The full story: Pipeline corrosion threat covered
up by BP
officials appearing on 16th November in front of a parliamentary
inquiry into BP’s beleaguered Baku-Tbilisi-Ceyhan (BTC) oil pipeline
admitted that BP did not inform them of major safety problems with
a controversial coating. They also conceded for the first time that,
contrary to assurances given to MPs in June by energy Minister Mike
O’Brien, the coating system had no previous track record.
published by the inquiry show that BP ignored warnings and clear
evidence that the coating would peel off the plastic exterior of
the pipeline, causing widespread corrosion, oil leakage and possible
catastrophic accidents. Representatives of the government’s Export
Credits Guarantee Department (ECGD) now admit that expecting the
BTC pipeline to operate safely without “interventions” for its 40-year
lifespan would be “remarkably optimistic”.
Trade and Industry Committee had summoned ECGD for a second time,
to explain its £60 million support for the BTC project, following
revelations in the Sunday Times of allegations of corruption, incompetence
and covering up of problems with the safety coating. The Committee
criticised ECGD for an over-reliance on project documents as opposed
to practical site visits.
the problem? Field joint coatings - The Basics
also published detailed evidence on the coating material from Michael
Gillard, the journalist behind the Sunday Times allegations. Gillard
- In October
2002, BP materials consultant Trevor Osborne nominated the coating,
SPC 2888, to coat the pipeline joints on the Azeri and Georgian
sectors of the BTC pipeline. SPC 2888 is a liquid epoxy coating,
which has never previously been used on polyethylene (PE) coated
pipelines like BTC, as BP’s own design manager and Peer Review
team admitted before the contract was assigned. Osborne did not
nominate any alternative anti-corrosion systems for review.
- BP consultant
Derek Mortimore submitted a report in November 2002 strongly criticising
the choice of SPC 2888, since it would not stick to the PE coating
on the pipeline. Mr Mortimore tried to organise a demonstration
of alternative coating technologies, but BP forced him to cancel
it. Mr Mortimore was sacked soon after raising his concerns; BP
have tried to rubbish him ever since.
- Seven of
the eight studies carried out on SPC 2888 to ensure it was the
right choice were done long after Osborne awarded the contract.
Cold weather and curing tests of SPC 2888 were only conducted
in the region in August and September 2003; the results have never
been released. Proper field tests were only conducted in December
2003, after the coating had been applied and had failed.
- The only
study performed on SPC 2888 and competing materials before the
contract was awarded was carried out by the laboratories of Advantica
Technologies in July 2002. On certain tests SPC 2888 was found
to perform “poorly”; other key tests were omitted from the results.
Nonetheless, SPC 2888 was listed as coming top in this study.
to evidence submitted to the Committee, one competitor coatings
provider, E Wood Ltd, directly accused Mr Osborne of “slanting”
the results of the study, forcing BP to carry out an internal
corruption investigation. BP refuses to release the report of
the investigation, although it claims that the report clears all
have also been raised with the Committee over potential conflict
of interest in Mr Osborne’s relationship with the makers of SPC
2888, the Canadian company Speciality Polymer Coatings (SPC).
At the time Osborne was choosing between coating materials, he
was setting up a coating materials company with SPC’s British
agent Mike Bird. Evidence submitted to the Committee reveals that
Bird himself was sacked from his previous company over his conduct
involving a competitor.
- The results
for an alternative technology, “shrink sleeves”, were excluded
from the Advantica study results altogether. The manufacturer,
ShawCor, got Advantica to repeat its study, also in July 2002.
This time, SPC 2888 failed the crucial tests outright, including
those for adhesion and flexibility.
BP documents of July 2002 confirm that crucial tests were omitted
from the first Advantica study, and that SPC 2888 does not properly
adhere to plastic.
- The specification
issued by BP for SPC 2888 allows the contractor and on-site inspectors
to pass what in normal circumstances would be a massive failure
in performamnce. If the coating “peels away in large pieces” it
is allowed to “pass”.
- BP was also
fully aware that SPC 2888 had never previously been used on PE
pipelines. BP’s own Peer Assist Review of September 2002 called
using SPC 2888 on plastic pipelines “a step change in present
industry practice.” BP design manager Ian Parker, part of that
review, later noted that, “As far as we know, this is the first
time such a system has been employed.”
- BP never
informed project financiers of Mr Mortimore’s concerns about SPC
2888, despite being required to reveal all material risks. Nor
did BP inform funders of the extensive cracking problems found
in the coating in Azerbaijan and Georgia in November 2003, at
the same time the World Bank and European Bank for Reconstruction
and Development were deciding whether to fund the BTC project
using taxpayers’ money. Furthermore, BP admits it only developed
a curing regime to dry SPC 2888 properly in cold temperatures
in December 2003, 17 months after choosing the material.
- A study carried
out for the funders now reveals that at least 26% of the joints
in Georgia were cracked, but the real figure is likely to be much
- BP claims
the problem has been solved by pre-heating the coating before
applying it to the pipeline. But a report from pipeline company
TransCanada decided against using liquid epoxy coatings on plastic
coated pipeline after it failed all tests. The TransCanada report
noted, “The coating may be applied and [dry] to look acceptable,
but once [buried] and operation of the pipeline is started, the
coating will fail.” BP constantly refuses to accept that there
is a problem with SPC 2888, because to do so would leave them
open to major financial liability—the very problem Mr Mortimore
was sacked for warning BP about.
- There is
considerable evidence that BP is trying to conceal the extent
of the coating problem in order to minimise publicity and prevent
repairs, construction delays and above all legal liability for
future disasters. An internal report of June 18 2004 notes that
“cross-cut adhesion testing was limited…based on the acceptable
outcome of previous testing and the desire to reduce repair frequency.”
Since the coating in fact failed after the previous testing, there
is no justification whatsoever for reducing further tests, except
to minimise damage to BP’s reputation and bottom line at the expense
of local people and a fragile local ecosystem.
- Mr Osborne’s
June 18 report for BP contains numerous serious findings about
the plastic coating of the BTC pipeline in Georgia, including
it peeling away from “a large proportion” of the steel pipe, damage
to the plastic coating from welding and large rocks and “moderate
to severe damage” from rain.
- These attempts
to play down the problems associated with the BTC project have
generated a major schism between BP's Projects department, which
designed BTC, and Operations, which refuses to bury the pipeline
without fully testing its viability first. Unless Operations managers
certify the pipeline as fit for purpose by the year’s end, BP
cannot offload the enormous financial liability for the pipeline
onto the commercial banks, including the Royal Bank of Scotland.
- The impact
of allowing this flawed coating to be used on the BTC pipeline
cannot be overstated. Since it will not stick to the plastic exterior
of the pipe, the coating will peel away, allowing water in and
permitting corrosion. Failures of the coating system also disable
the other main protective system for the project, cathodic protection,
which cannot operate under such conditions.
- At a minimum,
this will lead to the pipeline leaking oil into the environment
around it, something which BP assured interested parties before
construction began was “virtually impossible”. Oil leaks will
poison the ecosystem, polluting water supplies, killing flora
and fauna and damaging local people and their crops and livestock.
The pipeline will have to be dug up and replaced, perhaps many
times, causing immense harm and inconvenience as well as expense.
- There is
also the possibility of something far more disastrous, however:
stress corrosion cracking. In the event of a coating failure exposing
the bare steel, stress corrosion cracking will split open a buried
pipeline like a tin can. The escaping high pressured hot oil and
gas can easily explode into a fireball. This is even more terrifying
in the case of the BTC pipeline, as BP is building the even more
volatile South Caucasus gas pipeline alongside BTC, using the
same coating system.
- Leading pipeline
integrity consultant David Norman attended two meetings with BP
and its contractors at which he raised the issue of stress corrosion
cracking and asked what mitigation measures were in place. BP
allegedly told him it was not an issue.