Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any scientific information contained within this essay should not be treated as fact, this content is to be used for educational purposes only and may contain factual inaccuracies or be out of date.

Risk Management in Construction and Operation of Oil and Gas Pipeline

Paper Type: Free Essay Subject: Construction
Wordcount: 2507 words Published: 23rd Sep 2019

Reference this

Risk Management in Construction and Operation of Oil and Gas Pipeline


  1. Introduction


In many countries agriculture, transport, industries and even domestic consumption of energy depends upon oil and gas segment. Nearly 78% of energy generations is oil and gas grounded. Oil and gas segment are considered as back bone of any country’s economy. Structure and characteristics of risk are unlike in different projects of pipelines due to involvement of different people from different locations of the world. Nature and impact of risk are dissimilar in different periods of project life cycle of pipeline projects. For maximum effective risk management, it is suggested to strategize, analyse and manage risk in all phases of project life cycle such as; concept clearance, feasibility, design, construction and operation. Some risks are insignificant in construction phase but are vigorously important in design phase such as earthquake, tsunami etc. The hesitation in undertaking construction of a pipeline project comes from many foundations and frequently involves many contributors in the project.


On the other side, risks during operation of pipelines have various physiognomies depending over the strength and weakness of operational organization, structural, geopolitical and climatic environments of the place where project is implemented. While dealing with natural risks, the geology and topographical physiognomies of the region must be carefully studied.


Tools or techniques that can be implemented to mitigate the risk can be identified as Brainstorming, Delphi techniques, Root cause analysis and SWOT analysis. Brainstorming is data gathering technique in risk identification for experts whereas Delphi is a technique information gathering to reach the consensus of a subject. The most effective risk management methodology in this case for identifying critical risk in pipelines is the Monte Carlo simulation. This simulation is discussed further as the solution for this case. Fault tree analysis (FTA) can be well-thought-out to calculate the system risk.


  1. Research and Theory


Risk during construction and operations are different such as in construction we may face risk depending upon execution of work, material accessibility, manpower, budget, accidents, authorization and atmosphere. Whereas, in operation risks are slightly different which are related to functioning and flow of substance in the pipeline which effects and causes cracks, leakage and damage to the pipeline. The main causes of failure in the pipelines occur due to corrosion, excavation damage, incorrect operation, material or weld failure, outside force damage and natural force damage.


During research and analysis of gas pipeline results that, if action is not taken timely if a leakage caused during the operation the gas may mix with the air and if it reaches a certain concentration then it may result in fire and explosion resulting in loss of lives and heavy damage to the economy. So, it is necessary to take proper precautions to mitigate the consequences of the fatality. During the construction of the pipeline the failures can occur by wrong installation of welds which result in leakage and if it is due to environmental consequences like earthquake, landslides etc then there are no precautions for it as it is occurred naturally.



  1. Case evidence and theory


In this we discuss the potential issues that may cause pipeline leakage. The leakage failure of gas pipeline may arise due to inner and outdoor factors. Outdoor issues include corrosion, interference and natural disaster, while inner issues include material defect, weld defect and auxiliary’s failure.


Corrosion may lead to pipeline perforation and estrangement which regulate the way and rate of gas leakage. There are two types of corrosion, internal and external corrosion. Internal corrosion is generally due to corrosive medium and failure of corrosion protection procedures. This type of corrosion can be avoided by injection of corrosion inhibitor, anticorrosion fabrication and on time pipe cleaning. External corrosion is mostly arisen due to failure of coating and soil corrosion. Some common type of risk factors that are neglected are sabotage, overload and natural disasters like earthquake, tsunami, floods are the factors which cannot be neglected for pipeline leakage.


The material and weld defects are the defects which are produced by inappropriate design or fault operation factor in design and construction phases. If there are any external forces then these defects may lead to pipeline leakage. Auxiliary failures like defect in design of valve or flanges or rusting of these parts may also lead to leakage or factors which are out of control. Leakage in pipeline are serious because gases if leaked may cause explosives as they are highly flammable.



  1. Solution


Project management method of risk analysis and management may be complex and protracted for construction projects like pipeline. Therefore, a prototypical of risk analysis and management is developed which make simpler the procedure and form more likely results with the implementation of MONTE CARLO simulation.


Project document review

Geopolitical analysis and review

Market Analysis

Client/Contractor review



Risk Breakdown Structure (RBS)

Risk Classification



Risk probability and impact factor


Data collection (Authentic source)

Data processing (Normal, Beta, Gamma, Log, etc distribution)

Calculation of frequency (P) and Impact factor (I)




Risk Analysis

Monte Carlo Simulation



Identification of critical risk



Risk management strategy

Risk distribution (Between parties)

Risk Transfer (Contract, insurance)

Risk Mitigation (Eliminating risk cause)

Risk Avoidance



Risk monitoring process

Data Bank

Monitoring process and results


Check and make changes





Figure1: Risk Management Model for pipeline construction and operation


Step-1: It starts with documentation and cataloguing of risk in view of the type of construction project. Before recognizing the risk market, labour capability and environmental conditions of the area are analysed where project is likely to be executed.


Step-2: Over the source of risk identification risk are considered and Risk Breakdown Structure (RBS) is developed. Risk identification is the utmost vital thing trailed by the likelihood and bearing calculations in complete risk analysis process.  Risk likelihood assessment investigates the probability that each precise risk will arise. It examines the possible effects such as time, price, possibility and quality.


Step-3: On basis of possibility values for individual risk a risk register might be made which offers measurable risk analysis for each risk. Impact factor can be utilised which explains the kind and condition of risk impact. On the foundation of this, formula for qualitative analysis is made. The following connection is used for risk analysis.


R = Pf x Cf

Where Pf is the failure probability and Cf is a measure of the significances of failure.


Step-4: Monte Carlo simulation is extensively used computational technique for creating probability circulations of variables that depend on other variables or limitations signified as probability circulations. Monte Carlo simulation, which is a mathematical technique used in risk analysis to estimate the circulation of probable results grounded on probabilistic efforts would include many scheming of the intake rather than a solo calculation; for individual calculation, the computation would use a price for individual involvement parameter arbitrarily selected from the possibility density function for that variable. Each imitation is made by arbitrarily pulling a model value for each input variable from its defined probability circulation. These input model values are then used to analyse the outcomes.


Step-5: On the foundation of critical risk documentation by Monte Carlo simulation, risk decrease strategy is set, which may be risk transmission, mitigation, evasion or circulation.


Step-6: The result or set methodology for risk management must be occasionally supervised and check for improvisation.



  1. References


John W., Edward G.; International Project Risk

Assessment: Methods, Procedures,  and  Critical

John W., Edward G.; International Project Risk

Assessment: Methods, Procedures,  and  Critical

John W., Edward G.; International Project Risk

Assessment: Methods, Procedures,  and  Critical [

[1]   John W.; Edward G.; International Project Risk Assessment Methods, Procedures and Critical Factors (Centre Construction Industry Studies, Report No. 31, The University of Texas at Austin) Austin, Texas. (2003), 41-49


[2]   User’s Guide to Risky Project Professional 1.3, Intavar Institute Inc., USA, (2006), 31-38.


[3]   Wells Louis, Gleason Eric; Harvard Business Review Journal, 73(5) (1995) 44-



[4]   Slkder Mainul Hasan, Jason Everett Hults and Binder Singh, Risk and Integrity Management, Genesis Oil and Gas, Houston.

[5]   D. Yuhua and Y. Datao, “Estimation of failure probability of oil and gas transmission pipelines by fuzzy fault tree analysis,” Journal of Loss Prevention in the Process Industries, vol. 18, no. 2, pp. 83–88, 2005.



Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: