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Investigation Summary Report 2015-007: Pengrowth Energy Corporation
Pipeline Licence No. 3995
February 8, 2017
Investigation number:
2015-007
Responsible parties:
Pengrowth Energy Corporation Business Associate code: A5R5
Field centre of origin:
St Albert/Edmonton Regional Office
Incident location (nearest town):
04-31-064-11W5M, about 27 km southwest of Swan Hills, AB (Municipal District of Big Lakes)
Pipeline release date:
March 19, 2015
Authorization numbers and relevant legislation, regulations, and rules:
Pipeline licence no. 3995, line no. 16
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence
No. 3995
February 8, 2017
Published by
Alberta Energy Regulator
Suite 1000, 250 – 5 Street SW
Calgary, Alberta
T2P 0R4
Telephone: 403-297-8311
Inquiries (toll free): 1-855-297-8311
Email: [email protected]
Website: www.aer.ca
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 i
Contents
Summary ....................................................................................................................................................... 1
Company Overview ................................................................................................................................ 1
Pipeline and System Overview ............................................................................................................... 1
Incident Overview ................................................................................................................................... 2
Response ................................................................................................................................................ 3
Release Footprint and Environmental Impact ........................................................................................ 5
Investigation Findings and Potential Contraventions .................................................................................... 7
Failure Analysis ...................................................................................................................................... 7
Contravention 1 ...................................................................................................................................... 9
Findings ........................................................................................................................................ 9
Supporting Evidence ..................................................................................................................... 9
Contravention 2 .................................................................................................................................... 10
Findings ...................................................................................................................................... 10
Supporting Evidence ................................................................................................................... 13
Findings ...................................................................................................................................... 13
Supporting Evidence ................................................................................................................... 14
Due Diligence .............................................................................................................................................. 14
Compliance History ..................................................................................................................... 15
Mitigating Factors ................................................................................................................................. 16
Aggravating Factors ............................................................................................................................. 16
Conclusion and Recommended Counts ..................................................................................................... 17
Conclusion................................................................................................................................................... 17
Count 1 ................................................................................................................................................. 17
Count 2 ................................................................................................................................................. 17
Count 3 ................................................................................................................................................. 17
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 1
Summary
Company Overview
Pengrowth Energy Corporation is an intermediate Canadian oil and natural gas producer with
headquarters in Calgary, Alberta. Established in 1988, it is a large Canadian royalty trust company, and
according to Pengrowth’s Management Information Circular for annual meeting, April 2016 it has a
market capitalization of $1.95 billion and gross asset value of $6.17 billion as of December 31, 2014.
Pengrowth’s average daily production as of September 30, 2016, was 55 137 barrels of oil equivalent per
day with a production mix of 20% light oil, 28% heavy oil, 13% natural gas liquids, and 39% natural
gas.
Pipeline and System Overview
The Virginia Hills pipeline is part of the solution gas gathering system for the Pengrowth Judy Creek
Production Complex located in the Swan Hills area. The system was originally installed in 1964 by
Imperial Oil Ltd. and was purchased by Pengrowth in March 2000. The pipeline, licence number 3995,
consists of six line segments. Two of the segments (lines 11 and 13) are 273.1 millimetres (mm; 10
inches) outside diameter (OD) and run for 12.78 kilometres (km) from Legal Subdivision (LSD) 16,
Section 34, Township 64, Range 13, West of the 5th Meridian (16-34-065-13W5M) to a riser and
pigging station at LSD 04-36-064-12W5M (4-36 riser). The remaining four line segments (lines 16, 18,
30, and 31) are 323.9 mm (12 inch) OD and make up the remaining 11.23 km of pipeline running from
the 4-36 riser to the Pengrowth gas plant located at 10-25-064-11W5M (10-25 gas plant). The subject
pipeline (line 16) has been in service for approximately 51 years.
Source: Corrpro Canada Inc. cathodic protection survey report
Figure 1. Pipeline licence 3995, showing integrity digs, initial failure location, and pipe size change
According to AER records, line 16, which runs from the 4-36 riser to 08-29-064-11W5M, is 4.57 km
long and connects to line 18, which connects to the 10-25 gas plant. This segment of pipeline is
323.9 mm OD, carbon steel, type 5L, grade B pipeline and is coated with a high-density extruded
polyethylene “yellow jacket.” The line is licensed for sour service with a maximum hydrogen sulphide
4-31
failure
location
4-36 pig sender. 10 to
12 inch size transition.
Start of line 16. Line 18 to 10-25
gas plant
14-28 (line 13)
integrity dig in
March 2012
Line 16, no
corrosion
monitoring
13-25 (line 11)
integrity dig in
March 2012
Alberta Energy Regulator
2 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
(H2S) concentration of 3000 parts per million (ppm). The maximum licensed operating pressure is 1380
kilopascals (kPa), and the normal operating pressure is approximately 140 kPa.
Incident Overview
In the evening of March 19, 2015, the St. Albert Field Centre (SAFC) was receiving complaints from
operators in the Swan Hills area about having to flare their solution gas as a result of an unplanned sales
gas pipeline outage. At 6:42 p.m., the AER contacted Pengrowth about to inquire about the status of their
lines. Pengrowth responded that they believed their Swan Hills sales gas gathering pipeline had failed.
The 10-25 gas plant accepts raw gas via the subject pipeline from five other producers in the Swan
Hills / Judy Creek area. Below is a list of those producers and the current status of gas production
activities for each facility/well as a result of the Pengrowth pipeline outage:
Coral Hill Energy Ltd. (now Crescent Point Energy Corp.)
04-12-066-13W5M battery – 36.6 103 cubic metres per day (m
3/day). This facility curtailed 75% of
their gas production at the outset of the outage for approximately three months. Due to downhole
issues associated with an extended outage, they were allowed to restart 25% (running at 50%
production) of their production for approximately 10 months until a new short segment of pipeline
could be built and tied into an existing 114.3 (4 inch) pipeline going back to the 10-25 gas plant.
Penn West Petroleum Ltd.
06-32-064-12W5M – 1.3 103 m
3/day. Currently shut in.
11-08-065-12W5M – 0.0 103 m
3/day. Currently shut in.
Lightstream Resources Ltd.
08-25-065-14W5M – 3.4 103 m
3/day. Currently shut in.
White Ram Resources Ltd.
12-19-064-11W5M – 6.3 103 m
3/day. Currently shut in.
Crescent Point Energy Corp.
01-19-064-13W5M – 1.3 103 m
3/day. Currently shut in.
16-30-064-13W5M – 0.4 103 m
3/day. Currently shut in.
14-30-064-13W5M – 2.3 103 m
3/day. Currently shut in.
The potential pipeline failure was reported to Pengrowth by an individual inspecting an adjacent pipeline
in the same pipeline right-of-way (RoW) belonging to Pembina Pipeline Corp. The release was identified
at about 3:00 p.m. and located at 04-31-064-11W5M, approximately 48 km north of Whitecourt, Alberta,
and about 22 km southwest of Swan Hills. Initial indications of the release were hydrocarbon and H2S
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 3
odours, dark liquids and staining on the ground surface, and the sound of gas releasing at surface where
the release was first identified. The released volume was estimated at 20 m3 hydrocarbon condensate
(liquid) with some water condensate. Released fluids migrated in a northeast direction (downhill)
approximately 330 metres (m) on and off the RoW then migrated into a secondary tributary that flows
into the Freeman River, a fish-bearing watercourse downstream from the point of entry (PoE).
Subsequent to this initial release, on April 8, 2015, additional release areas were identified west of the
initial PoE and excavation area along the RoW. In total, nine additional release areas (known in the
Pengrowth information request response as investigation areas A through I) were identified, greatly
increasing the release footprint.
Response
On March 20, 2015, at 6:47 p.m., the SAFC, in consultation with the AER’s Field Incident Response and
Support Team (FIRST), classified this event as a level-1 emergency based on the AER’s assessment
matrix for classifying incidents in Directive 071: Emergency Preparedness and Response Requirements
for the Petroleum Industry. This emergency level was agreed upon by both the AER and Pengrowth.
Because the release migrated into an unnamed fish-bearing watercourse, and an aquatic assessment of
the stream shore and bed could not be completed until analytical results from sampling could be
evaluated, the level-1 emergency was deemed appropriate by provincial regulatory and responding staff.
Pengrowth immediately shut down and isolated the suspected pipeline and mobilized response crews to
confirm the failure. Once the line was depressurized and the area deemed safe, personnel began initial
response/recovery activities. The released fluids migrated in a northeast direction (downgradient)
approximately 330 metres on and off Pengrowth and Pembina Pipeline Corporation (Pembina) pipeline
RoWs. The released fluid then migrated into an unnamed, fish-bearing secondary tributary which
intersects with the Freeman River downstream from the PoE.
In response to the release, Pengrowth contracted the services of SWAT Consulting Inc., Aquality
Environmental Consulting Ltd., and Millenium EMS Solutions Ltd. to assist with spill remediation and
to develop and implement water, and soil monitoring plans. The AER requested an evaluation of the
entire tributary up to its confluence with the Freeman River; however, it was deemed unsafe to continue
the assessment beyond 2 km downstream (northeast) of the POE because the ice became unstable and
there was no condensate observed further downstream in the unnamed creek.
Pipe at all ten failure locations were evaluated, and the corrosion mechanisms appeared to be identical
(see figure 4for in-field pipe analysis). Spill response and assessment activities included pipeline
daylighting, surficial soil sampling, removal of visibly affected soil, surface water sampling, soil and
groundwater investigation, and remedial excavation of affected soil.
Alberta Energy Regulator
4 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
Figure 2. Map of area with spill locations
The incident did not receive media attention. Pengrowth notified Environment Canada, the AER, Alberta
Environment and Parks (wildlife biologist), the municipality, and Driftpile, Kapawe’no, Sawridge,
Sturgeon Lake, and Swan River First Nations bands. The incident was downgraded from a level-1 to a
level-0 emergency on March 27, 2015.
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 5
Release Footprint and Environmental Impact
The site lies within an area known as the Lower Foothills Natural Subregion. The subject pipeline runs
in an east-west direction within a 15 m RoW. The areas affected (10 failure locations) extend over
approximately 2.5 km in an area that starts from the low-lying PoE heading upgradient to the west.
The topography is hilly with low-lying areas typically consisting of muskeg, seasonal watercourses, and
streams. Typical plant species in the area consist of aspen, balsam poplar, white birch, lodgepole pine,
black spruce, white spruce, balsam fir, and tamarack. No rare plant species or rare and sensitive
vegetation communities have been reported in the area of the release. However, the pipeline failure and
subsequent spill occurred within grizzly bear habitat and about 400 metres from a key wildlife
biodiversity area (see figure 3).
In a SIR response [dated/received] November 23, 2016, Pengrowth stated that the remediation and
reclamation work was complete, and they provided the following information:
The total [footprint or affected area] including reclamation activities (e.g., vehicle traffic) was
45 000 square metres (m2), but only 4300 m
2 showed visible signs of condensate on the surface.
14 807.62 tonnes (~12 340 m3) of soils and organic materials and approximately 4709 m
3 of
water/hydrovac slurry were removed.
There was no wildlife (including amphibians and fish) affected by the condensate release itself. Fish
species captured during the fisheries habitat assessment did not exhibit any deformities, lesions, or
diseases. In total, two water shrews (drowned in a minnow and a pitfall trap), a masked shrew
(drowned in a pitfall trap), and a wood frog (crushed by an on-site vehicle) were found deceased.
Alberta Energy Regulator
6 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
Figure 3. Pipeline failure and spill in proximity to sensitive habitat
The ten failure locations are within grizzly bear
habitat and about 400 metres south of a key wildlife
biodiversity area
Grizzly bear habitat border
Key wildlife biodiversity areas
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 7
Figure 4. Significant internal corrosion features (pitting) on pipe evaluated at other failure locations
Investigation Findings and Potential Contraventions
Failure Analysis
Skystone Engineering Lp was contracted to do a metallurgical assessment of the failed segment of pipe
and draft a report detailing the potential causes or mechanisms of failure.
Skystone’s analysis determined that internal pitting corrosion was the cause of failure for the submitted
sample of pipe (a one-metre segment taken from the first failure location) . H2S corrosion and
microbiologically influenced corrosion (MIC) were the two main processes identified. Skystone also
identified the following additional factors:
Dehydrators were not operating. Water was present inside the pipeline.
Gas phase contained 1200–1500 ppm H2S.
The line was not pigged after 2013. The internal surface was covered with a scale and contained
corrosion/mineral deposit at the bottom.
A continuous inhibitor was injected to prevent corrosion. Corrosion processes occurred underneath
the scale/deposit, which did not allow the continuous corrosion inhibitor to reach the metal surface.
It was questionable if the continuous corrosion inhibitor applied (CG09178C) could prevent MIC if
MIC had already been established in the line.
The mechanisms that led to the failure of the Pengrowth Virginia Hills gas pipeline and the consequent
spill of hydrocarbon condensate were compounded by the absence of pigging and a pipeline integrity
Alberta Energy Regulator
8 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
management program for this segment of pipe—standard practices in the pipeline industry. Pigging the
line is necessary to keep it clean internally, and an integrity management program would have helped to
detect and monitor internal corrosion features and monitor for other potential failure threats to the
pipeline. These practices help to ensure safe pipeline operations and compliance with the Pipeline Act,
Pipeline Rules and CSA Z662. In addition, the flow of gas in the pipeline of this size was indicated to
have been at a very low rate, which may have allowed water and entrained solids to drop out and build
up along the bottom of the pipe, providing a supportive environment for under-deposit corrosion.
Because the primary cause of the failure and failure mechanisms had been established by Skystone, the
AER investigated several other risk factors when assessing the causes of this pipeline failure. These
factors took into account risks or combinations of risks that are considered in CSA Z662, the National
Association of Corrosion Engineers’ recommended practices, industry-recommended practices, and the
investigator’s applied knowledge and experience. The risk factors that the AER focused on were
operating procedures,
construction practices (pipe handling or backfill procedures),
maintenance and repair (cleaning/pigging),
internal/external corrosion monitoring and mitigation,
leak detection systems and processes, and
training.
After considering all the evidence collected through the investigative process and the information
gathered from initial and supplementary information requests, the investigator had grounds to believe the
following:
The release caused an adverse effect to the environment—specifically, the total of the condensate-
impacted areas was 4360 m2 and the total area affected by the response was 40 640 m
2. The total release
footprint with work areas and staging areas was about 4.5 hectares. The release affected local vegetation
and an unnamed fish-bearing watercourse; approximately 14 807.62 tonnes (~12,340 m3) of soils and
organic materials were also removed from the affected areas.
An evaluation of Pengrowth’s chemical corrosion inhibition program by Baker Petrolite Ltd.
(Pengrowth’s chemical vendor) of Pengrowth’s Swan Hills gas gathering system indicated a potential for
high corrosion rate on this pipeline.
The corrosion monitoring and mitigation program for this segment of pipeline was insufficient.
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 9
This segment of line experienced ten separate failures within a 2.5 km section of the 4.57 km segment,
and the internal corrosion features observed on other pipe segments evaluated after the failure indicated a
systemic corrosion condition.
The investigation has uncovered contraventions of legislation under the jurisdiction of the AER, some of
which are also offences that can be prosecuted by the Crown. The following are the contraventions that
are also offences:
Contravention 1
Legislation/Guideline name Section Citation
Public Lands Act 54(1) No person shall cause, permit or suffer (a.1) loss or damage to
public land
Public Lands Act (Prohibitions) 56(1) A person who…(g) contravenes section 53, 54, 54.01(2), (3),
(4) or (5), 57, 58 or 69.6 is guilty of an offence
Findings
The release caused damage to public land.
The release occurred in the Swan Hills, Judy Creek area on Crown land within grizzly bear habitat and
about 400 m south of a key wildlife biodiversity area. The total area impacted by the ten releases
encompassed approximately 45 000 m2 (4.5 hectares) of previously disturbed (pipeline corridor) and
undisturbed (off the pipeline RoW) public lands (this includes the surface areas required for access to the
release sites and work/staging areas). Once delineated, a total of 14 807.62 tonnes (~12 340 m3) of soils
and organic materials were removed from the affected areas. In addition, approximately 4709 m3 of
water/hydrovac slurry was removed from the affected areas.
Supporting Evidence
Millenium EMS Solutions Ltd.’s weekly summary issued July 13, 2015, indicating excavation
activities for areas D, E, and F and file pictures showing significant excavation activities at areas A,
B, E, and F.
Email from Pengrowth’s environmental advisor indicating total area impacted and volumes of soils
and water removed from the sites.
Situation reports indicating remedial activities for soil removal; creek, ground, and surface water
monitoring activities; and waste management activities. Included with the reports are pictures of
these activities.
Alberta Energy Regulator
10 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
Contravention 2
Legislation/Guideline name Section Citation
Pipeline Rules
7(1)
Operations, maintenance and integrity management
manuals
A licensee shall prepare and maintain a manual or
manuals containing procedures for pipeline operation,
corrosion control, integrity management, maintenance
and repair and shall on request file a copy of each
manual with the Regulator for review.
Pipeline Rules
7(3) Operations, maintenance and integrity management
manuals
A licensee shall…(b) be able to demonstrate that the
procedures contained in the manuals are being
implemented
Pipeline Act 52(2)(a)
A person who (a) whether as a principal or otherwise,
contravenes any provision of this Act or of the rules or of
any order, direction or licence under this Act,
is guilty of an offence
Findings
Pengrowth failed to demonstrate that they implemented their procedures.
Section 6.6, “Mitigation Program Management,” of Pengrowth’s pipeline operations and maintenance
manual (POMM) indicates the following for internal corrosion control (pg. 43, first clause):
Scope
This section describes the responsibilities and requirements for the following:
Internal and external corrosion control
o Pigging for corrosion control
o Chemical inhibition programs (continuous inhibition and batching)
Pengrowth’s POMM also indicates the following for internal corrosion control (pg 43,
“Responsibilities/Internal Corrosion Control,” fourth bullet):
Operations Personnel will execute the pigging & batching program as per the approved schedule
and document activities for compliance.
According to Pengrowth, pigging on this pipeline had not occurred since February 2014. Pigging is
standard practice as a means to mitigate corrosion because it removes the build-up of scale, clears
deposits of sessile bacteria (the failure mechanism detailed in Skystone’s report), and clears the line of
water in low points. Pengrowth was also unable to provide the AER with pigging information for this
line before February 2014, and there was no approved pigging schedule as required by their POMM.
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 11
Pengrowth stated that they discontinued pigging operations in 2014 due to valve problems and scheduled
the replacement of these valves for June 2015, during the Judy Creek gas conservation plant turnaround.
Canadian Standards Association (CSA) Z662, clause 11.26.8.1 “Control and Safety Devices” states as
follows:
Control and safety devices shall be inspected and tested at least annually to determine that such
devices are functioning properly. Records of such tests and inspections, including any corrective
actions taken, shall be kept.
For employee and public safety and pipeline integrity reasons, Pengrowth should have initiated a
pipeline outage early in 2014 to conduct the repairs necessary to get the control valves in working order
instead of waiting about 16 months for the next planned major plant turnaround.
On Page 44 of Pengrowth’s POMM under the “Requirements for Internal Corrosion Control” heading
are the following statements:
Internal mitigation program shall be established based on an evaluation of the following;
o Mitigation recommendations from the chemical vendor;
o Mitigation recommendations from Integrity Engineering;
o Field operations experience.
Pigging and batching activities will be tracked for audit and compliance reporting
purposes using the Pig and Batch Tracking Form, or alternate form capturing the
following items at a minimum:
o Pig or batch run (pipeline license number(s), send and receive location);
o Pig type(s) used (serial numbers, if available);
Pengrowth’s chemical vendor evaluated the chemical corrosion inhibition program in August 2014 and
determined that there was a corrosive environment present in this pipeline. The evaluation indicated;
the internal corrosion rate in this pipeline was moderate to severe – ranging from 1.67 to 88.15
millimetres per year,
high Co2 and high temperature had significant impact on the calculated corrosion rates,
there is H2S in the gas stream which may lead to localized pitting and
there is no scheduled pigging maintenance program to remove solids that may
accumulate in low flow conditions. Potential for under deposit corrosion exists.
Although Pengrowth was injecting chemical on a continuous basis into the line, they were not batch
pigging or maintenance pigging (monthly cleaning with a squeegee pig) and did not have any pigging
records (or tracking forms) available. Pengrowth indicated that no pigging activities took place from
about the beginning of February 2014. Further, Pengrowth could not provide any direct internal
Alberta Energy Regulator
12 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
corrosion evaluations (integrity dig, in-line-inspection or corrosion coupon analysis) of the subject
pipeline when requested.
Pengrowth has a “management of change” policy in place; however, this policy was not being adhered to
for this pipeline (pg. 43, “Responsibilities/Internal Corrosion Control,” sixth bullet):
The Asset Integrity Coordinator shall use the Management of Change (MOC) Procedure to evaluate
changes to the mitigation programs.
Pengrowth had a corrosion monitoring device (corrosion coupon extraction fitting) in place for this
pipeline on the pig receiver/riser located outside the fence at the 10-25 gas plant (see figure 5). Piping
modifications on the riser near the fitting resulted in the coupon access being obstructed, which
prevented the coupon vendor (Caproco Ltd) from installing and monitoring corrosion coupons for this
section of pipeline. While this omission did not lead directly to the pipeline failure, information gathered
from corrosion coupon history may have revealed a corrosion issue in this pipeline, and Pengrowth staff
may have been able to mitigate the corrosion before the pipeline failure.
Picture of main gas pipeline riser at
10-25 gas plant (near pig receiver).
Corrosion coupon extraction fitting
installed too close to pipe rack and
too close to the ground to
accommodate coupon extraction
tools.
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 13
Figure 5. Corrosion coupon extraction fitting at 10-25 gas plant (pig receiver)
Supporting Evidence
Pengrowth Document 21, “Virginia Hills Root Cause Investigation Report.”
Pengrowth Document 37, “Pipeline Operations and Maintenance Manual.”
Pengrowth Document 38, “Management of Change Procedure.”
Contravention 3
Legislation/Guideline Name Section Citation
Pipeline Rules
54(1) Annual evaluation for internal corrosion mitigation
Unless otherwise authorized by the Regulator, a
licensee shall conduct and document an evaluation of
any operating or discontinued metallic pipelines in a
pipeline system to determine the necessity for, and the
suitability of, internal corrosion mitigation procedures
(a) annually
Pipeline Act 52(2)(a)
A person who (a) whether as a principal or otherwise,
contravenes any provision of this Act or of the rules or
of any order, direction or licence under this Act,
Is guilty of an offence
Findings
Pengrowth failed to evaluate the internal corrosion mitigation program for the pipeline annually.
The investigation determined that the internal corrosion mitigation program for this segment of pipeline
was not being evaluated annually as required by section 54 of the Pipeline Rules. Pengrowth was unable
to provide in-line inspection records for this segment of pipeline and was unable to provide analysis of
solids received at the pig receiver (at the 10-25 gas plant) because the pipeline was not pigged since
February 2014 and no pigging records could be produced for dates before then.
Pengrowth conducted an integrity dig program in March 2012 consisting of ultrasonic thickness tests and
radiographic examination (X-ray) of this pipeline at two locations (lines 11 and 13) upstream of the 4-36
riser (pigging facility) where the pipeline changes from 273.1 mm (OD) to 323.9 mm (OD). Two
integrity dig locations were surveyed downstream of the 4-36 riser and upstream of the 10-25 gas plant;
however, access limitations during the spring of 2012 prevented Pengrowth from evaluating the pipe at
these locations. For unknown reasons, Pengrowth did not return to evaluate the pipeline when conditions
improved. Pengrowth did not provide any documentation to the AER indicating that an internal
corrosion evaluation of this pipeline past the 4-36 riser to the 10-25 gas plant had been completed
since 2010.
Alberta Energy Regulator
14 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
Pengrowth had a corrosion monitoring device (corrosion coupon fitting) in place for this pipeline on the
pig receiver/riser located outside the fence at the 10-25 gas plant. Piping modifications on the riser near
the fitting resulted in a coupon access obstruction, which prevented the coupon vendor (Caproco Ltd.)
from installing and monitoring corrosion coupons for this section of pipeline. While this omission did
not lead directly to the pipeline failure, information gathered from corrosion coupon history may have
revealed a corrosion issue in this pipeline, and Pengrowth staff may have been able to mitigate the
corrosion before the pipeline failed. Pengrowth should have installed the corrosion monitoring device at
a different location on the line so that evaluations could be carried out by their vendor.
Supporting Evidence
Pengrowth cover letter response 2015-007. Item #7 requesting Pengrowth’s Integrity Management
Plan for this pipeline and associated pipeline system (second bullet).
Pengrowth cover letter response 2015-007. Item #7 requesting Pengrowth’s Integrity Management
Plan for this pipeline and associated pipeline system (fourth bullet).
Pengrowth document 23, Skystone Report, Virginia Hills Final (section 6.0, “Conclusion”).
Pengrowth document 21, Virginia Hills Root Cause Investigation Report (“Root Cause 1:
Management of Change”).
Due Diligence
Section 54(2) of the Pipeline Act and section 59(3) of the Public Lands Act each provide a defence to
certain offences—namely, if an operator takes all reasonable steps to prevent the commission of an
offence, they will not be convicted. This is what we call “due diligence.” Having established the
contraventions above, it is necessary to determine whether the facts establish a defence to the
contraventions.
After a review of all information available, Pengrowth has not met the standard for due diligence for the
following reasons:
1) Although there were pigging facilities available on this pipeline, Pengrowth stopped pigging this
pipeline in February 2014, indicating that there were valve seating issues at the main plant that made
pigging operations unsafe. There was a pipeline size change from 273.1 mm (10 inch) to 323.9 mm
upstream of the failure location. This step change occurred at the riser located at 4-36 which is also a
pigging station. Based on the service conditions present in this pipeline (low/laminar flow regime, some
water, H2S and CO2, large diameter pipe) and an indication from their chemical supplier that a corrosion
risk was present, prudent and safe operation practices should have been to repair the valves to facilitate
pigging the line.
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 15
2) Pengrowth was unable to provide assessment information for this pipeline segment dating as far back
as 2010. Other than a pipeline corrosion mitigation recommendation from Baker Petrolite of specific
chemical inhibition, there was nothing indicating the condition of the pipeline from the 4-36 riser and
pigging station to the 10-25 gas plant for the previous five years.
Compliance History
Table 1. AER inspection results for Pengrowth, 2010 through 2014
Inspection Type
Number # Low
Risk
% Low
Riska
# High
Risk
% High
Riska
# Satisfactory
% Satisfactory
a
Drilling 27 3 11.11
(−2.69)
2 7.41 (−1.52)
22 81.48 (−4.22)
Drilling waste 5 0 0.00 (−9.61)
0 0.00 (−9.9)
5 100.00 (+19.51)
Gas facility 181 51 28.18 (+5.83)
2 1.11 (−0.85)
128 70.72 (+4.61)
Oil facility 104 15 14.42 (−2.19)
1 0.96 (−0.85)
88 84.62 (+3.05)
Pipeline 136 9 6.62 (−1.99)
7 5.15 (−6.46)
120 88.24 (+8.46)
Well service 12 1 8.33 (+1.83)
0 0.00 (−2.51)
11 91.67 (+0.68)
Well site 181 23 12.71 (−1.95)
4 2.21 (+0.59)
154 85.08 (+1.36)
Totals 646 102 15.79 (+0.26)
16 2.48 (−0.73)
528 81.73 (+0.47)
Source: Field Inspection System. a The number in parentheses is the difference between Pengrowth’s percentage and industry average.
Table 2. The Government of Alberta’s enforcement history for Pengrowth, 2000 through 2014
Accountable
party
Action Decision
date/penalty
Municipality
Legal
Description
Acts
and
sections
Comments/disposition
Pengrowth
Energy Corp
Warning
Letter
17-Mar-2009 Cypress
County
NE-34-019-09
W4M
AEPA
(R)
227 (e)
The company operates the Jenner Sour
Gas Processing Plant pursuant to an
approval. It contravened its approval
with the failure to submit monthly air
monitoring reports from February to
December of 2007. These reports were
not received until November 4, 2008.
Pengrowth
Energy Corp
Warning
Letter
21-Jan-2013 MD of Provost
NE-21-037-07
W4M
WA 142
(1)(e)
The company contravened its licence
with the annual groundwater diversion
allocation for 2011 being exceeded.
Source: Environmental Law Centre.
Alberta Energy Regulator
16 Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995
Mitigating Factors
Based on recommendations from its chemical supplier, Pengrowth was injecting corrosion mitigation
chemicals into the line on a continuous basis.
Pengrowth conducted an integrity dig program in 2012 on two separate locations upstream of the failure
location and did not find corrosion features significant enough to warrant shutting that specific segment
of the pipeline down and doing more evaluation or repairs. Due to seasonal access issues, they were
unable to do the integrity digs that were intended on the failed segment of line when the first two were
completed.
Pengrowth had scheduled an in-line inspection of the pipeline in June 2015; however, the failures in
March 2015 and subsequent abandonment of the line prevented Pengrowth from doing the inspection.
Pengrowth carried out an effective response to the release. The line was immediately shut down and the
source of the spill isolated. The area has since been remediated to the satisfaction of the AER.
Pengrowth’s percentage of inspections resulting in high-risk noncompliance is slightly below industry
average, and their overall satisfactory inspection percentage is slightly above industry average (see tables
1 and 2).
Aggravating Factors
A sufficient corrosion monitoring and mitigation program may have prevented the internal corrosion that
was present on the 4.57 km segment of pipeline. A total of ten failures were recorded in a 2.5 km section
of the line and significant corrosion features were evident when pipe at the other failure locations was
exposed and evaluated after the failure.
Pengrowth stopped pigging this pipeline in February 2014. Based on the service conditions present in
this pipeline (low/laminar flow regime, some water, H2S and CO2, large diameter pipe) and an indication
from their chemical supplier that a corrosion risk was present, prudent operation practices should have
been to pig the line.
Pengrowth was unable to provide assessment information for this pipeline segment dating as far back as
2010. Other than a pipeline corrosion mitigation recommendation Baker Petrolite of specific chemical
inhibition, there was nothing submitted indicating the condition of the pipeline from the 4-36 riser and
pigging station to the 10-25 gas plant for the previous five years.
Pengrowth shut in and abandoned this pipeline. An indirect environmental and resource management
result of this outage is that operating companies that relied on this pipeline to process their solution gas
were forced to flare or shut in their gas production.
Alberta Energy Regulator
Investigation Summary Report 2015-007: Pengrowth Energy Corporation; Pipeline Licence No. 3995 17
Conclusion and Recommended Counts
Conclusion
The investigation into the pipeline failure reported on March 19, 2015, has identified contributing factors
leading to the pipeline failure and three potential contraventions of the Pipeline Act, Pipeline Rules, and
the Public Lands Act. The investigation finds that Pengrowth did not demonstrate due diligence in
relation to the contraventions found.
The following counts are recommended.
Count 1
On or about the 19th day of March 2015, at or near Swan Hills, in the Province of Alberta, Pengrowth
did cause damage to public lands. This is contrary to section 54(1) of the Public Lands Act, which states
“no person shall cause, permit or suffer (a.1) loss or damage to public land, which is an offence under
56(1) of the Public Lands Act,” which also states that “a person who…(g) contravenes section 53, 54,
54.01(2), (3), (4) or (5), 57, 58, or 69.6 is guilty of an offence.”
Count 2
On or about the 19th day of March 2015, at or near Swan Hills, in the Province of Alberta, Pengrowth
failed to demonstrate that the procedures contained in their operations, maintenance and integrity
management manuals were being implemented. This is contrary to section 7(3) of the Pipeline Rules,
which states that “a licensee shall…(b) be able to demonstrate that the procedures contained in the
manuals were being implemented.” This is an offence under section 52(2)(a) of the Pipeline Act, which
states that “a person who;(a) whether as a principal or otherwise, contravenes any provision of this Act
or of the rules or of any order, direction or licence under this Act, is guilty of an offence.”
Count 3
On or about the 19th day of March 2015, at or near Swan Hills, in the Province of Alberta, Pengrowth
failed to conduct and document an annual evaluation of the subject pipeline to determine the necessity for,
and the suitability of, internal corrosion mitigation procedures. This is contrary to section 54(1) of the
Pipeline Rules, which states that “unless otherwise authorized by the Regulator, a licensee shall conduct
and document an evaluation of any operating or discontinued metallic pipelines in a pipeline system to
determine the necessity for, and the suitability of, internal corrosion mitigation procedures.” This is an
offence under section 52(2)(a) of the Pipeline Act, which states that “a person who;(a) whether as a
principal or otherwise, contravenes any provision of this Act or of the rules or of any order, direction or
licence under this Act, is guilty of an offence.”