A Part of "Corrosion: Technical and Economic Driver for Indonesia Oil and Gas Industry" Petroenergy Magazine Edition Jan -Feb 2008
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It is just about iron rust, scale, and debris. But if it is in a pressure system, online production upstream and downstream, the consequence will be a loss worth twice of the facility construction cost. Corrosion itself and efforts in fighting destruction effect of corrosion to materials has significant implication in economic and business process (corrosionomic).
Method for estimating the corrosion impact to national economy was proposed by:
- Uhlig Method that more emphasize in production aspects;
- Hoar Method that more emphasize in sectoral contribution; and
- In/Out Method that also estimate indirect cost of corrosion;
In/Out method divided corrosion cost into two categories:
- Direct Cost that made up of:
> Cost of Design, Manufacturing and Construction: materials selection, coating, sealants, inhibitor, cathodic protection, including labor cost and equipment;
> Cost of Management: inspection, rehabilitation, repair, and loss of productive maintenance;
- Indirect Cost includes loss productivity because of outages, delays, failures, litigation, and taxes of the overhead corrosion cost.
The economy of corrosion in was studied by Battelle (1995) and CC Technologies (2002) in United States and in Japan by Society of Corrosion Engineering and Japan Association of Corrosion Control (1997). Higher cost contribution from oil and gas sector is showed in US case.
Figure Showing Corrosion Cost Distribution in US and Japan
Battelle found that most expenditure in US is due to extensive development and application of corrosion resistant alloy (CRA) materials (56%) and protective coating (30%). Cathodic protection program which has significant impact on protection system and complimentary to protective coating contribute only 4% of the total corrosion cost. Slight different magnitude also contributes by corrosion inhibitor application and development of non-metal materials (e.g plastic pipe, fiber reinforced plastic).
Oil and gas sector contributed 18% to total US national corrosion cost. Detailed for this sector, the study showed that the activity for transporting and storage of gas and liquid contributing the highest corrosion cost (79,6%), followed by refining activities (14,8%), and exploration to production (5,6%), Table 1. The study so has conservatively estimated that total corrosion cost doubled by indirect cost. Both studies agree that effective corrosion control can save up to 40% of total corrosion cost.
Figure showing direct and indirect corrosion cost based on Battelle and CCT Study
Corrosion Damage Cost
Several major accidents related with corrosion: Texas City Refinery March 23, 2005; Moomba Gas Plant Australia January 1, 2004; Skikda LNG Plant 2004; Humber Estuary Refinery UK April 16, 2001; Brookdale Pipeline Manitoba Canada April 14, 2002: Carlsbad Pipeline US August 19, 2000; Trans-Alaska Pipeline March 2, 2006
If we can conservatively make a simple assumption, that oil and gas economic characteristic relatively similar, corrosion control and management in Indonesia perform as well as in US and both technical and legislative regulation as strict as in United States, corrosion cost (direct and indirect) in Indonesia oil and gas sector estimated to reach 1,12% of Indonesia Gross Domestic Product (GDP). This figure if we extrapolated to Indonesia GDP in 2006 equals to USD 3,74 billion. Annual cost saving through better corrosion control programs equals to USD 1,5 billion.
Significant impact of corrosion to the economy could be happened for Indonesia oil and gas industry. If so this issue should be able to raise the level of concern and awareness amongst the stakeholder (material producers, EPC companies, operator, and policy maker). As we can learn from the fact above, a large amount of money can be saved firstly by shifting paradigm of “corrosion as maintenance issue” to new paradigm “corrosion control as integrated company plan”.
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