Loss of Supply

The AS 2885 risk evaluation process requires the consequences of pipeline failure to be assessed on three dimensions (Appendix F2):

  1. human injury or fatality
  2. interruption to continuity of supply with economic impact
  3. environmental damage

(Also known as the people, supply and environment dimensions.)

It is interesting that the formal definition of supply impact includes the words “with economic impact“.  For some time now I have considered that a supply impact is significant only if it has an effect on the community rather than an economic effect.

In the AS 2885 risk matrix a severity of “Major” should be assigned if the consequence for people is “a few fatalities or several people with life-threatening injuries” or if the supply consequence is “prolonged interruption or long-term restriction of supply”.  But consider two pipelines with different delivery points:

  1. A plant producing LNG for export
  2. A major city that depends on the pipeline for 70% of its gas

A prolonged interruption to Pipeline 1 has a purely economic impact, affecting only the businesses involved in the pipeline and LNG plant, with no community or third party involvement.  In my opinion that is not a consequence that is comparable to “few fatalities or several life-threatening injuries”.  On the other hand a prolonged interruption to Pipeline 2 does seem to sit at roughly the same point on the severity scale as “few fatalities …”, as residents of Melbourne during the aftermath of the 1998 Longford disaster would probably agree.  The affected community would be severely inconvenienced, and in my mind that is what counts.

A bit of thought is necessary to understand the ramifications of supply interruption.  A pipeline that supplies a power station may have a major effect on a community, or none, depending on what other power supply options are available.  For a pipeline I once looked at in a third-world country the effect of supply interruption appeared at first glance to be purely economic (loss of profits to the multinational company that owned it) but once I remembered that the pipeline and associated projects would contribute something like 30% of the country’s GDP the loss of supply took on a whole different complexion because of the impact on a struggling society.

I have used the Major severity score in the examples discussed here, but similar illustrations could be developed for the other severity scores from Trivial to Catastrophic.  The principle is the same – impact on the community should count more than purely economic impact.

Of course nothing is ever perfectly clear-cut.  The Varanus Island failure in June 2008 was said to cost the WA economy $3 billion.  I don’t know how that was calculated but can guess it was probably the effect on third party industrial gas consumers who were shut down so that the limited gas available could continue to supply domestic consumers.  The community might not have been inconvenienced by cold showers and threats to hospital boilers, but the supply restriction had effects much more widespread than the parties directly involved (gas supplier and shippers).

I think that is the point – supply interruption counts when it affects third parties, either directly (blackouts, cold showers) or economically.  To my mind economic impacts on first and second parties (pipeline owners, gas shippers) don’t count for the purpose of the safety management study.

Discussion welcome …

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9 Responses to Loss of Supply

  1. Chris Hughes says:

    Good point Peter. However I have facilitated several SMS workshops where the client has required the use of their own company risk matrix rather than the AS2885 one, and many of these matrices give a heavy weighting to company reputation – and as long as the matrix does not give a lesser emphasis to the main AS2885 criteria of injury, supply and environment I see no problem in using them.

    Currently I am facilitating several workshops for the CSG developments in Queensland (as required by the APIA Code of Practice) and one of the biggest perceived risks is a large spill of produced water from a damaged line – not so much from any environmental damage but more for the negative publicity that might result. After all, a recent small breakout of HDD drilling mud into the Condamine River was reported in the media as a major disaster.

  2. petertuft says:

    I always insist that if a client want to use their own corporate risk matrix then they can go away and do that later outside the workshop (ie. reprocess the same threats through the alternative matrix). No-one has ever objected to that. AS 2885 is about safety, security and environment only, and gives you no flexibility – you must use the AS 2885 matrix. Things like reputation and financial loss are business hazards and I think are of no relevance to the technical regulation of pipeline safety. Which is not to say that they are unimportant to the companies involved, just that they must not be allowed to distract from the key safety requirements. I had one particularly bad experience trying to work with both the AS 2885 and a corporate matrix which taught me never to attempt that again.

    • Chris Hughes says:

      Certainly I would never try to use two different matrices – that would be a nightmare. And for AS2885 pipelines the standard is very clear that the matrix in Appendix F shall be used – I just don’t see any problem with adding other dimensions to the Severity classification as long as the three main dinensions are not diluted. After all, if a company wants to add additional protection to a pipeline to protect its reputation, and in doing so it reduces the risk to people, supply and environment, that surely has to be a good thing?

      For plastic CSG pipelines the APIA CoP mandates the use of the AS2885 SMS procedure but not the use of the AS2885 matrix – it only refers to AS4360, so any matrix can be used that meets AS4360 requirements.

  3. Anonymous says:

    Peter
    I am not fully following your logic.
    I agree with your argument regarding economic issues in a purely safety system.
    Economic issues are for company risk assessments.
    Does a loss of supply cause fatalities or injuries to the third parties?
    Was anyone injured in Melbourne in 1998?
    Are you saying that cold showers and hospital boilers are a safety issue?
    If it doesn’t, then there is no safety issue and should not be considered in the SMS.

    • petertuft says:

      Colin,
      Sorry, almost forgot to respond to this among the general busyness. This is all a bit subjective. One cold shower doesn’t count. When thousands or millions of people are inconvenienced through being unable to shower, cook, heat, etc then it becomes more significant. Failure of hospital boilers is indeed a potentially life-threatening issue. At an APIA Convention a few years ago there was a replay of a really interesting TV program made about the Pohangina Bridge pipeline failure in NZ. The effect on the community of loss of gas was dramatically greater than one might expect (notwithstanding the TV dramatisation). Among other things, if I recall correctly, it was harvest season in a major vegetable-growing area and because there was no gas to run the cannery the farmers lost much of their crops for the year. It is easy to underestimate how reliant modern society is on our energy sources and the widespread impact of a supply failure.

      • Chris Hughes says:

        When Longford blew up I was living in an all-electric dwelling on the Mornington Peninsular whilst working at Crib Point. We them moved to Sale to install the liquids bypass line necessary to get trains 2 & 3 back up and I was accommodated in a motel with gas heating and hot water – a consequence I would rate (at the time) as Major or even Catastrophic. It’s all very subjective!

  4. Colin Bristow says:

    Sorry Peter, I did not mean to be anonymous.

  5. Peter Owbridge says:

    In New Zealand (not sure about Australian Legislation) fuel and gas pipelines are deemed to be “Lifeline Utilities” under the Civild Defence Emergency Management (CDEM) Act and as such are mandated to have contingencies in place to reduce risk of loss of supply and ensure return to normal as soon as possible. Emergency Exercises and participation in Engineering Lifeline Utilities is essential to check reliance on each other for ensuring supply. The Power supply Utility can place additional risk on your continuity of supply etc so we need to ensure that we look beyond our internal boundaries when doing a SMS.
    We definitely need to take Loss of Supply into account.

  6. Pingback: Maui Pipeline Failure Reports | Pipelines OZ

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