GOVERNANCE AND PIPELINE CONSTRUCTION - THE STORY- Keystone pipeline shut down

GOVERNANCE AND PIPELINE CONSTRUCTION - THE STORY:
http://www.omaha.com/article/20110604/NEWS01/706049881
Published Saturday June 4, 2011- Keystone pipeline shut down

By Martha Stoddard -WORLD-HERALD BUREAU -LINCOLN — Federal officials on Friday barred TransCanada from operating its existing crude oil pipeline until safety concerns can be addressed. The U.S. Department of Transportation issued the order following two recent leaks at pumping stations along the Keystone pipeline. The order took effect immediately and affects the existing 1,300-mile Keystone pipeline, which crosses eastern Nebraska. It also comes as the company is seeking permission to build a second pipeline through the state. The existing pipeline carries oil from Canada through North Dakota, South Dakota and Nebraska before splitting. One section travels through Missouri to Illinois and the other goes through Kansas to Oklahoma. In the order, Jeffrey Wiese, associate administrator for pipeline safety, wrote that he bypassed the usual notice and hearing requirements because of the need for rapid action.“Continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment,” he concluded……………Ken Winston, a Lincoln attorney representing the Nebraska Sierra Club, said the order calls into question promises TransCanada has made about its ability to operate a pipeline properly. “It reflects poorly on their ability to build a safe pipeline and on their credibility,” he said. The Keystone pipeline has had at least 11 leaks since pumping began in June 2010. The Kansas leak amounted to about 420 gallons of crude oil, according to the federal order. Initial estimates were higher. On May 7, about 16,800 gallons of oil leaked at a North Dakota pumping station. The federal order also noted a smaller May 25 leak at another pumping station. Cunha said he understands why people might begin to question the number of leaks…………. The order requires TransCanada to take 14 steps, including making immediate repairs, ensuring proper staffing and submitting a written restart plan, before resuming the flow of crude oil through the pipeline. The order also calls for testing of the equipment, a review of the pipeline system for similar problems and a long-term plan to ensure safe operation of the pipeline.

What may have gone wrong - PROCESSES/POLICY/PROCEDURE?
1) The wrong people in the right places (KNOWLEDGE &VALUES):
Could it be that:
a. Inadequate, arrogant, and inexperienced people (for the most part) were brought together as teams. At most companies it is not what you know, but who you know that gets you a management job. The lack experience for many middle management personnel on projects of this magnitude may make the average employee squirm.
b. As these projects are billion dollar, herculean projects many phases are subcontracted could it be that:
i) inexperience engineers and other professionals are ill equipped ‘to ask the right questions’ of subcontractors;
ii) inexperience engineers and other professionals do not know what ‘actuals’ deviated from engineering specs; contractors are therefore, able to interrupt engineering specs to suit themselves;
iii) could it be that subcontractors are able to bamboozle; and procrastinate phases of these projects without decisive action being taken by management and cost over runs are the name of the game.
c. Middle and top management may be ill equipped with the knowledge necessary to ensure that the job will be done right, not even the first time, but, effectively at the end of the project, subsequently we have pipeline leaks -as noted above- “The Keystone pipeline has had at least 11 leaks since pumping began in June 2010. The Kansas leak amounted to about 420 gallons of crude oil, according to the federal order. Initial estimates were higher. On May 7, about 16,800 gallons of oil leaked at a North Dakota pumping station. The federal order also noted a smaller May 25 leak at another pumping station.”
2) COMMUNICATION
a) The essence of a fluid and fluent transition for every phase of a project of any size is communication. Communication is ever important in a project of this magnitude. Yet, communication between and among the numerous, contractors, subcontractors, affiliates, governmental bodies both Canadian and American may have been compromised or at best, abysmal.

As noted in the federal order a safe and well done project starts with:

Ensuring proper staffing – the right people to do the job
Yet this is what has been ordered after the fact, this organization threw a celebratory party in 2009 in commemoration of building the longest, safest pipeline in the history of mankind

It will be interesting to see the fall out and lawsuits that ensue as a result of what has happened and is happening on and along TransCanada Keystone pipeline.

I wonder if this is a new organizational strategy by companies - to defer blame – the scenario goes like this - parent company hires slew of other companies for:

i) Project Manage PROCURMENT & CONSTRUCT
ii) Facilities Engineering
iii) Pipeline Engineering – Canada
iv) Pipeline Engineering - USA
v) survey and design engineering;
vi) pipe offloading and stockpiling etc; etc; etc……………
these companies subcontract to contractors who subcontract ………….to subcontractors etc….etc……..and the list is endless, in the end there can be no legal action taken as there is no organization that can be held responsible, and the cycle begins again………..
When PROCESSES/POLICY/PROCEDURE/KNOWLEDGEABLE PERSONNEL/COMMUNICATION go awry, blame gets stuck on the best scapegoat and GOVERNANCE, well it is just a pretty word that BOARDS, CEO’s, ACCOUNTANTS and LAWYERS use to feel empowered when they use the word.
By using Dr. Rookmin Maharaj GOVERNANCE MODEL there is a significant probability that the problems encountered would have been alleviated. Essentially, “The order requires TransCanada to take 14 steps, including making immediate repairs, ensuring proper staffing and submitting a written restart plan, before resuming the flow of crude oil through the pipeline. The order also calls for testing of the equipment, a review of the pipeline system for similar problems and a long-term plan to ensure safe operation of the pipeline”.
How much do you think this ‘order’ costs an organization?