Page 507 - Pipelines and Risers

474 Chapter 25

Although any human loss is unacceptable, it is necessary to account for all possible scenarios.
Cost associated with averting fatalities and injuries (another wording for “human loss”) would
place a financial burden on the Owner. There are currently two main methods used for
determining the economic value of a human life. It must be noted that this is a ‘statistical’
life,’ not an identifiable individual. Society has always been ready to spend much more to
save an individual in a specific situation- trapped coal miner, for instance. The statistical life
reflects the amount that society is willing to spend to reduce the statistical risk of accidental
death by one individual.

The first method is the human capital approach in which the value is based upon the economic
loss of future contributions to society by an individual. The second approximation willingness
to pay, identifies how much an organization is willing to pay (in terms of other goods and
services given up) to gain a reduction in the probability of accidental death. Each method has
drawbacks and benefits.

Injuries frequently cost more than fatalities. This cost should also be included in consequence
modeling.

2. Material Repair
Material repair is a function of the extent of damage that the pipeline has experienced. There
are three ways in which a breach of containment is likely to be repaired; hyperbaric weld
repair, spoolpiece installation and bolted sleeve installation. Information regarding the cost of
these repairs are available from most operating companies.

3. Production Loss
The production loss calculates the financial loss due to the time which is lost due to the
damage of the pipeline, this is a function of the time it takes to repair the pipeline. This can be
calculated from the value of the product being transported per unit and the volume of product
that could potentially be transported during repair.

The cost that will arise from inconvenience caused to the receivers of the transported goods
must also be included. By assessing contractual agreements between operator and purchaser,
it is possible to identify potential costs.

4. Environmental Damage
It is necessary to assess each case on its own merits. The following factors will be the most
influential in determining any cost.

Volume and type of product lost
Probable currents and exposed coastline.
Topography and location of ‘sensitive areas’ (nature reserves, fanning, recreational areas,
potable water sources etc.)
Existing emergency response capacity