Arriving at dollar costs for pipeline spill scenarios may become easier

Researchers at New York University have analyzed data for the 1,582 pipeline accidents occurring in the US from January 2002 to December 2005. They then came up with examples of hypothetical accidents and put price tags on them.

The accident data the researchers used came from the US Department of Transportation's Office of Pipeline Safety. Spillage of crude oil or gasoline occurred in about 45% of accident cases involving a spill of liquid. Spills of propane, diesel fuel and unleaded gasoline were also relatively common, together representing about 10% of all spill cases. The most common causes for the accidents were external corrosion of pipelines, internal corrosion, damage caused by a third party's digging, the rupturing or leaking of a seal or pump packing, and incorrect operation.

The researchers did a regression on the accident data, to find and quantify the main factors linked with product loss costs, property damage costs, and cleanup and recovery costs.

The size of spills mattered, they found. For every 1% increase in product gallons lost, the cost of the product loss rose 0.86%, the cost of property damage rose 0.19%, and cleanup and recovery costs rose 0.25%.

The researchers found spills happening offshore and product ignition tended to bump up product loss costs, by 86% and by 1.9 times, respectively.

Property damage costs also were typically higher when spills took place offshore (by 33.2 times), and when product ignited (by 6.2 times). Spills in or near sensitive locations -- high-density populations or environmentally sensitive areas -- tended to increase property damage costs too (by 2.9 times).

Cleanup and recovery costs tended to be greater when spills were in or near those sensitive locations (by 3 times) and when taking place offshore (by 12.6 times).

The researchers took their regression results and came up with a few illustrative examples of what dollar costs to expect from spills of various sizes in different locations and with different explosion and ignition profiles. For all of the scenarios they presented, the researchers broke down expected total costs into the subcategories of product loss, property damage and cleanup costs. They also listed the probability that a given cost subcategory would be greater than zero.

For instance, one accident scenario involved a spill of 420,000 gallons from an onshore pipeline due to internal corrosion. The spill occurred away from any high-density populations and away from any environmentally sensitive locations. There was no explosion and no ignition of the liquid. The estimated total cost of the accident was $157,000. This figure included estimates for the cost of lost product ($58,000), the cost of property damage ($9,000), and cleanup and recovery costs ($90,000). For this accident scenario, the researchers found the chance of losing some amount of liquid product was about 94%, the chance of incurring some amount of property damage was about 50%, and the chance of being hit with some amount of cleanup and recovery costs was about 95%.

Spillage of 1.26 million gallons from an onshore storage tank due to malfunctioning control equipment came with the estimated total price tag of $601,000. That spill was near either a high-density population or in an environmentally sensitive area. The spill involved an explosion and liquid ignition.

And having 840,000 gallons escape from an offshore pipeline due to high winds, without any ignition or explosion of product, might cost a company a total of about $339 million.

NYU researcher Carlos Restrepo told The Barrel that pipeline risk managers wanting to look at scenarios of their own could use the regression results tabulated in the researchers' paper, which appears in a recent issue of the International Journal of Critical Infrastructure Protection.

Restrepo said he and his research colleagues were doing a similar cost analysis of data for incidents in the natural gas transmission and distribution industries. He said they hoped to have those research results published later this year.