(Corrects paragraph 5 to show Gary Shane is a consultant to BP,not an executive)
By Krithika Krishnamurthy
June 7 (Reuters) - No pilot was required when the AeryonScout took off into the leaden skies of Alaska to inspect astretch of oil pipeline. The miniature aircraft was guided by anengineer on the ground, armed only with a tablet computer.
The 20-minute test flight, conducted by BP Plc lastfall, was a glimpse of a future where oil and gas companies inthe Arctic can rely on unmanned aircraft to detect pipelinefaults, at a fraction of the cost of piloted helicopter flights.
It could become reality as soon as 2015, when the FederalAviation Administration (FAA) opens up American skies for thecommercial use of unmanned aircraft, popularly known as drones.
While technical shortcomings and strict regulation arelikely to limit the use of drones in the near term, the rulesgoverning public airspace will be more relaxed in the wildernessof Alaska than in the lower 48 states, industry experts say.
"We're going to take baby steps," said Gary Shane, aconsultant who works as a senior project manager for BPPipelines in North America. The company plans to deploy itsfirst drones in the Alaska North Slope within three years, hetold Reuters.
Laid end to end, the more than 300,000 miles (480,000 km) ofnatural gas pipelines that crisscross the United States wouldcircumnavigate the planet 12 times. There's a lot of money to besaved by reducing the number of manned flights on these routes.
A small, unmanned vehicle fitted with a heat-sensing cameracosts about $85,000, while it costs about $3,000 to send ahelicopter to monitor an oil pipeline for an hour, said DaveKroetsch, chief executive of drone manufacturer Aeryon Labs Inc.
The drone, therefore, would pay for itself within 29 hours.
BP began researching the use of unmanned aircraft in 2006.Royal Dutch Shell Plc began a year earlier. One aim,says Shell, is to track the movement of marine mammals to assessthe impact of the company's operations in the seas off Alaska.
The Scout is the flagship product of Aeryon Labs, a privateCanadian company based in Waterloo, Ontario - the sameuniversity town that gave rise to BlackBerry .
Under a meter in length, the Scout weighs 1.2 kg (2.7 lbs) -tiny when compared with the 1,020-kg MQ-1 Predator drone used bythe U.S. military and manufactured by San Diego-based GeneralAtomics.
Aeryon Labs calls the Scout a "flying robotic reconnaissancesystem". It has been used by Gaddafi-era Libyan rebels and seenaction in a Central American drugs bust. (http://r.reuters.com/zec68t)
A camera mounted on the drone trasmits a live feed to theoperator. In the case of pipeline work, sensors can pinpoint thelocation of a suspected leak and detect signs of decay, such ascracks or rust, said Ian McDonald, Aeryon Labs' vice-president.
With four rotors and legs allowing for vertical take-off andlanding, the Scout can also hover closer to a pipeline than anyhelicopter could. Proponents of the technology say this willhelp oil companies to find defects earlier than they can now.
According to a U.S. government report on pipeline safety,the public was quicker to report pipeline leaks than companies'in-house detection systems in a third of cases recorded betweenJanuary 2010 and July 2012. (http://link.reuters.com/wyk48t)
SHORT FLIGHTS ONLY
So with all these advantages, why aren't more oil companiessigning up? Why do Canada's two biggest pipeline operators,Enbridge Inc and TransCanada Corp, prefertraditional methods for inspecting their U.S. pipeline routes?
Technology, for one thing. Drones might not be new - BP alsoused the Aeryon Scout to help direct clean-up crews after theDeepwater Horizon oil spill in 2010 - but they are yet to beproven for large-scale commercial use.
"We have looked at this in detail, but advanced dronetechnology is largely proprietary to the U.S. military," saidEnbridge spokesman Graham White.
"Our experience is that there is still no substitute forhuman eyes, knowledge and expertise when inspecting the lines."
The 20 minutes flown by the Aeryon Scout is about the mostthat a small drone can manage. The sophisticated sensor systemsneeded for inspection are too big for longer flights;"miniaturizing" these sensors will take time, said BP's Shane.
Also missing from today's fleet of drones is the collisionavoidance technology that automatically instructs an aircraft totake evasive action if an obstacle appears in its path.
While doubts persist, some oil majors are on the sidelines.ConocoPhillips said it was interested, but that it didnot operate its own aerial surveillance program. Exxon MobilCorp declined to comment for this article.
David Yoel, chief executive of industry consultantsAerospace Advisors Inc, said it would be at least 10 yearsbefore unmanned aircraft are in common use along U.S. pipelines.
Draganfly Innovations Inc, a Saskatoon, Saskatchewan-basedmanufacturer that sold several drones to deepwater oil platformsin the Gulf of Mexico two years ago, said industry-wide saleshad begun to flag, due largely to the regulatory environment.
"Actual sales have definitely slowed, especially in theU.S., because of people's issues with the FAA regulations," saidKevin Lauscher, Draganfly's industrial sales manager.
INTO THE WILDERNESS
Current U.S. federal law permits only public agencies anduniversities to fly drones in public airspace. BP teamed up withthe University of Alaska Fairbanks when it tested the Scout.
This should change from September 2015, by which time theFAA is mandated by Congress to have drawn up rules for theircommercial use.
Even public agencies today must operate drones under strictregulations, and these restrictions will not disappear overnightfor commercial users, industry experts say.
Such rules - drones must fly in daylight hours only, forexample, within the remote operator's line of sight and morethan five miles (8 km) from any airport, big or small - arehardly conducive to monitoring a vast pipeline network.
Gretchen West, executive vice-president of the Associationfor Unmanned Vehicle Systems International (AUVSI), said shebelieved that drones would become "an important technology" foroil and gas companies. "(But) it's still going to be severalyears before it's not heavily regulated."
Alaska just might be the exception.
Its very remoteness could win it special dispensation thatwould permit drones to be operated round-the-clock andcontrolled from beyond the line of sight.
The FAA Modernization and Reform Act of 2012 - the existinglaw that stipulates the September 2015 deadline for commercialdrone use - saves a separate mention for the Arctic.
"The FAA is working ... to integrate unmanned aircraft intothe Arctic region, where potential uses include wildlifeobservation, oil and mineral exploration, sea ice studies andpipeline monitoring," FAA spokesman Les Dorr said.
The FAA estimates that about 7,500 commercial "smallunmanned systems" - drones weighing up to 55 lb (25 kg) - willbe in operation within five years of its opening up the skies.
For companies such as Aeryon Labs and Draganfly, thechallenge will be to develop the technology to drive more sales.
"Manufacturers and start-ups see that there will be greatpotential," said West. "This is going to be a great industry." (Editing by Robin Paxton)
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