Pipeline Technology Conference 2007

INTEGRAL AUDIT OF THE CAMISEA PIPLINE PROJECT

Abstract

Authors: Mr. Jorge Vallebueno, Germanischer Lloyd Oil and Gas, Hamburg, Germany Mr. Thorsten Gundlach Germanischer Lloyd Oil and Gas, Hamburg, Germany The Natural Gas (NG) and Natural Gas Liquids (NGL) Transport System of Camisea consist of two parallel pipelines. Both pipelines run from the exploitation site at the plant Malvinas located in the Cusco Department and traverse the Peruvian Amazon and Andean region (up to a height of 4,800 m above sea level). The Natural Gas pipeline has a total length of 730 kilometres (Km) and terminates in Lurín situated to the south of Lima. The NG pipeline is divided into three segments with different pipe diameters. The first segment: 210 Km long and 32 inch diameter; the second: segment 310 Km and 24 inch diameter; the third segment: 210 Km and 18 inch diameter. The NGL pipeline is 560 Km long and ends at the Pisco plant. It is divided into two segments with different diameters. The first segment: 455 Km long and 14 inch diameter; the second: segment 105 Km and 10.15 inch diameter. The NG and NGL transport system has been in operation since August 2004. Since then, five failures have occurred. These accidents have lead to leakages. In one case two persons were injured due to a fire. All failures concern the smaller pipeline (NGL). Due to these problems, the Ministry of Energy and Mines of Peru decided to carry out an integral audit on the pipeline system. Germanischer Lloyd has the task to determine whether the Camisea pipeline transportation system has been constructed and commissioned in compliance to the specifications and international norms and standards. The document review activities of the audit team will cover all the phases of the project; design, material and equipment acquisition, construction, testing, commissioning, operation and maintenance. In addition, the work group will perform inspections on site along the pipeline route in order to evaluate specific points considered critical due to their location (geo-hazardous areas). The expert team will also asses the geotechnical mitigation works that are being carried out. The auditor will verify that all equipment installed in the surface stations is in compliance with the specifications. Finally, the causes of the five accidents will be investigated. At the end of the project Germanischer Lloyd will issue a report addressed to the Ministry of Energy and Mines containing a detailed description of the activities, the results and possible mitigation strategies to solve potential problems.

INTEGRAL AUDIT OF THE CAMISEA PIPLINE PROJECT

Authors: Mr. Jorge Vallebueno, Germanischer Lloyd Oil and Gas, Hamburg, Germany Mr. Thorsten Gundlach Germanischer Lloyd Oil and Gas, Hamburg, Germany Presented by: Mr. Thorsten Gundlach

1. Summary

2. The System

3. The Situation

4. The approach of GL

- Design Phase - Procurement Phase - Construction Phase - Commissioning Phase - Failure Analysis

1. Summary

Deep in the jungle the San Martin and Cashiriari fields in Camisea, which are located 500 kilometres to the east of the city of Lima, the capital of Peru, are home to one of the most important non-associated natural gas reserves in Latin America. Discovered in the surroundings of the Camisea river in 1983 the area reserves are of a retrograde gas condensate type, supported by water drive. The proven volume of original gas in place is 8.7 trillions of cubic feet (TCF), with an estimated ultimate recovery of 6.8 TCF of natural gas (recovery factor: 78 %) and 411 million barrels of associated natural gas liquids (propane, butane and condensate). The upside potential is estimated in 11 TCF of natural gas. The Camisea reserves are ten times greater than all other existing natural gas reserves in Peru, and are capable of supplying energy to the country for approximately 80 years.

To exploit the natural gas a liquid separation plant has been build in Malvinas located in the Department of Cusco. In this plant, water is separated from the liquid hydrocarbons contained in the natural gas. To reach the market, the hydrocarbons are transported from Camisea to the Central Coast, for which purpose two parallel pipelines have been built: one for the transportation of Natural Gas (NG) and one for Natural Gas Liquids (NGL). Both pipelines run from the exploitation site at the plant Malvinas and traverse the Peruvian Amazon and Andean region (up to a height of 4,800 metres above sea level). The 1.6 billion Gas Project is backed up by the Dallas-based company Hunt Oil. The Natural Gas pipeline has a total length of 730 Km and terminates in Lurín situated to the south of Lima.

Photo 1: Pipeline route in the Peruvian jungle

The Natural Gas Liquids pipeline is 560 kilometres long and ends at the Pisco plant.

The NG and NGL transport system has been in operation since August 2004 and made a sudden impact on Peru’s growing economy: The pipelines make NG and NGL available for domestic consumption and for export. Natural gas is transported to the main consumption centres in Lima, where it is used for residential and industrial purposes and to generate electricity, which will then be distributed nationwide through Peru’s existing transmission infrastructure. The export market for NGL is also a significant source of Peru’s foreign currency earnings.

The area is located in a tropical rainforest in the Peruvian Amazonian region. From an environmental standpoint, this region is very sensitive and in the middle of two zones famous for their high biodiversity: the Apurimac Reserve to the west and the Manu National Park to the east. Therefore the five failures in the pipeline systems, which have occurred since then, took national and international attention from environmentalists, politicians and development experts.

In December 2004 a 14-inch section of the pipe ruptured, dumping about 48,343 gallons of natural gas liquids. In August 2005, another rupture occurred but without a substantial spill. Two more failures occurred the following September and November. In March 2006 the pipeline broke again, spilling a lot of gas into the rainforest and leading to an explosion that severely burned a mother and her child.

All failures concern the smaller pipeline (NGL). This record is highly unusual for a pipeline system, and due to these problems, the Ministry of Energy and Mines of Peru decided to carry out an integral audit on the system.

In September 2006 Germanischer Lloyd de Mexico has been awarded to carry out the integral technical audit of the Camisea Pipeline.

The scope of work covers review of all phases of the project starting from review of design, procurement, construction documentation and taking into account maintenance and operation procedures. A route survey and failure analysis is performed to achieve comprehensive results.

The audit activities are mainly focussing on review of material certificates, welders’ approval, inline inspection results, verification of geotechnical conditions and a failure analysis.

As the report will be finalised soon GL is not allowed to publish any details or results due to a confidentiality agreement.

2. The System

The Camisea Pipeline System consists of a Natural Gas Pipeline and a Natural Gas Liquids Pipeline. The Pipeline System has been designed and constructed from 2001 until 2004. The operation started in August 2004.

The Natural Gas pipeline has a total length of 730 Km and terminates in Lurín situated to the south of Lima. The NG pipeline is divided into three segments with different pipe diameters. The first segment is 210 kilometres long and has a 32 inch diameter; the second segment is 310 kilometres long and has a 24 inch diameter; the third segment is 210 kilometres long with a 18 inch diameter. The gas pipeline has a design capacity of 6.1 MMSCMD and is operated by one Compressor Stations. Pressure reduction stations are installed to ensure a safe operation of the gas pipeline. The central control room is located in Lurin.

The Natural Gas Liquids pipeline is 561 kilometres long and ends at the Pisco plant. It is divided into two segments with different diameters. The first segment is 455 kilometres long with a 14 inch diameter; the second segment 105 kilometres and has a nominal diameter of 10.15 inch diameter. The pipeline contains four pump stations and three pressure control stations.

Photo 2: Pump Station No. 4

3. The Situation

The pipelines start at Malvinas gas plant located in the Department of Cuzco and the gas pipeline terminates in the area of Lurin and the gas liquids pipelines at a fractionation plant near Pisco.

The route is located in a tropical rainforest in the Peruvian Amazonian region. From an environmental standpoint, this region is very sensitive and in the middle of two zones famous for their high biodiversity: the Apurimac Reserve to the west and the Manu National Park to the east. Therefore the five failures in the pipeline systems, which have occurred since then, took national and international attention from environmentalists, politicians and development experts.

In December 2004 a 14-inch section of the pipe ruptured, dumping about 48,343 gallons of natural gas liquids. In August 2005, another rupture occurred but without a substantial spill. Two more failures occurred the following September and November. In March 2006 the pipeline broke again, spilling a lot of gas into the rainforest and leading to an explosion that severely burned a mother and her child.

4. The approach of GL

Germanischer Lloyd Mexico was awarded in September 2006 by the Ministry of Energy and Mines of Peru decided to carry out an integral audit on the system. The objects of the audit are the gas pipeline and the natural gas liquids pipeline. The scope of the audit is covering the

- Design Phase - Procurement Phase - Construction Phase - Commissioning Phase - Operation and Maintenance - Failure Analysis

Main focus is the complete integral audit to identify what can be done to ensure a reliable operation of the Camisea pipelines and also to avoid the same problems in future projects.

During the integral audit Germanischer Lloyd has performed a complete scanning of each phase of the project. All phases of the project from the design, procurement, construction and commissioning has been investigated in detail. Additionally manuals and procedures for the operation and maintenance phase have been reviewed. The design documentation, the inspection reports of the Third Parties during manufacturing of components as well as pipeline and station construction and also the operation and maintenance log books are investigated.

In addition the audit team familiarised themselves with the contracting structure of the project during its realisation. It is important to know the number and kind of contractors from the design until the operation. The risk of failures during

construction is rising with the number of contractors and gives a first indication about the quality of the pipeline construction.

The project execution was divided into paper work and route surveys on site. Certain criteria have been developed during the study of the project documentation to focus on during the route survey with special attention of the part where the ruptures occurred.

Findings on site will be categorised and compared to the rehabilitation methods. Particularly the erosion control and preparation of crossing are reviewed to get the knowledge of the pipeline integrity.

4.1 Design Phase

During the audit project the GL team was focusing on the implementation of the quality system. This includes the implementation of a proper quality assurance and quality control System which is required by law in Peru. The objects of review have been e.g. the material certificates of the manufactured material and components and inspection reports of welding supervision on site. Reports are worked through looking for results of the hydrostatic tests and registers about evaluation of suppliers and especially qualifications of technical staff.

In this phase, GL reviewed the design documentation, operation manuals and operation logbooks as well as inspection and maintenance manuals but also emergency procedures.

It was checked if independent analysis or design reviews have been performed during the design phase. Involving an independent verification body reduces the design risks especially for a pipeline in this extraordinary territory.

For the project realisation GL checked if international codes and standards have been applied. Scope of this analysis was the whole pipeline route and in detail hydraulic profile, specifications of materials and components.

In detail the overpressure protection, corrosion protection, construction methods including the foundations and bracings have been checked. Special attention was paid to the active and passive corrosion protection, overpressure protection and instrumentation system.

The main focus here was also the correct transfer of the FEED into a project realisation according to Peruvian Law and international codes and standards.

The focus on geotechnical, hydrological and geological aspects aims to understand the pipeline integrity in conjunction with the route requirements.

The aim of the phase was to verify if the geotechnical risks are judge correctly, international codes are recognized, recommendations in relation to the design.

4.2 Procurement Phase

In the second phase the design documents were compared with available documentation of material tests prepared by the manufacturers. The procurement procedure has been evaluated to understand if there is any evidence for the activities of a third party agency at the vendors. Especially the loading and delivery documentation of the supplied material was checked for getting an overview of the material used for the project. But also the material certificates and the results of the material tests are of special interest.

Special focus was the documentation of the pipe manufacturing. The whole documentation is checked to understand the activities of the second party inspection involved in the manufacturing process

Photo 3: Pressure Reducing Station No.1 - Pressure Reducing Skid

4.3 Construction Phase

For the investigation of the construction phase the procedures for storage and handling and transportation was reviewed. We took into account the climate conditions and the correct handling of the pipes until the lowering in the trench including a detail investigation of the welding procedures. The existences of construction procedure needed to be checked if they are suitable for a proper pipeline installation with regard to contract requirements, procedures and specifications. It was looked for evidences that e.g. the pipeline trench was in good condition. This applies for the pipe handling in more than 4.000 m above sea level at steep slopes.

The documentation of the welding processes was checked from the welding procedures up to the qualification of the welders.

It was verified if welding supervision and NDT for the welds have been performed. This was compared with the national requirements.

During the route survey spot checks have been done with comparison of the as-built documentation. Of special interest was the change in the as-built documentation against the detail design issue for construction.

The results of the NDT by X-Ray have been checked on random basis. It was checked if the NDT testing was performed according to the necessary configuration.

The content of the as-built documentation was compared spot wise with the existing installation. It was checked that the changes during mechanical completion are included in the latest documentation. Even the approval of these changes with regard to permitting and technical feasibility by the involved parties needed to be verified.

A Defect Assessment has been carried out for each individual failure based on the existing reports and field inspections. The following aspects are considered:

1. Base material in the area of the defect 2. Welding consumables 3. X-Ray results 4. Final inspection 5. Parameters of hydro testing

Special attention was paid if the defects have been triggered by geotechnical reasons (landslides, mud slides and Huaycos)

Hydrostatic pressure testing

The results of the hydro tests along the whole pipeline were reviewed. This included the testing of valves prior to their installation. The records of the hydrostatic pressure testing of the pre-commissioning phase are a good indication about the integrity of the pipeline. The experts of the audit team verified the pressure curves against the maximum operation pressure. The data recorded during the pre-commissioning for the cathodic protection system was reviewed.

Photo 4: River crossing of the 14” NGL pipeline

4.4 Operation phase

During the review of the operational phase documents the operational data and logbooks were checked with regard to operation pressure, shut-downs, fluid composition. All figures had to be in the range specified by the design to achieve an optimal operation of the system.

It was audited if the maintenance program is in compliance with the executed maintenance and inspection. Based on the results of the maintenance and inspection reports check, these evidences were analysed.

The results of the intelligent inspection tools were of special interest. It was reviewed if the runs of the tools have been performed according to projects specification. It is vital to configure the inspection tools according to each individual pipeline to achieve comprehensive results.

Photo 5: Right of Way

4.5 Failure investigation

The investigation of failure appeared during the construction and commissioning of the pipelines were scope of the audit also. The causes for the failures of the pipeline during construction and operation were analysed. This included a detailed on site investigation for learning the real conditions in the area of the failures.

Independent verification of the onsite conditions is the basis of a risk analysis to validate the consequences of repair.

The failure occurred until today are:

1. Failure at KP 8+800 of a weld, repaired by installation of a new pipe with a length of 54m.

2. Failure at KP 222+500 leak at a weld repaired by onsite clamping. 3. Failure at KP 200+700 of a weld repaired by installation of bypass. 4. Failure at KP 50+900 leak repaired by bypass. 5. Failure at KP 126 rupture detected by SCADA- system.

The reasons of these ruptures or leaks are known and some of the pipe materials are still under investigation. It is the main objective to get substantial result of the failure analysis which should help to ensure a reliable system.

We hope to support the Ministry of Energy and Mines in Peru to stop the occurrence of the failures in the existing pipelines and prevent new-buildings. Implementation of state of the art design, technology and supervision methods ensure an operation of a reliable and safely operating pipeline system. Evidences exist in e.g. Europe of systems in operation since decades which still today have an unexpected high remaining lifetime.