Pipeline Guerrillas

22 August 2007 (Last Updated August 22nd, 2007 18:30)

From terrorism in Mexico to oil theft in Nigeria, oil companies are scrambling to secure their pipelines. Catherine Lafferty explains how they are trying to keep the economies that rely on them afloat.

Pipeline Guerrillas

Pipelines are the main form of transportation for oil across country and continent, and in many cases, they are also the life-blood of cities and business around the world. So when, in early July, a rash of bomb explosions stopped the flow of natural gas from PEMEX pipelines in Mexico, the ensuing outcome did not come as a surprise.

Up to 1,200 companies were hurt by the closure and security efforts were ramped up – on the land, around dams and PEMEX gates and offshore facilities, with Navy patrols working around the Caribbean.

The Leftist Popular Revolutionary Army claimed responsibility for the attacks to the state monopoly pipelines – now fully restored.

But despite the efforts to curb such attacks, the nation is on watch for similar incidents, just as offshore operators and the nations they work with have been for decades.

With an estimated cost of $1m a mile for the laying down of oil and gas pipelines, it is easy to see why the industry is so concerned. Notwithstanding the protection of ground and metal, the black gold which gushes within these steel veins is also a magnet for the politically-motivated saboteurs, the avaricious and the poor. Oil pipelines have long been targeted by thieves and terrorists in a myriad of countries.

TROUBLE IN THE CARIBBEAN

The Cano Limon oil pipeline, jointly owned by the Los Angeles-based Occidental Petroleum Corp and the Colombian state oil company Ecopetrol is a case in point. It transports around 110,000 barrels a day of crude oil from the Cano Limon field, operated by Occidental in oil-rich Arauca province on the border with Venezuela, to the Caribbean coastal town of Covenas.

It started operating in 1986 and traversing across 500 miles of Northern Columbia has been the subject of a concerted campaign of bombing by leftist guerrillas, who accuse foreign firms of plundering Columbia's natural resources.

Its vulnerability to attack is illustrated in this sobering statistic: between 1986 and 2002 it was the subject of over 900 attempts at sabotage, translating into a loss of around 2.5 million barrels of crude oil. In 2001 alone, sections of the pipeline were blown up 170 times, putting it out of action for 266 days.

"There has been an escalation in spending on pipeline security since 9/11."

The Cano Limon pipeline is useful but far from essential for the US. In 2001 Columbian oil exports made for less than 2% of US oil needs. But oil production is vital for the Columbian economy.

The government estimated that the attacks on the Cano Limon reduced GDP by half a percentage point.

What is certain is that the Columbian guerrillas do not underestimate the importance of the pipeline. One fighter was quoted as saying: "We have been told to bomb at will and keep the pipeline out of action."

In an indication of how seriously the attacks are taken by the US, the Bush administration said it would ask Congress for $98m in 2003 to train, arm and provide air support for Columbian troops guarding the pipeline. US Ambassador to Columbia, Anne Patterson described the pipeline as "important for the future of our petroleum supplies and the confidence of our investors."

AND IN NIGERIA TOO

Oil pipelines have also been repeatedly attacked in the world's eighth-largest oil producer Nigeria by civilians and politically-motivated groups alike. Militant groups in the oil-rich Niger delta region have been in conflict with government and the oil industry for the last 16 years, demanding a greater share of oil revenues and compensation for harm to the environment.

Despite the government's attempts to protect oil facilities, the militants have scored some notable successes, causing significant damage to oil companies. A glance at some recent incidents illustrates the scale of the problem.

In 2005 a dynamite attack on a key pipeline in the Niger delta caused President Obasanjo to put the security forces on high alert to prevent any further attempts at sabotage. The attack caused the deaths of eight people and delayed deliveries of up to 180,000 barrels of oil a day for a week.

"Despite government attempts to protect oil facilities, militants have scored some successes."

In an echo of Columbian concerns, local residents in Nigeria have complained that they do not benefit from the region's oil wealth. Despite the size of its oil reserves there is extreme poverty in Nigeria and a scarcity of available fuel.

With a booming black market in stolen fuel and petrol, there have been many occasions when pipelines have been cut enabling thieves to siphon off oil. Pipeline vandalism, known as 'scooping' is common in the region, despite the attendant risks of fire or being shot on sight by the police.

Last year Niger delta militants seized a Nigerian army post in waterways east of the city of Warri enabling them to dynamite a Royal Dutch Shell-owned floating barracks block and pipeline. The multi-national was forced to evacuate its facilities in the area, which usually produces 500,000 barrels of oil a day. Militants from the Movement for the Emancipation of the Niger Delta (Mend) had set a target of halting a third of Nigeria's 2.5 million daily barrels of oil.

In June, Nigerian political militants under the Joint Revolutionary Council (JRC) claimed to have destroyed a major pipeline in the Nembe area of Bayelsa State and warned that more such attacks were imminent.

WHERE THE BUCK LIES

While governments have an important role to play in protecting oil facilities, there are limits to what they can do and how effective it is. Oil companies have found risk assessment exercises and pipeline protection measures essential tools in the battle against theft and sabotage, all at a considerable cost.

"It adds to the cost of doing business but operators want to protect their assets," American Petroleum Institute (API) director of pipelines Peter Lidiak says. "There has been an escalation in spending on pipeline security since 9/11. I know our members have spent money just doing vulnerability assessments and working out how safe their facilities are."

The two main risks to oil pipelines – illegal tapping and terrorism – are constants in the industry and tend to be concentrated in different areas and require different responses, of ever-increasing technical sophistication. While the most common risk to pipelines comes from illegal tapping, the biggest threat undoubtedly comes from terrorism.

"The Cano Limon pipeline has been the subject of a concerted campaign of bombing by leftist guerrillas."

According to Lidiak, burying pipelines helps keep them secure, though most pipelines are a combination of underground (buried) and overground (exposed) systems. Facilities with above ground assets, such as pump-stations, tend to be placed in clear areas, with fencing, lighting, security patrols and ditches around the perimeter. In addition, companies patrol pipelines regularly and use satellite imaging, aerial patrols and other types of remote sensing technology to protect them.

Lidiak insists that protecting pipelines is no more difficult than securing any other asset but says the process is not without challenges. He lists among these the length of pipelines: "Pipelines stretch over long distances and the potential for leaks and spills has to be assessed. Also, a right-of-way can't be fenced out all the way through."

WHERE CHALLENGES DIFFER

Good pipeline protection systems must meet a number of different needs, including strong detection capabilities with a low rate of false alarm activations and the ability to identify the location of any incident.

Unsurprisingly, pipelines in the Middle East are particularly vulnerable to terrorist attack by Al Qa'eda affiliates. This has proven an ongoing problem in Iraq. By contrast, the problem of illegal tapping is especially marked in South East Asia.

Chris Cantell is the business development manager for Westminster, a defence company that provides oil pipeline security services to a range of customers. He explains the size of the problem facing one customer that approached Westminster for help in securing its underwater pipeline: "This customer was losing about $4m worth of oil a year through illegal tapping. The company only realises it's been attacked when an oil slick is noticed on the water."

For underwater pipelines, Westminster provides a diver detection scanner – the DDS-J Diver Detection Sonar. The DDS-J node is centrally placed on top of the pipeline, and actively scans to a distance of 1km per DDS-J node, with 25m coverage on either side of the pipeline and 50m vertically. It also provides alarm activation when a diver enters the scanned detection sector, alerting the operator of a potential threat.

The system comes equipped with passive hydrophone receivers that listen for attack that may be made on the pipeline, such as drilling. The detection equipment must be teamed with fast marine craft so those responsible can be apprehended as they try to make their getaway.

"The two main risks to oil pipelines – illegal tapping and terrorism – are constants in the industry."

Another of Westminster's customers needed electronic protection, having experienced guerrilla attacks in its South American facilities including attacks on its employees.

"If a pipeline is underground it is protected but a fibre-optic sensor can detect digging. One controller costs around $500,000. It can detect interference anywhere along a 40km stretch of pipeline. Above ground, a fibre-optic cable, protected inside a conduit is attached to a pipeline so it can register any tapping which may occur."

The API insists that ultimately, most damage to pipelines is readily repaired and that pipeline operators have emergency response plans in the event of any damage. Supply disruption can be avoided by providing alternative forms of transportation for short periods or by using interconnections to move products around the site of damage to a pipeline. However, prevention of pipeline damage is of paramount importance.

In an uncertain world, threats to oil pipelines are unlikely to disappear, meaning oil companies will have to remain vigilant and continue to invest in pipeline security systems.