The article discusses the broad approach and procedure for undertaking health, safety and environmental (HSE) due diligence on planned construction of LPG facilities. Generally, a LPG supply chain consists of following components:
Bulk Storage Facilities;
Tanker Truck Fleet, if LPG is to be supplied through land transport;
LPG Distribution Lines, if LPG is to be supplied through pipelines;
Cylinders and Other Appliances.
The context for any HSE due diligence for construction of LPG facilities emerges from the following aspects:
Socio-economic conditions in country/ region where LPG facilities are to be developed and major demand centers in the region for LPG;
Availability and quality of existing LPG facilities for storage, transportation and distribution in the region;
HSE Regulatory framework of the country concerned; and
Specific requirements/ objectives of the due diligence.
2. SCOPE AND METHOD FOR DUE DILIGENCE
The scope of work generally considered as part of HSE due diligence is depicted in the Figure 1 and discussed in subsequent pages.
Fig. 1 - Scope of Work for Environmental Due Diligence
2.1 Construction Phase
2.1.1 Baseline Environmental Setup
The macro level baseline environmental setting of the country followed by micro level assessment for proposed LPG facilities is undertaken. Major aspects to be studied include physical and biological environment like topography, land use pattern, soils and geological features, climate and meteorological parameters (rainfall, frost, temperature, snowfall, wind etc.), water resources, environmental quality (i.e. air, water, and noise), protected areas (i.e. wildlife sanctuaries, national parks, bio-reserve zones, historical monuments etc.), flora and fauna in the region.
2.1.2 Baseline Socio-economic Conditions
Information on socio-economic conditions of the country with specific focus on proposed LPG facilities and demand centers should be collected from various secondary sources and analyzed. Particularly data on demographic features like population, density, sex ratio, literacy rate, occupation, and major economic sectors like agriculture, industries, mineral resources, energy, culture, tourism is collected and analyzed.
2.1.3 Assessment of Impacts due to Construction of Proposed Facilities
Since LPG facilities include construction of bulk storage facilities which include storage tanks and associated amenities, disturbance to existing environmental conditions are likely. Major impacts associated with construction of LPG facilities include generation of dust, gaseous emissions (SO2, NOx, CO), noise pollution due to operation of construction machineries, drilling and vehicles’ movement, soil erosion, water pollution due to deposition of dust and contamination of nearby water bodies; waste generation from construction activities, impacts on flora due to clearing of ground, impacts on health of workers etc. Such impacts due to construction of LPG facility should be identified as direct and indirect impacts, positive and negative impacts, temporary and permanent impacts, short term and long term impacts. The impacts should be assessed on various environmental parameters which include physical environment, biological environment and socio-economic environment, and should be quantified wherever possible using available techniques i.e. Matrix Method, Delphi Techniques, Overlay method etc.
2.1.4 Environmental Management Measures
Based on the impacts identified above and to overcome the negative impacts, suitable mitigation measures like adoption of environmentally sound construction practices, maintenance of construction equipments and vehicles, sprinkling of water to control dust emissions, provision for adequate health and safety measures, monitoring requirements etc. should be proposed.
The environmental management measures to be included in the construction contract should be identified in the light of likely adverse impacts and due diligence should be undertaken by reviewing the contract documents of the company to ensure that adequate measures are incorporated in contract documents to manage the adverse environmental impacts due to construction activities.
2.2 Operation Phase
2.2.1 Positive Environmental Impacts
In developing countries, a majority of population is living in rural areas and using traditional fuels i.e. firewood, kerosene, and cow dung at a primary fuel for domestic purposes. The use of these fuels lead to environmental degradation in number of ways:
Increased pressure on existing resources i.e. trees, forests etc.
Emissions of smoke and gases (CO, SO2) from burning of wood, kerosene, cow dung;
Health impacts on users due to indoor air pollution.
Thus, the major positive long term impact due to use of LPG by replacing the conventional fuels for domestic and other purposes are reduction in indoor air pollution and saving the trees.
In developing countries, indoor air pollution is a prime cause of child and adult death. The air pollution arising from the use of solid fuels such as charcoal, dung and wood — often in cramped enclosed spaces — is deadly. A report released on 4th May 2006 by World Health Organization says that up to 1.5mn lives could be saved every year if LPG and other cleaner fuels were made more available to households in developing countries .
The positive environmental impacts of proposed LPG Project should be assessed and quantified within the framework depicted in Figure 2. At one hand, the resulting reduction if indoor air pollution should be quantified as follows:
The estimates of base year as well as projected demand for LPG in the subsequent years should be considered to get an idea about the pace of transition of population on the energy ladder leading to increased consumption of LPG;
An estimate of the quantity of traditional alternate fuels, like wood, being substituted by LPG should be undertaken by using unit energy equivalent values of two categories of fuels;
The quantity of various gaseous emissions should be quantified under two scenarios i.e. without use of LPG and with use of LPG;
The difference between quanta of emissions under two scenarios will give the quantum of indoor pollution reduction due to use of LPG.
On the other hand, the reduction in quantity of fuel wood demanded should form the basis for estimating the number of trees saved from cutting and thus resulting reduction in pace of deforestation.
Fig. 2 - Environmental Benefits due to Use of LPG
2.2.2 Negative Environmental Impacts
The negative impacts associated with operation of LPG facilities include waste (hazardous materials) generation form operation facilities, increased emission of exhaust gases from transport of LPG to major centres by road, health hazards due to leakage of gas from tanks, containers, cylinders etc., explosions, accidents during transfer and transportation and handling, increase in atmosphere concentration of hydrocarbon, smoke and gases emissions due to fire & explosions. If the storage facilities are underground and there is gas leakage, it may lead to formation of leachate causing ground water and soil contaminations.
A comprehensive assessment for the likely adverse environmental impacts should be undertaken in the light of activities associated with operations of the proposed LPG facilities and a plan covering the detailed strategies for mitigating the likely impacts due to the operation of LPG facilities should be recommended. The existing capacity of company in addressing and implementing these impacts should be assessed and possible institutional strengthening measures like induction of qualified staff and training needs should be worked.
2.3 Assessment of Safety Aspects of LPG Storage and Distribution
2.3.1 Review of Existing Laws and Regulatory Frameworks
This component of study should be based on three interrelated activities:
The existing HSE regulatory framework of the country should be reviewed in the context of proposed LPG project;
In case the existing regulatory framework with respect to environmentally safe handling of LPG is weak in the country specific, a review of regulatory best practices being followed in some other countries should be undertaken. On the basis of such review study industry best practices should be enlisted. The countries and their regulations to be studied are decided considering the stage of socio-economic development and location/climatic conditions in country where LPG facilities are proposed to be constructed in order to draw some logical parallels for benchmarking and suggesting an optimum regulatory framework;
A comparison of enlisted industry best practices and the existing system in the country will identify the gaps to be addressed (through formulation of law, code of practice and public education etc.) for ensuring environment friendly and safe LPG business (which includes storage, transfer, transportation and distribution) in the country.
2.3.2 Selection of Site
Generally, the site selection criteria for construction of LPG facilities consider factors like:
Property lines i.e. existence of major properties at the proposed site and in its vicinity;
Location of human settlements at the site and its vicinity;
Distance of the proposed facility from railway line and road network;
Location of other underground utilities like pipelines and OFCs etc.;
Locations of known potential hazards;
Route of overhead HT line;
Locations of Sites of Special Scientific Interest (SSSI's) and Sites of Biological Importance (SBI's), if any, and their distance from the site for proposed LPG facility and
Other factors like unwillingness of local community etc.
The safety of the proposed sites for construction of LPG facilities should be reviewed and evaluated in the light of above given criteria and alternate site should be suggested, if required.
2.3.3 Design Standards
The proposed design of LPG facilities should be reviewed in the light of Code of Practice (CoP) published by Liquid Petroleum Gas Association (LPGA)/ Liquefied Petroleum Gas Industry Technical Association (LPG ITA) and Guidance Notes published by Health and Safety Executive for the storage facilities, equipments, installation, transfer, transport, distribution and associated health and safety standards.
Such a review study should aim at ensuring the suitability of proposed design for the conditions in the country from health and safety perspective and should focus on the standards and specifications followed with particular attention to storage tanks / containers size, material to be used, valves and capacity gauges, dispensers, accessories, piping, transfer equipments, gas utilization equipments, appliances, associated pipe work, containers, cylinders and regulators. Suitable recommendations should be provided, if required.
2.3.4 LPG Cylinder Standards
LPG cylinders and valves of diverse specifications are available in the market. The suitability of specifications (size, length, weight, capacity, built etc.) of particular cylinders and valves being used should be assessed and suitable recommendations should be made, as required from HSE perspective. The following aspects should be thoroughly studied:
Need and structure of ‘Code of Practice for Use of LPG cylinders’;
Assessing the optimum design of cylinder and valves considering the industry best practices and the condition in the country;
Assessment for the proposed structure of codes and practices on the storage and handling of LPG, review of the codes and standards (HSE specific) to be adopted by the company;
Reviewing the status of cylinder testing facilities;
The need and provision of approved fillers;
Whether dedicated suppliers of cylinders are in place?
Whether added services/items are being made available?
Education on safe usage of LPG;
Whether ‘Guide to Gas Cylinder’ document is available?
Regulations on the type and specifications of LPG heaters to be used and connection system;
Proper maintenance and servicing; and
Filling Station specific controls.
2.3.5 Assessment of Risks
LPG is hydrocarbon that typically contains three to four carbon atoms. Due to its highly flammable nature (flammability range for propane is 2 to 11 percent) it is categorized as a hazardous substance. It is 50 percent heavier than air and stay close to ground only requiring more air for complete combustion.
The safe delivery, containment and use of this gas are paramount to safety. Following are major safety aspects:
The safety and operational considerations associated with Bulk Tanks are shown in Figure 3 below and safety and operational considerations associated with bulk storage, transportation, refilling and retail distribution is shown in Figure 4. The aspects depicted in the figures should be assessed and appropriate recommendations on emergency response management should be provided in the light of relevant codes of practices and regulations.
Fig. 3 - Safety and Operational Considerations associated with LPG Bulk Tanks
Fig. 4 - Safety and Operational Considerations associated with LPG Network Operation
The findings of the above due diligence exercise should be documented in a concise form to represent the overview of the entire due diligence exercise. The contents of document should follow the specific format (if available) and should cover general description of projects and details of associated activities, extent of scope under the project, regulatory framework to be followed under which the project will be executed, description of the environmental setting of the region highlighting the focused attention on major issues, the methodology adopted for the assessment and prediction of likely impacts and recommending suitable management measures, institutional and capacity building needs, the framework for environmental management during the operation of the facilities. The health and safety risks associated with the construction and operation of proposed facility should be assessed in depth and suitable emergency response management plan should be developed.
 Reported emission reduction by replacing use of natural gas as fuel by LPG will be 11 % to 13% less carbon dioxide, 15% to 80% less oxides of nitrogen, 20% to 40% less hydrocarbons and 30% to 35% less carbon monoxide. Similarly, replacing the use of diesel by LPG results in reduction in emissions of particulates by 80% to 95%, ultra fine particles by 99% to 99.8% and that of oxides of nitrogen by 90% to 99%. The replacement of wood and cow dung as a primary fuel by LPG in households will result in significant reduction in particulate, smoke and CO.
 Major uses of LPG are Space Heating, Central Heating, Air Conditioners, Hot Water Supply, Refrigeration, Cooking and Lighting etc.
 LPG World, Volume XII, 10, 17 May 2006.
 Various studies conducted on the LPG related misgivings identify the causes of incidents like faulty regulators and adaptors, over filling, loose adaptors, leaking cylinders, closeness of heaters to cylinder, tipping of heater, faulty parts and lack of maintenance. Such causes of incidents may be broadly categorized under four heads as follows:
1. Faults in Connector System: The studies indicate that about half of the incidents could be attributed to faults in the connection systems between the cylinder and the appliance.
2. Misuse of Equipment: Misuse of heater appliances by having them too close to combustibles and inadequate maintenance leads to accidents
3. Cylinder Overfill
4. Other undetermined causes.
 This option requires a specialist company who owns and provides all cylinders and valves, and who also fills the cylinders preferably on an automated filling system. This option would be similar to the situation in UK, Ireland and India where ownership of cylinders and valves stays with specialist provider, and customers swap empty cylinders for filled ones. The advantage of this scheme is that the filling operation would be closely controlled using approved fillers, and filled cylinders would have damage free valves because of the specialist’s warranty provisions.
 Codes of Practice (CoPs) approved by the Health and Safety Commission (HSC) under the Health and Safety at Work Act (HSWA) 1974, voluntary CoPs developed by the LPGA in conjunction with the HSE.