PTT Demands Compensation From Hyundai For Gulf Of Thailand Gas Leakage

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GAS LEAKAGE

PTT demands compensation from Hyundai

By WATCHARAPONG THONGRUNG,

NALIN VIBOONCHART

THE NATION

PTT is pressing its contractor Hyundai Heavy Industries to compensate for the damage to an undersea pipeline and vowed to bear the additional cost for power generation caused by the suspension of natural-gas supply to power plants.

The chief operating officer for the upstream petrochemical and natural gas business, Pailin Chuchottaworn, yesterday said PTT's legal department was considering ways to claim compensation from Hyundai, which had been tasked with laying a 24-inch (61-centimetre) tube to link the gas pipeline with the Platong 1 gas |field.

The work was believed to have caused gas leakage on Saturday, prompting PTT to shut down the pipeline and leading to the use of higher-priced bunker oil for power generation.

Sutas Patamasiriwat, governor or the Electricity Generating Authority of Thailand, said earlier that Egat should not have to cover the extra cost of the use of bunker oil. He estimated that if the pipeline shutdown continued for two weeks, power generation would cost an additional Bt1.2 billion.

Pailin said PTT was ready to cover the costs if so advised by the Energy Regulatory Commission.

"We'll claim as much compensation as possible from Hyundai and we will also seek compensation from Diphaya Insurance," he said.

Direk Lawansiri, chairman of the Energy Regulatory Commission, said that at a meeting yesterday with PTT and Egat, there was no discussion on the extra cost. Much of the discussion was centred on fixing the leak, which should be completed by July 15, he said.

"The regulator will call for more meetings to finalise which party is to pay for which part. This should be completed next week," Direk said, adding that the regulator would try to minimise impacts on the general public.

To make up the 250 million to 300 million cubic feet per day of gas supplied to power plants, PTT will need to supply 10 million litres of bunker oil.

At the news conference yesterday, Pailin said PTT had just sent a remotely operated vehicle to examine the pipeline. A preliminary assessment showed that the main 34-inch (86cm) tube and valve of the first gas pipeline were intact. Transmission can resume soon if no seawater is found in the pipeline, but if it is, it would require some time to fix it.

It was found that the 24-inch tube was broken and divers will be sent to close the valve of this tube by July 2 Saturday.

PTT has to import safety equipment from Singapore, which will be moved to Rayong today. Then it will take two days for divers to go under the sea and close the valve.

Pailin said that only after divers reach the pipeline could PTT evaluate the damage as well as the time it would take to fix the pipeline. It does not want to speculate on the damage and the exact date of resuming the pipeline operation.

Pailin added that PTT Exploration and Production (PTTEP), which holds a 5-per-cent stake in the Platong gas field, also would not be affected by the accident because of its low shareholding in the project.

PTT Chemical, whose ethane cracker has to be fed natural gas for petrochemical production, will experience little impact as well, as it plans to turn around its cracker starting on July 15.

-- The Nation 2011-06-30

[Soutpeel]

Rather a sensationalist headline.....eventualities like this would be covered under the project insurance which one assumes PTTEP made Hyundai take out as part of its tendering/award process.

Also what where the PTTEP reps on-board doing while all this was going on ?.....if laying a 24" pipeline next to existing operational pipelines, there should be monitoring/oversight by PTTEP personnel to ensure they are not dropping anchors etc on live pipelines...

With all due repsect to "The Nation".......please use the correct terminology.....its a pipe line we are taking about not a "tube"

[thaihome]

Hyundais contract is with PTT not PTTEP. PTT owns and runs all the pipelines, not PTTPE. They were installing the pipeline to connect the new Platong 2 plaform built by Chevron to the Third Transmission pipeline. When they were crossing the second parallel pipeline at the point where the Platong 1 pipeline ties into it, it appear an anchor line snagged one of the lines in the structure going to Platong 1.

There were PTT and Chevron reps on board. In an EPC contract such as this, the contractor is responsible for his actions and cannot blame the owner for what happens with his anchor operation. The owner does not stand there and give direction on anchor operation, he only makes sure that the existing structures and their locations are clearly identified.

The main issue and cost is not the repair itself, but the financial damage caused by losing the gas flow. Fuel oil cost, extra LNG imports, loss of ethylene production, etc. None of that is covered by the contractors insurance. PTT, PTTChem, and EGAT want Hyundai to be liable for that as well as the repair, which the insurance will cover at least part of, depending on how long it takes.

TH

Edited June 30, 2011 by thaihome

[Thai at Heart]

Well, that is a hell of a lot better than the original statement to say that the 'consumers' will simply pay higher electricity bills.

I am not in support of a litigous society, but when statements are made like that, it shows very clearly how Thai companies see their role in the market. Someone makes a mistake, and the cost must get passed onto the customer???????

Ah, whoops, never mind, the consumer will have to pay, as opposed to, ah whoops, whoever broke the pipeline has to pay.

[Soutpeel]

Hyundai’s contract is with PTT not PTTEP. PTT owns and runs all the pipelines, not PTTPE. They were installing the pipeline to connect the new Platong 2 plaform built by Chevron to the Third Transmission pipeline. When they were crossing the second parallel pipeline at the point where the Platong 1 pipeline ties into it, it appear an anchor line snagged one of the lines in the structure going to Platong 1.

There were PTT and Chevron reps on board. In an EPC contract such as this, the contractor is responsible for his actions and cannot blame the owner for what happens with his anchor operation. The owner does not stand there and give direction on anchor operation, he only makes sure that the existing structures and their locations are clearly identified.

The main issue and cost is not the repair itself, but the financial damage caused by losing the gas flow. Fuel oil cost, extra LNG imports, loss of ethylene production, etc. None of that is covered by the contractors insurance. PTT, PTTChem, and EGAT want Hyundai to be liable for that as well as the repair, which the insurance will cover at least part of, depending on how long it takes.

TH

Kinda figured anchor handling played a part in this, but would beg the question, if there were approved anchor patterns in place how did they manage to put an anchor wire around a valve/PLEM (which i assume has happened) as typically an anchor pattern is developed/approved with this sort of eventuality in mind, ie catenaries checked, mid-line buoys used so the anchor wire had no chance of getting that close to the pipeline

No dispute that Hyundai is responsible for their actions, but it seems very strange that if all the precautions/procedures were in place and followed how an anchor wire got wrapped around something, if it was an anchor drag, as happens, one could understand that, but actually snagging and existing known sub-sea structure, this is what I find stange..

[thaihome]

...catenaries checked, ...

Getting close to what happened. Again, the owner does not tell the winch operator to go ahead and take the slack out.

It really is a shame, up to this point Hyundai had the best record of any pipe lay company in the GOT over the past 5 years, having never snagged anything, of very intensive work. I guess it comes down to the percentages and it was their turn.

I misspoke when I said it was the second parallel pipeline that was involved, it is actually the first pipeline, laid in 1979 or so.

TH

[Soutpeel]

...catenaries checked, ...

Getting close to what happened. Again, the owner does not tell the winch operator to go ahead and take the slack out.

It really is a shame, up to this point Hyundai had the best record of any pipe lay company in the GOT over the past 5 years, having never snagged anything, of very intensive work. I guess it comes down to the percentages and it was their turn.

I misspoke when I said it was the second parallel pipeline that was involved, it is actually the first pipeline, laid in 1979 or so.

TH

Although the owner's may not give the instruction, but they should be watching the tensions, if the reps are experienced enough would have seen what was happening/ was going to happen.

Considering the gulf of Thailand is so full of sub-sea structures, this accident really shows the value of using dynamically positioned vessels and you wouldnt have this sort of problem....

[thaihome]

You ever been in the control room on a lay barge? I think there is good chance you have. Do you think the OIM is going to let the winch operators listen to the owner rep? Sure, if there was time the owner could mention to OIM that there appeared to be something wrong with way the cable looked, but there is no way he is going to interfere in the operation. Its the contractors job to do it right, not the owners rep on the barge, that is why they hire contractors rather then doing it themselves. Not sure why you are trying so hard to blame PTT. The OIM was Korean, the winch operator in question was a Brit.

Agree with you about the DP vessels, but none of the bidders for this project was going to use one, and anyone that does have one is not going to waste its time in the GOT right now. There too many places with much deeper water and bigger projects that need DP vessels. I suppose PTT could have put it in the TOR, but that would really limit the bidders and when they had the vessel available.

Anyway, we shall see how this develops over the next couple of weeks. I can say, there are a bunch of people staying up very late on Vibhavadi Road these days.

TH

Edited June 30, 2011 by thaihome

[Soutpeel]

You ever been in the control room on a lay barge? I think there is good chance you have. Do you think the OIM is going to let the winch operators listen to the owner rep? Sure, if there was time the owner could mention to OIM that there appeared to be something wrong with way the cable looked, but there is no way he is going to interfere in the operation. It’s the contractor’s job to do it right, not the owner’s rep on the barge, that is why they hire contractors rather then doing it themselves. Not sure why you are trying so hard to blame PTT. The OIM was Korean, the winch operator in question was a Brit.

Agree with you about the DP vessels, but none of the bidders for this project was going to use one, and anyone that does have one is not going to waste its time in the GOT right now. There too many places with much deeper water and bigger projects that need DP vessels. I suppose PTT could have put it in the TOR, but that would really limit the bidders and when they had the vessel available.

Anyway, we shall see how this develops over the next couple of weeks. I can say, there are a bunch of people staying up very late on Vibhavadi Road these days.

TH

TH...think you are taking my comments the wrong way..not trying to blame PTT for anything, there are multiple levels of control in situations like this..ie procedures/anchor patterns/competant personel etc and trying to get an inkling of an understand of how they got themselves in this position it shouldnt happen if all the measures are followed.

On the owners reps roles and repsonsiblities, think we will agree to disagree on this one, a debate for another day perhaps

I am assuming the accident investion has yet to be completed, but its seems a bit premature at this stage to be making demands for compensation, it will most likely pan out that fully responsibility sits with Hyundai as it certainly sounds like this is the case, but until the formal investigation is completed personally dont feel its is approriate for PTT to be making formal statements in the press, as pretty sure Hyundai already have their lawyers on the case.

ps....yes know my way around a lay barge pretty well, having put a few pipelines in my time...

[thaihome]

Actually PTT is not happy at all that Hyundai’s name has come out at all. Dr. Palin was reacting to stories that had already been published mentioning Hyundai and the context of his quote is to a question asked on how are the damages going to paid be paid for. His response was the PTT legal dept is looking into it and they expect Hyundai to pay for what ever the insurance doesn’t pay.

Early legal maneuvering no doubt and I’m not sure it is a good idea at this point when focus should be on getting the pipeline repaired. But that is what senior executives do, especially ones that are about to take over as CEO. Certainly when dealing with Korean companies, a bit of aggression to set the tone is often a good idea.

Hyundai is screwed and they know it, but they cannot walk away. Looks like it will be another bad year for the HHI Offshore Division. Not the first, that is for sure.

Anchor cables hooking subsea structures is not an uncommon event. To my knowledge this at least the third major incident in the past 4 years in GOT. It is the first for Hyundai and the first that got an operating pipeline.

TH

[Soutpeel]

Anchor cables hooking subsea structures is not an uncommon event. To my knowledge this at least the third major incident in the past 4 years in GOT. It is the first for Hyundai and the first that got an operating pipeline.

TH

Certainly time to be tightening up on the anchor handling procedures/anchor patterns or look at DP, the offshore construction industry (i.e. lay barges/derrick barges) is moving away from medium sized anchored barges towards medium sized DP barges as in addtion to eliminating to anchor handling risks, productivity on a DP barge as regards layrates is generally better (provided you have the right people running it of course) which offsets the increased dayrate cost for DP.

[HAL9000]

Why a delay to get safety equipment? Shouldn't safety equipment be on hand before commencing operations?

[Soutpeel]

Why a delay to get safety equipment? Shouldn't safety equipment be on hand before commencing operations?

Think this may be a misunderstanding on the part of the writer of the article, all required "safety equipment" would already be offshore, the next sentance talks about taking two days to get divers "under the sea and close a valve", which is of course not correct, if there is a saturation diving spread on-board, it takes about 4 hours to "blow" down the saturation divers for gulf of Thailand water depths, and closing a valve, if not damaged would literally take a few minutes to do.

One assumes as this is pipelay barge there may not be a saturation spread on-board the vessel, only air diving, therefore the "safety equipment" and talking 2 days could relate to having to bring in a Sat spread/divers from Singapore and obviously the saturation spread would need to be imported

Thats what read into this

[HAL9000]

Thanks for the explanation.