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SPE 111899

Managing Pipelines Risk in NigeriaSamuel 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.

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 Nigeriansociety.

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-

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 intentionof 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 overlong 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

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2 Samuel Awonusi SPE 111899

Managing Pipelines Risk in Nigeria

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 theirdestination 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 systemof 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 Location Number of

Death

Dec 2006 Lagos 750

May 2006 Lagos 150

Dec 2004 Lagos 20

Sept 2004 Lagos 60

June 2003 Aba 105

July 2000 Warri 300

March 2000 Aba 50

Oct 1998 Jesse 1,000

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- Ourenvironment 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 Offshoreoil 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 Losses- Improper

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 ManagementProcess (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 methodologyused by senior management to reduce mission

risk. Mitigation is defined as any action taken

to permanently eliminate or reduce the long-

term 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

regulations6. 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 thecategorisation 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.

Fig 1 – Shell EP Risk Assessment Matrix

Using the matrix, the following guide

questions should be asked:

What is the likelihood of occurrence?

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

operator’s 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 matrixtable, it falls within the red region

suggesting that the risk is high on

people.

b) On Assets: - E2A (E implies that




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



the environment i.e. minor effect

damage). E2E falls within the orange

region implying that the risk is

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medium on environment.

d) On Reputation: - E3R ((E implies that




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 toan 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. Evenwhere 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 doingsome 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 ofoperation.

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 isachieved 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 isachieved 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 isanaerobic 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 technicalintegrity 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 atALARP, 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 operatorsshould 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 onthe 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.

3. Insurance- Repairs of failed or vandalised

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 oiland 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 tocurb 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 adoptregulations 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.

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