Challenges For The Twenty-first Century Refinery Pipeline

Getting petroleum products from refineries to end users is complicated and may involve pipelines

, railways, trucks, and ships. Dispersing petroleum products from refineries may involve numerous types of transport, particularly over large geographic areas like North America. In general, refineries blend petroleum products and then ship them out by various means, including pipelines, to local terminals, which then truck products to retailers. To keep costs under control, refiners sometimes enter into product exchange agreements with other refiners. This reduces volumes and distances products are moved through, cutting transport costs. Geographic barriers and product volumes are important concerns when it comes to transport of petroleum products, and each transport method has advantages and disadvantages.

Capital Costs of the Refinery Pipeline

When it comes to transporting large volumes of petroleum products over long distances, pipelines are the safest and most reliable transport options. But constructing pipelines involves large up-front capital costs. Pipelines are most effective when transporting very large volumes of petroleum products over an extended distance for extended time periods. It can take up to 20 years for payback on major pipeline projects to break even. Once built, however, transport costs are low compared to transport costs using ships, railroads, and trucks. Transport by truck is the most expensive method, but it has the greatest flexibility.

Crude Oil Pipelines

Crude oil transport in North America is done through a network of pipelines, many of which have been operating close to capacity for the last several years. Construction of additional pipelines for transporting crude oil should, over the long term, enhance market access. The refinery pipeline supplier must be prepared to deliver pipeline efficiently in order to keep payback time on new pipelines as short as possible. That means that your pipeline supplier should not only have strong inventories in multiple locations worldwide, but also that your pipeline supplier should be willing to develop custom delivery schedules to keep your pipeline productivity high while minimizing inventory shortages at the project site.

Present-Day Pipeline Challenges

Rail availability in North America is becoming tighter, making rail a less viable option when petroleum products have to be moved quickly. This puts more of an onus on pipelines for delivery. Additionally, with refinery capacity near peak, unplanned refinery shutdowns may become more common, putting additional stresses on the petroleum distribution system. Add in geopolitical tensions in the Middle East and an elevated threat of terrorist activities, and oil pipeline transport becomes even more important along with security of the transport infrastructure.

Your Project and Your Refinery Pipeline Supplier

In short, pipeline projects are maintaining importance in the 21st century. If you are in charge of procurement for a pipeline project, you don't have time to worry about whether your refinery pipeline supplier is up to the job. Your supplier should be conversant in the technical language of petroleum pipelines, offer the exact pipeline products you need, and get them to you on time. Keeping a pipeline project on schedule and within budget is an enormous challenge. Your choice of pipeline supplier can make or break the success of your project.

by: Pete Caballero

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