Category Archives: Oil

Enbridge gets nod for Alberta pipeline

CALGARY, Alberta, Nov. 26 (UPI) — Canadian pipeline company Enbridge announced it reached an agreement with shippers for the expansion of an oil pipeline in Alberta province.

Enbridge said it agreed to terms for a $1.8 billion expansion to its pipeline system between Edmonton and Hardisty, Alberta. The expansion envisions a 2015 capacity target of 800,000 barrels per day.

The company said the new line agreements would fall within its competitive toll agreement and include a 25 cent surcharge on shipments.

“The agreement with shippers on terms for the expansion continues our collaborative relationship, ensuring that we provide the facilities and services they need to maximize the value of their crude oil,” Stephen Wuori, president of liquid pipelines for Enbridge, said in a statement.

Enbridge aims to build the twin Northern Gateway pipeline from oil sands operations in Alberta to ports along Canada’s west coast. Critics of tar sands oil, the type of crude found in Alberta, say there are concerns about the environmental consequences associated with pipeline developments.

Enbridge said the Edmonton to Hardisty line should begin construction by 2014 once it gets full support from the government.

SOURCE: http://www.upi.com/Business_News/Energy-Resources/2012/11/26/Enbridge-gets-nod-for-Alberta-pipeline/UPI-47511353934923/#ixzz2DLctvybr

Sunshine Oilsands Plans $3.5 Billion in Capital Investment

China-backed Sunshine Oilsands Ltd. has budgeted about US$3.5 billion for capital investment in its Canadian oil-sands projects at a time when investors are on edge about the investment climate in energy-rich Canada.

The Calgary-based energy company’s projects are still in a preliminary stage, but it is aiming for its first production in the fourth quarter of 2013, with output of 5,000 barrels a day by mid-2014, Co-Chairman Shen Songning said in an interview.

Mr. Shen’s optimism about the projects—based in Athabasca Sands, Alberta—comes at a tense time for Chinese and other foreign investors hoping to capitalize on Canada’s huge reserves of oil and natural gas, much of which are expensive to extract as they are trapped in oil-sands deposits or in shale-rock formations.

Last month, the Canadian government turned down a US$5.18 billion bid by Malaysia’s state-run Petroliam Nasional Bhd., or Petronas, to acquire Canada’s Progress Energy Corp. The bid isn’t dead, however, as the two sides have agreed to resume talks on the purchase.

Next week, the government is expected to rule on the US$15.1 billion purchase of Canada’s Nexen Inc. NXY.T +0.78% by China’s Cnooc Ltd. 0883.HK +1.24%

The two deals are a litmus test for Canada’s aspirations to develop its oil and gas reserves and find new export markets at a time when its main buyer, the U.S., is cutting energy imports due to the success of shale projects there.

“Conventional oil supply is in demand and global production is expected to transition toward unconventional sources,” said Mr. Shen. “We see Canada’s oil sands playing a major role in meeting the needs of the world’s growing crude demand.”

Oil sands—a mix of sand and tarlike ultraheavy crude oil called bitumen—are costly to refine, but higher crude prices in recent years have made production from oil sands more feasible. Canada’s oil sands will likely account for 4.4% of global crude-oil output by 2035, up from 1.6% in 2009, the International Energy Agency has said.

Mr. Shen said the US$3.5 billion expenditure will be funded by cash flow from existing projects and potential energy joint ventures, as well as bank loans and proceeds from Sunshine Oilsands’ Hong Kong initial public offering in March. Possible joint-venture investors include China sovereign-wealth fund China Investment Corp. and China oil company China Petrochemical Corp., also known as Sinopec Group.

The company’s oil-sands projects can achieve positive cash flow per barrel when West Texas Intermediate prices are above US$50 a barrel, Mr. Shen said.

“We see oil prices hovering around US$100 a barrel over the next three to five years as demand for oil is rising on the back of strong economic growth in Asia,” he said. He didn’t specify whether he was referring to benchmark West Texas Intermediate or Brent crude.

He also said the company’s operations could benefit from falling natural-gas prices, because fuel costs account for 20% of Sunshine Oilsands’ total production expenses.

Sunshine Oilsands, which raised $579 million from the Hong Kong IPO, is planning a secondary listing in Toronto in the fourth quarter to increase shareholder value. The company’s share price has fallen 46% in Hong Kong since the stock’s debut.

“Our current share prices are extremely undervalued,” Mr. Shen said, adding the company’s net asset value per share is at 21.40 Hong Kong dollars (US$2.76). Shares in Sunshine Oilsands closed at HK$2.62 on Thursday.

In response to the decline in its share price, Sunshine Oilsands recently announced a $50 million share-repurchase program.

SOURCE: http://online.wsj.com/article/SB10001424052970204712904578092052566429508.html

Keystone XL pipeline concerns are being addressed

A state agency has issued its preliminary review of the Keystone XL pipeline that appears to indicate most concerns are being addressed.

The draft evaluation report, released Tuesday afternoon by the Nebraska Department of Environmental Quality, concluded that the new route of the controversial crude-oil pipeline successfully avoids the Sand Hills region of Nebraska, a step agreed to during a special session of the Legislature last year.

The report also stated that pipeline developer TransCanada Inc. had, by making some minor changes to the pipeline route in August, addressed concerns raised by the agency about crossing areas of sandy soils or areas near municipal drinking-water supplies of two small communities, Clarks and Western.

The agency also said TransCanada has agreed to compile an emergency response plan for leaks that might occur in the 36-inch, high-pressure pipeline, and buy $200 million in third-party liability insurance policy to cover any clean-up costs.

The company has provided the state with a chemical makeup of several forms of crude oil that will be shipped through the pipeline, which will carry 30 million gallons of oil a day. The exact composition of the oil, the agency said, will be made immediately available in the event of a leak.

Environmental groups, including Bold Nebraska and the Sierra Club, have raised concerns about the lack of information about the chemical makeup of diluted bitumen that will be carried by the pipeline.

While Tuesday’s draft report doesn’t raise “concerns” like those this summer about sandy soils and drinking-water wells in the path of the pipeline, he said it does “point out the impacts on different kinds of terrain” that will be crossed by the pipeline.

A public hearing on the draft report will be held at 6 p.m. on Dec. 4 at the Boone County Fairgrounds in Albion, Neb. Linder encouraged the public to comment on the report, either at the meeting or by mail or email.

A final report will be issued after the hearing. Gov. Dave Heineman will have the final say on whether the state approves the pipeline’s route across Nebraska.

That decision will be forwarded to the U.S. Department of State, which will make the final judgment on whether the entire Keystone XL project will be allowed. The project will transport oil from Canada’s tar sands region to the U.S. Gulf Coast, and pick up some oil from North Dakota and Montana along the way.

Read More Here:

Nigeria: Oil Spill Investigations ‘A Fiasco’ in the Niger Delta

The investigation process into oil spills in the Niger Delta has been challenged today by Amnesty International and the Centre for Environment, Human Rights and Development (CEHRD), as inconsistencies in Shell’s claims about sabotage were revealed.

Experts have examined evidence from the latest oil spill from Shell’s poorly maintained pipelines in the Bodo creek area and confirmed that it strongly indicates that the leak is due to corrosion of the pipeline. However, Shell appears to be ignoring the evidence of corrosion.

“The investigation process into oil spills in the Niger Delta is a fiasco. There is more investment in public relations messaging than in facing up to the fact that much of the oil infrastructure is old, poorly maintained and prone to leaks – some of them devastating in terms of their human rights impact,” said Audrey Gaughran, Director of Global Issues at Amnesty International.

Amnesty International and CEHRD asked US company, Accufacts, which has many years experience in examining oil infrastructure, to examine photographs of the pipe at the leak point. They stated: “This is apparently due to external corrosion. Notice the layered loss of metal on the outside of the pipe around the “stick” from pipe wall loss (thinning) due to external corrosion. It is a very familiar pattern that we have seen many times on other pipelines.”

“Shell have said locally that the spill looks like sabotage, and they completely ignore the evidence of corrosion. This has generated a lot of confusion and some anger in the community,” said Stevyn Obodoekwe, Director of Programmes at CEHRD. “We have seen the pipe and brought an expert to look at it, and it seems pretty clear it is corroded.”

Shell will now remove the affected length of pipe to a Shell facility where, according to the company, tests will be done.

Shell’s pipelines are old and many have not been properly maintained or replaced, with local people and NGOs reporting that the pipes in the Bodo area have not been replaced since 1958. When Amnesty International asked Shell to confirm the age and status of the pipes the company did not respond.

One year ago, the United Nations Environment Programme (UNEP) issued a major report on the effects of oil pollution in the Ogoniland region of the Niger Delta. Little has changed, as this latest oil spill at Bodo demonstrates. Among its findings, UNEP confirmed that Nigerian regulatory agencies “are at the mercy of oil companies when it comes to conducting site inspections”. UNEP also found that Shell had failed to adhere to its own standards in relation to maintaining its infrastructure.

Thousands of oil spills have occurred in the Niger Delta since the oil industry began operations in the late 1950s. Corrosion of the pipes and equipment failure were responsible for the majority of spills. In recent years sabotage, vandalism and theft of oil have also contributed to pollution. However, corrosion and equipment failure remain very serious problems which have never been addressed.

Oil companies are responsible for ensuring that, as far as possible, their equipment is not vulnerable to tampering. However, Shell has not responded to request to for information on any measures it has taken to prevent sabotage and vandalism.

On 3 August Amnesty International and CEHRD published a report on an oil investigation at Bodo in June/July 2012. The report focuses on the lack of transparency in the process and the failure of shell to disclose any information on the condition or age of its pipes.

Since 2011 Shell has posted oil spill investigation data on its website. This move was welcomed by Amnesty International and CEHRD. However, as research by both organizations has made clear, the process on the ground remains highly problematic, and there is a lack of independence and transparency in the investigations themselves.

SOURCE: http://allafrica.com/stories/201208030327.html

NTSB blame multiple corrosion cracks & ‘weak’ regulations – Kalamazoo Oil Spill

The National Transportation Safety Board blamed multiple corrosion cracks and “pervasive organizational failures” at the Calgary-based Enbridge pipeline company for a more-than-20,000-barrel oil spill two years ago near Michigan’s Kalamazoo River.

The cost of the spill has reached $800 million and is rising, the NTSB said, making the pipeline rupture the most expensive on-shore oil spill in U.S. history. The pipeline’s contents — heavy crude oil from Canada’s oil sands — have made the spill a closely watched case with implications for other pipelines carrying such crude.

The NTSB also blamed “weak federal regulations” by the Pipeline and Hazardous Materials Safety Administration for the accident, which spilled at least 843,444 gallons of oil into a tributary of the Kalamazoo in Marshall, Mich. The oil spread into a 40-mile stretch of the Kalamazoo and a nearby wetlands area.

“This accident is a wake-up call to the industry, the regulator, and the public,” NTSB Chairman Deborah A.P. Hersman said in a statement.  She added that “for the regulator to delegate too much authority to the regulated to assess their own system risks and correct them is tantamount to the fox guarding the hen house.”

The spill began about 5:58 p.m. on July 25, 2010, when a 30-inch diameter pipeline ruptured. Twice, Enbridge workers tried to restart the pipeline after alarms about abnormal pressure in the line and 81 percent of the oil spilled over 17 hours after those alarms, the NTSB said.

“We believe that the experienced personnel involved in the decisions made at the time of the release were trying to do the right thing,” Enbridge’s chief executive, Patrick D. Daniel, said.“As with most such incidents, a series of unfortunate events and circumstances resulted in an outcome no one wanted.”

The case is being scrutinized by industry and environmental groups because it could threaten plans to build new pipelines to carry crude from Canada’s oil sands, or tar sands, into the United States. TransCanada’s controversial Keystone XL pipeline is one of the plans awaiting approval.

The NTSB, part of the Transportation Department, said the Enbridge pipeline break “was the result of multiple small corrosion-fatigue cracks that over time grew in size and linked together, creating a gaping breach in the pipe measuring over 80 inches long.”

SOURCE: http://www.washingtonpost.com/business/economy/ntsb-blames-enbridge-weak-regulations-in-kalamazoo-oil-spill/2012/07/10/gJQAWzqgbW_story.html

Alberta’s big small-pipe problem

They are the little brothers and sisters of the pipeline world. Some are barely large enough to jam a hand into, but they do the dirtiest work in the energy business, ferrying great volumes of raw oil and gas from wells to processing plants.

And though they are small, they often carry large risk, an issue of mounting concern in Alberta, a province that has seen a series of spills train a global spotlight on pipeline safety.

These smaller pipes can often be overlooked, next to the big ones that garner attention when they rupture into the Kalamazoo River — an accident that cost Enbridge Inc. a historic $3.7-million (US) fine this week, on top of $725 million in cleanup costs — or at an Alberta pumping station where the company recently had another large spill.

But in Alberta, the pipe is almost all small. Some 327,000 kilometres of pipe that is eight inches and smaller in diameter spread across the province like a network of veins. It is roughly 90 percent of all pipe in the province, a vast web of steel that is uniquely vulnerable to problems, and uniquely difficult to both oversee and maintain.

In large measure, that’s because the stuff those pipes carry is often nasty: impure, unprocessed energy laced with hydrogen sulphide and water and sand, each of which can inflict damage on buried steel. Construction methods of smaller pipes mean they often can’t be monitored and inspected using the best tools. Some of the junior and mid-sized oil and gas companies that run them don’t have the large dedicated inspection teams employed by larger pipeline operators.

Alberta’s energy regulator says problems on small pipes often lead to small spills, dampening the need for concern.

Alberta’s oil and gas regulator, the Energy Resources Conservation Board (ERCB), noted in a 2007 report that “most of Alberta’s pipeline infrastructure is used for the production of raw oil and gas, which by nature can be highly corrosive.” It said corrosion has been growing as a problem — from 63 percent of all leaks and ruptures in a 1998 report to 70 per cent less than a decade later.

And though overall accidents have been declining, last year Alberta saw 1.5 failures per 1,000 kilometres of pipe — or nearly 500 on its length of small lines. That’s down from an average in previous years of 3.5. Many of those spills are small — all leaks, regardless of size, get reported. But the ERCB also doesn’t record spills at pipeline facilities, like pumping stations, where many of them happen. That makes its numbers tough to compare with other jurisdictions.

The risks on small pipes are magnified by the low flows on stretches that might carry intermittent volumes of product from, say, oil tanks to a processing plant. When flow is slow or stopped, water and hydrogen sulphide are better able to corrode pipe. Sediments can also deposit, creating a mud where microbes can begin to eat away steel.

The ERCB played down the effect of corrosive products, which tend to create “pitting corrosion” that leads to “small volume spills (small leaks) that are not a significant safety hazard because they do not catastrophically rupture,” spokeswoman Cara Tobin said in an e-mailed statement.

(Although small pipes can lead to big spills: In December, 2011, 12,000 barrels spilled from a small Pengrowth Energy Corp. line, while 5,000 barrels leaked from a small Pace & Oil Gas Ltd. well pipe in May). The regulator requires surveillance of pipeline right-of-ways, corrosion evaluations, yearly inspections of water crossings and “continues to review and update its regulations and requirements to improve all aspects of pipeline performance,” she said.

Plus, industry has ways to combat corrosion. Pipes can be protected with MATCOR’s “cathodic protection,” products which uses electric current to counteract corrosion.  Cathodic Protection is mandatory in Alberta. They can also be chemically shielded from corrosion, and maintained with pigs, devices that travel inside the pipe, either to scrub it or detect areas of weakness.

But small pipe is often the hardest to “pig.” Worldwide, roughly a third of all pipe is not piggable. Alberta’s ERCB has no figure on what percentage of its pipe cannot accept pigs — and pigging is not required — but it’s likely to be large. Alberta’s pipeline system is made up of an enormous number of very short lengths, averaging just 1.6 kilometres long.

SOURCE: http://www.bnn.ca/News/2012/7/4/Albertas-big-small-pipe-problem.aspx

 

In hours, caustic vapors wreaked quiet ruin on biggest US refinery

In the end, all it took was a small chemical spill — perhaps less than a barrelful — to bring down the newest, mightiest oil refinery in the United States.

Three weeks ago, while workers repaired a minor leak at the Port Arthur, Texas plant owned by Motiva Enterprises, a few gallons a day of so-called “caustic” was inadvertently seeping into the newly built crude distillation unit (CDU), the 30-story-high network of interconnected cylinders and latticed pipelines at the heart of the refining process.

While harmless when mixed with crude, the undiluted caustic vaporized into an invisible but devastating agent of corrosion as the chamber heated up to 700 degrees Fahrenheit ( 370 Celsius); the chemical gas raced through key units, fouled huge heaters and corroded thousands of feet of stainless steel pipe.

Now, just weeks after they commissioned the biggest U.S. refinery project in a decade, two of the world’s biggest oil titans — Royal Dutch Shell and Saudi Aramco , which own Motiva — are rushing to repair the potentially billion-dollar glitch that has added an embarrassing and costly coda to a landmark $10 billion expansion.

After a five-year effort to double the plant’s capacity, making it the largest in the country, they must now reassemble many of the same people and parts for a blitzkrieg fix that may exceed the original $300 million cost of the unit: corrosion experts are flying in from across the world; hundreds of workers are being hired; bespoke 30-inch (75-cm) stainless steel pipelines and 30-story cranes may need to be obtained quickly, according to sources involved in the repairs.

Sources familiar with the effort provided Reuters with the most detailed account yet of what officials believe went wrong at the 325,000-barrels-per-day (bpd) unit known as vacuum pipestill-5 (VPS-5), showing how a series of seemingly minor glitches crippled the vast plant.

TOO HOT TO HANDLE

Motiva has said little about the incident. Late on Wednesday, 11 days after it occurred, the company confirmed for the first time that the unit might remain shut for “several months”. Sources say officials are telling workers that the unit could be idle for as long as a year.

On Friday, in response to Reuters questions, Motiva spokeswoman Kayla Macke confirmed the contamination: “The preliminary inspection indicates that parts of the new unit have been contaminated with elevated levels of caustic.”

The extent of the damage is still not known as portions of the crude unit are too hot to enter, according to the sources. Some areas may not be accessible for weeks.

Motiva has not reached a final conclusion as to the cause of the damage, but has developed a working theory on what experts said appeared to be a rare instance of “accelerated chemical corrosion”. The unit’s intense heat was critical: the rate of corrosion can double with every 10 degrees Celsius.

Even as it pitted the inside of the atmospheric section, a giant still that performs the initial and most basic stage of converting crude oil into fuel, the damage went undetected. Only when two fires broke out and a heater ruptured — once crude resumed flowing — did operators suspect something was amiss.

“They had the first fire and then they had the second one 20 feet away. They knew they had a problem,” one of the sources said.

Why caustic continued flowing into the unit while it was idled to repair an unrelated leak is unclear, and is a key part of the investigation to establish cause. It is thought a valve failed to shut completely, but why that happened is unknown.

CAUSTIC INVASION

While Motiva’s VPS-5 was idling, authorities believe a few gallons each day of caustic leaked into the unit. The caustics are a base meant to negate the acid in cheaper heavy, sour crude that the new CDU was made to consume. They prevent residue from blocking pipes and reducing crude intake.

Normally, the amount leaked in the CDU would have been harmless, diluted by the crude. But only a small amount of hydrocarbon was circulating through the still while it was out of production, the normal method to maintain so-called “warm circulation” during a brief shutdown.

By the following weekend, unaware of the caustic incursion, Motiva began reheating the unit to resume operations; as the temperature reached 300 to 400 Fahrenheit, the caustic vaporized.

Ground zero was the atmospheric section, one of the simplest but most important machines in a modern plant. Although vast in scale, today’s units are in many ways similar to the simple stills used to convert crude into kerosene for lamps at the start of the U.S. oil industry in the 1850s.

The core of any refinery, the main still boils crude at intense temperatures to split the hydrocarbon molecules into the initial components of fuels such as gasoline and diesel; the bulk of the output is an intermediate feedstock that requires further refining in a host of specialized secondary units.

Unlike a refinery blast, the misfortune unfolding at Motiva was relatively slow to materialize. The fires that erupted from small pipeline cracks that Saturday were small enough to be quickly extinguished by the workers on hand at the crude unit.

The extent of the damage was understood within two days.

“We have the worst-case scenario,” one of the sources said. “Extensive damage throughout the crude unit. All of it.”

Three engineering experts agreed that what one called “accelerated chemical corrosion” was rare, but not unheard of.

“The temperature issue could be a factor as well,” said Kevin Garrity, president of NACE International, a global organization for engineers studying corrosion, and a 38-year veteran of the industry. He compared the effect to pouring sugar into hot tea, which dissolves the crystals much more quickly than in a cup of cold tea.

Normally, corrosion problems can be prevented.

“From a general sense you would not expect this kind of deterioration and problems in such a short period of time. You might not even expect it in 30 years if you have the right combination of technology and inspection practices,” he said.

REPAIRS

Motiva has yet to examine the fractionation towers — tall, thin, metal columns — as well as the main part of the atmospheric section, because they are still cooling from their operating temperatures, said sources recruited for the repair work.

The vacuum section of the VPS-5 — which takes the heaviest “residue” created in the atmospheric section and refines it in a vacuum, increasing the yield of feedstocks for other units — was not damaged, they said.

Operators have continued to run many of the unharmed secondary units, although without the crude tanks they must buy intermediate feedstock from other refiners or shut peripheral units, as Motiva did last week.

But stainless steel piping, some sections as large as 30 inches in diameter, was damaged. Such equipment, part of more than 700 miles of pipe used on the expansion project, is often built to order, and may be difficult and costly to replace.

“If someone has 30-inch stainless steel pipe for sale, I would guess they’re going to charge a premium price,” one of the sources said.

Instrumentation on the unit is also known to be damaged, according to the sources.

Up to 50 heat exchangers will need to be cleaned throughout portions of the new plant, according to IIR Energy, an industrial intelligence firm that gathers data on operations and project activity on thousands of assets globally.

Work on exchangers 300 feet (90 meters) above the ground will require large cranes, though likely not the giants needed for the original construction. The heat exchangers, which look like 30-foot-long cylinders collected in a metal frame, house lengths of tubing where feedstocks are warmed and refined products are cooled as they go to and from a refining unit.

IIR also told Reuters that all trays in the distillation column and components within the furnace would need to be replaced. It said no restart timeframe had been determined.

Soon the question of who is to blame will arise. The cost to complete repairs may be as much as replacing the whole unit, which was originally estimated to cost some $300 million when the project was launched in April 2005, according to IIR.

Without knowing exactly why the caustic leaked, it’s not possible to say who, if anyone, is at fault. The two main contractors for the project — Bechtel and Jacobs Engineering — declined to comment.

Meanwhile, the investigation continues, and oil traders await any word on when the plant will resume operations. Motiva will likely be “extra-cautious” in restarting, Auers of Turner, Mason and Co said.

“They’re really focused on the repairs,” one of the sources close to refinery operations said. “They don’t need to know the cause now. They’ve got 12 months to figure that out and fix it.”

SOURCE: http://in.reuters.com/article/2012/06/25/usa-refinery-motiva-idINL2E8HO4GH20120625

Texas refinery unit shut down for ‘several months’ as it investigates major corrosion problem

Motiva Enterprises LLC has announced it is preparing to keep its new crude oil unit shut for “several months” as it investigates major corrosion problems that have crippled the country’s biggest refinery weeks after a massive expansion.

In the first public acknowledgment of a potentially long-term outage at the Port Arthur, Texas, plant, Motiva co-owner Royal Dutch Shell Plc confirmed the 325,000-barrel-per- day (bpd) unit was shut due to “corrosion problems,” as posted on integritythatworks.com earlier this week.

“The outage of the new crude unit may continue for several months, while the causes of the issue are established and rectified,” Shell said in a statement late Wednesday.

Sources said earlier this week the outage, initially estimated at two to five months, could now extend to a year.

Shell, which runs the Motiva joint venture with state oil firm Saudi Aramco, said all secondary units built as part of the five-year, $10 billion project were fully operational, although some were running at reduced throughput.

Separately, sources familiar with operations said one of the new units — a catalytic feed hydrotreater that removes sulfur from feedstock going to the refinery’s gasoline-producing fluidic catalytic cracking unit — was being shut down this week because of a lack of feedstock from the idled crude unit.

The sources also said Motiva was shutting an older catalytic reformer, which creates gasoline additives.

Motiva officials were not immediately available to comment on details of the secondary unit operations.

In the statement, Shell said the refinery’s original 275,000 bpd complex was operating “as per plan.”

Motiva’s Port Arthur refinery is not shutting the refinery’s FCC, but will emphasize production of diesel, which is yielding higher returns for U.S. refiners as an export, the sources said.

The new crude distillation unit, which began production in April and was shut following a June 9 fire, may be idle for up to a year to repair extensive corrosion found in the unit.

SOURCE: http://in.reuters.com/article/2012/06/21/refinery-operations-motiva-portarthur-idINL1E8HL2TI20120621

Extensive Corrosion Found – Port Arthur Refinery

Extensive corrosion, that may require up to five months to repair, has been found inside a new 325,000 barrel per day (bpd) crude distillation unit at a 600,000 bpd Port Arthur, Texas, refinery, according to sources familiar with refinery operations.

The root cause of the corrosion, found in vessels and piping on the crude distillation unit (CDU), has not been determined, the sources said.

Damage from a fire on the CDU during an attempted June 9 restart was seen as negligible, the sources said.

The refinery owner won’t know the full scale of repair work needed until it determines the cause of the corrosion, the sources said.

A representative was not immediately available to discuss refinery operations. On Friday, the owner said there was no timeline for bringing the crude unit back into production.

The unit began refining crude oil in April and was officially commissioned at a May 31 ceremony

This particular refinery’s Port Arthur CDU was built to run heavy, sour crude oil grades that have a high risk of corroding refinery units due to high sulfur content.

“There’s extensive corrosion in the crude unit itself,” one of the sources said. “All of it. Piping, vessels, all of it. It could take up to five months to fix. It will be several months.”

The CDU, which does the initial refining of crude oil coming into the refinery and provides the feedstock for all other refining units, is the centerpiece of a $10-billion, 5-year project to expand the refinery to be the nation’s largest.

At the time, the CDU was shut down it was three weeks away from reaching full production, a refinery owner executive had said.

Searching for answers after Red Deer’s pipeline spill

For a pipeline that is nearly half a century old, a river crossing can pose all manner of hazards. Bacteria and corrosion can attack from inside. Floodwater, scouring away the river bottom and heaving against the exposed pipe, can damage the outside. Pipes installed using old methods can be particularly vulnerable.

Sometimes, the result is catastrophe.

Last week, the Rangeland pipeline, built in 1966 and run by Plains Midstream Canada, ruptured beneath the flooding Red Deer River. It leaked 160,000 to 480,000 litres of oil, coating the banks with crude when the waters receded and leaving a large stain on Gleniffer Lake, a reservoir that supplies drinking water to Red Deer, Alberta’s third-largest city.

It may take many months to conclude what went wrong with the Rangeland pipe, and Plains has declined to comment on the cause, saying it is focusing on a cleanup effort that continued on Monday with more than 100 workers.

Today, companies building across major rivers typically use horizontal drills to burrow deep beneath the water – anywhere from eight to 30 metres – into stable rock. Those crossings are considered some of the safest parts of a pipeline. “Virtually all creeks and rivers are drilled under,” said Kevin O’Brien, president of IMV Projects Inc., a Calgary engineering firm that works on pipelines. Environmental regulations won’t even allow other methods “except in rare circumstances where not technically feasible.”

Techniques decades ago involved digging into the riverbed. Dredges, diggers and backhoes were all used, sometimes with the help of temporary dams, to open a trench for the pipe. Depending on the method, the pipe might be pulled into place, or coated in concrete, floated above the trench with barrels and then dropped down and covered with sediment.

The risks were numerous: Trenching in a flowing river meant it was difficult to create a clean bed for the pipe. Dropping it into place could introduce stress and strain, creating weak spots. And the cover was not always certain: The pipe might be buried two to three metres from the bottom of the river, but rivers are dynamic systems with the power to sweep away sediment, exposing the pipe. When they do, the force of the water can crack a pipe, or throw rocks that puncture its sides. In other cases, the trench was too shallow, compounding the problem.

“Some of those older ones, they weren’t too deep. They might have a couple, three feet of cover,” said Barry Singleton, senior vice-president of Singleton Associated Engineering Ltd., which designs pipelines. Even then, construction crews knew that what they were doing might not last.

“Lots of times they would install two crossings – they would install a spare,” Mr. Singleton said. “There were concerns back in the day.”

But external issues are only part of the potential problems. River crossings are low parts of the pipe, where water can collect, posing a risk of corrosion. Older pipes also may not be used as consistently – the Plains Rangeland system, for example, operated intermittently – which allows sediment to collect in low spots.

“Things start falling out [of the oil] and start stagnating,” said Izak Roux, technical manager for RAE Engineering and Inspection Ltd., which specializes in pipelines. A kind of mud layer can build up, and “then you can start having what we call a bacterial attack. This bacteria can eat right through the steel, and then you get a leak as well.”

Worse, many older pipes use sharp bends to get into and out of the riverbed. Those bends can make it impossible to push through cleaning tools called pigs. Neither Plains nor Alberta’s Energy Resources Conservation Board responded to questions on whether the Rangeland pipe is accessible to pigs.

But those pipes “constructed in the ‘50s and ‘60s, not all of them are piggable,” Mr. Roux said. “That’s basically the problem we have on the older lines.”

SOURCE: http://www.theglobeandmail.com/news/national/searching-for-answers-after-red-deers-pipeline-spill/article4249733/?cmpid=rss1