Friday, September 23, 2016

The Witch-King of the oil patch

So I promised, so I deliver.

My Wednesday blog had a dressed up overly-dramatic photo of sunrise over Calgary. The second photo, not the first. Or you could look at it embiggened here. I'd suggested a couple of story lines where this photo could be used as illustration, but nobody commented on the blog. One of my facebook buddies mentioned "It's the Witch-King of the Oil Patch donning his armour."

I suspect all my readers know that the witch-king is a character in Lord of the Rings. Once a mortal man, he was seduced to the dark side, I mean, corrupted to evil by a ring of power.

So who is the Witch-King of the Oil Patch? My take on this is corporatism drunk with profits. Corporations are made up entities that exist to make a profit, and insulate the people running the corporation from whatever bad things happen as a result of corporate activities. Everything else that corporations do is to serve those goals.

Compared to the butcher, the baker, the candlestick maker, the oil and gas industry is a very new kid on the block. It's only in the last 100 years or so that we've figured out how to extract the black goo and make it into useful products with a reasonable degree of safety. That last bit, safety, has been hard won. Safety was often the last thing on corporate owners minds. They wanted production now.

The result was a lot of people killed or injured along the way, and the dramatic expansion of regulatory bodies around every aspect of the industry. The bigger companies, by and large, have embraced safety culture as part of the social license they seek to keep operating. They've discovered that it really is cheaper to keep a worker healthy, than to deal with an injured one.

But there's still a bit of a cowboy mentality out there, that it's a manly profession, get in there, get'er done, get paid, and bugger off to the next job. I remember the first time BP started testing for Benzine in pressure vessels before people went in. (Exposure to Benzine is one way of getting cancer.) There was lots of pushback. "What do you mean, go in under mask? It's not sour, get on with it!"

Some of the other standards are a little tougher. Take pipelines, for example. Pipeline are the safest way of transporting petroleum products, provided they are built and maintained to the appropriate standards. And there's the rub. When a pipeline ruptures there are typically 4 possible root causes.

1) A known condition such as corrosion was allowed to continue without adequate mitigation for too long. (It's easy to believe that a functional pipeline will continue to be functional for another year. Or two.)
2) Something changed in the product stream that introduced a new condition, such that existing mitigation activities were no longer adequate. (Sometimes that change is known of, sometimes not.)
3) An external event happened, such as an equipment strike, or a flood washing away the surrounding earth. (Some of these can be planned for. There are extensive procedures around excavating soil near a pipeline.)
4) Something was not correctly understood and allowed for. At one time Stress Corrosion Cracking and Hydrogen Embrittlement were new and not well understood. Sometimes new materials do not behave as predicted.

When a company wants to build a new pipeline it's easy to say that they will adhere to all the relevant standards and implement a robust maintenance plan. Then budgeting happens, and it becomes all to easy to "tweak" the model, and defer work, or use a cheaper chemical, or something. Then we read about a pipeline rupture. The least damaging outcome is a fresh water leak, but even too much water in the wrong place can be a bad thing.

Other products getting outside a pipeline get to worse consequences very quickly. An explosion can cause many deaths and catastrophic equipment damage. Sour gas can kill quickly and with little warning. We've all see what happens with oil leaks; fouled waterways coating the creatures living there with oil.

I've been in the oil and gas industry for 25 years or so, and by and large it's been good to me. It's been quite the roller coaster ride, but it's very easy to make the case I'm one of the lucky ones. Mostly I work in an office in Calgary dealing with nice clean data, though I've done time out in the field getting my coveralls dirty. Not as dirty as some, I'll be the first to say.

There are lots of people that the industry has not been good to, mainly those unexpectedly exposed to petroleum products as a result of some incident. I can completely understand why various groups protest pipeline expansion. It's one thing for an executive approving a risk ranking to say that a certain level of risk is acceptable. The protesters rightly point out that executive isn't bearing the risk; that the people living next to the pipeline (or other facilities) are the ones that have to live with the consequences of an incident, not just now but forever after.  They have to trust the goodwill of a corporation, not just now, but every year into the indefinite future. There are lots of reasons why that might not seem like a good bet.

The recently ousted PC provincial government was hand in pocket with the industry. It's hard to say which was running the show. Decades of power corrupted the PC's and everything associated with them. The new NDP government is still rooting it out, and discovering the temptations of being in power. Just after the election there was lots of talk about uprooting and going to seek greener pastures. Greener meaning not yet plundered and with weaker guardians. Except that there really aren't any. I've heard of companies going bankrupt, but not of pulling up stakes and moving elsewhere. And no, the NDP didn't cause low oil prices.

There was talk of fighting the government, as if that would get anyone anywhere. Remember that social license? The NDP was a newly elected government. There isn't an oil company in the world that would come out on the good side of a name calling match. I had to admire the honesty of one executive who said something like "Our industry has always faced various winds and this is another; we will set our sails accordingly." I suppose one can read that several ways.

And after a big rant, the photo of the day. I hope you haven't read Day of the Triffids lately.

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