Using Risk Assessment to Support Investment Decision-Making

This paper concerns the management of onshore transmission oil and gas pipelines and the choices that operators must make for investment decision-making, particularly concerning the environmental consequences of incidents where there is a loss of containment (LOC) event from the pipeline (i.e. a leak or rupture). Understanding the tolerability of environmental impact is a difficult concept within the assessment process; there is no simple equivalence with safety risk tolerability where the principle of gross disproportionality may be used in decision-making to screen safety expenditure. Pipeline operators must develop alternative approaches to balance expenditure on pipeline inspection and maintenance that may mitigate environmental risks, versus expenditure for other purposes such as safety improvements. This paper explores how pipeline operation is regulated, the types of failures that operators must safeguard against and some possible approaches to aid decision-making.

The significant environmental liabilities associated with the decommissioning and abandonment of pipelines are not considered here. However, it is important to note that the management of pipelines beyond their useful economic life has important challenges and its own separate set of regulations.

Onshore pipelines have functionally similar roles to road and rail transportation – i.e. the bulk movement of natural gas, petroleum liquids and less frequently other chemicals over long distances. Compared to road and rail, pipelines are widely regarded as the safest mode of transport of hazardous fluids over long distances between facilities. However, pipeline management is complicated by the typical absence of secondary containment, with bunding, surface water traps and other measures usually only constructed at key points along the pipeline – such as valve chambers and pump stations. If LOC events occur the pipeline product may therefore contaminate the immediate pipeline vicinity. Depending on specific factors such as topography and location of isolating valves, the volume of product released into the environment can be significant.

The safety consequences of pipeline failure can be serious. For example, the San Bruno, California pipeline explosion of 2010, caused by the rupture of a large-diameter gas pipeline within a neighbourhood resulted in the deaths of eight residents (see Figure 1). However, less catastrophic events may still lead to significant environmental impact including soil contamination and the pollution of water courses. For example, the Kalamazoo River oil spill (Parfomak, 2016:11), has to-date cost the operator Enbridge Energy approximately USD 1 billion to remediate (Belvederisi, C., Thompson, M., and Komers, P., 2018:15). Whilst pipeline failures are fortunately ISO ISO 9001 Page 4 of 15 ISO# QMS_7.3_7.4.F08 Rev. 0 rare it is the potential consequences of these events that is recognised in the various regulatory approaches adopted internationally.


To download our resources, you must become a registered site user. After you register, you will receive an email with a login username and password.

Want to Get Full Access to our Technical Resources?

Register Now