The largest infrastructure project in Russia's Far East has resulted in unanticipated problems for the gas sector. The Sakhalin-Khabarovsk-Vladivostok gas pipeline, with a budget of 500 billion rubles of which more than half has already been spent, was launched more than six months ago but has still not managed to operate reliably due to hydrate plugs that have disrupted the operations of gas producers and power companies.

The problem

Over the winter, five hydrate plugs formed in the section of pipeline from Khabarovsk to Vladivostok: on December 14-18 at the 959-977 km section, on December 22 near Vladivostok, on December 25 at the 995-1,015 km section, on January 10-15 at 955-977 km, and on January 17 at the 1,378-1,521 km section.

"The plugs formed after nighttime temperatures dropped below minus 30 degrees Celsius for two day days," fuel and energy sector experts said.

However, the problems did not go away with the end of freezing temperatures. At the end of April, the pipeline again shut down due to another plug (at 1,131-1,153 km).

A commission under the Russian president's envoy to the Far East Federal District, including representatives of the Federal Environmental, Technological and Atomic Oversight Service (Rostekhnadzor) and the Far East Generating Company (DGK) (RTS: DVGC), was formed to investigate and eliminate the cause of the plugs.

The information department of gas giant Gazprom (RTS: GAZP) told Interfax: "There are no problems with formation of hydrate plugs in the Sakhalin-Khabarovsk-Vladivostok gas transport system. The last hydrate plug was eliminated in April of this year."

Rostekhnadzor is not commenting on the situation.

The reasons

Industry sources suggest several reasons for the formation of the plugs that are not mutually exclusive.

The first is violations in the process of construction and installation. "According to the preliminary assessment of specialists, the disruptions in the normal operation of the gas pipeline are the result of failure to maintain the quality of installation work during its construction," the presidential envoy to the Far East Federal District, Viktor Ishayev said in a decree signed in mid-January to inspect the technical condition of the pipeline.

The pipeline had to general contractors: Stroigazmontazh (SGM) and Stroigazconsulting (SGC). SGM welded the pipe sections at 0-133 km, 247-505 km, 874-926 km, and the branch to the Vladivostok gas distribution station. SGC built the pipeline from kilometer 926 to Vladivostok.

The plugs formed in the section from 955 km to Vladivostok. SGM said that "not a single hydrate plug has been reported on the Stroigazmontazh sections of the Sakhalin-Khabarovsk-Vladivostok gas pipeline. SGC declined to comment.

However, a Gazprom specialist acknowledged to Interfax that there were defects in construction. "There were nuances, that perhaps the pipe was not cleaned out. This is a defect, but this has already been dispensed with," he said.

The author of the idea to build the gas pipeline in time to gasify Russky Island for the 2012 APEC summit is reportedly former Gazprom deputy CEO Alexander Ananenkov. Industry sources said Ananenkov confirmed this project with officials personally, bypassing company management. Criticism of the work of one of the contractors last year cost Ananenkov his job at Gazprom, they said.

The second reason is poor supervision of construction, and the process of acceptance of the facility by the ordering party, which was LLC Gazprom Invest Vostok, the operator of LLC Gazprom Transgaz Tomsk. Vitaly Markelov, who replaced Ananenkov as head of Gazprom's production division, headed Transgaz until December and just before being transferred to Moscow managed to head the Invest unit for several weeks.

However, sources attribute both the first and second reasons to the rush in which the pipeline was built. The pipeline had to be built in record time, just two years, in order to supply gas to Russky Island for the APEC summit.

The third reason is an insufficient supply of gas in the pipeline. "Now hydrates naturally escape" due to the low pressure in the pipe. This problem, according to a Gazprom specialist, is resolved by pumping in inhibitors.

There has been no confirmation of speculation that the design of the pipeline's compressor station did not take into account proper requirements for gas treatment, or that allowances were not made for injecting methanol into the pipe to dissolve hydrates.

Power companies

Last year DGK, a division of OJSC RAO Energy Systems of the East (ES Vostoka), began converting Vladivostok's TETs-1 and TETs-2 power plants from fuel oil to natural gas in line with the schedule approved by the Russian Energy Ministry and Regional Development Ministry, as well as part of preparations for the APEC summit. The power plants are being converted to gas under the federal program for the Economic and Social Development of the Trans-Baikal Region and Far East in the period to 2013.

"For us, one of the main goals is to reduce emissions," a spokesman for ES Vostoka told Interfax. The main achievement of the first stage of upgrades, completed in 2011, was a 40% reduction of emissions at Vladivostok TETs-2.

Nonetheless, the company has faced problems drawing gas. "Several times over the winter, as well as in April, we received requests from the supplier to significantly reduce offtake of gas from the pipe due to formation of hydrate plugs," the spokesman said.

"In order to ensure continuous plant operation, DGK was forced to buy more expensive fuel oil. As a result, the company's expenditures related to the operation of boiler equipment on fuel oil amounted to more than 400 million rubles," he said.

"Materials are now being prepared to file lawsuits for damages, but DGK does not rule out the possibility of reaching an agreement with the gas supplier to resolve the dispute," he said.

Vp

(Our editorial staff can be reached at eng.editors@interfax.ru)

Copyright 2012 Interfax News Agency. All Rights Reserved.

(Originally published May 17, 2012, in Russia & CIS Business and Financial Newswire.)