STANDARDS

The evolution of pipeline regulations in Mexico

By Eng. Carlos Guillermo Lpez Andrade, Petroleos Mexicanos, Col Anahuac, Mexico The Government of Mexico expropriated the oil industry from foreign companies in 1938 following a decree issued by then President of the Republic, General Lazaro Cardenas del Rio. The oil industry was received into state ownership without any technical references, information, or procedures: the resentment of its former owners and technical and administrative staff hindered the access to, and availability of, manuals and standards. During the 1940s and 1950s, the Mexican oil industry was governed by international standards, mainly American. It was not until the 1960s that, in the areas of primary production, projects, and construction, the first plant designs, construction, operation, and maintenance plans and processes were drafted. Following this, there was a gradual development of new oil industry standards by specialty and discipline, and these standards form the base of those used by Petroleos Mexicanas (Pemex) today.

The influence of accidents, and of social and political issues, on the regulation of pipelines
As a consequence of the industrys history, Mexicos technical standards have been one or more steps behind the development of technology, and have been reactive to Mexicos major accidents. Whenever an accident occurs in a refinery or a gasprocessing or petrochemical complex, no matter how severe its effects, it is deemed to be controlled within the company as the effects remain inside the facilitys walls. The situation is different for pipeline accidents. Whenever a pipeline accident occurs, depending on its location, it affects private property, rivers and other bodies of water, buildings or urban infrastructure, and may take the lives of people outside the company, as well as to a greater or lesser extent harming the environment. An accident inside a plant is usually not considered news to the media; however, a pipeline incident will always be in the spotlight. Being a socially and politically delicate matter, and given a pipeline incidents potential consequences; political agents, authorities, and other players intervene to demand preventative action. For a number of years, Pemex has taken initiatives to make its hydrocarbon transportation processes and activities safer and more controlled. A break point in the history of pipeline activity standardisation and regulation was undoubtedly the accident that occurred in Guadalajara, Mexicos second largest city, on 22 April 1992. Galvanic coupling between a carbon steel gasoline transmission pipeline and an iron water pipeline caused a major gasoline leak. A number of consequent explosions took place over a four-hour period in the downtown district of Analco after the gasoline penetrated the sewer system, destroying around 8 km of streets in the area. According to a subsequent Lloyds of London report, 252 people were killed, nearly 500 injured, and 15,000 were left homeless. The cost of the damage ranges between $US300 million and $US1 billion. Three days before the explosions, residents started complaining of a strong gasoline-like smell coming from the sewers, and some residents even found gasoline coming out of their water pipes. City workers were dispatched to check the sewers and found dangerously high levels of gasoline fumes. Unfortunately, the city mayor did not feel it was necessary to evacuate the city because he felt that there was no risk of an explosion. An investigation into the disaster found that there were two precipitating causes. New water pipes, made of zinc-coated iron, were built too close to an existing steel gasoline pipeline. Underground moisture caused these metals to create an

electrolytic reaction, which eventually caused the gasoline pipe to corrode, creating a hole in the pipeline that allowed gasoline to leak into a main neighbouring sewer pipe. The sewer pipe had been recently rebuilt into a U-shape so that the city could expand its underground railway system. Usually sewers are built on a slope so that gravity helps move waste along. In order to get the U-shape to work, an inverted siphon was placed so that fluids could be pushed against gravity. The design was flawed, however. While liquids were successfully pumped through, gases were not, allowing the gasoline fumes to accumulate. As a result of this accident, it was demanded that the company reconsider its pipeline design and maintenance standards. The standard used at the time was (07.3.13) Minimum safety requirements for pipeline design, construction, inspection and maintenance.

Pemexs reorganisation and its impact on the development of standards and regulations
In 1992, the same year, Pemex was divided into four companies according to specific business activities: Pemex Exploration and Production (Pemex Exploracin y Produccin) Pemex Refinery (Pemex Refinacin) Pemex Gas and Basic Petrochemicals (Pemex Gas y Petroqumica Bsica) Pemex Petrochemicals (Pemex Petroqumica).

Each of these companies were given specific activities and defined facilities. However the subject of pipelines, multi-product pipelines, gas pipelines, oil pipelines, and other pipelines over thousands of kilometres in joint or individual rights-of-way, remained undefined in terms of their operational, maintenance, safety, and rights-of-way responsibilities. To solve this, the companys Chief Executive Officer instituted the Pemex and Subsidiary Bodies Pipeline Inter-body Committee, and the consequent Standardisation Sub-committee. This committee drafted Pemex Standard (CID-NOR-N-SI-0001) Minimum safety requirements for the design, construction, operation, maintenance and inspection of transportation pipelines. Among other areas, this standard covered the design and maintenance of cathodic protection systems and injection of corrosion inhibitors for land pipelines. Both the new standard and the existing 07.3.13 include mention of the

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STANDARDS

use of internal inspection equipment to determine the state of the pipeline. However, neither mention the different options available ultrasound or magnetic-flux leakage, eddy currents, transversal magnetic flow, etc. leaving the choice of process to the discretion of the technicians opinions and to the available budget. Given the fact that there are four oil companies in Mexico with similar activities, even though they handle different products and operate in three different areas of the country, the development of particular and more-detailed standards began, which could be interpreted as a professional competition between companies to have the best practices in the industry. This diversity of effort had a result that better practices were developed in the area of pipeline maintenance, and by 1996 and 1997 the concepts of integrity management, risk management, and reliability-based maintenance appear, as well as the first pipeline risk maps. During the period from 1996 to 2004, different maintenance management models were developed based on risk and integrity, with those drafted by Pemex Gas and Pemex Basic Petrochemicals based on the Mullbahuer principles, and that developed by Pemex Exploration and Production based on Pyramid. While these efforts and developments remain today as company policies, they have yet to be adopted as standards or regulations.

third-party private facilities, the CRE issued the first regulations for gas transmission pipelines. These include NOM-007SECRE-1999 for natural gas transportation, NOM-008-SECRE-1999 for corrosion control of underground and/or underwater steel pipelines, and NOM-009-SECRE-2002 for monitoring, detection, and classification of gas pipeline leaks.

Consolidation of the regulations

As was said above, the history of the pipeline industrys accidents has provided an important motivation for the development and improvement of regulations. Between 2004 and 2006, further major accidents occurred, mainly in ammonia, crude oil, and refined oil transmission pipelines (see Table 1). This forced Pemex to re-establish an initiative to strengthen transmission pipeline integrity management in Mexico, for even though the accidents did not occur in urban areas, as was the case in Guadalajara in 1992, they did have serious consequences in terms of their impacts on the environment and the communities involved. In 2005, the Pipeline Transportation Co-ordination Department (Subdireccin de Coordinacin de Transporte por Ducto) was created, which has responsibility for matters of integrity, reliability, and risk policy for all Pemexs subsidiary bodies. A distillation of the best practices developed by each company throughout 13 years of independent operation was used to set up the Hydrocarbon Transportation Advisory Committee (Comisin Asesora de Transporte de Hidrocarburos) and subsequently to develop the pipeline integrity management plan (Plan para Administracin de la Integridad de Ductos, PAID).

The introduction of gas, and Mexican Official Standards (NOM)

Up until 1996 Pemex, in what was considered a state monopoly, had responsibility for all aspects of the transportation, storage, and distribution of oil and its by-products. However, in that year, the Congress and the House of Representatives approved a modification to the Mexican Constitution in its Article 27, and its respective Regulatory Law. For the first time since the 1938 expropriation, private companies were allowed to construct pipelines, as well as to operate and provide maintenance for gas transmission pipelines. Regulatory Law of Constitutional Article 27 in the Oil Branch also establishes, in the second paragraph of its fourth article, that the private sector may undertake following permission given by the Ministry of Energy through its decentralised Energy Regulating Commission (Comisin Reguladora de Energa, CRE) the transportation, storage, and distribution of gas, for which they may construct, operate and own pipelines, facilities, and equipment according to the regulatory and technical requirement in force at the time. To contribute in safeguarding the provision of natural gas transportation services, promote fair competition between the permit holders, protect the interests of the users, and encourage development of a national network to provide a reliable, stable, and safe supply of gas, it was necessary to establish a mandatory technical standard covering the specifications and minimum safety requirements in terms of material, equipment, and operations. The Official Mexican Standard was therefore issued and will be published according to the Federal Law on Metrology and Standardisation. To guarantee fair competition in this sector of the energy market, the CRE was created. In order to guarantee that the activities of both the private operators and Pemex Gas and Pemex Basic Petrochemicals were safeguarding the community as a whole, as well as protecting the environment and the integrity of

Interaction between the authorities and Pemex in the development of pipeline standards
In 2007, and with the background described above, Pemexs efforts resulted in the Ministry of Energy approving the establishment of a revision group for the pipeline integrity management standard. The revision would be developed by Pemex and presented to the Ministry of Energy for its analysis and approval. The resulting standard, NOM-027-SESH-2009, titled Hydrocarbon collection and transportation pipeline integrity management, establishes the requirements for integrity management to be met by hydrocarbon gathering and transmission pipelines, although it excludes the gas and LPG pipelines operated under permits from the CRE, and it came into effect earlier this year (2010).

The application of pipeline best practice and regulation towards risk management based integrity
The initiatives undertaken by Pemex to enforce compliance with standards covering the integrity of the countrys gas, oil, and multi-products pipeline network have converged into the concept of risk-based integrity management Administracin de la Integridad Basada en Riesgo partially state-owned enterprise began in 1996 to modify the traditional processes of undertaking in-line inspection (ILI) and repair/rehabilitation of its pipelines, which were slow and reactive, depending on the inspection, evaluation, and budgeting cycle. The change from a reactive approach to integrity to the predictive approach has, without doubt, resulted in a reduction of reaction time and to an increase in operational safety in gas pipelines. This effort also had cost

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INDUSTRY ISSUES
Ethane pipe line Type /location: Date : Dire ct caus e : Environme ntal impact: Impact on the population: Impact on bus ine s s : Re pair: Product los s : Ammonia pipe line Type /location: Date : Dire ct caus e : Environme ntal impact: Impact on the population: Impact on bus ine s s : Re pair: Product los s : Oil and gas pipe line Type /location: Date : Dire ct caus e : Environme ntal impact: Impact on the population: Impact on bus ine s s : Re pair: Product los s : Crude oil pipe line Type /location: Date : Dire ct caus e : Maya crude leak in Mazumiapan Station and rupture of Nuevo Teapa - Poza Rica 30 inch oil pipeline 22 December 2004 Leakage of product due to pump seal and fire in Mazumiapan Station and pipeline rupture 11 km. stretch of Coatzacoalcos River and the riverbeds of Tepeyac, Gopalapa, and Teapa streams, 2 ha. sports field, 12 km of beaches, Laguna Pajaritos, 2 ha. of mangrove swamp 5 injured 326 million pesos (Mazumiapan), 2,295 million pesos (Nanchital) Reconstruction of Mazumiapan Station and replacement of damaged stretch of pipeline 20,653 bbl Leakage and explosion, Cunduacn 8 July 2005 Pipeline rupture due to external loads (in the process of identification by the IPN and awaiting release by the PGR) 105 hectares of vegetation burnt 4 deaths, 11 injured, 1,021 people evacuated in two dairy farmlands The gas pipeline operation remains suspended: 15,098 million pesos of gas were burnt in the period from July 2005 to 31 July 2006, at an estimated cost of $104.83 million Replacement of 48 inch section 10,000 bbl of fluid (gasolines, oil and water) and 53 mmpc of gas Ammonia leakage, Nanchital 13 April 2005 Accidental cut of pipeline by contractor Reparaciones Martimas Petroqumicas, during repairs to the Minatitln- Pajaritos 6 inch propylene pipeline 1.02 hectares of contaminated surface 6 deaths; evacuation of 6000 local inhabitants The pipeline was inerted and taken out of operation Replacement of 1.05 m of 10 inch pipeline 80 tonnes of ammonia C2+ leakage, Agua Dulce 24 January 2005 O verpressure in transportation system and external corrosion Leak of 481 barrels of light naptha, without soil affect 18 people with mild intoxication 20.8 million peso Replacement of section 481 bbl

Environme ntal impact: Impact on the population: Impact on bus ine s s : Re pair: Product los s :

Table 1: Major pipeline accidents between 2004 and 2006.

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STANDARDS

benefit of using the latest ILI technologies, the most advanced and sustainable codes for the evaluation of anomalies, and of applying industry best practice, even when the regulations are not very clear in this regard. Technology is known to develop earlier than standards and regulations, as the latter are generally reactive to the accidents that impact the industry and society. Such was the case with the accidents that occurred in the US at Bellingham, Washington, and Carlsbad, New Mexico. In the first, as a result of an operators decision, the inspection and repair of an anomaly detected by an inspection team was deferred, resulting in a failure that allowed leaking fuel to ignite, causing the tragic and regrettable death of three youngsters playing by a stream, in June 1999. In the second, 12 campers lost their lives following an explosion of a gas pipeline in August 2000. These significant accidents, together with other prior events, gave rise to the US Pipeline Safety Act of 2000, which binds operating companies to develop an integrity management programme that measures the likelihood and consequences of events within so called high-consequence areas. Derived from the above, the API 1160 code was developed for the oil industry, to manage the integrity of the pipelines that carry dangerous fluids, and the ASME B 31.8 S code was developed for pipeline systems carrying gas. In Mexico, the integrity management cycle was undertaken separately, emphasising the safety of populated areas. It was not until 1998 and 1999 that Pemex took the first steps toward risk evaluation and management of hydrocarbon pipeline transportation systems, by means of a quantitative/qualitative scientific approach entitled the Integrity assessment programme. None of the American, Canadian, UK, or German models were suitable for the Latin and specifically for the Mexican reality, which is influenced by the attitudes of minimum respect for pipeline facilities and rights-of-way, by theft and illegal tapping, by the claims industry, by illegal human settlements in the rights-of-way, and by the activities of non-authorised and unsupervised third parties. Currently, whether internally or using contractors, Pemex has developed and conducts its integrity management plans taking as a reference the actual risks associated with the operation of its pipelines. In this work, various academic and research institutions have provided great help in particular the Instituto Politcnico Nacional and the Instituto Mexicano del Petrleo. The collection, organisation, and verification of data, followed by risk evaluation and management, and the application of immediate threat-mitigation measures, as well as integrity assessment, determination of a baseline, repair of anomalies, and re-evaluation of the inspection results, now provides the basis for prioritisation of predictive and corrective maintenance activities in a systematic and ordered process. To these activities are added the technical advances that today are a reality, such as the SCADA system, the risk management system, and the GIS system, among others. Information from which is systematically combined and analysed, based on the companys own model.

Consequently, the maintenance scheme has significantly improved. What is now lacking, however, is for it to be fully and generally regulated for all pipeline operators, including those who hold a transportation permit under any of its conditions. This initiative, and its continuing development, is the responsibility of the Ministry of Energy (Secretara de Energa), through its Hydrocarbon Exploration and Exploitation General Management Department (Direccin General de Exploracin y Explotacin de Hidrocarburos) and the CRE. Migrating from the long-held methodology which was to inspect and restore to the cycle of diagnosis, prioritising, mitigating, securing, and re-evaluating, is the challenge in which the pipeline departments of the Subsidiary Bodies and the Corporate Operation Management (Direccin Corporativa de Operaciones) engage their efforts. In 2010, Pemex has made a goal of carrying out routine maintenance and risk-based integrity management in a systematic and holistic manner, regardless of whether the Mexican regulation is approved or not. By using this globally accepted principle, which has been adapted in many countries with both private and state-owned pipeline networks, Pemex and the Ministry of Energy (Secretara de Energa) are aiming to achieve the twin goals of reducing the likelihood of industrial incidents and accidents giving rise to environmental impact or, in the worst case, fatalities, as well as being able to plan the magnitude and target of investments in the longer term. In addition, if Pemexs reserves and production capacity are not renewed, or as long as high-volume and sustainable energy alternatives are not developed, Mexico will continue to depend on petroleum-derived fuels, regardless of their origin. Thus, crude or refined oil, and liquefied and gasified natural gas, will need to be transported in huge volumes, whether to be refined and for consumption or, in the case of oil products, for storage and distribution, and this will be done through the pipeline network. Given the above, the investments required for the maintenance of the infrastructure will be guaranteed. Besides, pipelines are the cheapest transportation alternative, with a current average cost of $US0.05 per kilometre. Securing the pipeline networks mechanical integrity, and the construction of new pipelines, is also a driver to reduce the costs of transportation by other means, including that of ships, railways, and road tankers, all of which are associated with higher costs and inherent risks. The Energy Reform and the approval of the regulatory framework in terms of management and integrity will allow Pemex to optimise one of its most valuable and less-valued assets: its pipeline transportation system, not in vain called Mexicos veins.

For further information, Carlos Guillermo Lpez Andrade can be contacted on +52 55 1944 9605 or via email: cglopeza@ref.pemex.com

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