Crude Oil Pipeline Failure - Report to Underwriters
The following is an excerpt from an Interface Consulting work product issued for use in litigation, arbitration, or mediation (dispute resolution). Names, dates, and other information has been modified for client confidentiality purposes.
XEPCO 30" Pipeline Analysis
The pipeline involved in this case is a 30-inch crude oil pipeline, which was constructed in 1979 and is owned and operated by XEPCO. It begins in Nueva Bolsa, Mexico, and ends in Rico Pico, Mexico.
Tapasitlan Sector – Flow from Nueva Bolsa to Tocumbre
From Nueva Bolsa to Rico Pico, there are four (4) pumping stations which move the oil through the pipeline. These are located in Nueva Bolsa, Tocumbre, El Espejo, and Jorge Benderez. The pipeline route and intermediate stations are depicted in the following graphic:
Pipeline Route and Intermediate Stations
The crude oil is stored at the Rico Pico terminal in preparation for distribution to area refineries. The kilometer marker measurements are based on the Nueva Bolsa station located at kilometer marker 0.
On November 12, 2003, a fire occurred at a crude oil pumping station owned and operated by XEPCO in Tocumbre, Mexico. Shortly thereafter, a segment of a XEPCO pipeline upstream of Tocumbre, between the pumping station in Nueva Bolsa and the pumping station in Tocumbre, ruptured, leading to a crude oil spill.
The pipeline rupture occurred around the same time as the fire in the pipeline’s downstream pumping station in Tocumbre, which was at kilometer marker 121+100. The pipeline rupture occurred near the town of Cristóbal at kilometer marker 9+200, between Nueva Bolsa and Tocumbre. This report will address the interrelation between the two (2) events involving the XEPCO pipeline.
Interface Consulting has been requested to provide a report addressing the causation of pipeline failure and due diligence evaluation of XEPCO’s pipeline maintenance in the area of the pipeline failure, as outlined in the following JBC letter excerpt....
The XEPCO pipeline rupture in the Cristóbal area was caused by a combination of the pipeline’s spike in operating pressure and the advanced level of the pipeline corrosion. The spike in pressure resulted from restricted flow of crude oil caused by a fire in the downstream pump station. As a result of investigations conducted by JBC and other parties, it has been determined that a seal on a pump at the Tocumbre pumping station failed, which led to a release of crude oil. The crude oil came in contact with a heated surface which then ignited.
Then, after experiencing a pressure surge when the Tocumbre pumps restricted the flow of the crude in the pipeline, the pipeline ruptured. Based on the photographs of the damaged section, the pipeline appears to be internally and externally corroded in the area of the rupture.
Interface Consulting’s conclusions and observations are based on facts relevant to the series of events which occurred and, to the extent possible, relate to the maintenance of the pipeline and applicable norms and standards of the oil and gas industry. The primary issue we have been asked to address is whether XEPCO exercised due diligence in the maintenance of the section of pipeline that failed.
It would be determined that XEPCO exercised due diligence if the facts of the situation indicate that XEPCO acted in a prudent and reasonable manner relative to how other pipeline operators would act in similar circumstances. Based on the information we were provided and our experience in the oil and gas industry, Interface Consulting concludes that XEPCO exercised due diligence and proper maintenance of the section of pipeline that ruptured. It appears that XEPCO had a pipeline maintenance procedure in place which was consistent with applicable industry practices and standards of pipeline companies in similar circumstances.
Although no single code or standard has specific criteria for performing pipeline maintenance, an effective maintenance program in the industry includes the following:
Pipeline external coating
Intelligent pigging inspection
Pressure relief systems
Chemical corrosion inhibitor treatment
Routine system condition monitoring and maintenance
The documents provided to us indicate that XEPCO followed the norms outlined above; therefore, it is reasonable to conclude that XEPCO exercised industry practice and prudent care in the maintenance of the section of pipeline that ruptured.
A pipeline company should have procedures in place for regular inspections and follow those procedures. Based on the information we have seen, XEPCO did have procedures in place, and it appears that XEPCO did follow those procedures. While we cannot certify that its maintenance procedures were performed properly, the data suggests that XEPCO did at least comply with its inspection and maintenance plan.
Based on the applicable industry norms, XEPCO’s maintenance practices were consistent with industry maintenance practices; therefore, we conclude that XEPCO did exercise due diligence from 1996 to 2003. Our conclusion is based on the following facts….
Despite XEPCO’s maintenance procedures and activities, it is apparent that significant corrosion occurred in the section of pipeline that ruptured. Corrosion protection systems are not 100% effective. In this case, although the pipe was corroded, there is no evidence to indicate that XEPCO’s lack of due diligence in the performance of its maintenance responsibilities was the cause of the corrosion.
III. Discussion of Pipeline Rupture
III.A. Review of Failure due to Overpressure
This section discusses observations and conclusions regarding the rupture of the pipeline near Cristóbal. The physical nature of the rupture indicates that it was caused by internal pressure exceeding the maximum operating pressure at the location of the rupture. The following information was extracted and adapted from one of XEPCO’s distributed control system (DCS) visual images. At 9:39 a.m., the pressure reached its maximum point. Immediately thereafter, the pressure dropped, indicating a sudden pressure release resulting from the rupture of the pipeline. These events are outlined in the following timeline:
Source: XEPCO Data
This particular segment of pipeline was positioned at an angle coming out of the ground. The rupture occurred at a point where the pipe was transitioning from underground to aboveground, at approximately the 6 o’clock position. Thus, the section of pipeline was both subjected to underground and aboveground conditions. Interface Consulting has been told that the coating used is a coal tar coating, which was common in the 1970s but is rare today.
For an aboveground pipeline, specific assessment of the coating should be made at crevice areas and on the underside of the pipeline. Areas where external corrosion has been identified require remedial action, including repair or replacement of the coating. In this case, the area where the rupture occurred was on the underside of the pipeline in a crevice area, as the pipeline comes out of the ground. This is clearly an area where special care should be taken to ensure that the coating is intact.
Diagram of Ruptured Segment
For a buried pipeline, assessment of the condition of the coating can be made by several techniques: 1) cathodic protection data; 2) special coating defect surveys; and 3) visual inspection at selected locations in bellhole excavations and where the pipeline is exposed for other reasons. Maintenance records provided by XEPCO indicate that regular inspections were performed. However, defects in coating may not be readily apparent, particularly in the location of the rupture.
III.B. Maintenance and Operation
This section discusses XEPCO’s performance of maintenance and operational procedures, including the intelligent pigging inspection performed....
Those 21 areas of repair are shown in the following illustration.
XEPCO Pipeline Repair Locations
III.B.1. Defect Repair
A contract was executed in February 2004 to repair defects. Records show that in area 9+200, repairs commenced on April 3, 2004. On May 13, 2004, the records show that excavation was begun. No other activities were performed in that area.
Eventually, in January 2005,....
III.B.2. Evaluation of Maintenance Records
Our analysis of XEPCO’s maintenance performance resulted in....
III.B.2.a. Cathodic Protection Maintenance Records
Records from XEPCO indicate that the scheduled maintenance was performed for the cathodic protection from....
III.B.2.b. Tube and Tank Maintenance Records
These records were examined…
III.B.2.c. Internal Corrosion Inhibitor System
Good industry practice indicates that operators of pipeline use a corrosion inhibitor system to minimize internal pipe corrosion. Such a system....
The following table illustrates the measurement and calibration data for....
III.B.3. Cathodic Protection System
Cathodic protection is one element of corrosion protection and is typically used in conjunction with coating. In the XEPCO pipeline section under evaluation, a cathodic protection system known as “impressed current” was utilized. An impressed current system uses a rectifier to convert alternating current to direct current. The principle is....
IV. Liability Conclusion
Interface Consulting has verified that XEPCO complied with the industry norms of a prudent pipeline owner in all of the following relevant areas which are the basis of an effective maintenance program.