Jointing controversy on Caspian oil pipeline

Jointing controversy on Caspian oil pipeline being diligently pursued by the opposition

When in November the directors of the Export Credits Guarantee Department were being pressed to explain to the House of Commons Trade and Industry Committee what response they had made to allegations of failing field joints on the Baku-Tbilisi-Ceyhan oil pipeline, they explained that in this matter they had acted as part of the Lenders Group which includes a number of export credit agencies, the European Bank for Reconstruction and Development, the International Finance Corporation and the commercial banks.

Linda Perham, one of the Labour MPs on the committee, asked John Weiss, the ECGDs deputy chief executive, whether he had seen the complaints from a group of non-governmental organisations (NGOs) about the effectiveness of the departments due diligence procedures in respect of the pipeline coating specification adopted by BTC despite advice against it given by Derek Mortimore.

In reply, Mr Weiss said that the issue as defined by the consultant to the Lenders Group - at the time Parsons E and C based in Houston, Texas - was ?ability effectively to repair coating damage and to coat field joints in a manner that will meet the 40-year design life.

That was in March last year; about six months after that Parsons, an engineering and construction management consultancy employing more than 5,400 personnel in 16 countries around the world, confirmed to the lenders in Mr Weisss words, "that they were then content with the way in which the company was intending to monitor the integrity of the pipeline in those high-risk areas".

" So by October", he added, "having had that advice the lenders concluded that this issue of the coatings had been satisfactorily resolved".

Linda Perham: "You say that the Parsons report was an independent study".

" What do you reply to the fact that Parsons told Michael Gillard, the journalist, that its assessment was not an in-depth study? Are you satisfied that they investigated sufficiently?" John Weiss: "Yes, we are fully satisfied with what Parsons did for us?".

" I think the comments from WorleyParsons [as the firm was renamed after the take-over at the end of 2003] were emphasising the fact that that is what they had been commissioned by the lenders to do and not to undertake a whole range of tests themselves".

After further advice from an independent engineer who visited the site, he said, ECGD remained content with the quality and independence of the advice they had received from WorleyParsons The desk-top report to which Mr Weiss referred was commissioned by the Lenders Group after the jointing failures of the winter were reported in The Sunday Times dated 2004-02-15.

Michael Gillard however, the author of that report, is not content with these explanations.

In a further exposé dated 2004-11-29 and published on the SpinWatch web site, he accuses BP/BTC of a cover-up and complains that they refuse to say how much of the pipeline was welded, coated or buried in Azerbaijan and Georgia by February 2004".

" "An independent audit of the failed coating, pipeline experts and campaigners argued, was the only socially and environmentally responsible course of action".

" But BP convinced the government and other members of the lenders group that this was unnecessary".

It is true that other pipeline experts as well as campaigners against the pipeline took a different view from Parsons.

For example, Dr John Leeds, a world expert on the problems of protective coating systems, declared that the chemistry of the system proposed by BTC was totally wrong.

He told the Parliamentary committee: "Unless the coating is replaced with a field joint system that works on plastic the cracking and flaking will continue while underground, leaving the steel dangerously exposed to rapid corrosion".

However, the view taken by WorleyParsons in their final report on the issue dated July 2004 satisfied the lenders as well as the operating company as to the validity or otherwise of these objections.

The executive summary explains that based on a desire to use a larger backfill, and a lack of confidence in the coatings used to date on 3-layer polyethylene coated line pipe, BP completed a very thorough field joint coating evaluation and testing process prior to selecting Specialty Polymer Coatings SP-2888 liquid field joint coating.

This is a shop-applied coating made up of three layers ? first, fusion bonded epoxy, second an adhesive, third polyethylene.

The desktop study did not address the situation in Turkey since BOTAª under its lump sum turnkey contract is using Protogol instead of SP-2888 as the field joint coating material.

On the controversial decision to adopt the SPC system, WorleyParsons commented that the latest liquid epoxy coating systems combine fast curing, high adhesion, flexibility and toughness with volatile organic compound free formulations for improved environmental friendliness.

In high build, single coat applications they are cost effective and becoming an industry standard for pipeline refurbishment and repair.

At the request of the coating sub-contractor Pipeline Induction Heat ., SPC completed low ambient temperature application tests, based on which the parameters required for successful application and cure of the jointing material at low ambient temperatures were developed.

At the same time the equipment necessary to achieve the required post-application cure temperatures was identified.

Between the start of production field joint coating in August 2003 and early November of that year BTC indicated that no problems had been reported with the application or integrity of the specified coating.

But as the weather turned colder, cracking of the field joint coating was reported in both Azerbaijan and Georgia.

Initially the investigation team concluded that the cracking was due to thermal cycling of the pipe while the coating was not adequately cured, a fault attributed to minimal heating of the field joints prior to coating, no post heating and ambient temperatures below 10 deg.

C.

Previously it had been determined that to apply the specified coating at temperatures below 10 deg., both pre-heat and post heating were required because the curing rate was severely diminished.

A prototype induction coil had been developed for post-curing but had rarely if ever been used, indicating that the sub-contractor had not followed his own method statement and applications procedures.

Subsequently a field test program verified the temperatures and time required to cure the specified coating successfully at low ambient temperatures and a project procedure note was drafted for its application and repair.

Since implementation of this procedure, WorleyParsons reported, there has been no cracking of the field joint coatings.

The report concludes that inaction on the part of the BTC construction management/inspection team to enforce the project requirements allowed the problem to become greater than necessary.

If immediate steps had been taken to ensure that the contractors followed their procedures and method statements, then the number of coated joints with cracks would have been significantly less in Georgia.

Instead, commented WorleyParsons, it seems that they only reacted when the cracks in the field joint coatings were discovered.

However, in Georgia the problem of renewal was significantly reduced because few of the joints had been backfilled, allowing the cracked joints to be removed and recoated with a minimum amount of extra work.

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