An Assessment of Societal Risk and the Cost of Saving Lives

During the period of 1994-2013, the Pipeline and Hazardous Materials and Safety Administration (PHMSA) collected data on natural gas pipeline accidents considered significant. The resulting fatalities from gas pipelines within the U.S. account for 363 lives lost. There have also been 1,392 injuries and more than $800 billion in property damages.

In 2021, an assessment was carried out to define the “true cost of societal risk” on a pipeline carrying liquid hydrocarbons. Four alternatives to reduce the cost of societal risk were analyzed:

– Increased aerial monitoring over the pipeline
– Mechanical protection with a concrete slab
– Mechanical protection with a polyethylene plate
– Pipeline realignment

Engineering Analysis for Risk Mitigation

The quantitative risk assessment (QRA) of the Societal Risk for all the proposed alternatives satisfied the acceptance criteria in reducing risk. The construction costs (millions U.S. Dollars) for each alternative were:

All the proposed alternatives reduced the levels of societal risk to acceptable values. The next step was a cost-benefit analysis to determine the optimal ratio between risk reduction and capital investment and a maximum limit of 10 was applied. Any investment greater than 10 times the benefit obtained was considered disproportionate.

Mitigation cost

Mitigation cost is the direct cost of intervention. It includes all construction expenses that a contractor may need regarding materials and all activities involved in repair and/or modification of the asset.

Cost per casualty averted

Cost per casualty averted is the mathematical relationship between mitigation cost and the multiplication of risk reduction (obtained from the QRA assessment) and design life.)

Disproportionate factor

The disproportionate factor is the mathematical relationship between the economic cost of mitigation involving risk reduction (i.e., cost per casualty averted) and the reference cost of compensation which a pipeline operator may incur if a casualty took place.

The cost-benefit analysis of the QRA showed that:

  1. The realignment alternative, despite having the lowest level of societal risk, presents a high level of investment, which makes it disproportionate.
  2. The increase in aerial monitoring presented the worst ratio between investment and risk mitigation, as can be seen by the highest value of the disproportionate factor.
  3. Although the level of risk of mechanical protection by the installation of concrete slabs or polyethylene plates is the same, it is the latter that guarantees the optimal ratio between risk reduction and capital investment, due to its low cost, design life and most efficient transportation and installation. This can be seen in the minimum value of the relationship between cost and benefit, which is equal to 5.

Therefore, the optimal solution to reduce societal risk is to cover a pipeline with robust polyethylene plates.

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