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Upstart Pipeline Company Staking Its Future on Stopping Heavy Oil Corrosion

The oil industry knows heavy oil is more corrosive than sweet crude, and MesoCoat says it has pipe-coating technology to solve the problem.

Apr 8, 2013
MesoCoat, Inc. breaks ground on its clad pipe manufacturing facility in Euclid,

An upstart company in Ohio is aiming to disrupt the oil pipeline business with new technology that resists corrosion far more effectively than conventional pipe.

MesoCoat, Inc. says its technology will become especially crucial as global oil production shifts to more sulfurous and heavier fuels like tar sands crude. It claims it can make pipelines safer from potential leaks and save oil companies hundreds of millions of dollars by reducing the frequency of replacing corroded pipes.

At just six years old, MesoCoat is already attracting interest from major oil companies and research centers in Alberta, home of Canada's vast oil sands resources. It has won five R&D 100 awards for innovation, plus an award from the National Institute of Standards and Technology, a U.S. agency. In the fall, it took the top spot in The Wall Street Journal's Technology Innovations Awards for manufacturing.

The global attention is helping MesoCoat leap from startup to commercial company. But for Canada's tar sands industry, the attention appears to be coming at a less-than-opportune time, as it lobbies hard for approval of the Alberta-to-Texas Keystone XL pipeline.

One of the main objections to the Keystone is the possibility that the tar sands oil it would carry is more corrosive to pipelines than ordinary crudes, with implications for oil spills. That concern deepened last week after an ExxonMobil pipeline carrying bitumen ruptured and leaked at least 200,000 gallons of the tarry crude in an Arkansas neighborhood.

Go to Our News Center for Full & Expert Coverage of Exxon's Arkansas Oil Spill

Because bitumen is too thick to flow through pipelines, it is blended with natural gas liquids and turned into diluted bitumen, or dilbit. Pipelines that carry dilbit operate at higher pressure and heat than those carrying conventional oil.

Environmental and safety groups contend that far too little scientific evaluation has been done to be sure that pipes designed for regular oil are safe for dilbit. "There hasn't been much in the way of basic science that addresses the question of corrosion," said Anthony Swift, an attorney at the Natural Resources Defense Council (NRDC) who studies pipeline safety issues.

Oil sands companies, and the Alberta and Canadian governments, say dilbit acts similarly to other crude inside a pipeline. In a backgrounder on the topic sent to InsideClimate News, the American Petroleum Institute, a trade association, said dilbit is "no more corrosive in pipelines than other heavy crude oils" transported by U.S. pipelines. A recent laboratory study by Natural Resources Canada, a government agency, tested the corrosivity of four types of dilbit—out of the dozens that exist—and seven other heavy oils. It found the dilbit samples to be among the least corrosive. The study didn't examine how any of the oils respond to higher temperatures. 

In the United States, a National Academies of Science committee is studying dilbit corrosion and will release its findings this summer. But the committee doesn't have access to proprietary industry data that is considered the most thorough and will base its report on existing research.

Ross Kozarsky, a senior analyst at Lux Research Inc., a research and advisory firm that focuses on emerging technologies, says several dozen startups and university labs are competing with global manufacturing companies in search of technologies to reduce corrosion of metals. So far, MesoCoat is one of the leaders of the upstart pack, he said.  

Whoever ends up developing the winning technologies could inherit a huge market in the oil industry.

According to estimates by the National Association of Corrosion Engineers, a global trade group for the corrosion control industry, repairing or replacing corroded pipes costs oil and gas companies more than $7 billion a year. When the costs of lost productivity and revenues—plus cleanup costs from spills or leaks—are factored in, the figure probably doubles, said Kevin Garrity, the association’s recent past president.

Those costs are expected to rise as the global oil market shifts to sour and heavier oils, which have higher sulfur contents and more corrosive properties than lighter, sweeter crudes, according to MesoCoat. At the same time, oil companies are using more intensive extraction techniques that involve salt water and acidic gases, including deep-sea drilling and enhanced recovery.

Robert Miller, CEO of Abakan, Inc., which owns a controlling stake in MesoCoat, anticipates strong demand in the future for corrosion-resistant products in long-distance downstream pipelines like the Keystone.

Dilbit "is more corrosive than sweet oil," Miller said in an interview, "although they strongly deny that, of course, in Canada."

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