Oil Pipelines: Are they worth the price & effort?

Written by Professor Arthur Cohen B.A., M.A.
(561) 509-6345    Email: Artmcohen@gmail.com

          Clearly when it comes to moving large quantities of oil from massive oilfields, few means of transport can equal the efficiency of a pipeline.  When oil fields are landlocked, there is possibly no other reasonable alternative. The Prudhoe Bay oil field in Alaska can move upwards of 400,000 barrels a day. However, there is a price to pay for this efficiency. One might become dependent on a constant and steady flow of oil. So dependent, that any interruption could be catastrophic. The U.S. is dependent upon 200,000 miles of pipe that transport oil products.  There are important considerations that must be factored into whether or not a pipeline is the way to go.  Here are just a few:

1.      Pipelines are only cost effective for extremely large oil or gas fields or to ship large quantities on a consistent basis.

2.      Pipelines are extremely expensive to build.

3.      They usually take years to construct and so you won’t see production come online quickly.

4.      Construction presents many environmental concerns.

5.      Pipeline Dependency.  While pipelines are efficient, what happens when the pipeline fails and has to be shut down for repairs or is attacked by terrorists? How then can we continue supplying the oil that is needed?

6.      Pipelines must be maintained. Sludge build-up and corrosion occurs. According to “engineering experts,” corrosion can’t be stopped, only controlled with continuous maintenance.  The projected cost of replacing and repairing the BP Alaska pipeline is $200,000,000.  

7.      Oil pipelines lead to steady dependence on supply and when a pipeline is shut down, for any reason, all supply stops. Buckeye Pipeline Failure Thursday and Friday 2/8/07 and 2/9/07 shut down fuel delivery to Long Island.  A frozen valve was all that was necessary to stop the flow of oil to residents and jet fuel for JFK Airport, one of the busiest airports in the world.

8.      Areas exposed to seismic activity place pipelines at risk.

9.      Pipelines are vulnerable to terrorists as we have seen in Iraq.  Today terrorist attacks on pipelines are a major concern. The region’s main pipeline for the Shirawa Oil Field in the northern city of Kirkuk has been shut down for months following months of sabotage. (Newsday Sept. 8, 2007) An attack could easily shut down a pipeline for weeks, months or indefinitely.  A Saudi Arabian terror faction with links to al-Qaida has urged Muslim militants to attack oil facilities all over the world, including Canada, Mexico and Venezuela to stop the flow of oil to the U.S. (Feb. 15, 2007) Six explosions cause damage to Mexican oil and gas pipelines.  A small leftist terrorist group has taken credit for the attack. (Sept. 10, 2007)

10.  In addition to terrorists, pipelines are vulnerable to thieves also.  A gas pipeline in Nigeria was recently ruptured by thieves and exploded as scavengers collected the fuel.  The explosion killed 260 people in the latest oil industry disaster in Nigeria (December 27, 2006).  However, this wasn’t the first time. Earlier this year, 150 people were killed in a similar event in Lagos.  Another pipeline fire in Nigeria in 1998 killed 1,500.  Because of poverty in many oil rich areas, people are tempted to steal oil products from vulnerable pipelines. 

11.  The environmental impact of a leak could also be catastrophic. An accidental leak in the BP Alaskan pipeline spilled 5,500 barrels of oil in March 2006 according to what was reported.  This was pure negligence and lack of proper maintenance.

12.   An oil pipeline from Russia runs through Belarus and supplies oil to Germany and Poland. Russia recently accused Belarus of stealing oil from the pipeline and then shut off crude exports. Belarus began taking oil as payment for a new duty they unilaterally imposed on oil through the pipeline.  The Russian cut-off of the “Friendship” pipeline stopped the flow of oil to Germany, Czech Republic, Poland, Hungary, Ukraine and Slovakia.  Europe is heavily dependent on its oil and gas from the Soviet Union and the EU has demanded an “urgent and detailed” explanation of the shutdown. The incident has deepened the EUs fears about over reliance on Russian energy. The EU has developed a long term plan to reduce its dependence on oil and gas.

13. A break into an oil pipeline in Nigeria by criminal gangs resulted in an explosion that killed 34 people near Lagos.  Most of the victims were impoverished people who tried to scoop up oil to sell or for personal use. (Newsday Dec. 27, 2007)

 

Can we afford to rely so heavily on pipelines and are there any alternatives?  When an oil field is near water, there might be another choice.  The Seasnake is a unique shipping system that is capable of moving in shallow water that tankers can’t enter.  Because of a lower draft design, it can travel shallow coastal water or into river systems. Unlike a tanker that can’t enter coastal areas or barges that aren’t ocean worthy, the Seasnake is capable of doing both. The Seasnake combines the best qualities of barges and tankers and adds many advantages of its own. Motorship Magazine, Jan. 2001,  likened it to “a railroad train at sea not restricted by the tracks.” By adding barges, it can carry the equivalent of medium or large tankers.  However, when coming to ports, it can be disconnected so as to fit into smaller dock spaces and is not as dependent on tides and tight channels as larger tankers are. Not only is it cheaper to build and operate than a comparable tanker, it can be built in many smaller shipyards that couldn’t handle larger tankers thereby making for more dependable production.  If in the event one of the barges is damaged, it is only necessary to replace one barge unit.  Not only is this less expensive than repairing a ship, it minimizes downtime. The mother ship and caboose both have transport power so that the latter could take over in the event that the mothership becomes damaged or inoperative.  In addition, the mother-ship and caboose also have storage capacity.

 

Homo sapiens are an ingenious species “always looking to build a better mousetrap.”  However, at the same time, they are resistant to change. As Lee Iacocca once said “Lead, follow or get out of the way.”  It is the leaders who get a jump start on their competitors.   The Seasnake will revolutionize shipping and it is only a matter of time before you see them entering a harbor near you.