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Cost of Risk and Its Affect on Integrity Management

[+] Author Affiliations
Shawn Laughlin

Clock Spring Company L.P., Houston, TX

Paper No. IPC2004-0151, pp. 2531-2534; 4 pages
  • 2004 International Pipeline Conference
  • 2004 International Pipeline Conference, Volumes 1, 2, and 3
  • Calgary, Alberta, Canada, October 4–8, 2004
  • Conference Sponsors: International Petroleum Technology Institute
  • ISBN: 0-7918-4176-6 | eISBN: 0-7918-3737-8
  • Copyright © 2004 by ASME


Pipeline Integrity Management is a growth industry. Much of the material published in the last few years has been directed at reducing maintenance cost by accepting and managing some level of risk. Risk is typically established by complex statistical calculations based on available data. These methods work well when both the accuracy and confidence of the data used in the calculations are very high. These methods work less well when the data is less accurate and can sometimes lead to underestimating both the degree of risk and its associated cost. This paper is a general review of the industry practice of determining risk and its cost. This paper reviews published specifications (accuracy and confidence) of in-line-inspection tools with regard to the use of this indirect data as a basis for complex calculations to determine acceptable risk. This paper argues that current tool specifications make determination of actual risk difficult. According to published papers and documents, the industry uses discounted cash flow models that consider only the cost of repairs and the cost of ILI inspection as the basis for management decisions on maintenance and scheduling of inspection and repair activities. This paper argues that the risk accepted under these models has a quantifiable cost commensurate with the accuracy of the data used in the risk assessment process and level of risk acceptable to the Operator. This paper argues that the cost of risk is sometimes underestimated.

Copyright © 2004 by ASME



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