Reducing your asset risk In the early evening of 9 September 2010, when many residents of the San Francisco suburb of San Bruno were arriving home from work or sitting down to dinner, a natural gas pipeline that served the community ruptured and burst into ames. The explosion and re ripped through the Crestmoor subdivision, destroying 38 homes and damaging many more. Eight people were killed. For the people of San Bruno, the experience was a life-altering tragedy, one that will never be forgotten. For the company that operated the pipeline, the explosion was a catastrophic nancial event, one expected to wipe out an estimated 15 to 20 years of earnings. Approximately 70 separate lawsuits were led in the case, representing more than 100 plaintiffs. In addition to expected payouts to those impacted, the company continues to suffer from negative impacts to its stock price, corporate reputation and relations with regulatory agencies. The section of pipe that failed in San Bruno had much in common with many other pipelines buried underground in major cities and towns across the United States. Aging infrastructure, much of it installed from the 1930s to the 1960s under different manufacturing and construction processes and without consistent regulatory oversight, is a looming issue for many companies in the utility and energy industries. For example, cast iron mains and service lines, which were prevalent from the 1830s until after World War II, are prone to failure due to graphitization or brittleness. Many major urban areas such as Philadelphia, Boston, Detroit, Washington, DC, and more still have cast iron pipe under ground. Plastic pipe, too, can fail prematurely due to cr acking. Even steel pipelines and connectors can break or rupture due to corrosion, stress, settlement or cyclic fatigue. Regardless of material used, aging and the effects of soil and water on pipelines take their toll. According to the Pipeline and Hazardous Materials Safety Administration, only timely repair, rehabilitation and replacement of high-risk pipeline infrastructure can prevent the types of tragedies suffered in San Bruno. Yet distribution lines rarely receive the same level of inspection and maintenance that major interstate pipelines do, despite the fact that they face the same corrosive conditions. Some of this is due to technological reasons — unlike major interstate transmission pipelines, many older distribution lines, especially those that service A split-second failure of equipment or facilities can lead to years of enormous expense, loss of reputation and difcult relations with stakeholders. Using Critical Asset Risk and Investment Planning (CARIP) can help your company better understand — and mitigate — risks related to energy assets. Oil & Gas Critical Asset Risk and Investment Planning July 2012
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7/30/2019 1206-1370794 Reducing Asset Risk Thought Leadership
Reducing your asset riskIn the early evening of 9 September 2010, when many residents of the San Francisco subur
of San Bruno were arriving home from work or sitting down to dinner, a natural gas pipeline
that served the community ruptured and burst into ames.
The explosion and re ripped through the Crestmoor subdivision, destroying 38 homes and
damaging many more. Eight people were killed.
For the people of San Bruno, the experience was a life-altering tragedy, one that will never be
forgotten.
For the company that operated the pipeline, the explosion was a catastrophic nancial event
one expected to wipe out an estimated 15 to 20 years of earnings. Approximately
70 separate lawsuits were led in the case, representing more than 100 plaintiffs. In addition
to expected payouts to those impacted, the company continues to suffer from negative
impacts to its stock price, corporate reputation and relations with regulatory agencies.
The section of pipe that failed in San Bruno had much in common with many other pipelines
buried underground in major cities and towns across the United States. Aging infrastructure
much of it installed from the 1930s to the 1960s under different manufacturing and
construction processes and without consistent regulatory oversight, is a looming issue for
many companies in the utility and energy industries.
For example, cast iron mains and service lines, which were prevalent from the 1830s until
after World War II, are prone to failure due to graphitization or brittleness. Many major urban
areas such as Philadelphia, Boston, Detroit, Washington, DC, and more still have cast iron pip
under ground.
Plastic pipe, too, can fail prematurely due to cracking. Even steel pipelines and connectors c
break or rupture due to corrosion, stress, settlement or cyclic fatigue. Regardless of materialused, aging and the effects of soil and water on pipelines take their toll.
According to the Pipeline and Hazardous Materials Safety Administration, only timely repair,
rehabilitation and replacement of high-risk pipeline infrastructure can prevent the types
of tragedies suffered in San Bruno. Yet distribution lines rarely receive the same level of
inspection and maintenance that major interstate pipelines do, despite the fact that they face
the same corrosive conditions. Some of this is due to technological reasons — unlike major
interstate transmission pipelines, many older distribution lines, especially those that service
A split-second failure of
equipment or facilities can lead
to years of enormous expense,
loss of reputation and difcult
relations with stakeholders.
Using Critical Asset Risk andInvestment Planning (CARIP)
can help your company better
understand — and mitigate —
risks related to energy assets.
Oil & GasCritical Asset Risk and
Investment Planning
July 2012
7/30/2019 1206-1370794 Reducing Asset Risk Thought Leadership