CountryMark invests in a new 17-mile pipeline that connects to the Patoka, Ill., crude oil hub to expand its capability and realize new opportunities.
By Janice Hoppe-Spiers, Knighthouse Media
CountryMark is a fully integrated oil and gas cooperative responsible for providing premium diesel and top tier gasoline to its member owners throughout the year. To ensure it continues to provide a steady, high-quality supply, the company invested $40 million to install 17 miles of new pipeline to the Patoka, Ill.-based crude oil hub, as well as make existing asset modifications, connecting it to the outside world for additional sources of crude oil.
“We are farmer-owned and our flagship product is a premium diesel fuel that we supply throughout the year, specifically during planting and harvesting season,” says Ash Titzer, manager of crude gathering and transportation. “We supply 70 percent of the diesel fuel that is used in the agricultural sector in Indiana and supply 50 percent of school buses in the state.”
Headquartered in Indianapolis, Ind., CountryMark is an American-owned oil exploration, production, refining and marketing company. The company’s complete line of premium quality liquid fuels begins with light, sweet crude oil, which is refined to the highest specifications at the CountryMark refinery in Mt. Vernon, Ind. “We have everything from the upstream oil producing folks on staff, our refinery team, and a midstream sector, which I’m in charge of, whose mission is to transport crude oil into the refinery and all the finished product back out of the refinery,” Titzer says.
The refinery is fitted to process about 30,000 barrels of crude oil per day. The midstream logistics department consists of 400 miles of crude gathering pipelines, 238 miles of refined product pipeline and its Riverdock facility located on the Ohio River.
Connecting to Patoka
CountryMark began developing the new 17-mile pipeline beyond a concept in 2014, focusing on the front-end engineering and design. The company began building the new pipeline in 2016 and pumped its first barrel in September 2017, but upgrades to its infrastructure have continued into 2019.
The new pipeline connects to the “extremely large crude oil hub” in Patoka, Ill., Titzer says. “The objective was to be able to continue to source crude oil for the refinery,” he adds. “We still source as much local Illinois Basin crude oil as possible – our refinery was built to run that and likes that crude oil. Through the recent $80 million in capital upgrades we made to the refinery to run and sustain capacity; we can now expand on that if we choose to do so. As the Patoka crude hub has expanded, we have been able to source crudes that we thought we would never be able to source, which has opened up opportunities to us. We have been able to experiment with different crude slates, for example, to see what our refinery capabilities are and make decisions based on that information.”
In addition to installing 17 miles of pipeline, CountryMark also added three new pump stations and upgraded five existing pipeline stations that had equipment from the 1970s and ’80s. The company invested in new state-of-the-art control systems and instrumentation, including a Supervisory Control and Data Acquisition (SCADA) system that allows it to run all its systems on the new platform.
One of CountryMark’s biggest challenges was the existing system that it tied into had a pre-1970s electric resistance welded (ERW) pipe that is known to be susceptible to seam failure. “We conducted integrity tests on the entire system of pipeline, which consists of 120 miles of pipeline,” Titzer explains. “What we found was areas that had pre-1970s ERW pipe – and certain areas did – that we had to operate those under reduced operating pressure. The way we mitigated that was by committing more capital spending and replaced 20 miles of that pipe in September 2019. That was a heck of a milestone.”
The replacement of the pre-1970s ERW pipe totaled about $20 million, which was in addition to the $40 million the company spent on the pipeline and existing asset upgrades.
When CountryMark first brought its new pipeline online, it discovered excessive vibration from the pump and piping design. Time and resources were invested to identify the root cause of the problems and systems were put in place to reduce or eliminate the vibrations. “We put a couple of components in place, including mechanical support and structures to alleviate the issues,” Titzer explains. “That’s all now in service and has been working well for us.”
As the new pipeline connected CountryMark to the “outside world,” the company was required to change its regulatory applicability from a rural gathering system to a fully regulated crude or liquid pipeline. “That required us to have additional reporting requirements to the Pipeline Hazardous Materials Safety Administration (PHMSA),” Titzer says. “It also required additional preventative maintenance practices. However, as a risk management protocol, CountryMark had established those practices prior to installation.”
CountryMark installed new safety systems to run its assets more safely. “The pipeline industry has a quest for triple zero – zero injury, zero releases and zero downtime – so we have a focus on operating our assets safely, reliably and efficiently with respect for the environment, stakeholders and every end-user that uses petroleum products,” Titzer explains.
The company added a leak detection program that monitors inputs from field instrumentation, including pressures, flows and product density. The program continuously runs algorithms to ensure there is not a leak in the system and is monitored by strategically located servers. The program will indicate if something is out of the normal process, initiating alarms and shutdown procedures, allowing CountryMark to respond and react if there was a leak.
Historically, if CountryMark experienced what it thought was a leak or release, it would respond by sending personnel to close isolation valves. The company developed a real-time transient and pipeline isolation model equipped with remote activated valves that are controlled from the pipeline control center. This allows the company to shut down the valve instantaneously, protecting the environment and the communities in which it operates.
CountryMark has noticed a culture change since making investments in the refinery and pipeline over the past few years. “It’s been a tremendous shift in the way our folks operate and maintain our equipment,” Titzer says. “They have always taken pride in their work, but now that they are seeing the company is focused on getting the right equipment and protecting the environment and communities we operate in. CountryMark has shown them that there is a commitment to their safety, as well. Our staff is taking ownership in their work and we have seen the pride in their work increase.”