A digger operator looking for swamp kauri ruptured the pipeline that cut fuel supplies from Marsden Pt Oil Refinery to Auckland, although the operator denied he had caused the damage.

The findings are in a Government Inquiry report into the September 2017 pipeline outage and the resilience of the fuel supply to Auckland that was ordered after the pipe rupture, on private land several kilometres south of the refinery, caused major problems.

Refining NZ, the owner and operator of the Marsden Pt refinery, has welcomed the report with chief executive Mike Fuge saying there are learnings around improving the resilience of Auckland's fuel supply into the future. The company looks forward to working with industry to implement those learnings for the benefit of Aucklanders and all New Zealanders, he said.

The report found Auckland's fuel infrastructure needs immediate investment to ensure there isn't complete disruption to Auckland Airport if something goes wrong with the supply line.

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The report said the damage to the pipeline, which provides the main supply of petrol, diesel and jet fuel for Auckland, "must have occurred" by a contractor looking for kauri logs on the site three years earlier.

It found a 16-tonne digger was working on the property between August 26 and 28, 2014, a few months after Refining NZ had carried out a technical inspection of the whole pipeline. Despite the landowner advising the contractor not to dig in the back paddock that contained the pipeline, a neighbour saw the digger working there.

"Although the contractor denied it, we were satisfied that he struck the pipeline with the bucket of the digger and damaged it," the report said.

"The contractor did not report the damage to anyone. The landowner was not aware that the pipe had been exposed and struck."

The pipe from Marsden Pt Oil Refinery to Auckland that was ruptured, probably by a digger looking for swamp kauri, causing major disruption and a government inquiry.
The pipe from Marsden Pt Oil Refinery to Auckland that was ruptured, probably by a digger looking for swamp kauri, causing major disruption and a government inquiry.

The report said a digger operated by a "contractor" suspected of damaging the fuel pipeline in 2014, was owned by Auckland company Oravida Kauri, which was renamed Kauri Ruakaka the following year.

Former Engineering NZ president Elena Trout, who headed the inquiry, said it understood the contractor sold swamp kauri to Oravida when he found them and was not charged by Oravida for the digger.

But he was a "totally independent contractor" and as far as the inquiry team was aware, he did not have a relationship with the company, she said.

The report said it's lucky the rupture happened in a location that was easy to access and wasn't in a highly populated area or the consequences could have been a lot worse.

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On September 14, 2017, the pipeline ruptured where it had been damaged and jet fuel escaped into several properties.

The rupture stopped the transmission of fuels into Auckland for 10 days and airlines had to limit jet fuel to 30 per cent of their usual usage, which caused significant disruption to flights to and from Auckland. The inquiry found Auckland's jet fuel supply was currently not sufficiently resilient.

"With only a single supply chain for jet fuel, a single point of failure at any point along that chain can cause a complete disruption of supply to Auckland Airport.

"There is limited storage near the airport to provide cover for an outage and the number of days of cover that storage provides is decreasing as the daily demand for jet fuel grows. This means our vulnerability is increasing."

Parts of the supply chain would not be able to meet basic demand in a few years' time, let alone recover from, or provide resilience, during any significant outage.

The report also called for a new National Fuel Emergency Plan, and for the Ministry of Business, Innovation and Employment to take a leadership role.

Current fuel supply chain infrastructure was largely owned or controlled by the three major fuel companies: BP, Mobil and Z Energy. The rupture exposed major holes in this infrastructure.

Fuge said the Refinery concurs with the inquiry's comments about current fuel storage at the Auckland end of the pipeline, especially the urgent need to build jet fuel resilience at Auckland airport.

"Among its findings the inquiry concluded that Refining NZ maintained and operated the RAP properly and in keeping with all legal requirements and standard industry practice.

"We also take pride in the Inquiry's findings around the high standard of the response of our staff and contractors to the pipeline rupture," he said.

Fuge acknowledged the inquiry's confirmation that the pipeline had been damaged by a digger that should not have been working over the pipeline and that the damage had not been reported.

"This underlines the fact that further legislative regulation is needed to protect the pipeline and other essential infrastructure."

The Refinery also concurs with the Inquiry's comments around current fuel storage at the Auckland end of the pipeline, especially the urgent need to build jet fuel resilience at Auckland airport.

"We are pleased that the inquiry has noted that Refining NZ is working to make timely investment decisions and that we have a clear goal of having new infrastructure in place shortly before it is needed to meet demand, rather than just in time or too late," Fuge said.