SPE 111899 Managing Pipelines Risk in Nigeria

Samuel Awonusi, SPE, NISP

Copyright 2007, Society of Petroleum Engineers Inc. This paper was prepared for presentation at the 31st Annual SPE International Technical Conference and Exhibition in Abuja, Nigeria, 6 8 August 2007. This paper was selected for presentation by an SPE Program Committee following review of information contained in an abstract submitted by the author(s). Contents of the paper, as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material, as presented, does not necessarily reflect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial Committees of the Society of Petroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paper for commercial purposes without the written consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgement of where and by whom the paper was presented. Write Librarian, SPE, P.O. Box 833836, Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435.

nationals) to their employees and third parties; and government regulations. The consequences of the attendant poor management have been loss of thousands of lives to fire outbreak on exposed pipelines, pollution of the environment, loss of earning power and scarcity of refined petroleum products in the country. Applying the HEMP process, it is the intention of this paper to take a critical look at pipelines associated risks, assessment of the risks taking into consideration current realities in the country and what controls are required to safeguard the pipelines, people and the environment in Nigeria. Introduction Pipeline is a system of pipes designed to flow or transport fluids such as water, oil, natural gas, or other petroleum-based products over long distances, often underground. These systems of pipes are either designed to carry mixed fluids or monotype fluid. In Nigeria, there are pipelines for transporting dry gases from Gas Plants to the blooming Liquefied Natural Gas Plants at Bonny and Escravos. There are also pipelines used for gathering crude oil with its associated water and gas from the oilfields to the export terminals at Bonny, Qua Ibno, Forcados, Escravos and Brass. The total length of the pipelines is several thousand kilometres and they are geo-political ring binder in Nigeria. Also, pipelines are used for moving refined products from Port Harcourt 1 & 2, Warri and Kaduna Refineries to Pipelines and Product

Abstract In Nigeria today, there are networks of pipelines cris-crossing the entire nation. These lines are used to transport hydrocarbon from the oilfields to the terminals and LNG plants. They are also used to move products from petroleum refineries or petroleum receiving jetties to product depots in the downstream sector. Pipelines risks are negative and undesirable factors that could erode the benefits of safe movement of hydrocarbon products cheaply and efficiently through these pipe networks. These risk factors are increasing by the day with the changing complexities of the Nigerian society. There are three keys drivers that drive the management of risks associated with pipeline transportation. These are economic benefits to users of pipelines, corporate social responsibility on the part of companies (multi-

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Marketing Company depots all over Nigeria. The length of this network of lines linking PPMC depots with the refineries is also in the region of thousands of kilometres. Pipeline system of transportation conveys the advantages of bulk movement of fluids to their destination with ease (unnoticed), eliminates the cumbersome option of trucking/hauling of products thereby reducing national exposure to road traffic accidents and its attendant losses. Inspite of these benefits to the society, pipelines system of transportation has its own risks. Uncertainty about a situation can often indicate risk, which is the possibility of loss, damage, or any other undesirable event. Most people desire low risk, which would translate to a high probability of success, profit, or some form of gain. Risk can also be defined as a possible event or circumstance that can have negative consequences on the enterprise in question. Pipelines risks, therefore, is the probability of injury to people, harm to the environment, reputation damage or economic loss multiplied by the potential consequence of the occurrence when using systems of pipes to flow fluids from one point to another. Risk Management Risk management is the culture, processes, and structures that are directed towards the effective management of potential opportunities and adverse effects. Also risk management is the process of assessing risk, taking steps to reduce risk to an acceptable level, and maintaining that level of risk. Every one of us is a risk manager of sorts. On daily basis, we make informed choices based on our knowledge of existing or inherent risks in processes, methods of working, allocation of scarce resources, choice of food, school for our children and choice of accommodation etc. Even choice of marriage partner and the

profession we practise is done with a lot of calculated risk. Why Manage Pipelines Risk? There are several reasons why we should manage risks associated with pipelines system of transportation in Nigeria today. Protection of human lives There is need for the government and international oil companies operating in the country to safeguard the lives of people living in Nigeria. These people include those who work for govt, the oil and gas companies and majority others in the villages, towns and cities where the pipeline networks are located. Historically in Nigeria, thousands of people have lost their lives as a result of repeated failures in the system for managing pipelines risks (see table below). Table 1.
Year Dec 2006 May 2006 Dec 2004 Sept 2004 June 2003 July 2000 March 2000 Oct 1998 Location Lagos Lagos Lagos Lagos Aba Warri Aba Jesse Number Death 750 150 20 60 105 300 50 1,000 of

Source: British Broadcasting Corporation (BBC)

According to the British Broadcasting Corporation, between October 1998 and December 2006, not less than 2,400 people have died from pipeline fire in Nigeria. It is

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only a careless government or organisation that would not want to arrest the ugly trend. Several others have suffered various forms of disability and lifetime injury in the course of several pipeline fire incidents in Nigeria. Safeguarding the environment- Our environment is part of the global environment. Any damage done to the Nigerian environment by the operations of oil and gas pipelines invariably contribute to the damage of world environment. In order to achieve the goals of sustainable development, NNPC and the JV partners should manage the risks in pipeline operations to avoid loss of containment of hydrocarbon fluids to the environment. A case that readily comes to mind is the Mobil Producing Nigeria Offshore oil pipeline failure that impacted the coastal waters of Nigeria from Cross- Rivers state up to Lagos. Organisational Reputation- The image of organisations in Nigeria today has become a key factor to securing licence to operate. When major incidents result from pipelines risk, the organisations concerned are exposed to negative publicity in the local and international. This could also lead receiving sanctions from industry regulators. Elimination of LossesImproper management of pipelines risks could result in loss of assets, product flow capacity and loss of optimal production capacity. This will invariably reduce earning capacity and eventually profit. Basics of Risk Management Applying the Hazard and Effects Management Process (HEMP), there are four basic steps in risk management Risk Identification Risk Assessment Risk Reduction Risk Mitigation

Risk Identification The first of the steps in risk management process, in which potential sources of loss are identified by conducting complete examinations of possible events that could occur by negligence, oversight or accident. Risk Assessment is a step in risk management process. Risk assessment is measuring two quantities of the risk R, the magnitude of the potential loss L, and the probability p that the loss will occur. Risk Control is a process that eliminates the threat from hazards. It includes coordinated activities to direct and control an organisation with regard to risk. Risk mitigation is a systematic methodology used by senior management to reduce mission risk. Mitigation is defined as any action taken to permanently eliminate or reduce the longterm risk to human life, property, and function from hazards. These four basic steps of risk management shall be applied to managing pipelines risks. Step 1: Identification of Pipelines Risks in Nigeria Risks associated with pipelines in Nigeria are Pipeline rupture from manufacturing defects of line pipes and construction/ installation error Pipeline leaks from corrosion due to age, activities of sulphur reducing bacteria, fluid flow velocities, operating pressure and temperature. Whip lashing and snaking pipelines under high pressure. Pipeline fire from the activities of bunkerers or vandals Pipeline explosion from acts of terrorism by aggrieved third parties. The threats that could bring about these

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pipelines hazards in Nigeria are 1. People 2. Materials 3. Methods 4. Environment 5. Non-Compliance with pipelines safety regulations 6. Socio-economic politics in the Niger Delta 7. Encroachment into pipelines right of way due to urbanisation 8. Prevalent poverty in Nigeria Assessing the Identified Risks The next thing to do is to assess the risks using a Risk Assessment Matrix (RAM). The RAM is a tool that standardises qualitative risk assessment and facilitates the categorisation of risks from threats to people, assets, environment and reputation of organisations. The use of RAM makes risk assessment simple for every one to understand. It is an analytical tool that allows the user to analyse the severity and probability of risk event occurring. On the RAM, there are two axes- the consequence axis and probability axis.

What is the frequency of actual occurrence in defined geographical boundaries? What is the impact on people? What is the impact on the environment? What is the impact on assets? What is the impact on pipelines operators reputation? Is the risk high i.e. in the red region? Is the risk medium i.e. in the orange region? Is the risk low i.e. in the blue region? Has it happened before and with what actual severity level?

In view of the fact that there have been series of pipelines incidents in different parts of Nigeria, potential and actual risk rating would then be used with reference to locations. Using the data in Table 1, potential risk rating for pipeline fire in Lagos would then be: a) On people- E5P (E implies that pipelines fire incident has occurred more than once per year in Lagos. 5 is the most likely severity outcome on people i.e. multiple fatalities or deaths.) Using the Shell EP matrix table, it falls within the red region suggesting that the risk is high on people. b) On Assets: - E2A (E implies that pipelines fire incident has occurred more than once per year in Lagos. 3 is the most likely severity outcome on assets i.e. moderate damage). E3A falls within the red region implying that the risk on assets is also high. c) On Environment: E2E (E implies that pipelines fire incident has occurred more than once per year in Lagos. 2 is the most likely severity outcome on the environment i.e. minor effect damage). E2E falls within the orange region implying that the risk is

Fig 1 Shell EP Risk Assessment Matrix

Using the matrix, the following guide questions should be asked: What is the likelihood of occurrence?

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medium on environment. d) On Reputation: - E3R ((E implies that pipelines fire incident has occurred more than once per year in Lagos. 3 is the most likely severity outcome on organisation reputation the environment i.e. minor effect damage). E3R falls within the red region implying that the risk is high on the reputation of the owners of petroleum products pipelines in Lagos. Actual Risk rating: Again, using Lagos as the location the actual risk rating a) On people is 5P b) On Assets is 3A c) On environment is 2E d) On reputation is 3R. Therefore, pipelines risk could be said to be high in Lagos (and in most parts of Nigeria where there are networks of pipelines). Risk Control Measures When risk is high, it is intolerable and measures should be put in place to keep it to as Low As Reasonably Practicable (ALARP). To do this effectively, questions like Are there resources to bring the risk to an acceptable level? Is there organisation to do what is required? Are the structure and the know-how available? Is the government or operators of pipelines ready to deal with the intolerable risk? Is there a policy statement on this? From the foregoing, it then implies that risks controls can be categorised into soft and hardware issues. Software Elements of Risk Control Statutory Regulations- In Nigeria today, the regulations that bother on pipelines routing,

safety, integrity and decommissioning are the Oil Pipeline Act, the Petroleum Act, Nigerian Urban and Regional Planning decree no 88 of 1992 and the Environmental Guidelines for the Petroleum Industry in Nigeria (EGASPIN). Enforcement of regulations- It is interesting to note that these regulations are adequate but the issue in Nigeria is non-compliance. For instance, according to the Oil Pipelines act Cap 338 part 3 section 14 there should be no building within 50 yards of a pipeline right of way. But what do we see today? Due to corruption and rapid urbanisation, many Nigerians no longer go through the Urban and Regional Planning units of Federal/State government for development approval. Even where approvals are sought from relevant authorities, site inspections are not conducted before development permits are issued. There are several newly developed areas in Port Harcourt and Lagos now where houses, markets, schools and some government infrastructures sit on oil and gas pipelines.

Fig 2- A local market located on top of crude oil Flowline row at a Portharcourt suburb.

In order to enforce compliance with regulations, there is need to create a paramilitary agency within the Department of Petroleum Resources (DPR) to handle all issues relating encroachment into pipelines right of way by property developers.

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This paramilitary agent should also be saddled with the responsibility of security surveillance on all refined petroleum products distribution pipelines in the country. By this, the menace of oil thieves would be greatly abated. Apprehended pipeline vandals and oil thieves should be handed over to the EFCC (Economic and Financial Crime Commission) for prosecution. The reality on the ground today is that the oil companies do nothing in cases of clear encroachment on their acquired pipeline right of way. Duty of care demands that the operators do everything within the ambit of the law to frustrate encroachers. Education- The NNPC is currently doing some campaigns on the dangers of pipeline vandalisation. There is need to intensify public educational drive to involve local communities hosting the vast network of pipelines binding Nigeria together. They need to be educated on the economic benefits of the lines to the nation and the impacts of spills/leakages caused by pipeline vandals on their environment. The international oil companies should also do more in the area of public enlightenment in their areas of operation. Hardware Elements of Risk Control Design and Engineering practises- Pipelines are designed to withstand stress over a number of years and therefore carry a design life span usually between 15-30 years depending on the geographical terrain where line is installed, the size of the pipe, material make-up of the pipe, and the characteristics of fluid the pipeline is designed to flow. The engineering design of pipelines ensures that the right materials are selected for the moulding of the line pipes in order to inhibit internal and external corrosion. Furthermore, pipes are coated using asphalt,

cement, polyethylene wraps, polypropylene wraps, neoprene wraps, and painting/metal spraying with epoxy paints before they are installed. This helps to further slow down external corrosion on the pipes. Cathodic protection is also done as part of the engineering process during construction of pipelines. This is achieved through a sacrificial anode or impressed current. Cathodic protection is another safeguard against corrosion. Burial of flowlines and pipelines is another standard engineering practise that reduces pipelines risk.

Fig 3- Pipeline coating using polyethylene wraps

Fig 4- Pipe coating using Epoxy paints

Planned Maintenance- Another effective barrier against the threats posed by pipelines risk is routine maintenance of the lines. This is achieved through pigging of the line at planned intervals. Pigging is the cleaning of pipeline internals to remove alien substance such as welding draft, rust, sand, gravel, etc. after completing new pipeline installation and after the line has been put into use. Presence

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of debris in the lines promotes localised internal corrosion. Condition Monitoring/NDT- Condition monitoring of pipelines is the act of checking the internal diameter/thickness of pipes after being subjected to extensive use. This is achieved through intelligent pigging which is the inspection of a pipeline from the interior of the pipe using an inline inspection tool/vehicle that deploys a Non-destructive Examination (NDE) technique to inspect the pipe wall condition. Injection of Corrosion Inhibitors: Chemicals that inhibit corrosion are injected into pipelines susceptible to the presence of Sulphur Reducing Bacteria (SRB). SRB is anaerobic i.e. an organism, that can live in the absence of atmospheric oxygen. SRB releases Hydrogen Sulphide into the line causing polarisation and rapid embrittlement. The release of Hydrogen Sulphide also reduces crude quality i.e. sours the crude. SRB feeds on internal coating material as its food thus reducing internal wall thickness of pipelines. Formaldehydes and amine derivatives are injected weekly or bi-weekly where SRB is prevalent in order to safeguard the technical integrity of the pipeline.

Inspections/Audits- Inspection of pipelines is a very effective hardware tool in keeping pipelines risks as low as reasonably practicable. Inspection of pipelines in Nigeria will give leading clues to impending danger or looming disaster if done at regular intervals. Most of the time, it is the locals hosting these lines that report pipe failures such as corrosion leak and vandalisation of pipelines to their operators. Even after reports have been lodged with the Operator (PPMC) and Nigerian Police Force, it takes the PPMC days to actually respond. The international oil companies actually respond promptly to fix the issues most of the time.

Operating Standards/Manuals- Operators of pipelines are expected to have operating procedures, manuals, and standards in order to systematically manage the lines for optimal benefits. Competence- The use of trained and competent staff for the operations of the pipelines is also key in safeguarding integrity of these lines. To achieve excellence in operations and to keep pipelines risks at ALARP, operators should train and re-train their staff especially on emerging technology in the pipeline industry. Risk Mitigation The main issues here are the recovery measures that could help limit or reduce to impact of loss of containment from pipelines systems. These measures include 1. Drills/Exercises Pipelines operators should have emergency drill plans that are religiously implemented in order to facilitate swift response during pipeline emergencies. They should also stock equipment and materials that could be used to provide first line response to prevent escalation before the arrival of external help.

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2. Emergency Response Body- Currently two bodies are saddled with emergency response in Nigeria. They are National Emergency Management Agency (NEMA) and National Oil Spill Detection and Response Agency (NOSDRA) in Nigeria. These bodies are currently ill equipped and are being managed by political appointees who have short-term focus. There is need for the JV operators (Shell, ChevronTexaco, ExxonMobil, and Total etc) and NNPC (PPMC) to take over the day-to-day management of NOSDRA for it to actualise its mandate. The takeover would ensure that the body is resourced with competent people, well equipped to respond to pipeline emergency in any part of Nigeria at short notice. After the takeover, NOSDRA should develop a nationwide Pipelines Emergency Plan with the mapping of all cities, towns and villages where are existing flowlines and pipelines. The plan should also identify areas that are noted for repeated pipeline failures, vandalisation and fire. The aim of the plan would be to facilitate rapid deployment and co-ordination of all necessary resources required to reduce the effects of loss of containment of pipeline fluids at any point on the mapped network of pipelines/flowlines. When the plan is implemented, it will achieve the following objectives Minimisation of danger to the public Assist in the process of controlling and containing the incident Facilitate the coordination of external authorities and services Ensure systemic flow of information during emergency and preserve relevant data for subsequent investigation.

lines cost money. As a last resort pipeline operators should insure the pipelines in order reduce financial loss. As is the case in the aviation industry, compensation and litigation costs arising from pipeline incidents could also be borne by oil and gas installation insurers. Conclusions Nigeria should do more than blaming poverty and vandals whenever pipeline tragedy befalls the nation. Ageing, construction errors and poor maintenance by the operators also cause pipeline disasters. There is need to also enforce strict compliance with town planning regulations in order to curb encroachment into acquired pipelines right of way. It is high time a pipelines enforcement agency is set up to monitor the lines. The use of modern technology for on-line monitoring of the lines should also be explored. Finally, the country should designate communities or locations hosting these pipelines as High HSE Risk Areas and adopt regulations for emergency plans in case of possible future disasters. References 1. Managing Risk by Vernor L. Grosses 2. Shell EP Risk Assessment Matrix 3. Risk Management Journals 4. Corrosion Control in Oil and Gas Facilities paper presented by Samuel Awonusi at an HSE forum in SPDC Port Harcourt.

3. Insurance- Repairs of failed or vandalised

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