Copyright of the Daily Oil Bulletin 2018
Forties On The Rocks: How Granite Led To U.K. Oil Pipeline Outage
(Reuters) — The unplanned shutdown in December of Britain's biggest oil pipeline, Forties, which shut off supplies for more than two weeks and fired up global oil prices, had an unlikely cause: Scottish granite, its owner Ineos said.
Ineos bought the pipeline from oil major BP plc last October for $250 million. In early December, its contractors spotted a crack on an onshore section of the pipeline during what Ineos called a routine inspection.
"The precise point of the transverse weld of the pipeline was resting on a sharp ridge of granite rock and over time vibration of the pipeline led to the hairline crack," Tom Crotty, director at Ineos, told Reuters.
"It was a failure that BP hadn't seen before and we don't expect to see again," he said, after the pipeline resumed full operation in late December following the Dec. 11 shutdown.
One of the oldest pipelines in the North Sea, Forties first pumped oil in 1975. Originally built to bring oil ashore from the vast Forties field, over time more and more oil and gas fields, now in excess of 50, were linked to it.
The outage of Forties, which pumps 450,000 bbls/d, helped push oil prices above $67, which was at that point the highest since 2015. Ineos declared force majeure on Forties exports, the first such move in the North Sea for decades.
Forties plays an important role in the global oil market as it is the biggest of the five North Sea crudes underpinning Brent, a benchmark for oil trading in Europe, the Middle East, Africa and Asia.
Privately owned Ineos did not give a precise figure for how much the repair and outage cost. But the bill would have added up, with parts having to be specially made and repair work being carried out around the clock during the Christmas holidays.
Ineos spoke to dozens of experts to be sure it had the best likelihood of success and took the precaution of ordering spares so any recurrence of "the unique issue," as the company called it, could be rapidly fixed.
Responding to a question on what condition the company found the pipeline to be in after buying it, Crotty used a secondhand car analogy.
"It was more of a Ford Mondeo than a Mercedes but that is a reflection of the age of the system," he said. "We knew that a robust maintenance program would be essential."
"We will probably spend more on maintenance than the previous owners, reflecting the fact that this is an older asset."
Crotty said Ineos, which has bought other BP assets such as the Grangemouth oil refinery in Scotland, does not see the Forties issue as one that will affect other former BP infrastructure.
"We don't have a long-term issue with BP assets. We have acquired quite a few assets from BP. Sometimes they need work such as Grangemouth and some are very good, such as Koln."
But the Forties outage still offered a useful lesson.
"Any new pipeline installations in areas with a rocky strata would need to be given additional protection," Crotty said.