Friday 7th December 2018
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Elena Trout and Rodger Blakeley have been appointed by the government to examine last year’s fuel pipeline shutdown in Northland and identify any lessons it has for the resilience of the country’s fuel supplies.
The 170-kilometre pipeline from the Marsden Point oil refinery to the Wiri fuel terminal in South Auckland delivers about 95 percent of Auckland’s fuel and all its jet fuel.
The 10-day 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.
The terms of reference issued today, almost a year after the inquiry was announced, instruct Trout and Blakeley to inquire into the causes, contributory factors and impacts of the outage and the operational responses and risk management practices of Refining NZ, fuel suppliers, airlines, and national and regional civil defence organisations.
They are not to consider criminal or civil liability.
The six-month inquiry is to then report back to Energy and Resources Minister Megan Woods with any recommendations regarding the resilience of fuel supply in the Auckland region, and any other relevant matters.
Trout is a company director, a former president of Engineering New Zealand and a former member of the Electricity Authority. Blakeley was chief executive of the Ministry for the Environment and spent five years as chief planning manager for Auckland Council from 2010.
The timing of the inquiry is ironic given Bulk Storage Terminals’ site on the southern end of Wyndham wharf and part of the Stolt-Nielsen operation there is currently being cleared to make space for the America’s Cup. The rest of the wharf is scheduled to be cleared from 2022.
Auckland Council, which has proposed using the area for an urban park, says it has no plan for identifying wharf-side fuel storage to replace the Stolt-Nielsen assets.
Auckland’s reliance on the pipeline, and the increasingly tight jet fuel supplies for Auckland International Airport, were well-known to Auckland Council, the government and its predecessor. Options for additional jet fuel storage were highlighted in a national review of fuel security in 2012.
Just prior to the shutdown, consultants Hale & Twomey provided an update of that earlier work to the Ministry of Business, Innovation and Employment. They specifically identified the importance of alternative wharf-side storage in Auckland in the event of a jet fuel outage, and the growing need for additional jet storage.
Their report noted “the important role the Wynyard wharf facilities in central Auckland would play should there be a significant disruption to normal Auckland supply.
“This needs to be considered when Auckland Council makes decisions regarding the relocation of these key facilities,” the authors said.
“Wiri throughputs have increased significantly, particularly for jet fuel. Constructing additional storage near the Roscommon Road boundary, as noted in the Auckland Council Planning Hearings, would greatly increase the terminal’s resilience.”
The consultants’ advice, to convert part of the Wyndham storage to receive jet fuel, was drawn on during the shutdown.
The shutdown cost Refining NZ about $14.3 million, including $6 million of repairs and a similar sum in lost processing fees. Insurance recovered part of that.
Z Energy, which also operates the Caltex chain, estimated its losses from the shutdown at $5 million.
In May Air New Zealand began High Court proceedings against Z and BP. It was claiming $4.3 million from Z.
A Northland Regional Council investigation found the damage to the pipe near Ruakaka had probably been caused by unlawful use of a digger in mid-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.
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