch” mentality translates into his own company’s standards that surpass requirements set by the Pipeline and Hazardous Materials Safety Administration (PHMSA), part of the U.S. Department of Transportation. Not all in the industry have acted with that level of commitment, however, which is why the topic dominates discussion in the regulatory domain.

“What’s driving new regulations and changes to regulations right now is public concern about safety, which stretches from Congress and regulators to industry and the people,” Jack Massey, Houston-based partner with Sutherland Asbill & Brennan LLP, told Midstream Business. “I think that concern will best be handled through strong collaboration between the regulators and industry. The industry’s done a very good job of being on the front end of safety regulation and adopting reasonable regulation, and I think that will continue.”

Outside pressure

Industry players really don’t have much choice, not if they want to stay in business. Massive costs aside, PG&E also faces 12 felony criminal counts in the aftermath of the San Bruno explosion for violation of the Natural Gas Pipeline Safety Act of 1968.

John R. Clayton, Houston-based attorney with McGlinchey Stafford, reminds that the federal regulations are the minimum bar to clear. Prosecutors are using a criminal standard: What did the company know about the potential for an incident? When did it know or should have known about it? What action did it take?

Clayton urges his clients to enact self-auditing programs, he told Midstream Business. While he noted that most companies are conscious of the possible catastrophic results of not taking preventive action, maintenance can be a tough sell for others. Inspection tools are expensive, and it takes time and trained people to execute a program.

But it’s easier than scrambling when regulators are on their way to your plant.

“Both pipeline safety and moving crude by rail—obviously for business reasons they’re distinct but for safety reasons they are related—will continue to be big focuses for PHMSA and for the public in the coming year,” Massey said. “The most recent incident in Mount Carbon in West Virginia [in which 28 CSX tank cars carrying Bakken crude were involved in a massive explosion, forcing the evacuation of 1,000 residents and polluting the Kanawha River] has certainly brought even more attention to standards regarding rail transfers.

“Likewise, I think that the criticism from the public—and some criticism from NTSB of how PHMSA’s done its job lately—will continue to focus in on how to enforce safety regulations effectively and reasonably. I would think that the rash of incidents in the last several years has drawn lots of attention to the safety of pipelines and of shipments by rail and other means and that will only continue.”

Protecting the infrastructure

Increasing outside disparagement of the industry stings because it reflects an ignorance of the complexity and diligence involved in protecting a vast infrastructure.

“Part of what we do is not just corrosion control any more, but we look at all these threats,” the industry expert said. “These include manufacturing threats, construction threats—which might be a dent that happens during construction of the pipe, equipment threats, problems with couplings when you’re putting them together, gasket failures … even vandalism we look at.”

And in relative terms, the industry has progressed swiftly in managing the rapid increase in output from the relatively recent boom in unconventional production.

“The aggregate numbers are actually pretty good regarding safety in the midstream industry,” Massey said. “The industry and its representatives like AOPL [Association of Oil Pipe Lines] and API [American Petroleum Institute] have been very good about working with administrators to improve not only safety but safety systems, technical safety, the whole nine yards. I do think there has been more coverage.

“From the more aggressive side of things, from the viewpoint of the NTSB, or from citizen stakeholder groups, I think there is concern that we are seeing more incidents in high-consequence areas. NTSB put out a study in January on gas transmission lines and reported that while PHMSA integrity management requirements have kept the rate of corrosion failure and the rate of material failure on pipes and welds low, the rate of incidents in high-consequence areas with causes other than corrosion or material failure increased between 2010 and 2013.

“As more hydrocarbons move on our expanding midstream system, and as suburbs and towns grow up around formerly isolated pipelines, the risk of incidents in high-consequence areas increases. That’s something that will hold the public eye and drive a regulatory and safety agenda,” he continued.

Power to protect

Corrosion occurs in nature, and when it occurs on an oil or gas pipeline that is not maintained properly, there will be a leak and possibly an explosion. And if the hazardous material flowing through the pipe was not explosive … well, then it wouldn’t be much use as an energy source.

“How do we prevent it?” mulled the expert. “You could change the environment. Put it all above ground, maybe something like the Alaska pipeline. That would change the environment. That’s hard to do.

“If you had an effective coating that was absolutely perfect, then you would never have corrosion because the coating is our first barrier to corrosion,” the expert continued. “You would not have any place where anodes and cathodes could set up. Unfortunately, there’s no such thing as a perfect coating. You’ll always have breaks and what we call ‘holidays’ in the coating.”

Cathodic protection, which utilizes a reverse current to counter electrolytes in the soil, shields pipe from corrosion.

“You put a pipe in the ground,” he said. “You’ve got a coating on it. You’re going to have imperfections. The spare steel in those little places is going to be exposed to the earth. It will set up anodes and cathodes and will corrode eventually. We take and impress a direct current on the entire pipeline system that alleviates that process of corrosion. It can’t corrode as long as you’ve got current going to the steel.”

Using electricity to protect pipe has a long history.

“In my world, we’re quite lucky because pipelines started flowing gas in 1950 and they had cathodic protection installed in the early 1950s,” he said. “We’ve effectively had cathodic protection on our pipeline since it’s gone in.”

Pipeline, heal thyself

Even with cathodic protection, a pipeline is vulnerable. But what if it could be made to be self-healing?

Researchers at Battelle have a developed a substance, the Battelle Smart Corrosion Detector bead or Smart Bead, that identifies corrosion, fills cracks in the line and alerts integrity specialists of problems to be addressed.

It’s more than just a high-tech bandaid, Olga Koper, Columbus, Ohio-based market manager for Battelle, told Midstream Business.

“Some of the repair is actually occurring when this material from the bead gets out and then fills the crack, because then you’re stopping some of the corrosion in this area,” she said.

Corrosion byproducts interact with the beads, Koper said. This interaction breaks the shell of the bead, releasing the “healing material” inside to fill cracks in the pipeline created by corrosion. The beads incorporate molecules that can be detected by spectroscopy, allowing asset integrity personnel to locate corroded segments of pipe with terahertz spectroscopy devices and make repairs.

The coating is versatile, Koper said, and can be adjusted for optimal effectiveness depending on whether the pipe is aluminum or iron, or whether the pipe is transporting natural gas or various grades of crude oil. There would be few issues in the unlikely event the beads mix with groundwater because they are non-toxic. It also has marine applications.

“Another type of application is utilization on pressure vessels because you can transport large amounts of the liquids—LNG and so on—and we have proven this technology on the vessels to see whether they have been damaged, let’s say, in transport and need maintenance,” she said. “These are completely different aspects from a pipeline, but again you can have visual observation—someone bumped into this vessel, we should check for its integrity right now.”

Can’t afford to fail

What is the cost of failure?

The California Public Utilities Commission has hit PG&E with more than $2 billion in penalties to atone for its 3,800 violations of state and federal laws and regulations in the years leading up to the San Bruno explosion in 2010. The commission demands that these costs be borne by investors and not be passed on to consumers.

Beyond penalties, Clayton mentioned risks of fraud charges, obstruction of justice, incarceration and loss of franchise license to operate.

Then there are intangible losses to reputation, like recent revelations that senior executives of PG&E advised the executive director of the commission on the wording of the safety directive that was sent to the company. A company that neglected routine maintenance that led to eight deaths and the destruction of a neighborhood does not get cut any slack in the news media.

Clayton, who urges his clients to adopt stringent self-audit programs, theorizes that companies that choose not to simply have not experienced a significant loss and don’t know what it’s like.

Other companies adopt a stringent approach.

“We don’t just look at high-consequence areas,” the industry expert said. “Our goal is to assess everything on the pipeline because our goal is zero incidents. The assessment program has been quite successful, in my opinion. I think it’s saved the industry a lot of problems over the last 10 years.”

Joseph Markman can be reached at jmarkman@hartenergy.com or 713-260-5208.

Setting The Standard

By Joseph Markman

Nobody knows pipelines like pipeliners, which is why the American Petroleum Institute’s (API’s) proposed safety management standard, API RP 1173, is seen as a model of cooperation with the potential to endure and benefit the industry over the long term.

“That kind of collaboration on the front-end—in talking about standards and regulations and certifications—can save a lot of time and a lot of heartache in rulemaking and administrative proceedings and litigation further down the road,” Jack Massey, Houston-based partner with Sutherland Asbill & Brennan LLP, told Midstream Business.

The National Transportation Safety Board recommended that API develop a pipeline safety management standard (SMS) following the 2010 rupture of Enbridge Energy Partners’ Line 6B that dumped more than 26,000 barrels of Canadian oil sands crude into a creek flowing into the Kalamazoo River near Marshall, Mich. Cleanup alone cost almost $800 million.

Ronald G. McClain, president of products pipelines for Kinder Morgan Inc., chaired the committee that drafted the proposal over 18 months. This proposal will be the first safety management system in effect that is specific to pipelines, designed to proactively address issues before they turn into incidents.

“We wanted to make compliance and risk reduction routine,” McClain told a Pipeline and Hazardous Materials Safety Administration workshop in February 2014.

Among the goals was to require senior management commit to operational safety. “Now that sounds easy, he said, “but it has to be intentional.”

Hunton & Williams LLP notes in an assessment of the standard that, while all safety programs claim a goal of “zero incidents,” API RP 1173 specifically seeks to enhance risk management and continually improve pipeline safety performance.

While 1173 is unlikely to become codified into federal regulations, “an operator’s use of the standard will be watched closely by agencies and the public (including shareholders, citizen groups, insurers and plaintiff attorneys),” Hunton advised. “A SMS will likely be used as a reference point for assessing an operator’s performance—and potential liability—following any incident. Even though it is not mandatory to adopt a SMS, under common law theories of negligence, an operator may be found negligent for not adopting and following a pipeline SMS consistent with RP 1173 in the event of an incident.”

Which means that the final standard better be good.

“API 1173 is interesting and could have far-ranging consequences,” Massey said. “It’s an example of good collaboration and industry leadership in developing a process safety system. These kinds of proactive moves to generate safety regimes are probably beneficial. The key thing that industry can provide is technical know-how and it can make sure that in the process of rulemaking, government, more often than not at least, will adopt more reasonable regulations.”

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