Page 245 - Pipeline Risk Management Manual Ideas, Techniques, and Resources

10/222 Service Interruption Risk
per month. The product contained in the section is valued at Table 10.5 Comparison of service interruption examples
approximately $2000. Service interruption penalties per con- ~~~~
tract are $3000. No other direct costs are foreseen. Indirect Example Upset score Impact interruption' Notes
costs are considered to be low.
10.3 484 3.1 156 Least potential for
Revenue loss = $2,000,000 service interrup
Direct costs = 2,000,000 + 2000 + 3000 = $2,005,000 tion (high upset
Indirectcosts=0.5 ~2,005,000=$1,002,000 score) with mod
Total Costs = $3.0 million erate impact
Impact factor = 10 x 3.007,000 + 27,000,000 = 1.1 10.4 391 1.1 355 Lowest impact
Risk of service interruption = 391 + I. 1 = 355 from a service
interruption
10.5 422 9.7 43.5 Highest risk due to
~~~ ~ ~ ~ ~ high consequ-
Example 10.5: High indirect costs ences ifthis line
This section of gas transmission pipeline supplies two segment is out of
municipal distribution systems, each of which has alternate service
supplies to provide approximately 50% of the peak winter load. a Higher numbers are safer (less risk)
Gas sales that would be lost on interruption of this section are
estimated to be $1 8 million per month. Total company gas sales
are approximately $60 million per month. Volume of the gas in
the section is valued at $47,000. Costs for rerouting gas sup- This is also a critical pipeline section, due to the low score for
plies to assist the alternate suppliers and the costs of fulfilling service interruptions.
contractual obligations for gas purchases are estimated at $2.1
million per month. A previous analysis has scored the potential Nonmonetary modeling
for service interruption (upset score) at 422 points.
Indirect costs are seen to be high. There would be a great deal In some countries, an economic model that involves pipeline
of public discomfort and possibly related health problems asso- revenues, product values, transportation fees, business compe-
ciated with a winter outage. The present regulatory environ- tition, and legal costs is not appropriate. Despite the lack of
ment would probably overreact to any serious pipeline problem direct monetary relationships, certain customers or groups of
due to loud public reaction as well as the fact that many legisla- customers can usually be identified as more critical than others
tors themselves would be impacted. Many businesses and light in terms of service interruption.
industrial users would experience business losses that might Hospitals, schools, and certain industries are possible exam-
prompt legal action against the pipeline company. In the present ples. In these cases, emphasis is placed on product uses that are
competitive environment, it is believed that some amount of viewed as more valuable, even if that value is not expressed in
sales would be permanently lost due to an outage. monetary terms. Risk of service interruption in such cases may
The evaluator scores the indirect costs at a 1.9 factor. Had not be as complicated as more directly business-driven pipeline
there been no redundant supplies at all, it would have scored operations. The evaluator can assign criticality values instead
2.0. of monetary values. Qualitative values of high, medium, and
low (or more categories if needed) would distinguish conse-
Revenue loss = $ I8 million quences of service interruption. A qualitative impact factor
Direct costs = 18,000,000 million+47,000+2,100,000 = $20,147,000 scale can then be used in combination with the service interrup-
Indirect costs = 20,147,000 x 1.9 = $38.2 million tion potential (upset score) to score the risk.
Total costs = $58.3 million
Impact factor= 10 x (58.3 million + 60 million) = 9.7
Risk of service interruption = 422 + 9.7 = 43.5