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The Cost of Corrosion

A detailed report taking a look at the annual
damage and incredible costs caused by corrosion

Do you know the average number of workovers performed on oil and gas wells are due to corrosion?

Effects of Corrosion on Industry

Corrosion is Costly Business

As you may already know, corrosion remains a huge problem in all sectors operating in a highly aqueous environment. Oil and gas carry highly impure substances with them such as salt water and hydrogen sulfide which are highly corrosive. Prolonged extraction of these components could make internal surfaces lose their mechanical properties like force and pliability. Workovers done due to equipment failure are not only disruptive but also costly. After a thorough pursuit, I found that an average of 0.18 corrosion related workovers per well is performed every year, this is according to a report published by DNV GL Group.


Corrosion erodes profit

According to a report published on DNV GLGroup website, the average failure rate is 0.6 failures per year per well, where 30% is related to corrosion.

Corrosion costs the world economy
$2.2 trillion a year.

In 2013, Breaking Media Inc. has cited World Corrosion Organization as saying that corrosion costs the world economy a total of $2.2 trillion or about 3% of the world's GDP. According to a report published by DNV GL Group in 1999, corrosion related damages have caused the oil and gas production industry in the US an average annual cost of $1.372 billion. They've broken down this cost into 42.9% ($589 million) in surface pipeline and facility costs, 33.7% ($463 million) in downhole tubing expenses, and 23.3% ($320 million) in capital expenditures related to corrosion. Breaking Media Inc. also reported, “As operating environments in these industries become increasingly challenging as a result of higher temperatures, higher pressures, higher corrosion and higher wear, the demand is increasing for materials that can better withstand these environments. Internal research shows that of the 225 oil and gas fields now being planned and developed across the globe, 158 are highly corrosive.”


Be proactive towards corrosion damage

To understand the total number of workovers due to corrosion, we need to take a closer look at costs involved in corrosion-related failures, for this event primarily triggers a workover. According to a report published on DNV GL Group website, the average failure rate is 0.6 failures per year per well, where 30% is related to corrosion. They've added that the average cost of a failed well is $3,000. These numbers would mean that there are 0.18 corrosion-related failures per year per well denoting that a total of $540 is spent on every oil and gas well in the US due to failures caused by corrosion. If there's a total of 600,679 producing oil wells (Source: World Oil) and 514,786 producing gas wells (Source: US Energy Information Administration) in the US, it would mean that a total of $602.4 million is spent in repairing oil and gas wells due to corrosion.

Interestingly, a report published by Oilfield Review has pointed out that due to the almost impossible nature of corrosion prevention, experts are now leading towards the view that regulating the corrosion rate might be a more economical and feasible remedy. In the recent years, corrosion engineers have been more proactive in assessing financial damages caused by this adversary, and furthermore, investigating on various approaches that could reduce the occurrence of this problem.

pH stabilization technique cannot be used in
oil pipelines or gas condensate

A quick growing industry out of necessity

In one of the issues published by Norway's ‘The Oil and Gas Review’, they've discussed various interventions that could help control internal corrosion in oil and gas pipelines. It includes prediction of internal corrosion in pipelines, the use of the pH stabilization technique, and the use of corrosion inhibitors. According to them, although a number of prediction models directed towards carbon dioxide corrosion have been set into motion the past years, there's still a lot of room for improvement regarding its accuracy. Due to the various uncertainties involving this model, they believe that the pH stabilization technique, a procedure that has proved efficient on various gas condensate pipelines might be a better option. With this model, a significant reduction in the corrosion rate has been observed which was due to the enhancement of the protective corrosion films' precipitative capacity on the steel surface. However, because pH stabilization technique cannot be used in oil pipelines or gas condensate pipelines due to the considerable amount of formation water being delivered, a more suitable solution will be the use of corrosion control method administered through the injection of corrosion inhibitors.

It is clear that experts recognize the gravity of damages produced by this natural process and are then actively exploring various approaches that could alleviate the costs associated with this problem. In a recent article by Industry Today UK, they've discussed the foreseen growth of the oil and gas pipeline prevention market from 2015 to 2023. According to them, “The pipeline corrosion can ultimately result in the leakage of oil and gas. Thus, in order to ensure the smooth and uninterrupted flow of oil and gas, it is imperative for the operators to utilize the oil and gas pipeline corrosion services.” They believe that companies offering preventive measures making use of non-corrosive material will have a dramatic effect on this costly challenge to the industry.

Words by Fred Nilson For more info visit

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