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Better protection needed for national infrastructure, pipeline inquiry told

Tuesday 4th June 2019

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The lack of sanctions for people damaging national infrastructure and covering it up needs to be addressed, Refining NZ chief executive Mike Fuge says.

The company operates the Marsden Point oil refinery and its contractors use a combination of walking inspections, drive-bys, helicopter fly-overs and inspections by fixed-wing aircraft to monitor potential threats – from land movements, excavation and construction - to its fuel pipeline to Auckland.

Fuge told an inquiry into the pipeline failure in September 2017 that each of those monitoring methods is an important part of the risk management for the pipeline which delivers about 95 percent of Auckland’s fuel and all its jet fuel.

But none of them would have detected the excavation that caused the original damage to the pipeline near Ruakaka.

“What that would not detect is someone wilfully digging down, damaging your pipeline and covering it up. And that is a whole new element and whole new set of costs that we now have to cope with because we have that element in our society and there are no effective legal remedies,” he said at a hearing in Auckland today.

“Damaging critical infrastructure of New Zealand and then covering it up is not an appropriate behaviour. And the fact that nothing has happened, or there have been no consequences for the individuals who do that, is a very serious matter.”

The 10-day pipeline shutdown in September 2017 caused widespread travel disruption. Airlines had to ration their fuel and tanks in Christchurch and Wellington were converted to handle jet fuel. Emergency regulations were put in place to enable jet fuel to be trucked from Marsden Point, and tanks at Wyndham Terminal in Auckland were converted to receive jet fuel.

Tanker deliveries were diverted and road shipments coordinated across the North Island to ensure sufficient petrol and diesel supplies for Auckland.

A subsequent Northland Regional Council investigation found the damage to the pipe under farm land near Ruakaka had probably been caused by unlawful use of a digger – possibly for Kauri extraction - in late 2014. But it was unable to identify the user to prosecute them. It found the refinery had no causative role in the pipeline’s failure.

The inquiry panel, comprising Elena Trout and Roger Blakeley, was formed in December to identify any lessons the shutdown has for the resilience of the country’s fuel supplies.

The inquiry was tasked with considering the causes, contributory factors and impacts of the outage, as well as the operational responses and risk management practices of Refining NZ, fuel suppliers, airlines, and national and regional civil defence organisations. It is not considering criminal or civil liability.

The panel spent the morning considering the adequacy of the refinery’s systems for monitoring risks to the pipeline and its systems for liaising with affected landowners.

Trout and Blakeley challenged Refining NZ and contractor First Gas on the utility of aerial inspections, particularly fixed-wing fly-overs. They cited a photo First Gas obtained from a neighbouring property which showed an area of disturbed earth over the pipeline leak site two weeks before a fly-over of the property in November 2014.

Both Fuge and First Gas chief executive Paul Goodeve said that, while that disturbance may appear obvious in hindsight, at the time there was no sign of deep excavation as the landowner had flattened the ground off.

Patches of bare earth are not rare in farming areas and landowners are allowed to till land over pipelines.

Fuge observed that fly-overs have proven very useful identifying activity like sub-division work and trenching near pipeline easements.

“The battle here is that you’ve had someone who had done something wrong and then had covered it up. That’s the problem,” he said.

First Gas also favours tougher rules for national infrastructure. In its submission to the inquiry it advocates developing a national planning statement for all critical infrastructure under the Resource Management Act.

It also favours adoptions of a regime similar to that in New South Wales which includes “dial before you dig” obligations, gives network owners the power to instruct parties to alter or cease operations that put infrastructure at risk, enables them to recover costs from parties that damage their assets and includes potential criminal liability for those damaging assets or not reporting damage.

First Gas noted that unauthorised work around its pipelines is not limited to laypeople, but has also included contractors working for large commercial organisations which are aware of the restrictions.

“This reinforces our view that a lack of knowledge is not the issue but is instead a willingness to run the risks because of the limited repercussions.”

Goodeve told the inquiry today that he doubts that a wider easement designation for pipelines or better planning rules would have made a difference at Ruakaka.

“Because, at least it appears to us, an operation went on even though at least one person in that operation knew about the restrictions.”


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