15 Jun Digital Track and Trace Comes to Pipelines
Sometimes it takes a shock to a system to accelerate a change already underway. Such a shock brought the concept of track and trace to the infrastructure sector. We should all be grateful.
When Disasters Happen
When bad things happen, inquiries are conducted, and changes are announced. It happens in aerospace (look at the Boeing Max situation), the nuclear industry (the Fukushima Daiichi melt down), and the cruise ship sector (the sinking of the Titanic). And it happens in the oil and gas industry who face the occasional mishap that goes on to trigger positive change.
For example, the Lac-Mégantic disaster caused a change in rail car standards. On July 6, 2013, while the town of Lac-Mégantic slept, an unattended fuel train at the top of a hill outside of the town slipped its brakes and derailed in the town. Several tankers, carrying highly volatile crude oil exploded, igniting an inferno and killing 47 people. Two years later, the US Federal Railroad Administration and Transport Canada jointly endorsed the new DOT117 standard rail car, and announced a phasing out of the older DOT111 standard car by 2025.
The pipeline sector came under intense scrutiny following a series of incidents that happened in a relatively short space of time.
The transformation started in July 2010, when a 40 foot segment of pipe in Enbridge’s Line 6B ruptured, spilling diluted bitumen into Talmadge Creek and on into the Kalamazoo River in Michigan. A million gallons of oil eventually bespoiled a 25 mile stretch of the river, causing over a billion dollars in recovery costs.
Naturally, hard questions are asked. Why this segment of pipe? Was it the pipe itself or the welding done on the pipe? Where did this pipe originate? What was its composition? Who inspected it? Are there similar segments of pipe also on the line and what is their condition?
Two months later, in September, a gas pipeline operated by Pacific Gas and Electric ruptured in massive fireball in San Bruno, near San Francisco. This conflagration killed 8, and levelled 35 houses. More hard questions.
A few months later, in April 2011, Plains Midstream experienced a pipeline rupture on its 44 year old Rainbow system near Little Buffalo, Alberta. This was a much smaller leak, but still ranked as the largest spill in Alberta’s history.
Regulators on both sides of the Canada-US border were stunned to learn that the pipeline companies were unable to quickly respond to these questions. 35% of companies could not say definitively what pipes were installed where, which mill manufactured the pipe, who welded them together, the conditions at installation, or the history of inspections. The conditions of the pipes were unknown.
For an industry that prides itself on operations excellence, and whose brand depends on reliability, this was a huge wake up call. Whatever mechanisms were in place to track pipe were not meeting the requirement. Something had to be done.
The regulators wasted no time in advancing the rules. The Pipeline and Hazardous Materials Safety Administration (PHMSA) in the US, and the Canadian Energy Regulator (CER) published their new rule books. In the US, PHMSA rules 192.67 requires pipeline material property records be complete and accurate. In Canada, CSA Z662 is comprised of over 500 pages of prescriptive and performance-based requirements and covers the technical aspects of design, construction, operation, maintenance, deactivation, and abandonment of oil and gas industry pipeline systems.
The biggest change to the code is that material records (ie, pipe segments, welds and other equipment) must be traceable, verifiable, complete and accurate. Or in lay terms, pipeline owners need to be able to show the full lifecycle of an individual segment of pipe, from source, to location, to condition, to disposal. Track and trace comes to pipelines.
Tracking is not the same thing as tracing, as we are learning in this pandemic. Tracking means knowing where something is. Tracing means knowing who or what you are, where you have been, what you have been doing, and where you are presently. Tracing is harder, needs a lot more data to do, but done well, yields a lot more useful insight.
Particularly for the pipeline industry, track and trace is a profoundly difficult problem to solve:
According to Natural Resources Canada (NRCAN), Canada has 840,000 km of pipeline. Pipe is sold in various lengths, but a common length is 40 feet or 12.2 meters. There are 82 segments of 12.2 m pipe per kilometer, yielding some 68,000,000 segments overall. There are at least 68 million welds holding these pipes together. The US has at least 10 times more pipeline.
Most land pipelines are buried a few feet underground, so as to keep them from interfering with animal migrations or inadvertent damage by falling trees or fires. Inspecting them poses its own challenge. Much pipe was installed before the invention of modern GPS systems, and are tough to precisely locate. Older maps are paper and may not be up to date. Undersea pipelines are exactly that — on sea floors and hard to access.
Pipelines can work reliably for decades. Enbridge’s Line 3, which is currently being replaced, was first built in the 1960s. Over time, segments of pipelines will be replaced, expanded, shut down, converted from transporting liquids to gas and back.
Pipelines cross the full gamut of terrain, from low valleys to high mountain passes, under rivers and lakes, through built up areas, and across sea beds. Pipelines need to be built to withstand all that Mother Nature can conjure, from floods, to fires, to earthquakes.
Hundreds of suppliers of tubular products from all around the world vie for business. Steel is the main ingredient, and much steel making is now in Asia. There are no universally accepted or fixed ways to characterise pipe products. Hundreds more companies move pipe, install pipe, weld pipe. The certifications of individual welders are important.
Not all pipe is the same. Pipe is sold in many different diameters and wall thickness, with different metals and different coatings.
Each segment of pipeline is characterised by its condition. How much have inside walls eroded over time? Has the steel corroded? How are the welds holding up? Have the metal walls suffered from stress, fatigue or micro fractures? What about the prepared bed on which the pipeline rests?
The data about new linear infrastructure originates in many different systems, with many different layouts, taxonomies and terminologies. Often the pipeline purchase contracts are silent on when the data should arrive, the format the data should take, and what the data should include. Frequently it arrives all at once, creating a huge burden to sift through the records.
Getting a Grip
Fixing the problem actually unlocks a lot of value for the pipeline sector.
One midstream company estimated that as much as 600 hours of people time is spent to prepare and manage the data associated with every $1m of their capital spend. Those are not cheap hours — an external consulting engineering rate of $150/hour is not unreasonable, or $90,000, or 9%. That time slows down projects, causes delays and inflates project costs. Better quality data about pipeline infrastructure will trim that cost budget.
Many pipelines register significant amounts of waste and delays associated with the importing and handling of tubular products. This is all costed into the pipe budget. A few years ago an oil sands executive confided in me his immense pride at completing a major upgrade at site, and having only $60m in left over pipe!
A few years ago, I ran a discovery workshop with a leading pipeline company who was trying to understand why some capital projects transitioned quickly and gracefully into operations, whereas others took months of arduous lifting. Much of that pain was traced back to poor quality data about what was actually installed where, and the reluctance of operations to take accountability to operate a new asset that had such uncertainties in the data. The longer the handover, the more delayed the revenue. The better the data, and the more confidence operations has in the data, the faster the inspections, the testing, the commissioning and the approvals.
Poor quality data about pipelines now detracts from value. Companies that buy pipelines will discount the value of the pipeline asset by 30-40% if it is not accompanied by rock-solid data about the installed pipe, components and welds. This implies that companies with pipeline assets on their books that are not backed up with quality data are potentially overstating the value of those assets.
Finally, I’m reminded how skillful litigators take full advantage of the unprepared in this area. It is not necessary to prove to a jury that a specific piece of data is inaccurate or incomplete. All the litigator needs to do is show that the system for managing data quality is error-prone, and all the data can be cast under a shadow. Pipelines that manage to a higher quality will be better able to defend themselves in litigation.
One solution that gets at the heart of this track and trace problem is Vintri Technologies. Vintri noted the pipeline problems in 2011, and has been working to crack the code on linear infrastructure track and trace. Leveraging digital tools like cloud computing, mobile devices and modern programming integrations, Vintri can ingest any pipeline origin data from virtually any source, and manage it from manufacturing to construction to operations and into whatever back end the pipeline company uses.
It’s not too hard to imagine track and trace rules coming to many different kinds of assets, including tanks, terminals, and turbines, particularly as the world builds out trillions of dollars in new infrastructure.
Track and trace has come to pipelines, and while it sounds like an onerous burden, clever digital technologies can make track and trace pay for itself.
Check out my book, ‘Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas’, available on Amazon and other on-line bookshops.
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