As oil and gas enters its fourth year of downturn, there are a lot of safety trends to be concerned about – the impact of cuts; an overworked, overstressed workforce; and training new workers once business picks up to name a few. Here’s a new one: things are wearing out.
Credit for pointing this out goes to David Yaeger, who wrote about it for Oilprice.com. The basic concern – our production facilities, our pipelines, our infrastructure is made of iron and steel, tons and tons of it and much of it is getting pretty old. For example, Yeager cites the projections of Suncor on the costs of maintaining or decommission aging facilities:
For decommissioning and restoration costs Suncor estimates $382 million for 2017 and $419 million for 2018. This stays about the same through 2021. But the figure for 2022 and beyond is $9.6 billion and the total is $11.7 billion.
Let’s remember, 2022 is just five years off and that $11.7 represents nearly 20% of the book value of Suncor’s assets.
An early warning of the costs of maintaining aging oil and gas infrastructure came when investment guru Matthew Simmons spoke to the Offshore Technology Conference in 2008. It is worth a read.
The enemy is corrosion. Metal becomes brittle. Equipment begins to leak and there is an increased risk of explosions. As wells play out, brine makes up a higher percentage of the output. Sweet oil becomes sour. All of this speeds up corrosion.
The advances in shale recovery and in identifying offshore oil and gas indicates that we have more reserves than we thought. Yeager and Simmons warning is that it may not be the supply that gives out; it may be the infrastructure to produce and transport it.
From a safety standpoint, it is important to understand the life-cycle of equipment. If your car is new, you generally just worry about changing your oil and rotating your tires. If you have every driven a car with more than 200,000 miles, you know how important it is to pay attention to every funny noise and signs of wear-and-tear. Similarly energy companies need effective, expert maintenance programs. Safety programs need to incorporate the risk of critical equipment failures. Key systems need to be taken out of service periodically for inspection and maintenance. Aging infrastructure can be managed, but the potential hazards need to be recognized and addressed in a systematic way.