* Pipeline that exploded breached 100 times a year bythieves
* Line deemed safe in internal checks two months beforeblast
* Urban development encroaching on pipeline routes
By Judy Hua and David Stanway
BEIJING, Dec 11 (Reuters) - A Chinese oil pipeline puncturedtwice a week by oil thieves cleared a safety inspection just twomonths before a section of the line exploded and killed 62people in November, sources at the pipeline operator Sinopecsaid.
Initial findings of an investigation showed crude oilleaking from the pipeline into urban storm drains appeared tohave fuelled the explosion, the worst accident at facilitiesowned and operated by top Asian refiner China Petroleum &Chemical Corp (Sinopec).
The case highlights the risks involved as both energypipeline networks and China's cities expand rapidly. Urbandevelopment has engulfed many existing pipelines, providing anopportunity for thieves but also leaving lines dangerously closeto residents, industry and commerce.
The Dongying-Huangdao II pipeline was breached on averagemore than 100 times a year by thieves to siphon off oil, asource at the pipeline subsidiary of Sinopec said.
The pipeline met internal safety standards during a companyinspection completed in September, another Sinopec source said.
They declined to be identified, saying information about theaccident remains sensitive as the authorities conduct theirinvestigations. Sinopec declined to comment.
"The problem of energy thieves and the clash with urbaninfrastructure hasn't been given enough attention," said LinBoqiang, director of the China Centre for Energy Economics atXiamen University in southeast China.
"With the pipeline boom in China, there are problems withsafety management of pipelines."
The blast occurred in the eastern Chinese city of Qingdao inShandong province and the official investigation ordered byBeijing has yet to be completed.
Yang Dongliang, the national director of the StateAdministration of Work Safety, blamed the explosion on a"serious dereliction of duty", China's official Xinhua newsagency reported last month. It did not give any further detailson the cause.
The explosion exposed problems with oil and urban drainagepipeline layouts, pipeline supervision and the handling of oilleaks, Xinhua quoted Yang as saying.
Sinopec warned another local government in the city ofWeifang, also in Shandong, in 2011 and 2012 that rapidurbanisation, including near the Dongying-Huangdao II pipeline,was impeding access and vital repair work on pipelines.
According to documents published on local governmentwebsites, Sinopec sought approval to reroute oil pipelines toreduce safety risks.
Sinopec received no reply from the local government, thesource with Sinopec's pipeline subsidiary said.
"With the expansion of cities, suburban areas have becomedowntown areas with lots of buildings and dense population. Thespaces around pipelines have been occupied, resulting ininability to conduct maintenance," Sinopec said in a publicnotice to Weifang bureau for environmental protection in 2011.
The authorities detained nine people as a result of theexplosions, including seven Sinopec workers and two governmentofficials.
Sinopec has also suspended two executives with directresponsibility for the pipeline, pending an investigation.
China has become the world's largest net importer of oil andconsumption of natural gas is growing rapidly. To supply thevast quantities of energy needed to fuel its economy, China'strunk oil-and-gas pipelines have more than doubled in lengthsince 2004, rising from 40,000 kilometres (25,000 miles) to morethan 100,000 kilometres.
Ageing pipelines in northeast and eastern China built in the1970s may be more vulnerable to accidents, said Jiang Yifang,Vice Director of the Underground Pipeline Committee of ChinaUrban Planning Association.
Urban expansion since 2000 has left pre-existing oil-and-gaspipelines in close proximity to industrial, residential andcommercial areas, Jiang said. The urban pipelines, such as forwater and drainage, have been laid closer than they should havebeen to energy pipelines, he said.
About 250 Chinese cities, or less than half of China'stotal, surveyed their underground pipeline networks between 2000and 2011. It remains common for Chinese cities to have nocentralised record of pipeline routes and layouts, Jiang said.
There is no nationwide database of underground pipelines, headded. Even in cities that have compiled data, the localgovernments may not share the information with the companiesthat need it, he said. Companies seeking to build new pipelinesoften have to gather information themselves.
China passed the Oil and Gas Protection Law in Oct 2010,requiring all new pipeline projects be at a safe distance fromnearby infrastructure, and banning activities that threatenedpipeline safety and operations. Jiang said little had been doneto address problems with older pipelines.
To improve older infrastructure, the government would firsthave to clarify who should bear the cost of rerouting pipelinesand any other required changes to the urban landscape.
"This is a historical debt. The question is who will pay forthe debt and who can make a powerful decision to pay the debt,"said Peng Xiaoyan, top advisor of GSD-Green Symbiosis, a safetymanagement consultancy.
UNPRECEDENTED SAFETY CHECKS
The Chinese government on Friday launched a nationwidesafety probe of all its oil-and-gas pipelines in the wake of theQingdao blast.
The government ordered nationwide industrial safety checksin June. Sinopec itself completed a one-month quality, safety,health and environmental protection (QHSE) check across all itsfacilities in mid-September, its website says.
The company detailed more than 8,000 safety problems rangingfrom oil-and-gas well management through to standards at rentedoil storage facilities.
That was the check that deemed that the Dongying-Huangdao IIpipeline met the company's safety standards, a source familiarwith the situation said.
"Sometime the dangerous period is after the safety checksbecause plant officials and workers are exhausted during thechecks and relax afterwards," Peng said.
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