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The Baku Ceyhan Campaign
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The full story: Pipeline corrosion threat covered up by BP

Senior government 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.

Submissions 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”.

The parliamentary 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.

See What's the problem? Field joint coatings - The Basics

The Committee also published detailed evidence on the coating material from Michael Gillard, the journalist behind the Sunday Times allegations. Gillard notes:

  • 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.

  • According 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 parties.

  • Questions 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.

  • Internal 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 higher.

  • 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.


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