PIPELINE RISK MANAGEMENT

Underlying the definition of risk is the concept of hazard. The word hazard comes from al zahr, the Arabic word for “dice” that referred to an ancient game of chance. We typically define a hazard as a characteristic or group of characteristics that provides the potential for a loss. Flammability and toxicity are examples of such characteristics.

It is important to make the distinction between a hazard and a risk because we can change the risk without changing the hazard. When a person crosses a busy street, the hazard should be clear to that person. Loosely defined, it is the prospect that the person must place himself in the path of moving vehicles that can cause him great bodily harm were he to be struck by one or more of them. The hazard is therefore injury or fatality as a result of being struck by a moving vehicle. The risk, however, is dependent on how that person conducts himself in the crossing of the street. He most likely realizes that the risk is reduced if he crosses in a designed traffic-controlled area and takes extra precautions against vehicle operators who may not see him. He has not changed the hazard—he can still be struck by a vehicle—but his risk of injury or death is reduced by prudent actions. Were he to encase himself in an armored vehicle for the trip across the street, his risk would be reduced even further—he has reduced the consequences of the hazard.

Risk is most commonly defined as the probability of an event that causes a loss and the potential magnitude of that loss. By this definition, risk is increased when either the probability of the event increases of the potential loss (the consequences of the event) increases. Transportation of products by pipeline is a risk because there is some probability of the pipeline failing, releasing its contents, and causing damage (in addition to the potential loss of the product itself). A risk is often expressed in measurable quantities such as the expected frequency of fatalities, injuries, or economic loss. Monetary costs are often used as part of an overall expression of risk; however, the difficult task of assigning a dollar value to human life or environmental damage is necessary in using this metric. Related risk terms include acceptable risk, tolerable risk, risk tolerance, and negligible risk, in which risk assessment and decision making meet. A complete understanding of the risk requires that three questions be answered: 1. What can go wrong? 2. How likely is it? and 3. What are the consequences?—by answering these questions, the risk is defined.

Answering the question of “what can go wrong?” begins with defining a pipeline failure. The unintentional release of pipeline contents is one definition. Loss of integrity is another way to characterize pipeline failure. However, a pipeline can fail in other ways by not meeting that do not involve a loss of contents. A more general definition is failure to perform its intended function.

By the commonly accepted definition of risk, it is apparent that probability is a critical aspect of all risk assessments. Some estimate of the probability of failure will be required in order to assess risks. This addresses the second question of the risk definition: “How likely is it?”

Inherent in any risk evaluation is a judgment of the potential consequences. This is the last of the three risk-defining questions: “If something goes wrong, what are the consequences?” Consequence implies a loss of some kind and many of the aspects of potential losses can readily quantified. In the case of a hydrocarbon pipeline accident (product escaping, perhaps causing an explosion and fire), we could quantify losses such as damaged buildings, vehicles, and other propriety; costs of service interruption; cost of the product lost; cost of the product cleanup; and so on.

Several methodologies are available to identify hazards and threats in a formal and structural way. A hazard and operability (HAZOP) study is a technique in which a team of system experts is guided through a formal process in which imaginative scenarios are developed using specific guide words and analyzed by the team.

It is generally recognized that, unlike most other facilities that undergo a risk assessment, a pipeline usually does not have a constant hazard potential over its entire length. As conditions along the line’s route change, so too does the risk picture. Because the risk picture is not constant, it is efficient to examine a long pipeline in shorter sections. The risk evaluator must decide on a strategy for creating these sections in order to obtain an accurate risk picture. Each section will have its own risk assessment results. Breaking the line into many short sections increases the accuracy of the assessment for each section, but may result in higher costs of data collection, handling, and maintenance (although higher costs are rarely an issue with modern computing capabilities). Longer sections (fewer in number), on the other hand, .

MUHLBAUER, W. K., Pipeline Risk Management, 2004.

PIPELINE RISK MANAGEMENT

Underlying the definition of risk is the concept of hazard. The word hazard comes from al zahr, the Arabic word for “dice” that referred to an ancient game of chance. We typically define a hazard as a characteristic or group of characteristics that provides the potential for a loss. Flammability and toxicity are examples of such characteristics.

It is important to make the distinction between a hazard and a risk because we can change the risk without changing the hazard. When a person crosses a busy street, the hazard should be clear to that person. Loosely defined, it is the prospect that the person must place himself in the path of moving vehicles that can cause him great bodily harm were he to be struck by one or more of them. The hazard is therefore injury or fatality as a result of being struck by a moving vehicle. The risk, however, is dependent on how that person conducts himself in the crossing of the street. He most likely realizes that the risk is reduced if he crosses in a designed traffic-controlled area and takes extra precautions against vehicle operators who may not see him. He has not changed the hazard—he can still be struck by a vehicle—but his risk of injury or death is reduced by prudent actions. Were he to encase himself in an armored vehicle for the trip across the street, his risk would be reduced even further—he has reduced the consequences of the hazard.

Risk is most commonly defined as the probability of an event that causes a loss and the potential magnitude of that loss. By this definition, risk is increased when either the probability of the event increases of the potential loss (the consequences of the event) increases. Transportation of products by pipeline is a risk because there is some probability of the pipeline failing, releasing its contents, and causing damage (in addition to the potential loss of the product itself). A risk is often expressed in measurable quantities such as the expected frequency of fatalities, injuries, or economic loss. Monetary costs are often used as part of an overall expression of risk; however, the difficult task of assigning a dollar value to human life or environmental damage is necessary in using this metric. Related risk terms include acceptable risk, tolerable risk, risk tolerance, and negligible risk, in which risk assessment and decision making meet. A complete understanding of the risk requires that three questions be answered: 1. What can go wrong? 2. How likely is it? and 3. What are the consequences?—by answering these questions, the risk is defined.

Answering the question of “what can go wrong?” begins with defining a pipeline failure. The unintentional release of pipeline contents is one definition. Loss of integrity is another way to characterize pipeline failure. However, a pipeline can fail in other ways by not meeting that do not involve a loss of contents. A more general definition is failure to perform its intended function.

By the commonly accepted definition of risk, it is apparent that probability is a critical aspect of all risk assessments. Some estimate of the probability of failure will be required in order to assess risks. This addresses the second question of the risk definition: “How likely is it?”

Inherent in any risk evaluation is a judgment of the potential consequences. This is the last of the three risk-defining questions: “If something goes wrong, what are the consequences?” Consequence implies a loss of some kind and many of the aspects of potential losses can readily quantified. In the case of a hydrocarbon pipeline accident (product escaping, perhaps causing an explosion and fire), we could quantify losses such as damaged buildings, vehicles, and other propriety; costs of service interruption; cost of the product lost; cost of the product cleanup; and so on.

Several methodologies are available to identify hazards and threats in a formal and structural way. A hazard and operability (HAZOP) study is a technique in which a team of system experts is guided through a formal process in which imaginative scenarios are developed using specific guide words and analyzed by the team.

It is generally recognized that, unlike most other facilities that undergo a risk assessment, a pipeline usually does not have a constant hazard potential over its entire length. As conditions along the line’s route change, so too does the risk picture. Because the risk picture is not constant, it is efficient to examine a long pipeline in shorter sections. The risk evaluator must decide on a strategy for creating these sections in order to obtain an accurate risk picture. Each section will have its own risk assessment results. Breaking the line into many short sections increases the accuracy of the assessment for each section, but may result in higher costs of data collection, handling, and maintenance (although higher costs are rarely an issue with modern computing capabilities). Longer sections (fewer in number), on the other hand, .

MUHLBAUER, W. K., Pipeline Risk Management, 2004.