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WORLD PIPELINES JANUARY 2015 www.worldpipelines.com Volume 15 Number 1 - January 2015 ®
Transcript of WORLD · 2016-03-09 · When the pressure is on, we deliver. As the only portable two-in-one...
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Contents
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03 Editor's commentStrategising in the face of strategies.
05 Pipeline newsKeystone XL; TAPI; TANAP; Ojinaga-El Encino pipeline; Colombian Bicentennial pipeline and more.
REGIONAL REVIEW
12. Energy-hungy China makes friends and influences peopleDr. Hooman Peimani outlines the major pipeline projects to watch in China.
REMOTE SENSING
18. Fibre optic leak sensing in the ArcticDr. Premkumar Thodi, Mike Paulin, Larry Forster and Glenn Lanan, INTECSEA, Canada.
24. Optimal surveillanceAdrian Banica, Synodon, Canada.
31. Managing the riskPhil Saxton, General Manager at Dräger Marine and Offshore, UK.
INLINE INSPECTION
34. Are you getting the most out of your pigging data?Tom Gilmour, DNV GL - Software, USA.
39. A new year of resolutionDave Latto and Stephen Westwood, Baker Hughes, USA.
45. Calculating pressureBorja Martinez, Daniel Molenda and Markus Brors, ROSEN Group, Germany.
PIPELINE STEELS
51. Developments in weldingMark Atkinson and Simon Slater, MACAW Engineering, UK, and David Teasdale and James Gilliver, National Grid, UK.
57. The next generationCindy Trahan, FlexSteel, USA.
COATINGS & LININGS
63. No compromise for offshore maintenanceJoao Azevedo, Sherwin Williams Protective & Marine Coatings Europe, Middle East and Africa (EMEA).
WELDING
67. A new spin on weldingScott Funderburk, Chief Operating Officer, Weld Revolution LLC, USA.
PIPELINE INTEGRITY MANAGEMENT
74. The industrial internet revolutionMauricio Palomino, Solutions Architect, GE Oil & Gas, Measurement & Control Business, USA.
81. Important epoxy developmentsIan Fordyce, Principal Consultant, Anthony Wood, Senior Consultant and Huw Jones, Mechanical Engineer, DNV GL, UK.
PIPELINE MACHINERY REVIEW
85. World Pipelines' pipeline machinery reviewFeaturing Worldwide Machinery, USA.
WORLD PIPELINES | Volume 15 | Number 1 | January 2015
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PAGE
12
makes friends and influences people
Dr. Hooman Peimani
outlines the major pipeline
projects to watch in
China.
China begins 2015 with major milestones achieved in the preceding years to make the widely-used term of emerging economy an inaccurate description of its regional and
global status. Corrected in terms of purchasing power parity, China’s GDP surpassed that of the US as the world’s largest economy in October 2014, according to the IMF, although the American economy is still larger in absolute dollar terms. The country overtook its American rival in terms of energy consumption in 2010, with its total primary energy consumption of 2339.6 million toe when that of the US was 2284.9 million toe. It has since retained its status as the world’s largest energy consumer – as reflected in its 2013 total primary energy consumption of 2852.4 million toe equal to 22.4% of the global consumption against the US’s 2265.8 million toe equal to 17.8% of such consumption. The two milestones should not be a surprise, as they have been the
Energy-hungryChina
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STRATEGISING IN THE FACE OF STRATEGISTS
What’s the biggest challenge for the pipeline industry in 2015? I welcome your thoughts at [email protected]
but meanwhile, my initial feeling is: pipeline operators will need to continue to develop the tenacity and flexibility to cope with opposition and protest. Amid increasingly vocal opposition to pipeline projects around the world, and particularly in North America, pipeline projects must be built around the central tenets that things can and will change, and that the road to a permit, and construction work, is often long.
In the last few years we’ve seen numerous pipeline projects face delays and setbacks, as opposition groups use different strategies to push back construction dates. The Wall Street Journal reports that six oil and gas pipelines in North America alone have been delayed, with another four in the region set to face delays due to ongoing opposition.
Kinder Morgan has moved back its TransMountain pipeline extension (Albertan oilsands to the BC Pacific coast) by another six months to allow for route changes, in the hope that a new route will garner less attention from opponents.
Enbridge’s Northern Gateway pipeline (also set to move Albertan oilsands to the west coast) has obtained a permit for construction from federal lawmakers but construction and operation are subject to a total of 209 conditions and further negotiations with aboriginal communities.
Keystone XL has been met with the loudest clamours for environmental policy change and opponents have enjoyed a level of success by prolonging government review periods and drawing the project into increasingly heated political debates.
ExxonMobil has been holding off calls that it should release further information about a proposed but later abandoned pipeline that was to have run alongside the Pegasus pipeline (the Pegasus pipeline delivered crude from Texas to Illinois before its partial closure in 2013, when it ruptured in Arkansas). Landowners have filed a class action lawsuit against Exxon and want to see information about the proposed Texas Access Pipeline project that never came to light.
In addition, I could write a whole series of columns about route changes, project downgrades and cancellations.
Local opposition to pipelines tends to focus on matters of land ownership, safety, potential for spills and protection of flora and fauna. National opposition tends to be based on bigger environmental issues: pipeline companies find themselves on the frontline of various bigger conflicts, including the questions of oilsands extraction, climate change, aboriginal tensions, landowner law disputes, etc.
While the upstream companies sourcing the resource can sometimes avoid dealing with
the community, pipeline companies rarely can. At a conference in Calgary late last year, Al Monaco, Chief Executive Officer of Enbridge, spoke about pipeliners in the spotlight and joked: “We never used to get invited anywhere’.
Pipeliners must continue to focus on the local. Monaco argues that environmental groups looking to slow the progress of oilsands development, for example, strategically target
pipelines: “Would you rather go after 100 upstream companies or 100 refineries? No – it makes a lot of sense to go after the midstream part of the value chain”.
In my research I came across some admirable and high-minded discourse on community-based, non-professionalised pipeline opposition, where the aim is not “just about building a group of people who oppose the pipeline in principle: [but] for figuring out collectively how to organise, oppose, and stop the pipeline – and how to dismantle the institutions and structures that support and reinforce it.”1 And that’s my point: it’s the institutions and structures that need to be taking their share of the heat. Pipeline companies are aware of their responsibilities and will work within the strictures placed upon them, but then that must be enough. I’ll end with a quote from Ian Anderson, Kinder Morgan Canada’s President, who sums up the challenges ahead for pipeliners: “You’re always in a campaign mode, it doesn’t matter if it’s municipal, provincial or federal. That’s just going to be part of life.”2
1. https://canadiandimension.com/articles/view/why-anti-pipeline-organizing-isnt-just-another-protest
2. http://www.therecord.com/news-story/5233474-oil-pipeline-projects-face-litany-of-challenges-heading-into-2015/
OPPOSITION GROUPS USE DIFFERENT STRATEGIES TO PUSH BACK CONSTRUCTION DATES
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Harper government announces introduction of the Pipeline Safety Act
On 8 December 2014, Greg Rickford, Canada’s Minister of Natural Resources, announced the introduction of the Pipeline Safety Act. The act introduces legislative measures to further enhance Canada’s world-class pipeline safety system.
The announcement builds on previous action taken by the Harper government to prevent incidents, including increasing the number of annual pipeline inspections and audits conducted by the National Energy Board (NEB) and strengthening the Board’s enforcement capabilities by giving it authority to fine pipeline operators for smaller incidents. Currently, 99.999% of the oil transported through 73 000 km of federally regulated pipeline is completed safely, including 1500 km in Quebec.
The government’s latest measures proposed in the legislation introduced in the House of Commons include: Introducing absolute liability for all NEB-regulated pipelines; companies continue to have unlimited liability when at fault or negligent; providing the NEB authority to order reimbursement of any cleanup costs incurred by governments, communities or individuals; and providing the NEB authority and resources to assume control of incident response if a company is unable or unwilling to do so (i.e. in exceptional circumstances). Other non-legislative actions being taken by the government include developing a strategy with industry and Aboriginal communities in an effort to increase Aboriginal Peoples’ participation in pipeline safety operations.
Rickford linked the pipeline safety improvements to the Canadian government’s plan for Responsible Resource Development, which strengthens environmental protection, enhances Aboriginal engagement and streamlines the review of major resource projects to make the process more timely and predictable.
Rickford said: “The new measures announced today demonstrate that we can benefit from resource development while increasing protection of the environment. Our government is once again demonstrating, through these new measures, its commitment to enhancing Canada’s world-class pipeline safety system while engaging with communities across the country.”
President Obama’s political gamesmanship over KXL needs to end
API President and Chief Executive Officer Jack Gerard told the White House that despite the ongoing years of delay, the industry will not give up on the Keystone XL pipeline.
“Six years of review and five positive environmental assessments from the State Department are enough,” said Gerard. “We are calling on President Obama to approve the Keystone XL pipeline. There is more than enough evidence to move forward immediately – without waiting for Congress to vote again in the new year when congressional support for Keystone XL will be even stronger. President Obama can end the delay today and give America’s construction workers a Christmas gift they’ve been waiting six years for.
“When America’s construction sector goes to work building Keystone XL, they’ll be building not just a pipeline, but energy security. We’re within 10 years of the ability to supply 100% of our liquid fuel needs from right here in North America, but we won’t get there through presidential dithering on infrastructure projects that are obviously in our national interest.
“President Obama’s approach to Keystone XL has been to delay a decision until after the next election, then the next. With no more elections left, it’s time for the president to look beyond the next election cycle to the next generation and do what’s right for America’s future.”
API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million US jobs and 8% of the US economy. API’s more than 625 members include large integrated companies and they provide most of the nation’s energy and are backed by a growing grassroots movement of more than 25 million Americans.
32% of natural gas pipeline capacity into the Northeast US could be bidirectional by 2017
Spurred by growing natural gas production in Pennsylvania, West Virginia, and Ohio, the US natural gas pipeline industry is planning to modify its systems to allow bidirectional flow to move up to 8.3 billion ft3/d out of the Northeast. As of 2013, the industry had the capacity to transport 25 billion ft3/d of natural gas from Canada, the Midwest, and the Southeast into the Northeast. In addition to bidirectional pipeline projects, the industry is planning to build 35 billion ft3/d of additional capacity to support the growth of natural gas production in the Northeast.
Flows on ANR Pipeline, Texas Eastern Transmission, Transcontinental Pipeline, Iroquois Gas Pipeline, Rockies Express Pipeline, and Tennessee Gas Pipeline accounted for 60% of flows to the Northeast in 2013. Flows on these pipelines in 2013 were between 21 - 84% below 2008 levels. As a result of these pipelines being underutilised, the pipeline companies have announced plans to modify their systems to allow for bidirectional flow, adding the ability to send natural gas out of the Northeast region:
) Columbia Gulf Transmission completed two bidirectional projects in 2013 and 2014 that enable the system to transport natural gas from Pennsylvania to Louisiana.
) ANR Pipeline, Tennessee Gas Pipeline, Texas Eastern Transmission and Transcontinental Gas Pipeline are planning to send natural gas from the Northeast to the Gulf Coast. These projects total 5.5 billion ft3/d of flow capacity.
) The Rockies Express Pipeline’s partial bidirectional project (2.5 billion ft3/d of capacity) is primarily to flow Marcellus natural gas to more attractive markets in Chicago, Detroit, and the Gulf Coast.
) The Iroquois Gas Pipeline’s bidirectional project (0.3 billion ft3/d of capacity) will deliver natural gas from the Marcellus to Canada. In comparison to building new pipelines,
modifying existing pipeline to enable bidirectional flow requires significantly less capital investment, fewer regulatory permits, and lower construction and labour costs, while resulting in fewer environmental impacts. Modifying these systems to be bidirectional can be executed quickly to respond to new market dynamics that will improve pipeline utilisation rates.
6 World Pipelines / JANUARY 2015
IN BRIEF
NigeriaOando Energy Resources Inc., Nigeria, has announced the completion of the 45 000 bpd, 51 km Umugini pipeline. The pipeline will provide an alternative evacuation route for crude oil produced from the Ebendo Field through the Trans Forcados export pipeline. The completion of the Umugini pipeline ensures that the Ebendo field can produce at its full capacity.
Pade Durotoye, Chief Executive Officer, Oando Energy Resources, said: “The completion of the Umugini pipeline now allows us to maximise the value of our investments to date on the asset and provides the latitude for further profitable development of prospects and resources identified in Ebendo.”
IsraelThe company responsible for a massive oil spill in Israel’s south in November 2014 has been banned from operating the faulty pipeline for the time being.
The Eilat Ashkelon Pipeline Company (EAPC) had maintained the Trans-Israel pipeline, which was damaged during maintenance and is said to have sent some 3 million litres of oil gushing into the southern desert, severely damaging a nature reserve and other areas.
The Environmental Protection Ministry said the company has to stop operating the line, a major oil conduit between the Mediterranean and the Red Sea, until it is issued a new permit.
NorwayGassco has received consent from Norway’s Petroleum Safety Authority (PSA) to use the Knarr gas export pipeline. The Knarr field is located in block 34/3 in the Tampen area of the North Sea.
Gas will be transported in a 106 km pipeline tied to the FLAGS pipeline system on the UK Continental Shelf for onward transport to St. Fergus in Scotland. Gassco AS will be the pipeline operator when gas transport begins.
The PSA has now given Gassco consent to put the pipeline into commission. The UK authorities will also need to provide consent for the 12 km section of the pipeline on the UK Shelf.
World NewsFOR MORE NEWS VISIT HTTP://WWW.ENERGYGLOBAL.COM/PIPELINES/
Eustream plans new pipeline
According to local reports, Eustream is planning to construct a new gas pipeline from Slovakia to the Bulgarian-Turkish border.
The proposed pipeline, providing an alternative to the recently terminated South Stream project, would supply the Balkans with gas from sources different from Russia. This would ensure that countries such as Bulgaria and Serbia could receive gas even if Russian supplies via Ukraine are disrupted.
The new ‘Eastring’ gas pipeline,
which will have a capacity of approximately 20 billion m3/yr and cost Eustream around e750 million (US$928 million), would reportedly connect to the company’s existing system, which has a capacity of more than 80 billion m3, to Ukraine’s Soyuz pipeline leading to the Romanian border.
According to press reports, Eustream is planning to present the project to the Slovak Industry Ministry in coming weeks.
New pipelines in Australia and Colombia
Spiecapag (VINCI Construction) has won one contract in Australia and two in Colombia for the construction of two gas pipelines and one oil pipeline.
Australian company APA, the leading gas operator in Australia, awarded the joint venture formed by Spiecapag (lead company) and Lucas a contract for the construction of the Eastern Goldfield Pipeline, a 300 km gas pipeline in Western Australia, about 1000 km to the east of Perth. It will cross a near-desert region and work will be carried out between March and November 2015.
The contract is worth AUS$60 million and bolsters the presence of Spiecapag in Australia following on from its work in 2013 and 2014 on the QCLNG Trunklines North project for QGC (British Gas) in Queensland.
In Colombia, Ecopetrol awarded the joint venture formed by Spiecapag (lead company) and Colombian company Ismocol a contract for the construction of the first 37 km section of an oil pipeline to the south-east of Bogota, with an option to construct an additional 40 km section.
Also in Colombia, Pacific Stratus awarded the Golfo de Morrosquillo (CGM) consortium headed by Spiecapag a contract for a project to export natural gas, including the construction of an 80 km onshore gas pipeline and a 4 km offshore gas pipeline, as well as civil engineering for a maritime terminal and construction of its structures.
TAPI pipeline hits production sharing roadblock
The fate of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline hangs in the balance, despite recent progress and with construction expected to begin this year. Turkmenistan has argued that its current laws do not permit the granting of production-sharing rights for onshore blocks to foreign companies. This has halted negotiations and restricted the number of foreign companies coming forward to build the pipeline.
Sunil Jain, India’s Ambassador to Turkmenistan, recently conveyed to Petroleum Minister Dharmendra Pradhan that Ashgabat has ruled out signing a production-sharing contract (PSC) with any foreign company for extraction of gas from its fields. “The only possibility they are willing to consider is a consortium of national oil companies of all four participating countries, with Turkmengaz, the national oil company of Turkmenistan, as the consortium leader,” a source said.
Recent moves have given TAPI a sudden burst of momentum. First, the four countries set up a new company to “build, own, and operate” the 1800 km pipeline. The TAPI Pipeline Company Limited will see Turkmengaz, Afghan Gas Enterprise, Inter State Gas Systems (Private) Limited, and GAIL (India) Limited with equal shares. Second, a batch of recent meetings have resulted in a handful of commitments. The four countries are said to have agreed to begin constructing the pipeline by 2016, with completion by the end of 2018.
No energy majors have yet signed up for the pipeline, though the field appears to be narrowing.
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World News
Saipem wins pipe contract
Saipem, through its controlled company ERSAI Caspian Contractor LLC, has been awarded a major new engineering and construction contract in the Caspian Region. The contract awarded to ERSAI, in consortium with Daewoo Shipbuilding & Marine Engineering Corp., is worth approximately US$1 billion.
Contract scope includes yard engineering, fabrication and pre-commissioning activities as well as the load-out of 55 000 t of pipe racks.
Umberto Vergine, Saipem Chief Executive Officer, commented: “This contract underlines our excellent track record in a key market for Saipem and I look forward to the continued development of our presence in the Caspian Region, working with our local partners to deliver a high quality service to some of our most important clients”.
➤ ShawCor acquires Dhatec
➤ API applauds swift Senate action on KXL
➤ Enbridge’s North Dakota pipeline resumes operations
TANAP is Turkey’s priority
The Trans Anatolia Natural Gas Pipeline is Turkey’s priority rather than Russia’s last project proposal, according to Turkey’s Minister of Foreign Affairs.
Cavusoglu spoke on Putin’s announcement of the suspension of the South Stream natural gas project and his proposal for an alternative route through Turkey to send natural gas to Greece and to European countries.
“We signed a MoU with Russia but it does not mean that TANAP stays in the background,” Cavusoglu said at a meeting with Azerbaijan’s Elmar Mammadyarov and Georgia’s Tamar Beruchasvili.
The foreign ministers of Turkey, Azerbaijan and Georgia met in December in Turkey’s northeastern province of Kars to discuss energy and transportation projects.
“Russia’s offer is the main issue and we have talked about it with my Georgian and Azerbaijani colleagues,” he said. “We know the importance of TANAP for Georgia and for Europe. We already ordered the natural gas pipes. The project won’t be affected by falling oil prices and will be completed. We emphasise the importance of TANAP everywhere,” he added.
Gazprom creates new company
Gazprom is establishing a new company, Gazprom Russkaya, which will be tasked with building a new gas pipeline to Turkey, Gazprom Spokesman Sergei Kupriyanov said last month.
The announcement was made the same day as Russian President Vladimir Putin said that Russia was not willing to continue the implementation of South Stream pipeline project.
Russia is ready to build another pipeline system to meet Turkey’s economic needs and create a gas hub, Putin told a news conference. “In view of Turkey’s growing needs we are not only ready to expand the Blue Stream but can build another pipeline transportation system to help Turkey meet its growing gas needs. If this idea is considered to be expedient, we can create an additional gas hub for consumers in southern Europe in the Turkish territory on the border with Greece,” Putin said.
Alexey Miller explained that the would-be gas pipeline to Turkey would use the same entry station as under the South Stream project – the Russkaya compressor station.
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Rotork selected for pipeline project in Colombia
Rotork electro-hydraulic (EH) actuators have been selected as a reliable solution for failsafe valve control on a pivotal new oil pipeline under construction in Colombia.
The Colombian Bicentennial Pipeline will improve the country’s crude oil transportation infrastructure and keep pace with burgeoning production. The three stage project will run for nearly 1000 km from the Lianos region of the country to the port of Coveñas on the Pacific coast. The pipeline will encompass 42 in. and 36 in. dia. pipe and have a capacity of up to 600 000 bpd of crude oil when completed in early 2016.
The first phase of the project includes the laying of a 226 km pipeline from Araguaney to Banadia, for which Rotork EH actuators have been ordered for the control of 42 in. Class 900 pipeline ball valves. Situated at strategic locations along the route of the pipeline, these valves perform vital safety functions.
Designed specifically for critical safety applications, Rotork EH actuators combine the simplicity of electrical operation with the precision of hydraulic positional control and a programmable failsafe function. Failsafe operation for the actuators on this project is secured with stored energy provided by custom-built Rotork HPU hydraulic power units.
EH actuators utilise Rotork’s non-intrusive setting, commissioning and data communication technologies. In combination with Rotork Insight2 software, the data made available can help to maximise plant utilisation by identifying potential valve wear problems and facilitating predictive maintenance.
IEnova wins Mexico natural gas pipeline contract
IEnova, the Mexican subsidiary of US firm Sempra Energy, has been awarded a 25 year contract to build and operate a natural gas pipeline in the north of the country, by Mexico’s state power company CFE. CFE has said that the 254 km Ojinaga-El Encino pipeline project in northern Chihuahua state will need an investment of approximateley US$400 million.
In 2014, CFE announced various infrastructure projects near Mexico’s northern border with the US that are part of the company’s aim to boost US natural gas imports and help lower electricity rates via cheaper inputs and more modern power infrastructure.
Under the terms of the contract, IEnova will provide the transportation services of natural gas to the CFE for a term of 25 years. The pipeline is expected to begin operations during 1Q17. The company noted that the 42 in. dia. pipeline will have a design capacity capable of transporting approximately 1.4 billion ft3/d of natural gas.
Carlos Ruiz Sacristan, Chairman and Chief Executive Officer of IEnova, said: “This is a result of our experience in building energy infrastructure projects and our commitment with the development of Mexico. I would like to highlight that the tender process was conducted by the CFE with transparency and professionalism. This was a competitive bid in which five other companies participated.”
Technip awarded Tupi BV contract
Technip has been awarded a contract from Tupi BV, a consortium controlled by Petrobras Netherland BV, and constituted also by BG and Galp, for the ongoing development of the Iracema North field, located in the Santos Basin pre-salt area, Brazil.
Aiming to meet pre-salt challenges, the contract covers the supply of 114 km of flexible pipes, including gas lift, gas injection and gas export lines.
Technip’s operating centre in Rio de Janeiro, Brazil, will perform the engineering and project management. The highly technological flexible pipes are designed to meet Petrobras’ requested service life for up to 30 years, sour service application, water depths of up to 2500 m and high pressures to inject gas in the reservoir. Delivery is scheduled to start in the first half of 2015.
The flexible pipes will be produced at Technip’s manufacturing sites of Vitoria and Açu, the new state-of-the-art plant of the Group, which has already delivered its first products for the pre-salt developments in Brazil.
Adriano Novitsky, President of Technip in Brazil, commented: “This award confirms the flexible pipe as a reliable and optimised solution for the pre-salt challenging applications and Technips’ technological leadership in this business. It follows the flexible pipe supply contract awarded last year for the Iracema Sul field.”
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Wood Group secures major BP contract
Wood Group has been awarded a five year contract with an estimated value of US$750 million from BP. Under the contract, Wood Group PSN will deliver engineering, procurement and construction services to six UK continental shelf offshore upstream assets and the Forties Pipeline System (FPS) onshore midstream facilities in Grangemouth.
Effective January 2015, the contract will create 150 new jobs and will secure more than 700 existing positions. The contract is WGPSN’s largest award in 2014 and includes an option for two, one year extensions.
WGPSN already provide engineering, procurement and construction services for six BP offshore assets – Clair, Magnus, ETAP, Andrew, Bruce, and its new Glen Lyon FPSO, which is currently being constructed and is due to come online in 2016. This is the first time WGPSN has secured a contract for the FPS onshore facilities and adds to the company’s current contract to support BP’s Sullom Voe Terminal in Shetland.
Dave Stewart, UK Managing Director of WGPSN, said: “Wood Group has more than 40 years of experience working with BP globally and this new contract is testament to the partnership and understanding we have developed.
“Providing this combined service across upstream and midstream operations for the first time positions us well for continued excellence in delivering safe, collaborative and innovative services directed at maximising productivity and efficiency across BP’s assets in the UK.”
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Energy-hungryChina
Dr. Hooman Peimani
outlines the major pipeline
projects to watch in
China.
China begins 2015 with major milestones achieved in the preceding years to make the widely-used term of emerging economy an inaccurate description of its regional and
global status. Corrected in terms of purchasing power parity, China’s GDP surpassed that of the US as the world’s largest economy in October 2014, according to the IMF, although the American economy is still larger in absolute dollar terms. The country overtook its American rival in terms of energy consumption in 2010, with its total primary energy consumption of 2339.6 million toe when that of the US was 2284.9 million toe. It has since retained its status as the world’s largest energy consumer – as reflected in its 2013 total primary energy consumption of 2852.4 million toe equal to 22.4% of the global consumption against the US’s 2265.8 million toe equal to 17.8% of such consumption. The two milestones should not be a surprise, as they have been the
predictable outcomes of China’s change of course in 1978 that set the world’s most populous country on the track of economic growth.
Facing the growing cost of heavy imports of fossil energy and worsening air pollutions because of heavy consumption of such energy, China has made impressive efforts to decrease its consumption of oil, gas and coal and thus to reduce their share of its energy mix by encouraging, especially, renewables and nuclear energy. Despite its emergence as the world’s largest producer of wind turbines and solar panels, the country is still heavily dependent on fossil fuels accounting for about 90.38% (2578.2 million toe) of its energy mix (2852.4 million toe) in 2013. Yet, the bulk of these requirements has to be imported as there is still a large gap between its production and consumption of oil, gas and coal as evident in its respective 2013 statistics: oil (4.18 million bpd; 10.756 million bpd), gas (117.1 billion m3; 161.6 billion m3) and coal (1840.0 million toe; 1925.3 million toe). Consequently, securing reliable means for imports is crucial while their availability, although important, is not a major concern thanks to their global abundance at lowering prices.
PipelinesAgainst this background, pipelines are important components of Chinese energy security. Their importance has further increased owing to Beijing’s immediate and long-term concerns about the sea routes through which China imports the bulk of its energy imports. These are the existence of chokepoints on those routes (Gulf of Eden and Strait of Malacca) because of piracy or its threat and the possibility of expansion of armed conflicts in or around their costal countries to their respective waters (Red Sea and South China Sea), on the one hand. On the other, Beijing is aiming at decreasing its dependence, to the extent possible, on the sea routes over which it has and will not have control in the foreseeable future because of its naval power weaknesses. As a result, shifting its imports from sea to land and thus importing more petroleum from suppliers in its close proximity with land connection to China have motivated the construction of many pipelines in that country. Thus, import pipelines account for the bulk of the major Chinese pipeline projects, while the major domestic ones are meant to distribute the imported fuels in China. Given that China is switching to gas as much as possible to curb air pollution, most of the major Chinese pipelines are gas ones. Within the mentioned context, the following account offers a summary of the major ongoing Chinese pipeline projects.
The Russian-Chinese gas pipelineThe Russian-Chinese gas pipeline is the most important ongoing pipeline project in the Asia-Pacific region. Its importance does not lie in the volume of gas that will pass through it once it is operational in 2018 (38 billion m3/yr) as that of the Central Asian Gas Pipeline System is more than double this amount, even though it is certainly large enough (1 trillion m3 over 30 years) to rank it as one of the largest Chinese and also regional pipelines. What makes it important is that it reduces China’s dependency on expensive LNG imports by sea when the country lacks naval supremacy over
the sea routes used for such imports. Cheaper Russian piped gas surely makes the pipeline also important financially.
Additionally, uplifting Russia’s gas role in Asia makes the pipeline important. In this region, the Russians are currently confined to LNG exports while Russia’s main gas market, Europe, is diminishing in importance due to its declining and ageing population and shrinking economy. The latter’s increasing hostility towards Moscow over Ukraine to be possibly translated into its decreasing petroleum imports from Russia in the medium-term, if it finds alternative suppliers, is also detracting from its long-term significance for Russia.
The Power of Siberia pipelineBeing a Russian-envisioned project to help Russia expand its exports to East Asia, the Power of Siberia GTS (POS), “Sila Sibiri” in Russian, is the Russian pipeline for exporting gas to China. The pipeline (approximately 4000 km; 52 in.; 61 billion m3/yr) is a joint venture of CNPC and Gazprom. Consisting of two segments, the pipeline, also known as the East Route Gas Pipeline, is designed to facilitate gas transportation from the Irkutsk and Yakutia gas production centres to Russia’s Far East and also China. To this, China will add a pipeline to import Russian gas across the Russian-Chinese border, the specifics of which are currently unknown.
The pipeline is part of a deal described by the Russians as their largest one ever (US$400 billion) involving the development of the Russian East Siberian gas fields, sale of Russian gas to China for 30 years and pipeline construction. Gazprom will start developing its Chayandinskoye (Chayandin) field’s gas parallel to its construction of the pipeline’s first segment (3200 km Yakutia-Khabarovsk-Vladivostok) to be completed by late 2017 as planned. Its second segment (800 km Irkutsk Region-Yakutia) will be constructed later. The Chayandin and Kovyktin gas fields in eastern Siberia will be the POS’s main feeders.
Gazprom has instructed all of its specialised structural units and subsidiary companies to begin the implementation of the deal’s investment projects, including gas production, transmission, and processing capacity projects. Thus, the welding of the first roll of pipes on the POS’s Russian part in Yakutsk, the capital of Russia’s Sakha (Yakutia) Republic, on 1 September 2014 began the construction of the pipeline. Chinese Vice Premier Zhang Gaoli and Russian President Vladimir Putin attended the event. The POS’s Russian part starts at the Kovyktin and the Chayandin gas fields to extend through the existing pipelines in eastern Siberia and end in the Far East Port of Vladivostok.
The construction of the POS’s Chinese section is set to start in 2015. Reportedly, the Chinese government has approved the CNPC plan for its construction. Consisting of northern, southern and central sections, it will pass through six Chinese provinces (Heilongjiang, Jilin, Liaoning, Hebei, Shandong and Jiangsu), the Inner Mongolia Autonomous Region, Tianjin and Shanghai.
There is uncertainty about the pipeline’s total cost while there are differing reports about that of its Russian part. Whereas some sources estimate the latter at US$20 billion, others suggest China may make up to US$25 billion in advance
14 World Pipelines / JANUARY 2015
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