November 2012, Vol. 67, No. 11
Features
Energy Pipeline Construction Remains Strong
Underground Construction/Pipeline & Gas Journal’s latest international survey indicates 89,233 miles of new and planned oil and gas pipelines are under construction and planned. Of these 49,488 miles account for projects in the planning and engineering phase and 39,745 miles are in various stages of construction.
Based on BP’s recently released Statistical Review of World Energy 2011, many more miles of new pipelines will be needed to meet global energy consumption demand which grew 5.6 percent in 2011, the highest increase since 1973. The report credits the increase to rebounding economies after the recession and strong growth among developing nations.
The report shows oil consumption grew 3.1 percent last year, the highest since 2004. It shows a strong rise in natural gas consumption which rose 7.4 percent, the largest gain by volume on record. Coal use rose by 5.2 percent, its highest single-year jump in 31 years. Chinese energy consumption grew by 11.2 percent, as China surpassed the U.S. as the world’s largest energy consumer for the first time in 2010.
As several countries in the Asia Pacific region lead the way in the global economic recovery, it is not surprising this region accounts for the highest number of new and planned pipeline miles in the six basic country groupings (see accompanying map) used in this report. Here is a breakdown of the pipeline miles planned and under construction in each respective area: Asia Pacific Region – 36,596; South-Central America, Caribbean – 12,079; and Western Europe and European Union countries –2,330; Middle East – 8,455; former Soviet Union and Eastern European countries – 22,029; Africa – 7,744.
Asia Pacific region
Fast-growing Asian economies are driving global energy demand growth and taking an increasingly larger share of oil and gas markets from developed economies.
China, India and Australia remain the most active in the region in terms of pipelines planned and under construction. Much of the activity in China is centered around China National Petroleum Corp. (CNPC), the country’s largest oil and gas producer and supplier, that remains focused on coordinating domestic and international resources and markets to safeguard China’s energy security.
CNPC plans to double the length of pipelines laid during its 12th Five Year plan – 2011-2015 – vs. the 2006-2011 Five Year plan when 167,775 miles of pipeline were constructed. This would indicate construction of some 335,550 miles, or 67,100 miles per year, by the end of 2015.
With its high economic growth rates and 15 percent of global population, analysts expect India’s oil and gas import demands to increase. Several import schemes, including LNG and pipeline projects, have been implemented or considered.
Australia was the world’s largest coal exporter and the fourth-largest exporter of LNG in 2009. Its prospects for expanding these exports are promising as Asian demand for coal and LNG is rising along with Australia’s proven natural gas reserves. Because the distances between Australia and its key natural gas export markets in Asia discourage pipeline trade, all exports are in the form of LNG.
Australian LNG exports have risen 48 percent over the past decade and are expected to continue to increase over the short to medium term. Japan is the main destination, but other customers include China, South Korea, India, and Taiwan.
Africa
While the potential energy resource base appears ample, there remain challenges and important considerations that may continue to deter oil and gas development, including but not limited to political, economic, operational, and geopolitical risks
Despite these challenges, pipeline are being planned and constructed. One of the most ambitious is the Trans-Saharan Gas Pipeline (TSGP) planned by the Nigerian National Petroleum Company and Algeria’s Sonatrach. The 2,565-mile project will take gas from fields in the Niger Delta north through Nigeria to Algeria and then to the coast. It could be on line in 2015. Estimated cost is in the $10 billion range with $3 billion for upstream gas development. EU officials say the pipeline could supply 20 Bcm/y of gas to Europe by 2016.
In South Africa, construction is ahead of schedule on the 338-mile Durban-Gauteng multi-products pipeline for which Transnet received a license from the National Energy Regulator of South Africa to construct and operate, along with an associated 160-mile, 16-inch inland pipeline network. Transneft officials said the project would be completed by September.
Western Europe, EU Countries
Western Europe and the EU countries hold promise for future activity with a decision by the European Commission to provide US$1.9 billion in grants to ensure that some 30 gas projects are not delayed. Those to receive grants include the 500-mile Interconnector Turkey-Greece-Italy (ITGI) project, 130-mile Poseidon Pipeline, 281-mile Skanled Pipeline, 2,050-mile Nabucco Pipeline, 235-mile Odessa-Brody project and the 130-mile Slovakia- Hungary Interconnector.
EU officials want a merger of two strategic pipeline projects – Nabucco and its smaller Italian rival ITGI – to secure gas supplies from Azerbaijan to Europe. Several options have been floated, including a two-phase construction sequence that would see gas transported to Greece and Italy in the first phase and creation of a spur from the main pipeline in the second phase that would follow Nabucco’s originally planned route to Austria.
South America, Central America
Brazil, Venezuela, Colombia and Argentina have major pipeline projects under construction and planned.
A 530-mile ethanol pipeline is planned by Petrobras to link main ethanol-producing regions to consuming centers in Sao Paulo and Rio de Janeiro. The pipeline will have a transport capacity of 21 MMcm/a.
Work is scheduled to start on the 2,575-mile Noreste Argentino Gas Pipeline (GNEA), to bring gas from Bolivia to Argentina. Argentina announced the first phase of construction will begin later this year to increase shipments of natural gas from Bolivia to 27.7 MMcf/d. The pipeline will cost an estimated $5 billion and will provide 3.4 million people in six provinces access to natural gas.
Venezuela remains a significant supplier of crude oil to the world market although no significant pipeline construction is reported. Still awaiting a construction is the $2.1 billion, 293-mile natural gas pipeline linking Venezuela’s Sucre and Anzoategui states and a second gas pipeline linking Venezuela to Argentina that will go through Brazil, Uruguay, Chile and Bolivia. On the oil side, construction is expected to start in 2012-13 on the pipeline planned by state-owned PdVSA and Russian oil transporter Transneft for development of the Orinoco oil belt.
FSU, Eastern European Countries
The slowest projected energy growth among non-OECD regions is for non-OECD Europe and Eurasia, which includes Russia and the other former Soviet republics. Growth in energy use for the region totals 17 percent from 2007-2035 as its population declines and substantial gains in energy efficiency are achieved by replacing inefficient Soviet-era capital equipment.
Nevertheless, Russia and nations in the FSU and Eastern Europe hold promise for future oil and gas activity and several are constructing and planning extensive pipeline networks to reach Europe and the Asia Pacific region.
Middle East
Several major projects are slated in the Middle East where 3,201 miles of pipelines are in various stages of construction and 5,254 pipeline miles are in the planning and engineering phase.
The Iranian Gas Engineering and Development Company is planning to invest $US6 billion for 1,677 miles of high-pressure gas pipelines and 19 compression facilities in the next two years. Plans call for construction of the 335-mile Tran-Iranian gas pipeline from Iranshahr to Zahedan and another to the Pakistan border; a 373-mile pipeline from the Dehgolan region to Ahmaz; and a 56-mile line to Chabahar in the southeast.
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