New fuel storage facilities near Auckland Airport and legislation allowing the Government to step-in if required recommended in report on 2017 rupture of Marsden Point to Auckland fuel pipeline

New fuel storage facilities near Auckland Airport and legislation allowing the Government to step-in if required recommended in report on 2017 rupture of Marsden Point to Auckland fuel pipeline

A Government inquiry into the 2017 breach of the Marsden Point to Auckland fuel pipeline recommends building new fuel storage facilities near Auckland Airport and legislation to allow the Government to step-in if required.

The report says the events that followed the rupture of the Refining NZ pipeline, which was shut down for 10 days, showed the lack of back up infrastructure and contingency planning for the supply of jet fuel. It says any upgrades are still only at a preliminary stage, and argues fuel companies have failed to make timely investments to achieve and maintain an appropriate level of resilience in the supply chain.

The Marsden Point to Auckland pipeline supplies almost all of Auckland’s diesel and petrol, and is the only major supply of jet fuel to Auckland Airport. Three major fuel companies (BP, Mobil, and Z Energy) control, or have exclusive use of it through a complex series of joint ventures and commercial agreements. 

In 2014 a contractor looking for swamp kauri with a digger on a property in Ruakaka damaged the line. But it wasn’t until nearly three years later that the pipeline actually ruptured and set off a chain of events as the fuel industry attempted to reduce the impact it had on the supply of petrol, diesel and jet fuel to Auckland.  

Impact on supply

The inquiry report says the fuel companies were able to transport petrol and diesel to the city by truck from other parts of the country.

“The stocks of ground fuels (the different grades of petrol and diesel) already in Auckland, along with supplies brought in by truck from Marsden Point and the Port of Tauranga, proved adequate to keep industry and fuel retailers supplied. A small number of retail petrol stations ran out of some of the more specialised stock towards the end of the outage.”

However, there was no similar alternative source for jet fuel which requires its own facilities, such as storage tanks, valves, pumps, and trucks. And Auckland Airport was hit the hardest.

“The fuel companies rationed the airlines to 30% of their normal usage from Sunday 17 September.  The airlines took steps such as flying in aeroplanes full of fuel without passengers, filling up at nearby airports (for example, in Christchurch, the east coast of Australia, and some Pacific islands), reducing the weight on planes by postponing cargo, and cancelling some flights.

“All these steps to reduce the impact came at a cost. Some of the travelling public were inconvenienced and some businesses suffered significant losses. Even so, the outage was over within 10 days and the city quickly returned to normal.” 

Need for improved infrastructure

It says that in the process of completing the inquiry they discussed with the fuel companies what contingency plans they were working on and if they were planning to upgrade the necessary infrastructure. But it says any upgrades are still only at a preliminary stage.

“In our view, the fuel companies have failed to make timely investments to achieve and maintain the level of resilience in the supply chain that we regard as appropriate. BP told us that it disagrees with this view, because it considers that a cost-benefit analysis of the specific options should be completed before finalising a view on the appropriate resilience standards.”

The report calls for the Auckland Airport to regularly update its demand forecasts and to share them with the fuel suppliers, airlines, officials and other interested parties. It also recommends that the airport should establish a jet fuel supply coordination forum, similar to the one operating at Brisbane Airport, to share information on “capacity constraints and pressure points, demand forecasts, linkages, security of supply, and investment plans”.

The report also calls for a commitment from the fuel sector to build new infrastructure to improve the diversity of supply with new storage facilities at or near Auckland Airport to provide at least 10 days’ cover at 80% of operations.

“The fuel sector should provide information on progress towards these decisions to all those with an interest (in particular, Auckland Airport, the airlines, and the Government).”

Legislation allowing the Government to step-in advised

And it also says the Government should begin work on legislation to allow it to step in “should the fuel sector not be able to adequately take into account the public interest in resilience when making investment decisions relating to fuel infrastructure”.

“The incident raised awareness and was a reminder that the fuel supply chain infrastructure is nationally critical infrastructure.”

But the situation is complicated by the fact the fuel supply chain is owned by the three major fuel companies (BP, Mobil, and Z Energy), with limited Government oversight or ability to intervene.    

“The infrastructure we have has been able to meet demand to date largely because of investments made in previous decades. As a market-led system, investment decisions seem to have been focused on meeting the demand curve on a “just in time” basis. This may not take adequate account of the interests of the wider community and stakeholders in maintaining a system with greater resilience to withstand rapid increases in demand or events that disrupt supply."

And the industry may not be willing to make the necessary investment.

“Most of the fuel companies agreed with the forecast growth of jet fuel demand. However, in our interactions with them, some were slow to link those forecasts to a need for further investment in infrastructure and to share information about their thinking on investment possibilities. The complexity of the ownership and joint venture structures, and the confidentiality arrangements between the different parts of the supply chain, made it challenging to have visibility and allow us to have confidence about future investment plans."

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27 Comments

The oxymoron of all time.

We need to be weaning ourselves from fossil fuels, we will indeed run out of fossil fuels, but we are insisting that those who supply us with fossil fuels not only supply us with fossil fuels, but guarantee no inconvenience and indeed, add resilience. Oh, and planning for growth (RNZ, Morning Report).

How abour we have the bigger debate? We are traversing the peak of fossil fuel supply, and investment is no longer warranted - indeed, can't be justified business-case-wise. Why else the targeting of the biggest Saudi refinery?

And we can't run our economy without fossil fuels - no tourism, no dairy, less construction. Interesting times

Quote us some resilience.org links from the enlightened few to kick start the debate on an (un)sound footing.

... the problem the fossil fuel haters smash up against is that the most efficient , clean & green alternative is nuclear power ...

mmm. It transcends that - and PDK is a great example of this - the main problem that fossil fuel haters have is that they don't understand basic economics and the notion of technology.
Case in point the quote above "we will indeed run out of fossil fuels". Nope. Categorically incorrect. We will not ever run out of fossil fuels because at some point the marginal extraction cost will become economically nonviable. We will never extract anywhere near close to 100% of extractable fossil fuel resources.

Unfortunately they believe we can save civilisation by boiling water with focused magnifying glasses and that, as you allude, technology is the big bad baddy.

Steam powered aviation? Giant magnifying glass directed at a boiler, superheating the water and providing thrust. Have a condensate collector at the front of the aircraft to refill the boiler by flying into clouds.

Genius.

So fossil fuel haters are UNDERSTATING the time available till we "run out"... You would think these clued up economists would be shouting from the rooftops in alarm?
No?
The problem being economists dont understand the basic formula .... that Technology without energy is redundant

"Technology without energy is redundant"
But why don't we have energy?
Fossil fuels aren't the only primary energy source we have, ya know..

Take oil, coal and gas out of this graph - call me a cynic but technology is not closing that gap any time soon, especially given the lack of effort currently working on it.
https://en.wikipedia.org/wiki/World_energy_consumption#/media/File:Bp_wo...

exactly - the only thing filling the gap is DEBT ... which is temporarily allowing access to ever harder to access Fossil fuels with the dubious appearance of ongoing viablity in supply... which is why interest rates can only go one way ...
When debt collapses we will discover we have been swimming with no clothes for some time

"We will not ever run out of fossil fuels because at some point the marginal extraction cost will become economically nonviable."

That's what "running out" means - it's no longer economic to extract them, thus 0 are extracted, thus we have "run out".

I mean to take your argument to a stupid extreme - Titan (one of Saturn's moons) rains methane on its surface. So long as Titan has methane on it, we can never "run out" of methane.

Clearly what matters to humans is resources we can actually extract and utilise. If we can no longer economically extract and utilise a resource, then we have "run out" of that resource (at least while technology remains at that level).

"That's what "running out" means - it's no longer economic to extract them, thus 0 are extracted, thus we have "run out"."
Nope. PDK talks in absolute finite resource. Interestingly, so do economists.
Plus, if extraction costs effectively decrease, it is again technically viable to return to extract more.
The hard limit - 'running out' - is zero possible extractable resource. That is very different to technically extractable resources.

When you don't have petrol to put in your car, you can console yourself that there is plenty more in the ground.

anyone who is a fossil fuel hater doesnt understand where their current standard of living comes from.
anyone who thinks that their current standard of living is guaranteed courtesy of fossil fuel doesnt understand physics

Thanks free market.

. . so , we have the report out ... telling us exactly what we all knew anyway ... 2 years wasted on an unnecessary report , but no action on the actual problem ...

Seems to sum up this hapless coalition government ...

I doubt the government is going to move on the report findings now either. The Greens have been strong-arming the coalition to cancel major NZTA-funded projects throughout the country... because... cars bad, bikes good.
The Greenies are unlikely to 'allow' an oil infrastructure expansion; perhaps because the project doesn't come with the same 'job creation' benefits of a water bottling plant proposal.
The worst part about all this is that there isn't even a plan B.

Yep, Jacinda "I think we need a new Working Group setup to check the findings".

I'm sure some of our buddies need some more tax funded money. Just like the fuel price investigation, "oh darn, it shows that the increase is the 16% tax we put on".

Did they figure out if any swamp Kauri was found near the pipeline?

Never saw the terms of reference of the enquiry
They knew who the land owner is. They knew who the digger operator is.
No names
All care - no responsibility
No mention of Oravida Kauri

Actually the inquiry was ordered on 10th of December 2018 and they expected to produce the report in June of this year. The deadline was then extended to August, and now it has been published publicly.

Heres another report from 2011. https://www.mbie.govt.nz/assets/0127f68d90/rap-contingency-options.pdf
Did anyone read it?

UK decides to re-open the "pot of gold" that is the export education market. Looks like NZ will have to fight even harder for the "talent" we're currently coming through our international education pathway.

https://www.google.com/amp/s/amp.theguardian.com/education/2019/sep/11/u...

FYI;

Government Pipeline Inquiry

17/9/2019, 8:31 am GENERAL

Refinery welcomes the Auckland Fuel Supply Disruption Inquiry report

Refining NZ the owner and operator of the Marsden Point refinery, has today welcomed the publication of the Government Inquiry report into the September 2017 pipeline outage and the resilience of the fuel supply to Auckland.

Commenting, Chief Executive Officer, Mike Fuge said there are learnings around improving the resilience of Auckland’s fuel supply into the future and the Company looks forward to working with industry to implement those learnings for the benefit of Aucklanders and all New Zealanders.

“Among its findings the Inquiry concluded that Refining NZ maintained and operated the RAP properly and in keeping with all legal requirements and standard industry practice. We also take pride in the Inquiry’s findings around the high standard of the response of our staff and contractors to the pipeline rupture.”

Fuge acknowledged the Inquiry’s confirmation that the pipeline had been damaged by a digger that should not have been working over the pipeline and that the damage had not been reported: “This underlines the fact that further legislative regulation is needed to protect the pipeline and other essential infrastructure.”

The Refinery also concurs with the Inquiry’s comments around current fuel storage at the Auckland end of the pipeline especially the urgent need to build jet fuel resilience at Auckland airport.

Said Fuge: “We are pleased that the Inquiry has noted that Refining NZ is working to make timely investment decisions and that we have a clear goal of having new infrastructure in place shortly before it is needed to meet demand, rather than just in time or too late.”

Fuel Companies failed to invest ?.................. were they allowed to ?

What we have is a collection of energy-requiring infrastructures, all aging - which requires more energy. That energy has to be compact, transportable and use as little energy to obtain, transport, contain, burn and release the entropic results (like CO2).

We found the best, by several orders of magnitude. We chewed into it, best-first. And we built an energy-requiring suburban sprawl, plus the stuff which we fill that suburban sprawl with, using it. Oh, and we failed to curtail population - mainly because or our fixation on that falsehood of a worshiped metric; GDP.

Now, the quantity we can pump per day is maxing out, and the quality has been falling since day one. And the infratructures - never more of them - are never older, so never more requiring of maintenance/replacement. This is a one-off event. It will never happen again.

And even using every last kilogram of fossilised sunlight, won't extend the game very much - exponential growth and doubling-times and the Jevons/rebound effect see to that.

The Genters and the PDK's of this world, understand that you are better making the transition to the long-term renewable regime, while there is still a supply of the best ever stuff. He can state it, she'd get voted out by ignorant short-term ill-informed selfishness, so can't. Just what sort of accounting system you want to run, to tabulate such a morph, I care not. But the one we are currently running, is terminally doomed. You cannot run exponentially-increasing numbers against an ever-more-depleted world, and expect the number-to-volume ration to hold up. Bet ahead on growth, and you will lose. As negative interest-rates are telling us.

And we are going to see ever-more ' pipeline failures' as time moves on. We will be in serious triage (or avoidance) within 10 years. No energy move, done this late this big, can avoid that now. Too many dies cast.

Twisted contortion of asset ownership, probably some incestuous relationships as well. Nationalise and create an SOE. No more beating about the bush trying to cajole disparate interests into working together and invest.