Corrosion control in the oil and gas industry

The annual cost of corrosion in the USA oil and gas industry is over 27 billion; leading some toestimate the global annual corrosion cost of the oil and gas industry as exceeding 60 billion. Forcompanies with oil or gas infrastructure, the need to reduce corrosionrelated costs is pressing. Further,public awareness and regulatory scrutiny of the environmental impact of releases of oil and gas haveenormously increased in recent years.

and Gas Industry

Sankara Papavinasam

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This book will help oil and gas practitioners responsible for corrosion management make technicallysound, effective, and efficient decisions Its greatest strength is that it strikes a middle-ground betweencorrosion science textbooks and technical practice documents.

The demographics in our profession are such that the bulk of our most experienced oil and gascorrosion practitioners will retire in the next ten years This is creating demand for new entrants, many

of which will be drawn either from universities or the oil and gas generalist community

The university-educated corrosion scientist will benefit from the background chapters on the oiland gas industry, giving the necessary context to convert their scientific knowledge into engineeringpractice The chapter on corrosion management, including risk, will be especially valuable becausethis topic is core to optimally managing corrosion threats but is normally absent from universitycorrosion science curricula

The oil and gas generalist who is trained in operations and engineering decision-making can usethis book to learn about corrosion from a facility operation context Available corrosion sciencetextbooks are like a foreign language to those outside of our profession After reading this book, thisnew corrosion practitioner can keep it as a reference to help identify unfamiliar corrosion threats anddetermine when they require the help of a corrosion specialist

Finally, the book is informative even for those of us who have spent many years inside the oil andgas corrosion professional practice community, and I plan to have one on my bookshelf as a reference.For sure, its presence will remind me of our genuine wish that our present and future colleagues willfind success in our corrosion profession

Oliver Moghissi, Past NACE President (2011–2012)

xix

The annual cost of corrosion in the USA oil and gas industry is over $27 billion; leading some toestimate the global annual corrosion cost of the oil and gas industry as exceeding $60 billion Forcompanies with oil or gas infrastructure, the need to reduce corrosion-related costs is pressing Further,public awareness and regulatory scrutiny of the environmental impact of releases of oil and gas haveenormously increased in recent years.

The oil and gas industry is striving to reach ‘zero failure’ The key elements to reach ‘zero failure’due to corrosion include:

• Precise assessment of corrosion risks,

• Implementation of cost-effective methods to control corrosion,

• Accurate monitoring of corrosion rates at various stages of the infrastructure,

• Maintenance of corrosion control strategies for the entire duration of the infrastructure,

• Incorporation of industry best practices and standards in corrosion management, and

• Treatment of oil and gas infrastructures as one system in order to avoid the impacts of onesegment’s corrosion management program on another segment

The overall objective of this book is to present the unique 5-M methodology to help the industry toreach this ‘zero failure’ goal The book discusses the characteristics of each of the methodology’s fivepillars: Modeling, Mitigation, Monitoring, Maintenance, and Management It describes imple-mentation of the 5-M methodology in various sectors of the oil and gas industry including production,transmission, storage, refining, and distribution

This book also provides the reader a gateway to industry’s best practices, 1,000+ internationalstandards, and fundamental scientific and engineering principles It is based on the author’s twodecades of experience in the field and on reviewing 10,000+ references and case histories

Chapter 1 provides a bird’s eye view of the oil and gas industry It discusses the importance ofenergy from hydrocarbons, describes their different types, indicates their sources, and provides a briefhistory of the industry This chapter then explains how the industry is regulated by various governmentagencies in North America, and finally presents the impact of corrosion on the industry

To use hydrocarbons as energy source, they must be extracted from underground, all other energy containing products separated from them, and the different types of hydrocarbons separatedfrom one another These processes occur in different segments of the oil and gas industry networkoperating between the underground wells where the hydrocarbons are found and the locations wherethey are used as fuels, for example, in an automobile Chapter 2 presents various operating conditions

non-in different segments, the different types of materials used non-in those segments, and the different types ofcorrosion that may take place

The oil and gas industry uses various materials, both metals and non-metals More than 90% of thematerials used are metals, but non-metals serve critical functions in the industry Chapter 3 discussesthe basic properties of metals and non-metals, classification of materials, and types of materials used inthe oil and gas industry

The rate at which the corrosion takes place depends on several environmental factors includingflow, pressure, temperature, composition of oil phase, composition of water phase, composition of gas

xxi

phase, solids, microbes, pH, organic acids, and mercury Chapter 4 discusses the influence of ronmental factors.

envi-Different types of corrosion occur in various segments of oil and gas industry depending on theinteraction between the material and the environment The predominant types include general corrosion,localized pitting corrosion, hydrogen induced cracking, erosion-corrosion, microbiologically influencedcorrosion, erosion-corrosion, sulfide stress cracking, stress corrosion cracking (intergranular or trans-granular), chloride stress corrosion cracking, corrosion fatigue, high temperature corrosion, hydrogenflaking, corrosion under insulation, metal dusting, carburization, and graphitization Chapter 5 describesthese types of corrosion and their mechanisms, as well as general methods of controlling them.Based on several years of field experience and laboratory experiments, several models have beendeveloped to predict the risk of corrosion occurring inside the infrastructure Chapter 6 presents models

to predict hydrogen effects, general corrosion, pitting corrosion, erosion-corrosion, microbiologicallyinfluenced corrosion (MIC), high temperature corrosion, and top-of-the line corrosion (TLC)

A decision should be taken at the design stage either to use corrosion-resistant alloys (CRA) orcarbon steel In either option, implementation of appropriate mitigation activities is required Chapter

7 discusses some time-tested and proven strategies to mitigate internal corrosion including pigging,corrosion inhibitors, biocides, internal lining and coating, cladding, cathodic protection (CP), andprocess optimization

Successful selection of materials and successful implementation of mitigation strategies ensure thatthe infrastructure is safe for continued operation It is also important that under the actual fieldoperating conditions, corrosion proceeds according to the anticipated low rate Various techniques areused to monitor corrosion at different stages Chapter 8 discusses techniques to monitor internalcorrosion as well as to inspect wall loss resulting from internal corrosion

The external surface of oil and gas infrastructure is exposed either to the atmosphere (above-groundstructures) or to underground conditions (buried in soil or submerged in water) Electrically insulatingcoatings are applied to control the external corrosion of structures exposed to the atmosphere, and forunderground structures, electrically insulated coatings and cathodic protection (CP) are used Chapter

9 provides an overview of coatings and CP, as used to mitigate external corrosion in oil and gasinfrastructures

Corrosion may take place when the coating deteriorates and when the CP does not adequatelyprotect the areas where this occurs Chapter 10 discusses models to predict the effectiveness ofcorrosion control strategies and the rate of corrosion when the corrosion control strategies fail.Strategies to control external corrosion are integral to the infrastructure, i.e., the coating is applied asthe material (e.g., steel) is produced and the CP is applied immediately after the installation of theinfrastructure For this reason, monitoring techniques focus on estimating the effectiveness ofthe external corrosion control strategies as well as on estimating the external corrosion rate of theinfrastructure Chapter 11 discusses various monitoring techniques, including holiday detection, above-ground monitoring, remote monitoring, inline inspection, hydrostatic test, and below-ground inspection.Chapter 4 discusses the environmental factors which influence corrosion These factors are nor-mally measured for reasons other than corrosion control Chapter 12 discusses general types ofmeasurements, factors measured, importance of quality control during the measurement, andprecautions when using these factors in developing corrosion control strategies

All strategies (selection of appropriate materials that can withstand corrosion in a given ronment, development of appropriate model to predict the behavior of the system, implementation of

envi-mitigation strategies to control corrosion, and monitoring of system to ensure that the corrosion of thesystem is under control) would be inadequate if a good maintenance strategy was not developed andimplemented A comprehensive and effective program requires maintenance of five interdependententities (equipment, workforce, data, communication, and associated activities) Chapter 13 describesthe general characteristics of these entities.

Corporate management implements a top-down approach (risk-avoidance, goal-based, oriented) to minimize the risks of corrosion On the other hand, corrosion professional estimates risk

finance-by a bottom-up approach (field experience, fact-based, technically-oriented) Corrosion managementprovides a vital, seamless link between the two approaches In a way, corrosion management is acombination of art and science to balance financial and technical requirements Chapter 14 describescritical aspects of corrosion management This chapter also describes methodologies to integrate theinformation presented in Chapter 1 through 13 for developing an effective corrosion managementprogram

Corrosion professionals with a ‘bottom-up’ orientation may start reading the book from Chapter 1,whereas readers with ‘top-down’ orientation may start reading the book from Chapter 14 Eitherstarting point will help the development and implementation of a risk-minimized, technically sound,and cost-effective corrosion management program

Both imperial and metric units are alternatively used in the oil and gas industry For this reason,both imperial and metric units are used to the extent possible without losing the flow of the book Inequations only unit used in the original reference is presented Factors to convert values from one unit

to another are listed in Appendix

I would like to thank the companies and individuals for granting permission to use copyrightmaterials Every effort has been made to obtain copyright permission from the sources and they areacknowledged I would be happy to hear and correct any errors or omission in providing properacknowledgment

Lastly, I would like to quote:

What we learned is smaller than handful

What we need to learn is larger than the universe*

Avvaiyyar (A respected poet from first century)

I would be happy to hear suggestions and ideas to further the knowledge

Sankara PapavinasamCorrMagnet Consulting Inc.Ottawa, Ontario, Canada

Seeds for the 5-M methodology and for this book were planted one afternoon in 2005 when a group ofcorrosion professionals brain-stormed key elements for developing effective corrosion strategies Eachone of us emphasized the importance of one key element:

• Mechanism/model (Tom Jack)

• Mitigation (Joseph Boivin)

• Monitoring (Yours truly)

• Maintenance (Bich Nguyen)

• Management (Tanis Lindberg)

We all soon realized that each of the element is equally important in developing effective controlstrategies Experience of organizing presentations, tutorials, workshops, and courses under the 5-Mmethodology title has been fruitful Many industry leaders pointed out that they have come acrossproposals and reports organized under the 5-M methodology

Most technical knowledge for writing this book was acquired at CanmetMATERIALS, where I hadthe privilege of working for close to twenty years I acknowledge with gratitude R Winston Revie forintroducing me to the oil and gas pipelines industry I would also like to extend my appreciation toAlebechew Demoz, Alex Doiron, Tharani Panneerselvam, Jennifer Collier, Bill Santos, MimounElboujdaini, and other colleagues at CANMET laboratories in Ottawa, Devon, Hamilton, and Calgary,Canada for their collaboration and support

I have had the fortune of developing friendships with several corrosion professionals duringNACE conferences, NACE Corrosion Technology Weeks, Banff Pipeline Workshops, ASTMCorrosion Committee meetings, and CSA Coating Committee meetings I would especially like tothank Nihal Obeyesekere, Jennifer Klements, Kimberly-Joy Harris, Amal Al-Borno, Dennis Wong,Peter Singh, John Shore, Ravinda Chhatre and Anand S Khanna for their support throughout theprogress of this book

I would also like to thank Trevor Place, Alan Bowles, and Doug Cariou for reviewing the initialdraft from a technical, business, and communication perspective Their feedback was invaluable fordeveloping the flow of the book I wish to express my sincere gratitude to all reviewers for their qualityand timely review as well as for their valuable input

My friends from my school days, Hari Prasad and Shaheen Taj, have always provided unwaveringsupport for all my initiatives

I have written this book based on two virtues that my father lives by and my mother helps me tofollow: ‘nothing other than being honest brings satisfaction’ and ‘do not come to any conclusion untilyou hear the other side of the story’ I dedicate this book to my parents

My special thanks are due to my wife and son for understanding my frequent absence from familyevents and responsibilities while working on this book Without their support and encouragement itwould have been impossible for me to undertake this project Throughout the writing of this book myfather-in-law and my brother-in-law have supported me with their friendly queries I also expressspecial thanks to my sister for her unconditional love I am blessed with love from innumerable aunts,uncles, cousins, nieces, and nephews I would like to specially remember Thiraviamama, Shanmukka,Ayyappamama, Chakkaathai, and Leelaathai for their affection

xxv

The Elsevier team has provided valuable support and encouragement throughout this project.

I would like to especially thank Ken McCombs, Katie Hammon, Kattie Washington, Joanna Souch,and Helen Stedman for their help

Sankara PapavinasamCorrMagnet Consulting Inc.Ottawa, Ontario, Canada

The Oil and Gas Industry

1

This chapter provides a birds-eye view of the oil and gas industry It discusses the importance ofenergy from hydrocarbons, describes different types of hydrocarbons, indicates their sources, andprovides a brief history of the industry The chapter then explains how the industry is regulated byvarious government agencies in North America, and finally presents the impact of corrosion on theindustry

The progress of civilization over the past two centuries has depended on the energy derived fromcrude oil, natural gas, coal, and nuclear reaction, as well as from renewable (wind, sun, biofuels, andhydroelectric) sources.Table 1.1 lists sources of energy in 2005; of these hydrocarbons (crude oiland natural gas) and coal comprised 84%.1Total global energy demand in 2030 is projected to be50–60% more than current levels.Figure 1.1presents the anticipated sources of energy in 2030; energyfrom nuclear and renewable sources could increase substantially, but energy from hydrocarbons andcoal would nevertheless be up to 80% of the total.2

The industry has produced 1.063 trillion barrels (bbl) of oil since its inception in the late 1800s Theglobal demand for oil in 2000 was 76 million bbl/day (27.74 billion bbl/year).Table 1.2presents

Table 1.1 Current Sources of World Energy1

Energy Source Supply Percentage)

Corrosion Control in the Oil and Gas Industry http://dx.doi.org/10.1016/B978-0-12-397022-0.00001-7

FIGURE 1.1 Anticipated Sources of Energy in 2030 2

Reproduced with permission from Cambridge University Press.

Table 1.2 )Worldwide Oil Production3

Crude Oil Production (Thousand Barrels Per Day) Country 1970 1980 1990 1991 1992 1993 1994 1995 1996

Saudi Arabia 3,789 9,903 6,414 8,223 8,308 8,087 8,000 8,074 8,083 United States 9,648 8,597 7,355 7,417 7,171 6,847 6,662 6,560 6,471 Russia NA)) NA 10,325 9,220 7,915 6,875 6,315 6,135 6,010 Iran 3,831 1,662 3,252 3,358 3,455 3,671 3,585 3,612 3,675 China 602 2,113 2,769 2,785 2,835 2,908 2,961 3,007 3,127 Norway 0 528 1,620 1,876 2,144 2,264 2,580 2,782 3,086 Venezuela 3,708 2,165 2,085 2,350 2,314 2,335 2,463 2,609 2,955 Mexico 420 1,936 2,648 2,774 2,668 2,673 2,685 2,722 2,854 United Kingdom 2 1,619 1,850 1,823 1,864 1,922 2,469 2,565 2,633 United Arab

Emirates

691 1,702 2,117 2,416 2,322 2,195 2,223 2,205 2,217

Nigeria 1,090 2,058 1,811 1,867 1,902 1,905 1,883 1,890 2,014 Kuwait 2,983 1,661 1,235 200 1,050 1,870 2,000 2,007 2,060 Canada 1,305 1,424 1,518 1,548 1,604 1,677 1,742 1,806 1,820 Indonesia 855 1,576 1,289 1,411 1,346 1,327 1,319 1,498 1,516 Libya 3,321 1,830 1,374 1,509 1,493 1,361 1,380 1,390 1,403 Algeria 976 1,020 794 803 772 747 750 764 816 Iraq 1,563 2,514 2,080 283 425 448 550 600 600

)Based on Table 1, page S2 of reference 1.3

))

annual production of the major oil-producing countries.3In 2030, global oil demand is estimated to beabout 37.6 to 50.4 billion bbl/year.

The industry has also produced 3,000 trillion cubic feet (TCF) [85 trillion cubic meters (TCM)] ofgas The remaining gas reserve is estimated to be 7,000 TCF (200 TCM) The global demand fornatural gas in 2000 was 88.7 TCF (2.51 TCM) per year In 2030, gas demand is estimated to be about130–212 TCF per year (3.7–6.0 TCM per year)

The energy (heat) content is a unique property of each type of hydrocarbon The normal unit used forheat is the British Thermal Unit (BTU) The amount of heat required to raise the temperature of onepound (lb) of water by 1
F is one BTU The heating value may be reported as higher heating value(HHV) and lower heating value (LHV) HHV is a measure of the gross amount of heat produced whenthe hydrocarbon burns LHV considers the loss of heat due to vaporization of water during the burning ofhydrocarbon The thermal efficiency (TE) can be calculated from the HHV and LHV using (Eqn 1.1):

Efficiency (LHV/HHV) KJ/m3 BTU/ft3 KJ/m3 BTU/ft3

Ethane C 2 H 6 66,032 1,770 60,395 1,618 0.91 Propane C 3 H 8 93,972 2,516 86,456 2,315 0.92 Normal butane C 4 H 10 121,779 3,262 112,384 3,011 0.92 Iso butane C 4 H 10 121,426 3,252 112,031 3,000 0.92 Normal pentane C 5 H 12 149,654 4,009 138,380 3,707 0.92 Iso pentane C 5 H 12 149,319 4,001 138,044 3,699 0.92 Normal hexane C 6 H 14 177,556 4,756 164,402 4,404 0.93 Normal heptane C 7 H 16 205,431 5,502 190,398 5,100 0.93 Normal octane C 8 H 18 233,286 6,249 216,374 5,796 0.93 Normal nonane C9H20 261,189 6,700 242,398 6,493 0.93 Normal decane C10H22 289,066 7,743 268,396 7,189 0.93 Hydrogen sulfide H 2 S 23,791 637 21,912 589 0.92 Carbon monoxide CO 11,959 321 11,959 321 1.00

1.3 What are hydrocarbons?

Hydrocarbons are chemical species containing only carbon and hydrogen atoms Hydrocarbons can bechemically classified into several categories, but with respect to the oil and gas industry three types areimportant: alkanes, cycloalkanes, and aromatic compounds

1.3.1 Alkanes (Paraffins)

In the oil and gas industry alkanes are known as paraffins Alkanes are saturated (all bonds betweencarbon and hydrogen atoms are single bonds) hydrocarbons Alkanes have a general formula CnH2nþ2;where ‘n’ is the number of carbon atoms.Table 1.4presents the chemical and physical properties ofsome alkanes

The simplest hydrocarbon, having just one carbon atom (n¼ 1), is methane Methane is the mary component of natural gas Natural gas containing only methane is called ‘dry gas’ In the past,natural gas was simply burned (known as flaring), but now it is used as a major fuel source Theadvantage of natural gas is that it produces less CO2when combusted compared with other hydro-carbons Hence it is considered a clean fuel

pri-Hydrocarbons with values of ‘n’ between 2 and 5 [(ethane (C2), propane (C3), butane (C4), andpentane (C5)] are collectively known as natural gas liquids (NGLs), liquid petroleum gases (LPGs), orcondensates At atmospheric pressure they exist in the gaseous state, but the application of pressureturns them into liquids Natural gas containing NGLs is known as wet natural gas

The alkanes with ‘n’ values between 5 and 8 [pentane (C5), hexane (C6), heptane (C7), and octane(C8)] are refined into gasoline (petrol) Due to its high energy density, easy transportability and relativeabundance, gasoline has become the most commonly used fuel in automobiles.Table 1.5presents thecommon names and uses of different alkanes

Table 1.4 Properties of Alkanes (Saturated Hydrocarbons or Paraffins)

Name Chemical Formula Melting Point (
C) Boiling Point (
C) State at 25
C

1.3.2 Cycloalkanes (Naphthenes)

Cycloalkanes are known as naphthenes Cycloalkanes are saturated hydrocarbons having one or morecarbon rings with a general formula CnH2n.Figure 1.2compares the structures of hexane (paraffin) andcyclohexane (naphthane); both have six carbon atoms Cycloalkanes have similar properties to alkanesbut higher boiling points Cyclohexane is commonly used as a solvent in the chemical industry andlaboratories It is also the raw material used to produce nylon

Table 1.5 Use of Various Hydrocarbons

Number of Carbons

in the Paraffin Chain Commonly Known as Used as

2 to 4) Natural gas liquids (NGL)

Liquid petroleum gases (LPG) Condensates

Fuel, blended with gasoline, raw material for producing ethylene, propylene, and butylene

5 to 8 Gasoline (petrol) Automobile fuel

9 to 10 Naphtha Raw material for chemical and plastics

11 to 15 Kerosene Heating oil and fuels for jet

16 to 20 Diesel Fuel in automobile and trucks and

heating oil

21 to 25 Greasy material Grease and lubricants

26 to 35 Asphalt Construction materials to pave roads

and protective coatings Above 35 Bitumen

(Each corner of the hexagon representing a –CH 2 group)

FIGURE 1.2 Comparison of the Structures of Hexane and Cyclohexane.

(A) Hexane (B) Cyclohexane (Each apex of the hexagon represents a –CH group)

1.3.3 Aromatic hydrocarbons

Aromatic hydrocarbons are unsaturated hydrocarbons with the formula CnHn They have at least onecharacteristic ‘six carbon ring’ called a benzene ring.Figure 1.3compares cyclohexane and benzene,which both have an ‘n’ value of six Aromatic hydrocarbons tend to burn with a sooty flame Many ofthem have aroma (smell) and are carcinogenic (cancer causing)

Hydrocarbons occur naturally in the earth According to the most widely accepted theory, bons were formed when organic matter (such as the remains of plants or animals) was compressedunder the earth, at very high pressure and high temperature for a very long time

hydrocar-Hydrocarbons may occur in the earth either as liquid or as gas Liquid hydrocarbon is commonlyknown as crude oil and gaseous hydrocarbon is commonly known as natural gas Crude oil is alsoknown as ‘petroleum’ – derived from ‘petros’ (a Greek term for stone or rock) and ‘oleum’ (a Latinterm for oil) An ancient term for petroleum is ‘rock oil’ An oil-producing well may also producegas The gas produced from an oil well is commonly known as ‘associated gas’ The relative pro-portion of gas and oil in the well is expressed as the gas to oil ratio (GOR) At relatively lowertemperatures, more crude oil is formed and at higher temperatures more gas is formed As we go

(A) Cyclohexane (Each corner of the hexagon representing a –CH 2 group)

(B) Benzene (Each corner of the hexagon representing a –CH group)

FIGURE 1.3 Comparison of the Structures of Cyclohexane and Benzene.

(A) Cyclohexane (Each apex of the hexagon represents a –CH2group) (B) Benzene (Each apex of the hexagonrepresents a –CH group; ring represents double-bond structure)

further beneath the earth’s crust, the temperature increases For this reason, gas is usually associatedwith oil in wells that are within one to two miles from the earth’s crest Wells deeper than two milesprimarily produce natural gas.

In addition to oil and gas, wells may produce several other substances, including salt water(commonly known as formation or produced water), organic compounds (nitrogen, oxygen, andsulfur-containing species), metals (iron, nickel, copper, mercury, and vanadium), and radioactivematerials (commonly known as NORM – naturally occurring radioactive materials) The gas phasemay contain, in addition to hydrocarbons, carbon dioxide (CO2), hydrogen sulfide (H2S), hydrogen,and helium The term ‘sweet’ is commonly used to refer to environments containing CO2with no

H2S The term ‘sour’ is used to refer to environments containing H2S Sour environments may alsocontain CO2

The less the hydrocarbons are contaminated with other non-energy substances, the easier it is toextract them from the earth To quickly express the value of crude oils, some industry bench markcrude oils have been established.Table 1.6presents some commonly used key industry benchmarkcrude oils The value of crude oil is also ranked using American Petrochemical Institute (API) gravity.API gravity and density are inversely related, i.e., the higher the density, the lower the API gravity(Table 1.7) and the higher the API value, the more valuable is the crude oil.5

In general, hydrocarbon sources may be broadly classified into conventional, unconventional, andrenewable

Table 1.6 Characteristics of Some Bench Mark Crude Oils

Name API Gravity Sulfur, % Source Remarks

Brent crude 38.3 0.37 North Sea 15 oils from fields in the Brent

and Ninian systems in the East Shetland Basin of the North Sea

West Texas

Intermediate (WTI)

39.6 0.24 North America

Tapis 45.1 0.10 Malaysia Light far east oil

Minas 35.0 0.80 Indonesia A weighted average of these

crude oils are known as The Organization of the Petroleum Exporting Countries (OPEC) reference basket

Arab light 34.1 1.78 Saudi Arabia

Bonny light 35.0e37.0 0.15 Nigeria

Isthmus 32.3e34.8 1.50 e 1.86 Mexico

Saharan Blend 43.5e47.5 0.10 Algeria

properties of rock in the reservoir should be conducive to the free flow of hydrocarbons The oil andgas industry uses five rock properties to determine whether the reservoir can produce hydrocarbons byconventional methods They are:

• Porosity: the ratio of the void space in a rock to the bulk volume of rock;

• Permeability: a measure of the ability of rock to permeate hydrocarbons through it;

• Fluid saturation: a measure of oil, water, and gas contents of a rock;

• Capillary pressure: a measure of ability of hydrocarbon to pass through a capillary tube which is

an indirect measure of whether the rock is wetted with water or oil;

• Electrical conductivity: a measure of conductivity of bulk fluid in the rock The oil-phase has lowconductivity and the water-phase has high conductivity

Conventional production may take place in three stages: primary production, secondary, and tertiary.During the early stages of production, the reservoir pressure and hydrocarbon content are high As thereservoir pressure and hydrocarbon content decrease, water is pumped into the well to continue toproduce from it This process is known as secondary recovery or water flooding Secondary recovery

by water injection increases the amount of oil recovered over primary production, but may still leavemore than 80% of oil in the reservoir To recover more oil, gas (CO2, N2or methane) may be injected.The process of recovering oil by injecting gas is known as tertiary recovery

A few countries with the largest conventional oil reserves account for more than 70% of carbon production.Table 1.8presents one estimate of the remaining quantities of conventional oil insome countries.2

hydro-1.4.2 Unconventional

Unconventional sources may be defined as those that cannot produce hydrocarbons at economic flowrates and in economic volumes unless the reservoir is first stimulated The stimulation techniques

Table 1.7 Relationship Between API Gravity and Density5

Classification of Crude Oil API Gravity Scale,

Density (kilograms per cubic meter)

include heat treatment, hydraulic fracture treatment, multilateral wellbores, and some other techniquesthat expose more of the reservoir to the wellbore According to estimates, the world’s remainingsupplies of unconventional resources are 13–15 trillion barrels of crude oil and 32,000 TCF (910TCM) of natural gas (Table 1.9).6Unconventional sources of hydrocarbons include oilsands, oil shales,gas shales, tight gas, coal bed methane, and gas hydrates.

Table 1.8 Supply of Oil in Selected Countries2

Country

Years Remaining for Conventional Oil Reserves Producing at Current Oil Flow Rates

quarters of the world’s known reserves are in Canada and Venezuela Oilsands represent about 66% ofthe world’s total reserves of oil According to estimates, the volumes of oil in Canadian and Ven-ezuelan oilsands are at least 1.7 trillion barrels (270 x 109m3) and 235 billion barrels (37 x 109m3)respectively.7–9

Most of the oilsands in Canada are located in three principal deposits in Northern Alberta:Athabasca, Cold Lake, and Peace River The deposits encompass nearly 47,845 miles (77,000 km2) ofland area The first Canadian oilsand mining operations started in 1967, the second began in

1978, and the third began in 2003 Currently several further mining operations are either underdevelopment or commercial consideration In 2005, oilsands accounted for 50% of Canada’s totalcrude oil output

The Venezuelan oilsands are commonly known as ‘extra heavy oil’ Bitumen and extra heavy oilare essentially the same The Venezuelan oilsands occur at higher temperatures 120
F (50
C) and theCanadian oilsands occur at freezing temperatures For this reason, the Venezuelan oilsands existmostly in the liquid state, whereas Canadian oilsands exist in semi-solid and solid states Hence theextraction of Venezuelan oilsands is relatively easier than Canadian oilsands

In the USA, oilsands are primarily concentrated in eastern Utah, with an estimated 32 billionbarrels (5.1 x 109m3) of oil These oilsands have been quarried since the 1900s and are used mainly aspaving materials

Oilsands are extracted by surface mining, or by in situ methods including cyclic steam stimulation(CSS), steam-assisted gravity drainage (SAGD), toe to head air injection (THAI), cold heavy oilproduction with sand (CHOPS), and the vapor extraction process (VAPEX) (see sections 2.8 and 2.9)

1.4.2b Shale oil

Shale oil is a fine-grained rock containing significant amounts of hydrocarbons.10The global deposits

of shale oil from which crude oil can be recovered are estimated to be about 3 trillion barrels (w500 x

109m3) Shale oil deposits occur in the USA, Estonia, China, Brazil, Germany, Israel, and Russia TheUSA possesses 68% of the world shale oil resources, but in 2009 Estonia produced 80% of its oilrequirements from oil shale.11

The most common method of extracting shale oil is by surface mining The in situ combustionprocess is used for extracting shale oil from far below the surface The extracted shale oil thenundergoes pyrolysis at 842 to 932
F (450 to 500
C) to produce oil shale (synthetic crude oil), shale gasand residue (solid) This process also produces sulfur, ammonia, alumina, soda ash, uranium, arsenic,and nitrogen Thus, similar to oilsands, the production of oil from shale oil is energy intensive andenvironmentally challenging

Most shale oil is used as fuel in power generation plants For example, 90% of the shale oil duced in Estonia is used for power generation Countries such as Romania and Russia also use shale oilfor power generation It may also be used to produce several products including carbon fibers,adsorbents, carbon black, phenols, resins, glues, tanning agents, mastic, road bitumen, cement, bricks,construction and decorative blocks, soil additives, fertilizers, rock-wool insulation, glass, and phar-maceutical products When the price of oil is high, however shale oil is used to produce crude oil

pro-1.4.2c Shale gas

Gas produced from shale is known as shale gas.12Shales containing gas have a high organic materialcontent (up to 25%), to which the natural gas is adsorbed For this reason, the shale has low

permeability for gas flow The shale must be fractured to increase gas permeability Techniques used tofracture the shale include hydraulic fracturing, horizontal drilling, and injection of large volumes ofwater containing sand particles at high pressure.

1.4.2d Tight gas

Tight gas refers to the natural gas trapped in reservoirs of low permeability The low permeability ofthe reservoir is due to the fine-grained nature of the sediments, compaction, carbonates and silicatesfilling the pores Gas from these reservoirs is produced by using similar special techniques to thoseused to produce gas from shale gas resources

1.4.2e Coal bed methane

Methane adsorbed onto the surface of the coal bed is known as coal bed gas or coal bed methane(CBM).13Coal beds predominantly contain methane, but they may also contain small amounts ofethane, propane, light liquid hydrocarbons, and CO2 To produce commercially, the methane content inthe coal bed should be more than 92% Extraction of methane from a coal bed depends on its porosity,the adsorption strength of methane onto carbon, fracture permeability, thickness of the formation, andinitial reservoir pressure Methane is extracted from the coal bed by drilling a steel pipe into the coalseam to release the pressure As the pressure in the coal seam decreases, methane adsorbed onto coaldesorbs and escapes to the surface through the steel pipe

1.4.2f Gas hydrates

Gas hydrates are solids with a cage-like chemical structure, in which natural gas (methane) moleculesare enclosed in water molecules Hydrates are formed naturally at sub-zero temperatures, whenmethane produced by the breakdown of organic materials solidifies with water Hydrates containimmense volumes of methane For example, one unit volume of methane hydrate may produce 160unit volumes of methane at a given pressure In addition ethane, propane, and butane hydrates alsooccur

Globally, the amount of methane in gas hydrates is estimated to be 1 x 104gigatons.14Canada hasthe most concentrated deposits of gas hydrates in the world Russia, USA, India, Japan, and China alsohave substantial deposits of gas hydrates The first hydrate core was obtained from water 5,635 feet(1,718 m) deep in Guatemala The second hydrate core was obtained from water 1,738 feet (530 m)deep in the Gulf of Mexico The Malik field in the Canadian Arctic was the first experimental field toproduce natural gas from gas hydrates

The formation and breakdown of gas hydrates depend on water content, composition of water,pressure (normally high pressure facilitates hydrate formation), and temperature (normally low orsub-zero temperatures facilitates hydrate formation) By varying the pressure, temperature, andadding chemicals (e.g., methanol or ethylene glycol), hydrates may be broken down to producenatural gas

1.4.3 Renewables

At this time, renewable hydrocarbon technology is not mature enough to replace fossil fuels, but ismature enough to supplement them In some countries, fossil fuels used in automobiles contain 10 to20% biofuels Many governments have passed legislation encouraging the use of renewable fuels

Among the renewable fuels, biofuels (bioethanol and biodiesel) are most promising Bioethanol ismixed with gasoline and biodiesel is mixed with diesel.

According to a 2006 survey, the worldwide production of bioethanol was 126 million barrels(15 billion liters) and that of biodiesel was 33 million barrels (4 billion liters) The production of bothbioethanol and biodiesel is anticipated to increase 10-fold over the next ten years Currently, Brazil andthe USA are leaders in the production of bioethanol.Table 1.10presents the amount of bioethanolproduced in different countries in 2006.15The world trend shows a nearly five-fold increase in worldproduction over the next 20 years The primary sources for bioethanol are corn and sugarcane Othersources include hemp, sugar beets, maize, barley, potatoes, cassava, sunflower, wood pulp, andbrewing wastes

Biodiesel is predominantly produced in Europe (90% of total biodiesel production) The remaining10% is produced in the USA (8%) and other countries, including Argentina, Brazil, Canada, India, andMalaysia In 2007, the USA produced 2,392 million liters (632 million gallons) of biodiesel In 2004,Canada produced approximately 3.5 million liters (875,000 gallons) of biodiesel, and in 2010 theproduction is expected to reach 500 million liters (132 million gallons).1,16

Biodiesel is produced from a variety of sources Figure 1.4 presents various sources of diesel.17,18About 80% of the biodiesel in Europe is produced from rapeseed oil and about 20% fromsoybean oil In the USA, most biodiesel is produced from soybeans In Canada, biodiesel is producedfrom yellow grease, tallow, canola, and soybeans Both the US and New Zealand are conductingexperimental studies to produce biodiesel from algae In India, biodiesel is produced from two non-edible plants – Jatropha curcas and Pongamia pinnata

bio-The content of biodiesel in the blend is identified using the designation ‘B’, followed by thepercentage of biodiesel For example, B2 indicates 2% biodiesel and 98% petroleum diesel and B20indicates 20% biodiesel and 80% petroleum diesel Of the various blends, B20 is most commonly used.The energy content of biodiesel (as measured, for example in BTU) is about 7–9% less than that ofpetroleum diesel

Table 1.10 Global Production of Bioethanol15

Country

Millions of Gallons Produced (in 2006)

1.5 History of the oil and gas industry19–24

The oil and gas industry has been maturing over the past two centuries and continues to evolve Thissection presents a brief history of the oil and gas industry so that we can appreciate its magnitude,knowledge, wealth, breadth, and impact

4000 BC Oil seep was reported on the banks of the Euphrates River (currently Iraq) It was considered as

the ‘fountains of pitch’ Asphalt obtained from this pitch was used as mortar between building stones.

347 AD Oil wells of depths 800 feet (240 meters) were drilled in China using bits attached to bamboo

poles.

1482 A barrel of volume 42 US gallons (159 liters) was established as the standard for the packing of

fish This scale is now commonly used to measure crude oil.

1500 Hydrogen was first recognized as inflammable air by Paracelsus.

1594 Oil wells of 115 feet (35 meters) deep were hand-dug in Baku, Persia (currently Iran).

1742 Oilsands were used by the ancient Mesopotamians and Canadian first nations.

1742 Corrosion protection of steel by zinc coating was first described.

1766 Hydrogen was first recognized as a substance by Cavendish.

1783 The name ‘hydrogen’ was coined by Lavoisier.

Continued

FIGURE 1.4 Some Resources for the Production of Biodiesel 17,18

1815 Oil was produced as an undesirable byproduct from brine wells in Pennsylvania, USA.

1824 Copper was successfully protected from corrosion by coupling it with either steel or zinc This is

the origin of cathodic protection.

1836 Steel was protected from corrosion by dipping it into molten zinc This procedure is known as

galvanizing and the product is known as galvanized steel.

1848 The first modern oil well was drilled in Baku, Iran.

1849 Abraham Gesner of Canada distilled kerosene from cannel coal and bituminous shale for the first

time.

1853 Kerosene was extracted from petroleum.

1853 Biodiesel was first produced by Duffy and Patarick.

1854 The first European oil well was drilled in Bobrka, Poland.

1854 The first oil company (Pennsylvania Rock Oil Company) was formed in USA.

1858 The first North American oil well was drilled in Southern Ontario, Canada.

1859 The first commercially successful oil well was drilled in Pennsylvania, USA.

1860 The first real-time, end-to-end communications system along railway right of way was

established using telegraphic line (this technology was later adopted for use in pipeline way).

right-of-1860s A company started manufacturing blue containers of volume 42 gallons The company called it

the blue barrel and abbreviated it as ‘bbl’ This term is still being used.

1860s Hydrotransport process was used during the construction of the Suez Canal The same

technology is currently being used to transport oilsands from mines to processing centers.

1861 Railroad tracks were laid in Pennsylvania, USA to transport oil from the field to the market Oil

from the wells to the railway station was transported in horse-drawn wagons.

1862 Atmospheric distillation was used in the refinery to produce kerosene.

1863 Dmitri Mendeleev first proposed the idea of transporting petroleum using pipes.

1863 The first oil transportation pipeline was constructed in Pennsylvania, USA This 2 inch diameter

(51 mm) and 2.5 mile (4 km) long cast iron pipeline used three pumps to transport oil over a 400 foot (22 meters) ridge It was however quickly abandoned because it developed several leaks.

1865 Another 6 inch (152 mm) diameter pipeline was constructed in Pennsylvania This pipeline

transported oil along a gradient of 52 feet per mile (10 meters per kilometer) About 7,000 barrels

of oil per day were transported through this pipeline without any pump.

1865 Wrought iron was used to construct pipelines to overcome the leakage problems associated with

cast iron The first wrought iron pipeline transported petroleum distillates over a distance of three miles Subsequently, another 2 inch (51 mm) diameter, 6 mile (10 km) long wrought iron pipe was constructed Three pumps were installed along the pipeline to increase the flow This pipeline also had the distinction of having first data acquisition and communications system; a telegraph line was used to communicate data on oil shipments.

1866 The practice of extracting oil from the well and storing it temporarily in tanks was established As

a result, the cost of gathering the oil dropped from $1.00 to $0.25 per barrel.

1870 Vacuum distillation was established in the refinery.

1872 The Petroleum Producers Association endorsed 42 gallons (159 L) as equivalent to one barrel for

reporting the volume of crude oil This was the first consensus standard in the oil and gas industry.

1873 The first oil-tank steamer was built in Belgium, but it was not successful due to many safety

concerns.

1878 The first successful oil tanker (Zoroaster) was built in Sweden to transport oil from Baku to

Astrakhan Zoroaster carried 242 tons of kerosene in two iron tanks joined by pipes This ship was 184 feet (56 m) long, with a 27 feet (8.2 m) long beam and 9 feet (2.7 m) long draft.

1881 A tanker carrying kerosene exploded in Baku A pipe was pushed out of its holding tank when a

gust of wind hit the tanker, and as a consequence oil tanker design drastically changed.

1893 Rudolf Diesel operated the first diesel engine, using peanut oil as the fuel.

1897 The first offshore well was drilled in Summerland, California, USA.

1800e1900 Europe and USA started using gas containing a mixture of hydrogen, methane, carbon dioxide,

and carbon monoxide as fuel This fuel was commonly known as ‘town gas’.

1900 Rotary drilling technology was first used to drill an oil well.

1901 Henry Ford formed the Ford Motor Company; as a consequence crude oil demand started to

increase.

1901 Hydraulic rotary drilling technology was first used.

1903 Two tankers (Vandal and Sarma) were built with internal combustion engines (until then tankers

used steam engines) Each was capable of carrying 750 tons of refined oil and was powered by a

360 horsepower (270 kW) diesel engine.

1908 Offshore production started in the shallow waters of Caddo Lake, Louisiana, USA.

1910e12 Impressed-current cathodic protection system was first used to protect underground structure 1910s Underwater drilling activities started in Caddo Lake, Louisiana, USA and Maracaibo Lake,

Maracaibo, Venezuela Initially, wells were drilled from onshore piers and subsequently they were drilled from offshore wooden platforms.

1911 The volume of gasoline production exceeded that of kerosene as motor cars required them to

run Until then gasoline was discarded as a wasteful byproduct.

1913 The thermal cracking process was established in the refinery.

1916 The sweetening process was established in the refinery.

1920s Steel piers from onshore extended up to a quarter of a mile into the ocean in California, USA.

1924 Offshore platforms were constructed on top of timber or concrete pilings in Lake Maracaibo,

Venezuela.

1930 The thermal reforming process was established in the refinery.

1932 The first offshore steel platform (60 x 90 feet/18  27 meters) was completed in 38 feet (w12 m)

deep water.

1932 The hydrogenation process was established in the refinery.

1932 The coking process was established in the refinery.

1933 The solvent extraction process was established in the refinery.

1935 First airline was successfully flown This started the demand for jet fuel.

1935 The solvent dewaxing process was established in the refinery.

1935 The catalytic polymerization process was established in the refinery.

1937 The catalytic cracking process was established in the refinery.

1938 An offshore field was discovered in the Gulf of Mexico, USA.

1938 The first hydrogen pipeline was constructed in Germany.

1939 The visbreaking process was established in the refinery.

1940 Divers were used for the first time to remove wall casing under the ocean.

Continued

1940 The alkylation and isomerization processes were established in the refinery.

1941 An offshore well was drilled to 9,000 feet (2,743 meters) in depth, in Texas, USA.

1942 The fluid catalytic cracking process was established in the refinery.

1947 The first ‘out off sight of land’ (drilling platform), i.e., far away from the coast, oil well was

constructed off the coast of Louisiana, USA.

1940s Two long pipelines, commonly known as ‘Big Inch’ and the ‘Little Big Inch’, were constructed

between Texas and the east coast of the USA The Big Inch pipeline was a 24 inch (61 cm) diameter pipeline to transport 300,000 barrel per day (BPD) of crude oil, and the Little Big inch was a 20 inch (51 cm) pipeline to transport 235,000 BPD of refined oil.

1950 The deasphalting process was established in the refinery.

1950 The first successful application of cathodic protection to control corrosion of ships in Canada,

along with protective coating Previous attempts made between 1824 and 1827 had failed due to fouling by marine organisms.

1952 The catalytic reforming process was established in the refinery.

1953 The first floating rotary drilling vessel was operated It was capable of drilling through 400 feet

(122 meters) of water to depths of 3000 feet (914 meters).

1954 The hydrosulfurization process was established in the refinery.

1955 The drilling rig was moved from the side to the center of the ship to reduce the impact of vessel

motion.

1957 The catalytic isomerization process was established in the refinery.

1950s The discovery of major crude oil and natural gas fields in Western Canada led to the

establishment of pipeline grid across Canada.

1960 The hydrocracking process was established in the refinery.

1963 The first commercial oil field was discovered in Alaska, USA.

1964 The first vessel carrying liquid natural gas (LNG) (Methane Princess) started operation.

1964 The first hydrogen pipeline was constructed in Canada.

1967 First commercial oilsands production started in Alberta, Canada.

1968 Fourteen platforms started producing oil and gas in Alaska, USA.

1969 A storage steel dome capable of storing 500,000 bbl oil was installed in the Arabian Gulf This

dome resembles an inverted champagne glass.

1960s The Colonial pipeline of diameter ranging between 30 inches (76 cm) and 36 inches (91 cm) was

constructed Currently this pipeline is the longest petroleum product transportation system.

1970 Buoyant articulated columns were installed in the North Sea for loading crude oil directly into oil

tankers (ships).

1972 Sand and gravel islands were constructed in Alaska, USA for exploratory drilling in water depths

of 100 feet ( w31 meters).

1972 Flexible steel pipe was first used.

1974 The catalytic dewaxing process was established in the refinery.

1975 A two-piece jacket was installed in 850 feet (259 meters) of water off the coast of California, USA.

1976 A one-piece jacket in 680 feet (207 meters) of water was installed in the Gulf of Mexico, USA.

1977 The Trans-Alaska crude oil pipeline was constructed This 48 inch (1.22 m) diameter, 798 mile

(1,284 km) long pipeline transported approximately 1.7 million bpd of oil Due to the extreme arctic climate, rugged mountain terrain, earthquake regions (geological faults), and stringent standards to preserve the arctic environment, the construction cost of the pipeline was $9 billion, making it by far the most costly pipeline project in the world.

1981 A one-piece jacket was installed in 915 feet (279 meters) of water.

1983 A floating conical drilling unit was first deployed in the Canadian Beaufort Sea.

1984 A tension-leg platform was installed in 485 feet (148 meters) of water in the North Sea, Europe 1980s Horizontal drilling was successfully used in France and Italy.

1991 The first industrial-scale biodiesel plant started operation in Austria.

Current The Comecon pipeline transporting oil from the Urals, Russia to Eastern Europe over a distance

of 3,800 mi (6,115 km) is the longest pipeline in the world The world’s longest gas pipeline is also

in Russia This pipeline is 3,400 mile (5,500 km) long.

There are more than 2.5 million miles (4 million kilometers) of pipelines in North America If these pipelines were laid end-to-end they would circle the earth about 100 times This pipeline network includes:

• 170,000 miles (274,000 kilometers) of onshore and offshore hazardous liquid pipelines

• 295,220 miles (475,110 kilometers) of onshore and offshore gas transmission pipelines

• 1,900,000 miles (3 million kilometers) of natural gas distribution pipelines and propane distribution pipelines

Future hydrocarbons will increasingly be produced from frontier (arctic) as well as from deep water (deeper than 33,000 feet (10,000 meters)) regions.

As conventional sources become depleted, more and more efforts will be made to produce hydrocarbons from unconventional and renewable sources.

Chapter 2 describes different entities of the oil and gas industry network Most parts of these networksare underground, except for some huge facilities such as storage tanks and refineries The existence ofunderground facilities is indicated with aboveground markings in many countries For example, inUSA the American Public Works Association (APWA) uses yellow color code to indicate oil and gasstructure.Table 1.11presents the APWA color code to indicate various infrastructures

The vast underground oil and gas networks are strictly regulated by a number of governmentregulatory agencies; from the design and construction stages to operation and discontinuation (oftenreferred to as abandonment) stages These agencies ensure that the oil and gas network is operatedsafely, responsibly, and in the public interest.Table 1.12presents typical types of approvals requiredfor operating an oil and gas network in Canada, andTable 1.13presents typical types of applicationrequired for approval.25 Table 1.14 presents the types of regulators for gas networks in the USA.Table 1.15presents some regulators in Canada and USA

While different countries have different regulations, they are all more or less based on the sameprinciple; i.e., to safeguard people, the environment, and the facility.Table 1.16compares differentregulators’ approaches.26Some regulations are prescriptive in nature, while others are descriptive Inprescriptive regulations, the steps to be taken to maintain the integrity of the infrastructure are

prescribed Generally, prescriptive regulations are to be considered only as a minimum Responsibleoperation may need to go further In descriptive regulations, the expectations of the regulators areoutlined, leaving the steps to be taken with the operators There are many terms for this style ofregulation: goal-based, outcome-based, goal-oriented All describe the desired outcome and leave themechanics of how to achieve that to the operator.

Because transmission pipelines operate at elevated pressure, travel long distances, and pass throughother infrastructure such as roads, buildings, railway lines, electric towers, and industrial complexes,the regulations governing their operation can be more stringent than those governing other parts of theoil and gas industry Regulations in Canada (mostly descriptive) and in US (mostly prescriptive) fortransmission pipelines are discussed in the following paragraphs as illustration

In Canada, the National Energy Board (NEB) regulates the design, construction, operation, andabandonment of interprovincial and international pipelines within Canada According to the NEB Act(OPR 99), ‘pipeline’ means a line that is used or to be used for the transmission of oil, gas, or any othercommodity and includes all branches, extensions, tanks, reservoirs, storage facilities, pumps, racks,compressors, loading facilities, inter-station systems of communication by telephone, telegraph orradio and real and personal property and works connected therewith, but does not include sewer orwater pipeline that is used or proposed to be used solely for municipal purposes

Pipelines within the province are regulated by provincial regulators For example, in Alberta, mostactivities related to the planning, construction, operation, and abandonment of oil and gas pipelines areregulated by the Alberta Energy Regulator (AER) The AER is responsible for issuing approvals forgathering and transmission lines as well as high pressure (greater than 700 kPa) distribution lines thatlie fully within Alberta Alberta Transportation and Utilities (ATU) board regulates lower pressurelines

Regulations may require the operator to have manual describing operations, maintenance, repair,corrosion control, and integrity management processes as well as to have documents to demonstratecompliance Regulations may also require the operator to evaluate, inspect, and/or test annually theoperating or discontinued pipelines and the operator to submit corrosion control experience, moni-toring data and inspection data

It is generally expected that the operators are responsible for ensuring that their operations areconducted in accordance with regulations and best practices However, in certain situations, regula-tions may be enforced.Table 1.17presents the enforcement ladder that AER uses to categorize thelevels of non-compliance.27

Table 1.11 American Public Works Association Color Code)

Proposed excavation White

)American Public Works Association (APWA) color code

Construction operation or reclamation of

an oil production site

Directive 056: Energy development application guide and schedules

Activities designation regulation; conservation and reclamation regulation, Section 3: Code of practice for oil production sites - IL 95e3 and

IL 94e6 Single sour oil well Directive 056

Multiple sour oil or gas wells Directive 056

Multiple sweet oil or gas wells Directive 056

Conduct of an exploration operation for oil

sands

Activities designation regulation, code of practice for exploration operations

Oil sands mine Environmental assessment; Mandatory and

exempted activities regulation Sweet gas plant processing less than

16 kg/hr of nitrous oxide (NO x )

Oil and Gas Conservation Act, Section 21 and Directive 056

Code of practice for compressor and pumping stations and sweet gas processing plants;

Activities designation regulation, A.R 211e96 Sweet gas plant processing more than

16 kg/hr of nitrous oxide (NO x )

Oil and Gas Conservation Act, Section 21 and Directive 056

Code of practice for compressor and pumping stations and sweet gas processing plants;

Activities designation regulation, substance release regulation, Section 14e1

Sour gas processing plant Directive 056 Activities designation regulation; environmental

assessment; Mandatory and exempted activities regulation

In situ oil sands or heavy oil processing

plant

Activities designation regulation

Commercial oil sands, heavy oil

extraction, upgrading or processing plant

producing more than 2000 m3of crude

bitumen or derivatives/day

Guide 23: Guidelines respecting an application for a commercial crude bitumen recovery and upgrading project

Environmental assessment; Mandatory and exempted activities regulation

Sweet or sour compressor or pump

stations

Directive 056 Code of practice for compressor and pumping

stations and sweet gas processing plants Tank farm or Bulk petroleum storage

facility

Activities designation regulation

Pipelines Directive 056

Oil refinery Activities designation regulation; environmental

assessment; Mandatory and exempted activities regulation

)

In addition, Canadian environmental protection agencies may regulate conservation andreclamation activities on private land for gathering, transmission, and distribution pipelines.Additional approvals from environmental, fisheries, and ocean governing agencies may also berequired to construct, operate, or discontinue the pipelines In addition to these governmentapprovals, operators must also obtain the landowner’s permission for construction and maintenance ofpipelines.

The Federal Energy Regulatory Commission (FERC) oversees the USA interstate natural gaspipeline industry The commission regulates both the construction of interstate natural gas pipelinesand transportation of natural gas in interstate commerce Companies wishing to build interstatepipeline facilities or operate pipelines must first obtain a Certificate of Public Convenience andNecessity from FERC This is done to ensure that pipeline facilities benefit consumers, are compatiblewith the environment, and minimize interference with the public’s and landowners’ rights-of-wayalong the pipeline

The Office of Pipeline Safety (OPS), within the US Department of Transportation (DOT), Pipelineand Hazardous Materials Safety Administration (PHMSA), regulates hazardous liquid and gas onshorepipelines Offshore pipelines are regulated by the US Department of Interior’s Minerals ManagementService (MMS)

Table 1.13 Energy Resources and Conservation Board Pipeline

Application Procedure24

Schedule Category Type of Application

1.0 Energy development application

2.1 Facility development license

2.2 Gas plants e facility

Gas wells Unregulated

Production pipeline Regulated in some states by State regulators

Transmission pipeline Federal Energy Regulatory Commission (FERC) and Pipeline

Hazardous Materials Safety Administration (PHMSA) Storage Regulated in some states by State regulators

Distribution Regulated in some states by State regulators

Table 1.15 Some Government Bodies Regulating Oil and Gas Industry in Canada and USA

Canada National Energy Board (NEB) Federal regulator of pipelines crossing

country and provincial borders Canada Transportation Safety Board Failure investigation

Canada Alberta Energy Regulator (AER), Alberta Regulator of all oil and gas

infrastructure in Alberta, Canada Canada British Columbia Oil and Gas

Commission

Regulator of oil and as infrastructure

in British Columbia Canada New Brunswick Board of Commission

of Public Utilities

Regulator of oil and as infrastructure

in New Brunswick Canada Resources, Economic Development,

Minerals, Oil and Gas, North West Territories

Regulator of oil and gas infrastructure

in North West Territories

Canada National Energy Board (COGOA) Regulator of oil and gas infrastructure

in Northwest Territories and Nunavut Canada Northern Pipelines Beaufort-Mackenzie

Mineral Development Commission

Regulator of oil and gas infrastructure

in Beaufort and Mackenzie area Canada Nova Scotia Offshore Petroleum Board Regulator of offshore oil and gas

infrastructure in Nova Scotia Canada Nova Scotia Utility and Review Board Regulator of onshore oil and gas

infrastructure in Nova Scotia Canada Ontario Energy Board and Technical

Standards and Safety Authority

Regulators of Ontario

Canada Quebec Regie de l’Energie (Quebec

Energy Board)

Regulator of Quebec

Canada Saskatchewan Energy and Mines Regulator of Saskatchewan

Canada Yukon Territory Department of

Economic Development Oil and Gas Resources Branch

Regulator of Yukon

Canada Manitoba Public Utilities Board and

Manitoba Department of Energy and Mines

Regulators in Manitoba

Canada Prince Edward Island Energy and Mines Regulator in Prince Edward Island

USA Pipeline and Hazardous Materials

Safety Administration (PHMSA)

Regulator of onshore pipeline

USA US Department of Interior - Minerals

Management Service

Regulator of offshore pipeline

USA California Office of Spill Prevention and

Response

Regulator in California state

USA California Division of Oil, Gas, &

Geothermal Resources Pages

Regulator in California state

USA California State Fire Marshall’s Office

Pages

Regulator in California state

Continued

The minimum pipeline safety standards are prescribed in the US Code of Federal Regulations(CFR), Title 49, ‘Transportation’, Parts 192–195.

• Part 192: Transportation of natural and other gas by pipeline

• Part 193: Liquefied natural gas facilities

• Part 194: Response plans for onshore oil pipelines

• Part 195: Transportation of hazardous liquids by pipelines

Regulations of pipelines are often based on rigorous standards and best practices developed by variousindustry, technical, and scientific associations The voluntary consensus standards and best practicesare developed as a method of improving the individual quality of a product or system.Table 1.18presents some organizations that develop standards pertaining to oil and gas industry

Table 1.15 Some Government Bodies Regulating Oil and Gas Industry in Canada and USA Continued

USA California State Lands Commission Regulator in California state

USA Washington Utilities & Transportation

Commission

Regulator in Washington state

USA Oregon Department of Environmental

Quality

Regulator in Oregon state

USA Alaska Department of Environmental

Conservation

Regulator in Alaska state

USA National Transportation Safety Board

Goal-Based (Descriptive) Regulations provide Direction on

methods

Direction on methods and description of desired end states

Description of desired end states

threat to the public and/or the environment and does not adversely effect oil and gas operations

identification sign(s) are not posted and are inadequate Valve handle(s) missing Oil or salt water staining on lease

Required calibration tag not attached to measurement device

2 Instruction

3 Full or partial suspension of operations when safe to do so A non-compliance event will be added into the corporate data information system.

4 Full or partial suspension of operation when safe to do so.

Suspension will remain in effect until documented meeting with senior company representative with provincial authority (VP/Pres)

is held.

Major non-compliance The operator has failed to

address an issue and/or the issue has the potential to cause an adverse impact on the public and/or the environment

Blowout preventer failed to operate properly

Tank vapor recovery unit not functional allowing H 2 S to vent Unaddressed spill on or off lease

No crossing agreement on pipeline construction

2 Level: Instruction and temporary suspension of certain operations

to correct deficiencies and alleviate impact or potential impact.

3 Full or partial suspension of operations to alleviate impact or potential impact when safe to do

so Suspension will remain in effect until documented meeting with senior company

representative (Vice president/

President) with provincial authority is held.

4 Immediate suspension (full or partial) of operations to alleviate issue when safe to do so.

Suspension will remain in effect until documented meeting with senior company representative

Continued

Table 1.17 Alberta (Canada) Provincial Government’s Enforcement Ladder Continued

Compliance Magnitude of the Issue Types of Issue Level Enforcement Ladder

with provincial authority is held.

Company also confirms compliance at this and all similar facilities and submits a written acceptable action plan including examination of cause and future prevention plans and

commitments.

Serious non-compliance Causing or may cause a

significant impact on the public and/or environment

Blowout preventer(s) missing Unaddressed spill into water, operator aware, no action is being taken

Conducting an activity without

an approval and/or license where required

H 2 S odor present, operator aware, no action is being taken

3 Full or partial suspension of operations to alleviate impact or potential impact when safe to do

so Suspension will remain in effect until documented meeting with senior company

representative with provincial authority is held.

4 Immediate suspension (full or partial) of operations to alleviate issue when safe to do so.

Suspension will remain in effect until documented meeting with senior company representative with provincial authority is held.

Company also confirms compliance at this and all similar facilities and submits a written acceptable action plan including examination of cause and future prevention plans and

Table 1.18 Selected Technical Organizations Developing Standards for Oil and Gas Industry

Association Francaise de Normalization AFNOR

Association Suisse de Normalization SNV

American Bureau of Shipping ABS

American National Standards Institute ANSI

American Petroleum Institute API

American Society of Mechanical Engineers ASME

ASTM International (formerly American Society of Testing

and Materials)

ASTM

American Water Works Association AWWA

American Petroleum Industry API

American Society of Mechanical Engineers ASME

American Nation Standard Institute ANSI

American Society of Petroleum Engineers ASPE

Association of Oil Pipelines AOP

Badan Kerjasama Standardisasi Lipi-Ydni (Indonesia

standard organization)

British Standards Institute BSI

Bureau of Indian Standards BIS

Canadian Association of Petroleum Producers CAPP

Canadian Energy Pipelines Associations CEPA

Canadian Standards Association CSA

China Association for Standardization

Commission Venezolana de Normas Industriales

(Venezuela)

COVENIN

Composites Engineering and Applications Center CEAC

Deutsches Normenausschub (Germany) DIN

Direccion General de Normas (Mexico) DGN

Ente Nazionale Italiano de Unificazione (Italy) UNI

Gas Technology Institute (formerly Gas Research Institute) GTI

Indian Standards Institute ISI

International Organization for Standards ISO

Interstate Natural Gas Association of America INGAA

Japanese Industrial Standards Committee JISC

Nederlands Normalisatie Instituut NNT

Despite the best efforts of companies, industry, regulatory agencies, and stakeholders, oil and gasinfrastructure may sometimes fail, releasing their contents to the environment The impact of thefailure depends on its size and type, the location and type of infrastructure, and the products beingtransported The failures may be broadly classified into accidents, incidents, and leaks Accidents aremajor occurrences, such as a line rupture or an instantaneous tearing or fracturing of material, whichimmediately shut down the system Incidents are minor leaks and operational malfunctions that affectthe safety of the system and that curtail operations Leaks are loss of product through small openings,cracks, or holes that do not immediately affect pipeline operation and which may have gone unnoticedfor a long time.

When a failure occurs, normally another government body investigates it In Canada, for example,the Transportation Safety Board (TSB) investigates incidents on federally regulated infrastructure toidentify direct causes and contributing factors In the USA, the National Transportation Safety Board(NTSB) investigates pipeline significant accidents (fatality or substantial property damage; typicallyany failure causing more than five gallons or equivalent amounts of hydrocarbon release) Theinvestigatory agencies conduct failure analysis and root-cause analysis The investigatory agenciesmay also issue safety recommendations aimed at preventing future accidents

In order to use hydrocarbons as energy source, they must be extracted from underground, all other energy containing products separated from them, and the different types of hydrocarbons separatedfrom one another These processes occur at various stages between the wells where the hydrocarbonsare found and the locations where they are used as fuels Between the sources of the hydrocarbons andthe locations in which they are used as fuels, there is a vast network of oil and gas infrastructure

non-Table 1.18 Selected Technical Organizations Developing Standards for Oil and Gas

Industry Continued

National Fire Protection Association NFPA

Oesterreichisches Normungsinstitut (Austria) ONORM

Pipeline Research Council International PRCI

Standards Association of Australia SAA

Saudi Arabian Standards Organization SASO

Singapore Institute of Standards and Industrial Research SIRU

Standardisering Kommissionen (Sweden) SIS

Society of Protective Coating SSPC

United Kingdom Offshore Operators Association UKOOA

USSR State Committee for Standards (Russia)

Table 1.19presents the major sectors of oil and gas network and Chapter 2 describes their teristics This vast network comprises different materials exposed to different environmentsand to different operating conditions (flow, temperature, and pressure) As consequence of variousinteractions, the integrity of the infrastructure may be compromised resulting in failures In general,the causes of failure may be classified into two categories: pre-service and in service Table 1.20summarizes the major factors that can compromise the integrity of the oil and gas network.28FromTable 1.20it is obvious that corrosion is a key cause of failure Recently, the cost of corrosion in the

charac-Table 1.19 Annual Corrosion Cost in Major Sectors of USA Oil and Gas Industry3

)The amount is only for production from conventional sources (corrosion cost for production from

non-conventional and renewal sources is not included)

))World total

Table 1.20 Types of Failures and their Causes in Oil and Gas Industry27

Location

Causes Pre-Service In Service Main body Mechanical damage Mechanical damage

Defective material Defective material Transportation damage Corrosion (internal and external)

Cracking (Hydrogen-stress, stress-corrosion, sulfide-stress and stepwise)

Joints (including weld) Defective joints Defective weld

Weld (heat-affected) zone corrosion Incompatibility between main body and joint All components Secondary loads from soil movement

Earthquake Internal combustion Sabotages Interferences (telluric, alternating current, and stray) Incompatibility between material and environment (i.e., selection of wrong material)

USA was surveyed The cost of corrosion in the oil and gas industry from that survey3and from otherstudies is summarized in the following sections.

1.7.1 Production sector

Components of production sector include drill pipe (see section 2.2), casing pipe (see section 2.3),downhole tubular (see section 2.4), acidizing pipe (see section 2.5), water generator (see section 2.6),gas generator (see section 2.7), wellhead (see section 2.10), production pipeline (see section 2.11), gasdehydration facility (see section 2.14), oil separator (see section 2.15), lease tank (see section 2.18),and waste water pipeline (see section 2.19) The oil and gas production sector may be broadly clas-sified into downhole and surface units

• The downhole unit consists of drill pipe, casing pipe, downhole tubular, acidizing pipe, watergenerator, and gas generator

• The surface unit consists of the wellhead, production pipeline, gas dehydration facility, oilseparator, lease tank, and waste water pipeline

The annual capital expenditure of onshore oil and gas production sector in the USA is estimated at $4.0billion; of which $320 million (8%) is directly related to corrosion control The annual operatingexpenditure of the onshore oil and gas production sector in the USA is estimated at $1.372 billion; ofwhich $1.052 billion (76%) is directly related to corrosion control Of that $1.052 billion, $589 million

is spent on controlling corrosion in downhole units, and $463 million is spent on controlling corrosion

pre-There is a vast network of production pipelines between the wellhead and gas dehydration ities, as well as between wellhead and oil separators.Figures 1.5, 1.6, and 1.7 present statistics forproduction pipelines in Alberta, Canada.29,30 Figure 1.8 presents factors that cause failure of pro-duction pipelines.Figure 1.9presents the number of failures caused by corrosion More than 70% offailures were caused by corrosion; of which about 58% were due to internal corrosion and 12% weredue to external corrosion

facil-Table 1.21 Corrosion Cost in Production Pipeline Unit in the USA3

Production Cost per Barrel, $ Offshore oil 0.40

Offshore water 0.14 to 0.18 Onshore water 0.07 to 0.09

FIGURE 1.5 Lengths of Production Pipelines in Alberta, Canada 28,29 (The reduction of pipeline length in 1998 is due to transfer of regulatory responsibility of some pipelines to federal regulator).

Some components, such as open mining (see section 2.8), in situ production (see section 2.9),heavy crude oil pipelines (see section 2.12), hydrotransport pipelines (see section 2.13), recoverycenters (see section 2.16), upgraders (see section 2.17), and tailing pipelines (see section 2.20), areexclusively used in producing oil from oilsands This part of the industry is relatively new andexpanding rapidly The corrosion cost of these components is not fully understood Oilsands plants cancost $10 billion or more to build Individual companies in Canada spend over $20 million in corrosioncontrol program per year on just one operating field One study does however indicate that the annualcorrosion cost for just one company producing oil from oilsands is over $450 million.31

1.7.2 Transportation – pipeline sector

Transmission pipeline sector normally includes pipelines (see section 2.21), compressor stations (seesection 2.22), pump stations (see section 2.23), and pipeline accessories (see section 2.24) Theyoperate mostly onshore, transporting large quantities of products across countries or continents InUSA, there are more than 483,000 km (300,000 mi) of natural gas transmission pipelines operated byover 60 companies, and 217,000 km (135,000 mi) of hazardous liquid transmission pipelines operated

by more than 150 companies In Canada there are approximately 45,000 km of oil and gas transmissionpipelines

In the USA as of 1998, total investment for establishing gas pipeline network was $63.1 billion andthat for establishing the liquid pipeline network was $30.2 billion; i.e., the total capital investment forthe transmission pipeline industry was $93.3 billion If this transmission pipeline network were to be