Course Summary

The gas industry, a "chain business," uses pipelines to form the main link of the gas chain. These pipelines are major engineering projects. The pipeline’s economics are crucial to the viability of gas development projects. This course brings together key engineering and economic factors essential to the success of pipeline projects and provides a detailed analysis of the cost structure of pipelines and the inter-relations between all the factors. Optimisation of provisional capacity and the exchange between pipelines and compressors will be studied, along with the effect of project build-up and demand growth on the overall economics and decision-making process. Calculation and analysis of unit costs, rates of return, and tariffs, are an integral part of the course. To further enhance the learning experience, delegates will examine and analyze a case study on the economics of a major international pipeline project in Asia, including setting up an economic model and evaluation of project viability.

What you will learn

• Significance of engineering factors in the economics of pipeline projects
• Cost structure of pipeline projects
• How to make a basic cost estimate for a pipeline project
• How to calculate the unit cost of capacity and therefore identify the optimum capacity configuration for a project
• How transportation tariffs are calculated
• Difficulties in determining reasonable rates of return

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Who Should Attend?

• Engineers, planners, and project managers involved in the oil and gas industries
• Gas utility personnel involved in the planning and operation of pipeline systems
• Government regulatory staff, managers and staff in public sector ministries
• Departments and agencies responsible for energy sector planning

Course Contents

Introduction to Pipelines

• History of pipelines
• Onshore v. offshore pipelines
• The planning of pipelines
• The methods of construction
• Operating requirements and practices

Pipeline Planning

• The gas chain
• Gas production profiles
• Gas markets and their impact on chain economics
• Gas demand forecasting
• Load duration curves
• Seasonal demand variations
• Diurnal demand variations
• The need for storage/use of storage
• Interruptible gas supplies
• Gas contract conditions
• Volumes

Engineering Factors

• Capacity requirements
• Load factor
• Distance
• Gas/liquid properties
• Location
• Pressure
• Onshore/offshore
• The need for compression

Environmental Factors

• Licensing of activities
• Site surveys (pre- and post-operations)
• Fishing and other marine users
• Discharge of chemicals and other materials used during construction and operations
• Abandonment/restitution of sites

Typical Cost Indicators

• Pipeline installation offshore and onshore
• Compressor installations
• Operating costs
• Fuel costs

Capacity Optimisation

• Pipeline capacity v. compressor capacity
• CAPEX v. OPEX
• Optimum compressor spacing
• Looping v. compressors
• Unit cost of providing capacity
• Timing of load build-up and rate of load growth

Unit Cost of Transportation

• Capital cost
• Importance of volume throughput
• Impact of OPEX
• Capacity and commodity charges
• Ship or pay
• Distance and load factor

Return on Investment

• Regulatory objectives
• New projects v. existing assets
• ROI v. RONA
• Regulated v. non-regulated projects
• Non-regulated returns
• Examples of regulated returns in the USA and UK
• Transportation 'rates' or tariffs