Underground Rock Cavern Storages Challenges and Project Management
R K Pillai, CEO, Indian Strategic Petroleum Reserves Limited (ISPRL)

With rapid economic growth and the increasing energy requirement of Indian households, the issue of Energy Security has assumed importance. In view of the country's high dependence on imported crude oil, volatility of oil prices in the international market as well as perpetual political instability in some of the major oil exporting nations/regions, the Indian Government appointed Indian Strategic Petroleum Reserves Limited (ISPRL), a special purpose vehicle (SPV), to build and commission strategic storage of crude oil at three locations (Visakhapatnam, Mangalore, and Padur) to ensure uninterrupted supply of crude oil to the country's large and well spread energy supply chain. R K Pillai, CEO, Indian Strategic Petroleum Reserves Limited (ISPRL), details the challenges and geological risks while excavating the underground rock caverns storages. He also describes the magnitude of works, project management, and bidding process in successfully commissioning the underground caverns. Edited excerpts from Pillai's presentation delivered during the Oil & Gas World Expo 2014.

In January 2006, the government approved the financial plan for the strategic reserves to create 5 million metric tonnes (MMT) of crude oil storage. The capacity is almost 75 days of the entire crude oil production of ONGC. This storage was to be in underground rock cavern. The client ISPRL was required to create the largest underground caverns, ever excavated, in the country, without any technical expertises, the necessary land acquisition, environment clearance and supporting infrastructure, within a timeline of six years. The height of the caverns is almost equivalent to a ten story building and the main storage galleries as long as 913 meter.

Risk & Challenges Involved in Underground Works
It is noted that storage in rock caverns is akin to storage of hydrocarbon and porous vessels. Hence there were challenges with respect to containment of products. Unlike aboveground works where it is possible to a large extent to determine the timelines required for different activities, determination of timelines for underground works is not easy because geology can change very rapidly in underground works.

Drilling & blasting method for excavation in underground works can vary depending upon the rock quality. When the rock quality is good, it is possible to excavate large quantum of rock, but when the rock quality is poor, excavation can be painfully slow. This is because the support requirements for stabilising the cavities are different.

This is a major factor in deciding the timelines for underground project and can also be a major issue while deciding the performance of a contractor. A good contractor despite his best effort can end up being slow in excavation when he encounters poor rock condition. Geological risks during construction of underground cavern include wedge failures that can cause fatalities and slow down the progress of the project.

Fault can cause a rock slide, hidden behind the bench. When the bench is excavated because of the weight of the rock, a rock slide can occur, and huge quantities of rock can come crashing down, resulting in accidents and delays.

Water bearing zones or aquifers could result in large water ingress into caverns or shafts, resulting in a slow down of works. Such problems were encountered by ISPRL in cavern projects in Vishakhapatnam. Water jetting out of the joints of the caverns with a speed as high as 17/18 kg per square centimeter can create problems for the progress of the underground works.

Large number of equipment are deployed for excavation of caverns in underground works and handling these equipments like loaders, huge excavators - PC 200 can be risky because these are louvered through shafts.

Magnitude of Works in Caverns
A typical process scheme of crude cavern is included the construction of both underground and aboveground facilities (Figure 1). Aboveground facilities are to be constructed as per standard oil industry practice and layout shall be as per Oil Industry Safety Directorate (OSID) guidelines.

For the underground facilities, the quantum of excavation made by ISPRL is shown in Figure 2.

In Figure 2, the encircled highlights that the total tunneling requirement was approximately 30 km, drilling of borehole of water curtain was to the extent of 76 km and rock excavation was almost 22 million tonnes. The excavated rock debris can fill almost 2.5 million standard 10 ton trucks.

For the underground facilities, the quantum of material used by ISPRL is shown in Figure 3.

Figure 3 shows that the amount of concrete used was around 1,77,000 cubic meter, shotcrete around 94,000 cubic meter, rock bolts around 7,000 tonnes, reinforcement steel around 10,000 tonnes and explosive around 8,300 tonnes.

The aboveground facilities were also a complex task; and packages and systems used by ISPRL in aboveground facility included:
  • In-shaft facilities
  • DCS, Metering skids and instrumentation
  • Hot oil circulation system including boilers & heat exchangers
  • Diesel/Fuel oil storage facilities
  • Flare system
  • Nitrogen system
  • Effluent treatment plant
  • Electrical substation, switchyard and distribution system
  • Standby generator
  • Compressed air supply system
The quantum of work involved in the aboveground facility was equal to a crude unit in a medium size refinery.

Project Management in ISPRL
There were many challenges faced by ISPRL for excavating the underground rock caverns and aboveground facility too. Because ISPRL did not have the expertise for underground and aboveground works, and had to bank upon the oil & gas industry for the expertise. ISPRL appointed Engineers India Ltd (EIL), the leading oil & gas consultant in India, as the project management consultant (PMC). As crude oil storage in unlined rock caverns was a new concept to India, EIL engaged foreign backup consultants (FBC) with the experience in underground rock caverns.

The FBC for the Visakhapatnam site was lead by SWECO of Sweden. For Mangalore, EIL choose Geostock of France and for Padur, EIL did not appoint any back consultant, only spot assistance was provided by SWECO of Sweden.

Cost Reduction Method & Other Innovations
ISPRL took many innovation steps to reduce the cost for building these rock caverns, with insured complete compliance to CVC guidelines. When it came to order placement, ISPRL had to insure that the government did not lose as a result of changes in the geology. Visakhapatnam was the first project to commence and ISPRL got a part of the land from Visakhapatnam Port Trust and a part of the land from Indian Navy. While the total area was approximately 68 acres at Visakhapatnam, land at Mangalore and Padur was yet to be acquired in 2007. ISPRL was not very sure of how the geology could turn out in these locations. The survey result at Visakhapatnam indicated that the geology is good.

At Visakhapatnam, the capacity of cavern was originally planned to be 1 million metric tonnes (MMT) by the Goverment. But ISPRL decided to increase the capacity at Visakhapatnam in order to keeping in mind that even if geological problems crop up at Mangalore or Padur, the capacity would not be less than 5 MMT. In underground works, the marginal cost for additional volume is low because a large investment is required to make for mobilization of equipment & facilities. Hence larger the volume of excavation, lower would be the cost of excavation and this cost gets distributed over the entire volume. It was decided that in case the geology would turn out good at Mangalore or Padur, then the additional volume at Visakhapatnam would be offered to HPCL, which has a refinery at Visakhapatnam.

The geology at Mangalore and Padur latter proved as good and approval was taken from the government to share the additional capacity at Visakhapatnam with HPCL at proportionate cost. This was a win-win situation for ISPRL and HPCL and resulted in cost saving to ISPRL.

In underground works, geology can vary drastically. Cavern or tunnel having poor geology requires additional expenditure in terms of items like, shotcreate, rock bolts, grouting, etc. It is not possible to accurately predict the quantities that can be consumed. Hence ISPRL decided that underground works would be based on an item rate contract. To address the concerns of time and cost, ISPRL decided to introduce a concept called geotechnical reference frames or reference conditions (GRC), which was introduced for the first time in India.

The risk perceived by different contractors can be different, which could lead different in loadings. The basic philosophy of the GRC was to ensure that all bidders can base their estimates on a well-defined set of site conditions with an assurance that equitable compensation will be made if changed conditions are encountered. The GRC was an interval of values, which was determined by ISPRL in consultation with EIL and the back up consultants . If the actual geotechnical conditions encounterd were found to be outside the reference frames set out, the contractor was entitled to compensation in terms of time and cost.

One of the major achievements of ISPRL was successful implementation of reverse auction for determination of the L1 bidder for his contract. While the reverse auction was a tool, which was used successfully in the past by number of organizations, but it was never used for item rate contracts. ISPRL used an innovative method to apply the reverse auction process to item rate contract. ISPRL discussed the matter with EIL and the backup consultants and decided to provide the schedule of rates along with the estimate of quantities to the qualify bidders. And it is noted that all the clearances were taken from CVC prior implementation.

The reverse auction was then proposed to be conducted on the total estimated value derived from the estimated quantities in the rates. The percentage reduction obtained on the start price would then apply to all items equally. Before the reverse auction method could be finalized, it was also necessary to ensure compliance with CVC guidelines, security of the process, avoidance of speculative bidding, etc. The reverse auction in ISPRL resulted in saving approximately 500 crores on the bid start price of all major ISPRL contracts put together.

Visakhapatnam Underground Facilities
The storage at the Visakhapatnam site comprises of five parallel caverns (Figure 4), three 840 meter long and two 320 meter long. Each cavern width is 20 meters with a maximum height of 30 m, which altogether yields a total crude oil storage capacity of 1.33 MMT.

The total tunneling of Visakhapatnam facility is 7 km and hard rock excavation is approx. 19 lakh cubic meters and the borehole drilling for water curtains is approx. 17 km. Physical progress of the project by the end of December 2013 was 97 per cent.

Mangalore Underground Facilities
Mangalore site comprises of four parallel caverns, two of them are 913 m long and two are 873 m long (Figure 5).

The cavern width is 20 m with a maximum height of 31 m, which altogether yields a total crude oil storage capacity of 1.5 MMT. The total tunneling including shafts of Mangalore facility exceeds 9.2 km. Physical progress of the project by the end of December 2013 was 94 percent.

Padur Underground Facilities
Padur is the largest cavern crude reserve of these three strategic reserves in the country, with a total crude oil storage capacity of 2.5 MMT. Padur site comprises 8 parallel caverns, six of them 700 m long and two are 656 m long (Figure 6).

The cavern width is 20 m with a maximum height of 31.40 m. The total tunneling including shafts of Padur facility exceeds 13.7 km and the total excavation is in excess of 36.8 lakh cubic meter. Entire excavation of the Padur site has been completed.