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New Technology Could End The Debate Over Pipeline Safety

Tyler Durden's picture




 

Submitted by James Stafford via OilPrice.com,

Who could have ever imagined that North America would surpass Saudi Arabia as the world’s largest producer of oil and natural gas liquids? A decade ago, that would have seemed laughable.

Yet that’s exactly what has happened; and it’s not just Saudi Arabia that has been left in North America’s dust -- Russia has, too.

The surge in North American oil and gas production is arguably the most important development in energy over the last decade. That’s the good news. The not so good news is that North America doesn’t have nearly enough oil and gas pipelines to accommodate its 11-million-barrel-a-day output level.

The famously unresolved proposed Keystone XL pipeline would carry oil from Canada to the U.S. Gulf Coast, but its future is in legal and political limbo. The controversial Northern Gateway pipeline, proposed as an alternative to Keystone XL, would connect Canada’s oil sands to the Pacific Coast, allowing greater volumes of oil to be shipped to Asia, but it, too, is still on the drawing board.

Both are good examples of how pipelines – considered the safest way to move oil and gas – have become politicized and scrutinized, and not without reason. Despite their reliability, pipelines still lead to an unacceptable rate of safety mishaps. They corrode and rupture, which threatens workers and nearby communities. In 2013 alone, over 119,000 barrels of oil were spilled in 623 incidents.

America’s existing pipelines are getting older and more prone to corrosion, and over the next five to 10 years, there will be a significant increase in the number of new pipelines.

And that is creating a huge opportunity for better pipeline safety technology.

Monitoring and detecting corrosion in pipelines is still a crude affair (no pun intended). Pipeline companies tend to underspend on safety, concerned only with meeting the minimum regulatory requirements.

One of the major ways pipeline operators detect corrosion is with a “pig,” a machine that travels down the inside of a pipeline looking for problems.

Pigs are not new -- the industry has long relied heavily on them—and the newest generation of pigs, known as “smart pigs,” is considered an improvement over the pigs of yesterday. Smart pigs give a read on the state of the pipeline, such as cracks, corrosion, and metal loss. Operators receive this information in a control room and can then dispatch crews to fix the problem. As of 2012, 93 percent of pipeline inspections were conducted using smart pigs.

But smart pigs might not be enough. Enbridge (NYSE: ENB), a major Canadian pipeline company, has spent over $4.4 billion to upgrade pipeline safety. It is spending big bucks after one of its pipelines spilled oil into the Kalamazoo River in 2010 – a corrosion breach that Enbridge’s smart pigs failed to detect ahead of time.

And that’s the problem: despite recent advances, smart pigs aren’t terribly accurate. They also require pipeline operations to shut down (you can’t pump oil through a pipeline if there is a machine in the way), and analyzing the data smart pigs gather can take some time. The Wall Street Journal ran an article last year that talked about the pitfalls of smart pigs, even as pipeline companies continue to depend heavily on them.

So alternative methods to detect trouble spots are needed. One method for detecting corrosion uses a device from outside the pipeline. A series of sensors placed on the outside of the pipeline can search for corrosion without interfering in operations.

Pipeline safety company Fox-Tek, a subsidiary of Augusta Industries (CVE: AAO), uses such a system to detect corrosion, as well as a fiber optic system to detect bends, strains and stress in pipelines.

But the real innovation in Fox-Tek’s system is its data analytics package. Companies that use smart pigs usually need to spend months doing post-inspection analysis, but Fox-Tek has developed proprietary software that does continuous and automatic analysis.

Fox-Tek’s sensors gather information and automatically send back confidential reports on everything the company needs to know – temperature, pressure, strain, rates of corrosion, etc. in the form of handy graphs, charts and diagrams. It eliminates the need for an army of people to go out and inspect pipelines and then come back to do the analysis.

The pipeline safety market is massive and growing, but one of the major hurdles for new technologies like advanced sensors and software will be reluctance by pipeline companies to proactively invest in corrosion management and maintenance. In the past, they have largely focused on the bare minimum and viewed safety as a regulatory requirement.

However, there seems to be a sea change in the pipeline industry, particularly since operators are running into an environmental backlash. The blocking of several high-profile pipelines may have finally gotten the attention of the industry. Bringing local communities onboard and acquiring permits from regulators will require pipeline operators to demonstrate improved safety throughout their networks.

But above all, pipeline companies will see dollars saved by using cost-effective monitoring systems to reduce pipeline leaks. Enbridge has been forced to spend around $1 billion to clean up its mess in the Kalamazoo River, which was the result of a corrosion breach. It could spend a fraction of that to have better information on pipeline corrosion to prevent a growing problem from getting worse. That could reduce the frequency of future pipeline spills.

This could be a game changer in terms of how oil and gas pipelines are viewed in North America. If operators use smart software to catch small problems before they can turn into big ones, the common view of pipelines as accidents waiting to happen could be erased. Instead of seeing them as an environmental risk, the public may grow to see them as just another piece of modern infrastructure that facilitates commerce.

 

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Thu, 08/28/2014 - 12:44 | 5154345 insanelysane
insanelysane's picture

"Pipeline companies tend to underspend on safety, concerned only with meeting the minimum regulatory requirements."

What?  The requirements are the requirements.

Thu, 08/28/2014 - 12:49 | 5154382 Herd Redirectio...
Herd Redirection Committee's picture

Northern Gateway won't be built.

British Columbians are fine with the pipeline itself.  They are not fine with oil tankers in the coastal waters off BC.

Thu, 08/28/2014 - 12:52 | 5154403 0b1knob
0b1knob's picture

Pipelines are unsafe?  Compared to what?   Uncle Warren's two mile long rolling atomic bomb tanker car trains?

Thu, 08/28/2014 - 13:34 | 5154645 CrazyCooter
CrazyCooter's picture

This article is for investors who don't know the basics about pipelines. This is a pretty sweeping and useless statement ...

If operators use smart software to catch small problems before they can turn into big ones, the common view of pipelines as accidents waiting to happen could be erased.

Just consider that *IF* my grandmother had balls she'd be my grandfather.

I suggest investors start with "Oil & Gas Pipelines in Nontechnical Language" first ...

http://www.pennwellbooks.com/oil-gas-pipelines-in-nontechnical-language/

... and then consider investing in the industry. Folks really need to have some background about an industry before sinking cash in stocks (at all time highs).

Regards,

Cooter

Thu, 08/28/2014 - 12:57 | 5154438 Payne
Payne's picture

when you speak of new technology I thought it would be new !

How about non-corrosive, non-rusting pipes ?

http://www.basaltfiberpipe.com/properties.html

 

 

Thu, 08/28/2014 - 13:15 | 5154542 PeeramidIdeologies
PeeramidIdeologies's picture

Good point! Creating safe, durable pipeline isn't the issue. Convincing companies to utilize the option is.

The bottom line, this year, is all that matters.

Thu, 08/28/2014 - 14:21 | 5154940 inhibi
inhibi's picture

Exactly, companies are looking for technology that will work on EXISTING pipelines and is cheap....well it doesnt exist. Of course we already have the technology for corrosion resistant, self-healing, bendable pipes. But, as aleays, it always comes down to money, and segmented concrete pipes are laughably cheap.

Thu, 08/28/2014 - 12:52 | 5154384 hedgeless_horseman
hedgeless_horseman's picture

 

 

One of the major ways pipeline operators detect corrosion is with a
“pig,” a machine that travels down the inside of a pipeline looking for
problems.

Wonka (WW +2.05 ) has been the industry leader for decades.

Thu, 08/28/2014 - 12:54 | 5154416 Emergency Ward
Emergency Ward's picture

Is that Chris Christie?

Thu, 08/28/2014 - 13:07 | 5154486 hedgeless_horseman
hedgeless_horseman's picture

 

 

No.  That is a Second Generation, "smart pig."

...the newest generation of pigs, known as “smart pigs,” is considered an improvement over the pigs of yesterday.

The old dumb pigs, like Christie, were prone to bad decision making, and would actually cause blockages, rather than fix them.

Thu, 08/28/2014 - 13:11 | 5154515 DOT
DOT's picture

I'm waiting for the i-pig 8s.

 

Thu, 08/28/2014 - 13:38 | 5154696 Metalredneck
Metalredneck's picture

Pig night!

Thu, 08/28/2014 - 12:45 | 5154351 Theta_Burn
Theta_Burn's picture

As stated this tech. has been around for yrs.

It all comes down to costs. Increase the fines for maintainance/neglect, with lowered insurance premiums for well maintained systems, and problems magically disappear

Thu, 08/28/2014 - 12:45 | 5154352 Supafly
Supafly's picture

Pump and dump.  I just shorted the stock.

Thu, 08/28/2014 - 12:48 | 5154373 Save_America1st
Save_America1st's picture

Lemme guess....Made in China?  Or if made in the U.S. who's producing the steel and electronics for it, the fucking Chinese?

Face it...if America wants to get out of the shit hole we're in we need to be manufacturing EVERYTHING here.  Not in China. 

But that can't happen with this fucked up Marxist, treasonous government, and it's crony, statist, Fascist, monopolistic, scumbag corporations.

These dirt-bag, greedy, sociopath, politi-scum have sold us down the river to the U.N. and the NWO globalist scumbags and the banksters. 

Thu, 08/28/2014 - 12:49 | 5154378 Loucleve
Loucleve's picture

I first met the "pig" in a James Bond movie!  They smuggled that guy out of Russia in it.

and what the hell exchange is CVE?

Thu, 08/28/2014 - 12:50 | 5154390 Fedaykinx
Fedaykinx's picture

screw this shit, uncle warren likes choo choo trains, capiche?

Thu, 08/28/2014 - 12:54 | 5154415 bigkansas
bigkansas's picture

Or we could just build refineries where we pump the oil.

Thu, 08/28/2014 - 14:34 | 5155009 FeralSerf
FeralSerf's picture

And freeways too!

Thu, 08/28/2014 - 12:56 | 5154418 youngman
youngman's picture

Going to have to change the name...the Muslims will not use it...

Thu, 08/28/2014 - 12:55 | 5154428 Seize Mars
Seize Mars's picture

What is that picture on the lead-in? Is that like a hi-tech dildo or something?

Thu, 08/28/2014 - 14:01 | 5154828 Seize Mars
Seize Mars's picture

Wait, that's the techno-pig? That doesn't look like the one with Pierce Brosnan. Anyways his also had the woman from Braveheart. She was hot. Hot!!!!

Thu, 08/28/2014 - 22:07 | 5156841 Seize Mars
Seize Mars's picture

Sophie Marceau. That's it.

I'm slapping myself inthe forehead with my own woody just thinking about her.

https://en.wikipedia.org/wiki/Sophie_Marceau#mediaviewer/File:Sophie_Mar...

Thu, 08/28/2014 - 12:59 | 5154431 oddjob
oddjob's picture

New Technology Could 'End The Debate' Over Pipeline Safety

The statist garbage that OilPriceBarf.com spews out everyday is vile. And to boot, Enbridge is by far the most reckless pipeline operator out there.

 

Thu, 08/28/2014 - 12:58 | 5154447 loveyajimbo
loveyajimbo's picture

Ticker: FBOP  Around .10/share  Worth a flyer or a Tyler pump/dump??  Grey markets are a casino... but... $25 Million market cap... if the tech is a real advantage... maybe a buyout...  Hold on to your clankers!!

Thu, 08/28/2014 - 13:02 | 5154469 TuPhat
TuPhat's picture

Pigs are good.

Thu, 08/28/2014 - 13:08 | 5154505 NYPoke
NYPoke's picture

Being a tech dork, this fiber monitoring was something I thought about years ago.  Could even use wireless, if needed.  Similar systems have been built for decades, just that they normally go in engines & what not.

 

Heck, I'll watch it.  If it dips to 5 cents again, why the heck not try a little...AA0.V that is.

Thu, 08/28/2014 - 13:10 | 5154514 q99x2
q99x2's picture

How bout a new bridge or two first.

Thu, 08/28/2014 - 13:17 | 5154556 ZeroPoint
ZeroPoint's picture

Too bad Americans won't be needing that extra gas and oil because they don't have jobs.

Thu, 08/28/2014 - 13:26 | 5154616 falak pema
falak pema's picture

11 billion produced ( for how long) vs 18 billion consumed. 

Not really the Saudi or Russian situation on import/export model.

Thu, 08/28/2014 - 14:01 | 5154826 Duude
Duude's picture

Are you suggesting having a crappier economy is best?

Thu, 08/28/2014 - 13:30 | 5154646 AchtungAffen
AchtungAffen's picture

The only sustainable technology is stone age technology...

Thu, 08/28/2014 - 13:59 | 5154811 Duude
Duude's picture

There will never a technology that will end environmental protests simply because their main objection is the use of oil in our economy.  For if it was about environmental polution caused in the transport, they would accept today's current pipelines over transporting crude by rail which results in far more environmental damage per barrel transported.

Thu, 08/28/2014 - 14:04 | 5154843 DaveA
DaveA's picture

New technology won't make much difference because safety isn't the issue here. What matters is imposing an ideology where carbon-based fuels are evil and anything that impairs their production is good.

Fri, 08/29/2014 - 13:49 | 5159444 MeelionDollerBogus
MeelionDollerBogus's picture

Carbon-based fuels are plenty fine, it's the gas-based emissions that are the problem. If solids were the emissions & used into carbon recycling aka, soil production, then there'd never be a problem.

Simply a matter of chemistry & problem-solving though our choice of vehicle or other machinery may need to change quite a lot to make efficient use of the carbon fuel as per what we do with it & any damage we sustain from its use.

This is a sensible thought most people ignore. Think about it: even metabolic damage to your cells from handling oxygen will slowly kill you, despite the need to have oxygen, hence the need to also have anti-oxidants.

Thu, 08/28/2014 - 14:06 | 5154854 SanfordandSon
SanfordandSon's picture

Never happen as it will hurt Uncle Warren. 

Thu, 08/28/2014 - 14:45 | 5155061 Lostinfortwalton
Lostinfortwalton's picture

So pipelines laid through the middle of nowhere are dangerous but putting the oil in rail tank cars and running long trains through towns large and small is quite OK?

Thu, 08/28/2014 - 15:01 | 5155097 oddjob
oddjob's picture

Middle of nowhere

 urbanite drivel.

Thu, 08/28/2014 - 14:53 | 5155101 kchrisc
kchrisc's picture

I smell propaganda poontang.

An American, not US subject.

 

https://www.youtube.com/watch?v=wkrvGDQ-kpU

Thu, 08/28/2014 - 14:53 | 5155105 baldski
baldski's picture

If we are talking about crude oil pipelines, the problem I am familiar with from oil tankers is not corrosion but internal EROSION.

Crude oil is found in layers of sand and this sand settles to the bottom of the pipe and is pushed along scouring the bottom of the pipe and eroding away the metal. We have to rotate the pipelines 90 degrees to prevent failure every 5 years on tankers. If the oil companies can prevent erosion failure, let's hear about it.

 

Fri, 08/29/2014 - 13:27 | 5159312 MeelionDollerBogus
MeelionDollerBogus's picture

Makes me wonder how much more expensive replacing pipes is vs filtering the liquid better to ensure there is no sand. Or, perhaps coating the inside of the pipe with something harder to ensure damage is very slow.

Perhaps it's the kickbacks to keep pipelines running damaged that ensures it's cheaper not to repair, not to filter? After all, Joe Sixpack / Señor Taxpayer pick up the real bill regardless.

Thu, 08/28/2014 - 15:31 | 5155271 fishwharf
fishwharf's picture

Probably the biggest improvement in oil pipeline safety happened in the late 1920s when Harold Price started building pipelines with arc welding.  Before then, pipelines were held together with rivets. which was labor intensive and the pipes leaked.

Thu, 08/28/2014 - 15:55 | 5155402 orangegeek
orangegeek's picture

warren buffet is heavily invested in trains.

 

warren buffet uses his cash to finance lobbying against pipelines.

 

so pipeline proponents need to blow a few more of his trains and then we may get some cooperation to finish these pipelines.

 

or may warren can corner the wheel barrow market and then Barry can hire people to walk the product to the gas stations.

 

such a shit show.

Fri, 08/29/2014 - 12:55 | 5159122 MeelionDollerBogus
MeelionDollerBogus's picture

FOOL.

How many rails OWN the land under the railway?

How much is actually attainable for near zero cost by pipeline operators using eminent domain?

For each railway track is a potential pipeline under it.

Thu, 08/28/2014 - 16:14 | 5155528 ImReady
ImReady's picture

How in the hell are we going to boost GDP if we don't drive trains back and forth( 20x/train) over the Canadian border? 

Thu, 08/28/2014 - 16:36 | 5155623 moneybots
moneybots's picture

"The famously unresolved proposed Keystone XL pipeline would carry oil from Canada to the U.S. Gulf Coast, but its future is in legal and political limbo"

 

Warren Buffett limbo.  Pipe lines are competion for trains.  Buffett owns trains.

Thu, 08/28/2014 - 18:40 | 5156164 zipit
zipit's picture

Put some lipstick on that pig and sell it to retail.

Fri, 08/29/2014 - 12:53 | 5159106 MeelionDollerBogus
MeelionDollerBogus's picture

oil FROM Canada is not oil PRODUCED by the USA even if it is pipelined there for re-sale.

This article is bogus on that point alone.

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