Context Of Gas Pipeline Asset: Risk And Asset Management

Context of Gas Pipeline Asset

Risk Management is the process of identification, evaluation, and ranking risks through coordination and cost analysis of products to minimize, to survey, and control the chances of risk. The main aim of risk management in an organization is to ensure that doubt does not make the company’s activities to deviate from its goals. Risks might come from uncertainty in the field of project failures, financial markets, legal actions by man, liabilities, and accidents, natural and human error. Financial and practical limitations might cause all risks not to be fully avoided or mitigated, but all companies and organizations have to accept some level of risks. In this case, it is important that all risks be set apart, analyzed, managed, and monitored within financial and practical constraints (Day 2002). Due to complexity and engineering challenges to develop new products Product lifecycle management help organizations in adapting to the challenge for a competitive market. Risk-based asset management is making sure that an organization puts proper processes in place so that a system performs well. It includes a resource solution, which properly documents asset management, risk, and failure analysis and effective control plans.  This paper looks at risk and asset management of in a gas pipeline industry(Cunha 2010).It looks at the context which forms the basis of risk management processes and how assets can be managed using a risk-based approach.

The gas pipeline asset management concerns with activities of asset life cycle such as designing, constructing, installing, utilizing as well as disposal. The pipeline industry uses of standards such as ISO/IEC 15288 and PAS 55-1 & 2 in order to improve asset management system (Lowenstein & Slater 2016). The company will first look at the context as pertaining to the Australian and New Zealand ISO 31000 standards, and this will help to define its objectives better. The context looked at is both external and internal.

The external context of the gas pipeline industry is its external environment. This will enable the company to ensure that it meets the needs of its external stakeholders as it comes up with its risk criteria. The company will, therefore, look at political, economic, social and technological issues that influence its operations (Evans, 2010). The political environment influences the gas pipeline industry. The major threats are geopolitical conflicts, political instability and governments in oil producing countries usually control more than 90% of the oil reserves. Substantial amounts of gas reserves in a country can lead to wars and an increase in corruption. The value of the dollar also influences the gas industry, as there is a correlation between US dollar and oil prices.

Policies on the environment and takes also affect the gas pipeline industry. Governments have a legal right to change taxes on the profits of the gas industry. An increase in taxes leads to a decrease in profits. There are new environmental rules on carbon dioxide emissions, reduction of use of fossil fuels and increasing use of renewables. Global economic consumption also drives consumption of gas. Other economic factors, which can also affect the gas industry, are the global economic crisis, over borrowing by public and private sectors in gas producing countries and bankruptcy of large commercial banks due to investing in dangerous products.

External Context of Gas Pipeline Asset

Social factors like increasing knowledge on usage of more friendly fuels and a decrease in usage of dirty fossil fuels like shale gas are influencing the gas industry. Natural gas is also considered the cleanest, and there are debates concerning extraction of gas and protection of the environment. Technological factors also have a direct impact on the gas pipeline industry (Flyvbjerg2011). The gas industry faces technological barriers due to uncertainty about returns, skill shortages in operation of new technologies, the cost of developing new technologies, uncertainty over gas prices and stringent regulations. Automation is however increasing, and in the next few years, it is expected that there will be enhanced drilling technologies and robotic technologies.

The stakeholders in the gas industry are International gas organizations, National and Regional companies that deal with fossil fuel related issues, gas companies, communities living near gas companies, governments, consumers, and environmentalists. All these affect how the gas pipeline industry comes up with risk criteria.

Currently, gas industries are moving towards technological advancement, and these have been used to find more gas quantities and enhance pipeline transportation. The companies are also focusing on training and offering employees more than just salary to enhance productivity.

The Internal context is the internal environment of the organization and can be directly controlled. The risk management process must also be aligned to this. The gas pipeline industry will be affected by the kind of organizational structure it has, employee roles and the policies and strategies, which have been set in place by the organization. The organizational capabilities in terms of resources and knowledge will also have an influence on the industry as it will determine what kind of structures are laid out in terms of the gas pipelines. The organization’s culture will also have a big effect on the gas pipeline asset management, as it will determine how the company assesses its risks.

The context of risk management depends on an industry or organization. The resources that will be used to assess the risk of the gas pipeline asset must be justified. As underground pipelines are the safest way to transport gas, accidents are still a threat to the public and environment. In carrying out risk activities, the organization will first define the goals and objectives, which are as follows.

• Risk Modelling which will be transparent and efficient
• Accurate and  verifiable results after assessments are performed on underground pipelines
• Improved Understanding of the actual risk that is faced by the gas pipeline
• Optimizing resource allocation in the building of pipelines so that the public is safer
• Standardization of gas pipelines that will lead to smoother regulatory audits
• To fulfill expectations of the regulators, the public and the management with regards to safety of the gas pipelines
• To integrate all pipeline knowledge so as to make better decisions
• To calculate the probability of failure of underground gas pipelines as per engineering principles.

There must be a definition of responsibilities for the risk management process. The organization can come up with a risk management committee for the pipeline assessment. The committee will draft roles and responsibilities that are expected to be taken by employees and stakeholders of the respective company dealing with the gas pipeline.

Scope definition and specific instructions on risk management activities will be carried out.  The risk management process of the gas pipeline must be measurable in units, and failure probability must be measured. All plausible failure mechanisms of the gas pipeline must be elaborated in terms of exposure caused, how it can be mitigated and survivability in case a failure occurs. Consequences of failure of the pipeline must be fully documented. A continuous profile of risks across the entire gas pipeline should be documented. There must also be the transparent use of all available information regarding the pipeline.

Internal Context of Gas Pipeline Asset

The relationships between the gas pipeline and different projects must be elaborated as the risk criteria are being set out. The organization has to define the methodologies that will be used to perform a risk assessment on the gas pipeline. There has to be a baseline assessment, which will look at the geographical risks of the pipeline, the hazards and the functional risks. The next step will be to have an issue based risk assessment, which will look at the equipment being used and any legislative issues. The Continous risk assessment will involve day to day checking of pipeline operations, frequent inspections and pipeline operator checks. The organization has to define evaluation mechanisms that will be used to check on each risk that has been defined. Resources needed to identify and mitigate pipeline risks will also be identified.

Under the context, risk criteria must also be defined. These are tools used to control and evaluate risks.  The impact factor for gas pipelines are an individual and social risk, economy loss related to pipeline accidents, the cost of potential accidents, shutdown and delay of production, operations, and gas leakage that leads to loss of life and property (Pearce 2013). These factors will be used to measure quantitative or qualitative indicators. The views of the stakeholders will be defined to enable determination of which risks are acceptable or tolerable depending on the impact of the gas pipeline.

Risk Assessment involves identification, analysis, and evaluation. In risk identification, sources of pipeline risks, areas of impact and events and potential consequences will be identified (Malakooti 2013). This has to be done comprehensively. Some of the hazard risks of the gas pipeline are elaborated in the table below.

Gas Pipeline Component	Hazardous Scenario	Impact
Well	Release of natural gas from well head	Jet Fires leading to risks to people and properties
Gas Gathering Pipe	Release of natural gas from the gathering line above ground and underground	Fire Balls leading to risks to people and properties
Nodal Gas Compressor	Escalation of fire to the diesel storage system	Flash Fires leading to risks to people and properties
Gas transmission pipeline	Gas release from medium  and high-pressure transmissions/damage to gas transmission pipelines during renovations	Vapour Cloud Explosions leading to risks to people and properties
Gas Compression Facility	Release of natural gas from equipment hence causing fires to diesel storage	Bund Fires leading to risks to people and properties
Water Management Facilities	Water shortage due to damage	Catastrophic Flooding leading to risks to people and properties

The identified risks must then be analyzed. The risks identified for the gas pipeline will involve consideration of the sources of risk, their impacts, and likelihood.

Gas Pipeline Component	Hazardous Scenario	Risk Receptor	Consequence	Likelihood	Residual Risk
Well	Release of natural gas from well head	People	Significant	Isolated	Medium
		Property	Moderate	Isolated	Low
Gas Gathering Pipe	Release of natural gas from the gathering line above ground and underground	People	Significant	Isolated	Medium
		Property	Moderate	Isolated	Low
Nodal Gas Compressor	Escalation of fire to the diesel storage system	People	Significant	Isolated	Medium
		Property	Moderate	Isolated	Low
Gas transmission pipeline	Gas release from medium  and high-pressure transmissions/damage to gas transmission pipelines during renovations	People	Significant	Isolated	Medium
		Property	Moderate	Isolated	Low
		People	Significant	Isolated	Medium
Gas Compression Facility	Release of natural gas from equipment hence causing fires to diesel storage	Property	Moderate	Isolated	Low
		People	Significant	Isolated	Medium
Water Management Facilities	Water shortage due to damage	Property	Moderate	Isolated	Low

Risk Evaluation will help the organization to make decisions on how different risks will be treated. The risk levels on the gas pipeline will be compared, and decisions made on how the various risks identified will be handled.

Role and Key Relationships between Asset and Risk Management

The gas pipeline industry is asset-sensitive. The daily performance largely depends on asset performance. Asset performance must, therefore, be optimized, and therefore a risk-based approach is taken (Hill 2003). The organization carrying out the gas pipeline will review the following areas that could compromise its asset management strategy.

Organizational Strategic Plan-The gas pipeline’s organizational strategy has to be reviewed. The organizational strategies have to help in the mitigation of risks associated with the gas pipeline. The strategy will also consider the view of the stakeholders with regards to the underground pipeline. The strategies will be implemented such that it will take into account the asset-related risks. (Hill 2006). The strategy will consider the PAS 55-1: 2008 standards, which will measure pipeline performance, will investigate any incidences that are related to the underground pipeline, will deal with emergency preparedness, response, and documentation of records. There will be a business continuity and emergency response plan that will be utilized in case anything happens to the pipeline.

Goals and Objectives of Risk Management Process

Legal, Regulatory and Mandatory Requirements-Various acts are related to the gas pipeline system and must be followed. The environmental protection hard will define how the dangerous chemicals used in the pipeline will be handled so that they do not pose a risk to the environment and people. The petroleum and gas act explain how the gas pipeline should be safely installed and the safety management plan that the organization has come up with. The work health and safety act outlines a framework that will be used to ensure that workers are safe when installing or repairing the pipeline. The electrical safety act outlines safety measures as concerns electricity and pipeline installation.

Identification and Evaluation of Asset, Management Risks-The organization will identify and evaluate any risks that are associated with the pipeline and find ways to manage these risks. Some of the risks facing the pipeline are damages by third parties, overheating of the system, internal and external corrosion caused by the contents being transported, the design and construction of the pipeline and ground movement or leakages (Badiru&Osisanya 2016). The organization will evaluate and classify according to impact and come up with ways of managing each risk.

Existing Asset Management Practices, Processes, and Procedures-The organization has to review current practices of how the gas pipeline is handled. The processes and procedures must also be reviewed. This will assist in the identification of loopholes that may be causing the system to have different challenges. Once these are identified, it becomes easier for the company to come up with better asset management practices for the gas pipeline.

Asset and Asset System Performance- The risk in the pipeline system is majorly coming from leakages and explosions. The company must, therefore, ensure that the system has the ability to transport gas smoothly without leakages or explosions occurring. The organization will use the PAS 55-1: 2008 system to manage the pipeline (Love et al. 2014). This system provides a long-term guideline on how the pipeline can be managed and will assist in competitive advantage being gained. There will also be inspection intervals setup using expert judgment, and this will assist in the assessment of the performance of the pipeline.

Investigation of Incidents, Accidents, and Emergencies-There will be a framework for investigating any accidents or incidents along the pipeline. There will be a risk assessment methodology and consequence management framework. This will set out the necessary guidelines for investigation and management of incidents.

Management Systems, Competencies, Internal and External Resources-The organization, will carry out primary and support activities that will help in resource management and ensure that asset management of the pipeline works (Knapp &Langill 2014). The primary activities will include maintenance of the pipeline, operations factors, design and projects related to the pipeline. Supporting activities will be procurement, which will deal with purchase of any materials, needed to install or repair the pipeline, technology development that will assist the pipeline perform in an efficient manner and human resource management that will ensure the organization gets the right skills and does the right training that will ensure the pipeline is operated and maintained well.

Once all the above are in place, the company has to constantly monitor its processes to ensure that everything is working as required. Constant monitoring ensures that any new risks are always identified and mitigated on time and that the asset performs at optimum.

Conclusion:

Risk management in the current global world has different aspects and hence requires competent workforce and the most function of business and machines as well for efficient risk mitigation. The management of different sector and the department have the responsibility for evaluation, analysis, assessment and monitor risks on project post and responsibilities. Effective risk management sometimes anticipates risks before the event has happened.(Hill 2006) The management in this scenario should avoid the uncertainty, control and manage the situation before it happens or in the case of a project stop it if you know it is under your management. Good risk management approach should enable the management to manage and mitigate the problem and avoid blames to each other. Effective and Active risk management follow the process and procedure of risk management periodically starting from identifying the risk all the way to implementation of the strategies to mitigate or control the problem. One of the most effective ways of managing risk is to form all steps one process, which is manageable and defines all responsibilities and expectation of the organization Success and continuation of the business depends on the ability to manage and detect low risks and how to mitigate.

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