How can we justify having a $8 million component sitting on the shelf?

This was the question asked by some Apache manager when asked to buy a replacement valve, which had been identified as having design problems, in case of an emergency.

Apache is the US company operating the Varanus gas facility which suffered an explosion June 3rd, instantly depriving Western Australia of about 30% of its energy supply. I guess in hindsight you can justify an $8 million component, previously identified as suspect, waiting on standby, when its failure leads to the loss of hundreds of millions of dollars. But that would require critical thinking and less faith in the power of money to instantly provide substitutable materials.

From The Age

Police warned Varanus plant: report

West Australian police repeatedly warned the operator of the Varanus Island gas plant that it needed a contingency plan to ensure it could operate in the event of a disaster, it has been reported.

...US-based Apache Energy had first been warned in 1993 that it needed a contingency plan for a terrorist attack or industrial disaster.

The gas shortage, which could affect WA supplies for another six months, has already cost business hundreds of millions of US dollars and has led to the laying-off or sacking of hundreds of workers.

He said Apache had been told of a potential problem with a valve similar to the one the company is now trying to replace as a result of the explosion.

When told to buy a duplicate valve, Apache had commented "how can we justify having a $8 million component sitting on the shelf?"

"I got the impression they were not taking the need for contingencies too seriously," Mr Parkinson said.

"They were more worried about economics.

"What has happened now is a disgrace. It should have been prevented."

A related story in The Australian demonstrates the potential weakness of large centralised power facilities.

Coal-fired power station failed days before gas crisis
Verve Energy has admitted its flagship Collie A coal-fired power station shattered its turbines less than a week before the June 3 pipeline explosion at Apache Energy's gas processing facility knocked out 30 per cent of the state's gas supply.

The loss of the Collie power station at the end of last month increased the state's already heavy dependence on gas in the days leading up to the explosion.

The Longford gas explosion in Victoria in 1998 has been raised as an example that should have prompted greater planning by gas-dependent states.

Murdoch University School of Sustainability head Brad Pettitt said: "We obviously didn't take the implications of that (disaster) seriously."

Dr Pettitt said the gas crisis highlighted Western Australia's unsustainable and wrong mix of energy sources. In the wake of the explosion, he is one of a number of experts across the state who have called for greater commitment and funding for more diverse and decentralised energy sources for Western Australia.

"We need a broader range of decentralised energy sources," Dr Pettitt said.

"Then you reduce your carbon footprint and add to energy security. I think that we really have all of our eggs in too few baskets."

When operated privately, the evidence suggests that some operators prefer to live on the edge, "saving" precious money. We have to get away from the idea that money is "the thing"; money is only the system (and a useful one) for getting the things that we need and want. The manager above, in thinking that the company made a great saving of 8 million has broken the mechanism that provided the captial flow. Perhaps they have insurance?

The other issue that these two stories (and others) illustrate is the strain that can be placed on other infrastructure by the failure of one large facility. Or the amplifying effect of two (though improbable) failures close together.

The Auckland power failure of 1998 is another example where incorrect installation and poor maintenance led to a cascading sequence of failures in key infrastructure that led to power failure in that city for an extended period of time.

Decentralised systems like solar may not have all the answers, but it just might keep the lights on at home.

Meanwhile;

No review of solar rebate means test
The federal government will not review its decision to means test for the solar panel rebate, Treasurer Wayne Swan says.

"There is a limit on the amount that the government can spend.

"We've got an inflation situation, we've taken some tough decisions. That was one of them, but it's a decision that is still seeing assistance go to people who need it."

And yet we still have a massive Government surplus...

Spending on other things (like roads!) doesn't appear to be slowing...

And we wouldn't want a sudden splurge in solar sales to challenge fuel prices as THE PRIME DRIVER of inflation. Anyway, I thought it was bananas driving inflation!

Lets hope some of these people actually get a clue before a real crisis happens, becuase the evidence suggests that they can't think outside their rhetorical comfort zone.