Historical Development of the Pipeline as a Mode of Transportation M. O. Lawal Professor Department of Geography and Planning Faculty of Social Sciences Lagos State University, Ojo P.M.B. 1087 Apapa-Lagos, Nigeria ABSTRACT The evolution of pipelines as a mode of transportation is examined. Specifi- cally, the paper considers the general sa- lient characteristics of pipeline trends and some of the recent changes of pipeline transportation both in developed coun- tries and OPEC countries vis-a-vis their functions. Recent developments in Nige- ria provide an example of proposed oil and natural gas transfer from Africa to Europe. KEY WoRDS: pipelines, transportation, oil, gas, history INTRODUCTION Over the years, a vast worldwide net- work of various transportation technolo- gies, ranging from pipelines and tankers to trucks and barges, has been devel- oped. The purpose was to ensure that oil and its many products reach consumers no matter where they live, whether in metropolitan areas, towns, villages, or even in the remotest part of rural areas. This system has constantly been im- proved upon. The fossil fuels, oil and gas, produced by many countries are com- monly transported from their sources to areas of consumption. Table 1 and Table 2 list the 15 highest global producers of crude oil and natural gas in 1998. In terms of crude oil, Saudi Arabia is the leader and most of the product is exported via tanker through the Gulf or by pipelines, such as the Trans Arabian Pipeline (TAP) to world markets via the Mediterranean. More specifically, Table 1 reveals that leaders in crude production are not nec- essarily large consumers of the product since their industrial base is relatively modest (e.g. UAE, Kuwait, Nigeria). With regard to natural gas, a similar contrast occurs between production and con- sumption. For example, Algeria and Uz- bekistan are world-class natural gas pro- ducers. However, they consume modest amounts of the energy compared to their production. The transport of the oil and gas is a significant element in the ultimate cost of the fuel. Perhaps even more so, within a country and between contiguous 91TABLE 1 Crude Oil Production in 1998 (000's Tonnes) Percent of Country 000 Tonnes World Production Saudi Arabia 443,215 12.60 United States 367,920 10.46 Russian Federation 304,300 8.65 Iran 187,695 5.33 Mexico 174,395 4.96 Venezuela 171,825 4.88 China 159,860 4.54 Norway 150,020 4.26 United Kingdom 132,630 3.77 Canada 124,655 3.54 UAE 121,365 3.45 Kuwait 107,595 3.06 Nigeria 106,245 3.02 Iraq 105,315 2.99 Indonesia 7,875 2.04 World Total 3,518,920 countries such as the United States and Canada, or between Russia and Eastern Europe, the importance of transport and distribution especially by pipeline is clearer. Without efficient ways of export- ing the products, market share and econ- omies of producing nations may decline. Furthermore the loss of foreign capital is jeopardized by the producing country. Since its nascence, the oil industry has sought ways of simultaneously improv- ing transport efficiency, so that unit cost of transport can be lowered. As transpor- tation cost is minimized, petroleum prod- ucts can be delivered from producers to consumers at the lowest possible cost. The key roles in transporting oil from the field to markets are fulfilled by pipe- lines and crude oil tankers. Tankers are particularly crucial to the global distribu- tion of oil. Before World War Il (1939- 1945) when the demand for petroleum products was more modest than now, ad- vantage of the economies of scale was 92 taken by concentrating refining idustries in the major oil producing areas of the world (Odell, 1965). With the rapid in- crease in demand for a greater range of refined petroleum products following the war, came a trend towards siting refiner- ies in the consuming areas rather than close to the point of production. The growth of “super ships” developed (Mos- teri, 1975). Complimenting the services or operations of these vessels are railroad, and pipelines that assist in the movement of petroleum products from the refineries to depots and to consumers. This pattern of movement has been classified into three major forms by Ward (1963), Odell (1965), Standen (1968) and Baker (1975) as follows: i, Movement of crude oil from points of production to refineries, which is known as primary transport. ii, Movement of refined products from refineries to terminals or depots known as secondary transport. ool EeTABLE 2 Natural Gas Production in 1998 (000,000 CU.M) Percent of Country 000,000m? World Production Russian Federation 551,300 24.27 United States 543,800 23.94 Canada 160,400 7.06 United Kingdom 90,300 3.97 Algeria 72,800 3.20 Indonesia 68,400 3.01 Netherlands 63,600 2.80 Uzbekistan 51,100 2.25 Iran 50,000 2.20 Norway 47,800 2.10 Saudi Arabia 46,000 2.02 Malaysia 41,300 1.82 UAE 36,500 1.61 Mexico 34,800 1.53 Australia 30,600 1.35 World Total 2,271,800 iii. Movement involving direct delivery from refinery to consumers, which forms a small but increasing pro- portion of oil movement. This is known as tertiary transport. For the primary transport, waterways, boats, ocean tankers, and pipelines are mostly used, while tanker trucks take the lion's share of the secondary transport. The rail tankers also constitute one of the containerized modes of transportation used in many countries. The road and railroad play significant roles in direct de- liveries. The mode of transport, whether rail or road, water or pipeline, is not made ‘on the grounds of transport costs alone, but in the context of the total distribution costs. Total distribution cost according to Baker (1975) embraces all three methods of crude oil movement as well as the stor- age and handling of oil products at refin- eries and terminals. The major objective is to obtain the lowest distribution cost for the total of all petroleum product move- ments. It follows therefore, that by mini- mizing any one type of cost (e.g. second- ary costs) will not necessarily be the right policy in relation to the minimization of the total distribution costs. This paper examines the historical de- velopment or evolution of pipelines in general, its global trends, and the general characteristics of pipelines, as well as re- cent changes in pipeline development. The method of distributing petroleum products in many countries ranges from road and railroad to water transport. However, utilization of pipelines is now gaining ground in many countries with higher road costs in oil production, con- sumption, and distribution. The increas- ing use of pipelines in recent years ac- cording to Manners (1962) represents one of the most notable revolutions in the his- tory of transport and especially in the transport of energy. 93EVOLUTION OF PIPELINES Chronologically, the history of oil transportation began with oil shipment across the Atlantic. The Elizabeth Watt is generally credited as the first ship to carry a cargo of oil across the Atlantic in 1861 (Baptist, 1980). In 1865, the G/uckauf, built on the River Tyne in Britain, had a holding capacity of 2,300 tons. Her hull was de- signed specifically as a container for free liquid, instead of a cargo hold of barrels. Oil transportation by sea was closely fol- lowed by pipeline transportation because it had proved to be one of the most reli- able and economic means of transporting oil and oil products (Jones, 1975). Pipe- lines provided a continuous flow process and not a batch process, as do ships, trucks, or rail vehicles. Pipelines constitute a specialized transportation system for the movement of crude oil, natural gas, dredged sedi- ments, and other fluids and by-products. Besides their use for the movement of water, oil and gas, pipelines are now be- ing used for long distance transport of chemicals, liquified coal, otherwise known as “stabilized slurry” (Manners, 1962; Robinson and Bamford, 1978) in which the percentage composition of coal to water are in the proportion of 65 per- cent coal, and 35 percent water. This tech- nique allows the coal to remain in sus- pension, easy for transportation and storage. Pipelines are known to carry 30 percent more coal than other existing methods of transmission. The slurry can be burnt as a liquid fuel and thus requires no dewatering plant (Manners, 1962; For- ster, 1969; Robinson et al. 1978). Pipelines have been successfully used to transport milk in parts of Switzerland (Mountjoy, 1959; Manners, 1962). This new and rap- idly increasing role of the pipeline in transport geography has been made pos- sible by many technological advances. HISTORICAL DEVELOPMENT OF PIPELINES The use of pipelines predates the Christian era, when water supplies are known to have been piped over long dis- tances in the Middle East. Bamboo pipes 94 were being used in China circa 5,000 B.C., and pipes made of clay or stone were widely used in the ancient civilizations of Egypt, Mesopotamia and Rome (Robin- son and Bamford, 1978). There was a rec- ord of a long distance pipeline made out of ox-hides sewn together, which was laid out across the desert to supply water to the Persian forces when Cambyses in- vaded Egypt in 525 B.C. The chief purpose of a pipeline how- ever, was to convey water from produc- tive reservoirs to consuming areas. Pip- ing represented the only satisfactory means of conveyance since water is a commodity of low value and consumed in large quantities. In time the discovery and use of petroleum however, ushered in a new era in pipeline use. Pipelines in their present role of oil transport have ex- isted for over a century and their devel- opment has been closely connected with expansion of industry and the develop- ment of the automobile (Osayimwese, 1986). The first crude oil pipeline was con- structed of wood and laid down in the United States in 1861 (Robinson and Bamford, 1978). The first modern oil pipe- line was built in Pennsylvania in 1865 by S. F. Karns (Williamson and Arnold, 1959; Fair et al. 1959; Locklin, 1968; Dudley, 1986; and Harpers 1978) to offset the high transport cost levied by teamsters who hauled oil over a five-mile route for $3.00 a barrel. In 1865, a pipeline system was built to replace this very inefficient method and it did the job at a reduced cost of $1.00 a barrel (Patterson, 1962). Karns proposed to lay a 6-inch (15.2 cm) artery from his well at Burning Springs, West Virginia to a rail head at Parkersburg. Unfortunately before he could start construction, the Civil War broke out and he enlisted in the Union Army. Hermus Jones, a neighbor of Karns in West Virginia who moved to Oil Creek after the outbreak of war planned to con- struct a 4-inch wooden line from the Tarr farm to Oil City, Pennsylvania in Novem- ber, 1862. However, he failed to secure a charter from the Pennsylvania legislature and thus abandoned the project. Commenting on the current status of transport technology, the Titusville Morn-ing Herald declared on April 21, 1866 that “The process of moving oil has entirely superseded the old method of hauling oll in barrels from Benehoff to Sheffer.” The following September, Scientific American announced that because of the innova- tion, a 600-ft. oil reservoir was pumping oil to Jersey City, a distance of over 400 miles, without having been touched by the hand of man” (Williamson et al. 1959, 187). WORLD PIPELINE TRENDS The United States of America (U.S.) had the longest pipeline network in the world, which totaled 434,000 kilometers in 1955. This was increased to a total of 569,000 kilometers by 1970 and to 687,540 kilometers in 1980. The network increased by 31.2 percent within the first 15 years (1955-1970) and another 20.7 percent within the later 10-year period (1970-1980). Following the United States, the for- mer Union of Soviet Socialist Republics (USSR) had a total natural gas pipeline of 111,700 kilometers in 1977, which in- creased to 144,000 kilometers in 1983 rep- resenting an increase of 28.9 percent. Mellor (1982, p. 167) succinctly observed that pipeline transport accounted for about a fifth of all transport methods in the Soviet Union. Robinson (1979) noted that one of the most recent oil pipelines and the largest built so far, is the 4,800 kilometer “Friendship Pipeline” which carried crude oil from the Ural-Volga oil fields in Russia to eastern Europe, as well as West Germany, France and Italy. In Britain, the history of pipeline de- velopment dates back to 1940, when gas- oline supplies became inadequate in terms of distribution. Undersea pipelines were built from Liverpool to the south coast of England, which ensured safe shipping transport against attack and bad weather. The increasing demand for oil and oil products in the 1960s coupled with the discovery of natural gas in the North Sea, led to a boom of oil and gas. Osyaimwese (1986) remarked that the United Kingdom pipeline had gained in the percentage share of transport volume of refined products at the expense of practically all other competing modes. The share of pipeline transport had dou- bled from 8.8 percent in 1967 to 15.7 per- cent in 1973, and 18.6 percent in 1976 respectively. The use of pipelines according to Em- erson (1950) is not peculiar to the United States alone, but is likewise used abroad wherever there is an economic justifica- tion. For example, pipelines have formed integral part of the crude oil producing ies in Venezuela and Colombia, where they are used to bring crude oil from the interior oil fields to the coast for transshipment by vessel. With increased production of crude oil in the Middle East, the installation and operation of the first crude oil pipelines from the desert inte- rior to the Persian (Arabian) Gulf and to Mediterranean ports have become of spe- cial interest to Iran (Longhurst, 1959). GENERAL CHARACTERISTICS OF PIPELINES In contrast with all other forms of transport, pipelines provide for the con- tinuous movement of a commodity at a constant rate, rather than for the move- ment of variable amounts at irregular in- tervals. As a consequence, the transport opportunities offered by pipelines are somewhat rigid. Not only is there a limi- tation to the range of commodities which can be efficiently moved. Also the pump- ing and discharge capacity are limited by the physical parameters of the pipe and the fluid being transported. Pipelines are also rigid in the routes which they serve. Once they are laid down, there is no possibility of transfer- ring part of the structure to serve an al- ternative route, even if conditions change and different patterns of transport are re- quired. In contrast to pipelines, crude oil tankers are a highly flexible form of trans- port. They can easily be transferred from one market to another, even during the course of voyage; and since the provision of additional carrying capacity can be made in relatively small increments, they are ideally suited to a gradual growth of demand. Pipelines, given sufficient tonnage, are generally more economical than rail or 95water transport. Hoyle (1959) attributed the economical reasons in the use of pipelines to the construction of a crude oil pipeline from the port of Lavera to east- ern France and Germany. In Nigeria for example, a comparison of the commer- cial value of pipelines with other internal means of transport reveals that pipelines possess a clearer competitive advantage for mass movement of crude oil and nat- ural gas (Schatzl, 1969). Furthermore Schatzl remarked that “pipelines are un- doubtedly the best means for the bulk transport of crude oil and natural gas in southern Nigeria because of their great reliability, easy adaption to the country- side, their almost unlimited capacity, and the simplicity of construction and manner of operation” (1969). Emerson (1950) summarized the ad- vantages that accrue in the use of pipeline as follows: i. That pipeline shipper/owner in which the owner may have an exten- sive familiarity with the complete transportation situation of the prod- ucts. The supplier according to Em- erson's view knows what transpor- tation capacity is available, where his firm’s oil is, and what delivery schedule can and will be maintained. i. Pipelines offer a unique desirable service where oil has to be trans- ported overland in bulk. Weather conditions do not disturb pipeline transportation. Handling the com- modity is simple and a minimum la- bor force is required. Losses in han- dling oil by this method are small since the transportation service is clearly consistent and certain. i. Under prescribed conditions pipe- line transportation is economical. It was estimated that 3 million tons per year at $0.40/ton/kilometer was the break-even cost for transporta- tion by pipeline and by barge (Harper, 1978). However, for trans- porting 30 million tons/year a pipe- line can be operated at $0.10/ton/ 96 kilometer. similarly, the cost of natural gas transported by pipeline compared to energy transmitted by electric power lines was 10 times less expensive. Other salient char- acteristics of pipelines have been provided by Manners, 1962; Axel- rad, 1964; Forster, 1969; and Har- oer, 1978). SOME RECENT CHANGES IN PIPELINE DEVELOPMENT AND DISTRIBUTION The greatest changes in pipeline de- velopment and distribution in recent years are those that have occurred as a result of the emergence of the Organiza- tion of Petroleum Exporting Countries (OPEC). Oil has been discovered and tapped in enormous quantities in these countries. Pipeline infrastructure was the principle system of distribution of oil and its products from the oil fields to the re- fineries and depots (Table 3). Liquified natural gas and other petroleum products have also been transported by the use of pipelines. The history of OPEC dates back to 1949 when through Venezuela, a consultative meeting of oil producing countries oc- curred to discuss the need for closer com- munication. OPEC was actually formed as @ permanent inter-government body at the Baghdad Conference of September 10-14, 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, the five founding members. Ultimately, Algeria, Ecuador, Gabon, Indonesia, Libya, Nigeria, Qatar and the United Arab Emirates joined the cartel. At the moment, Nigeria has over 3,000-kilometer network of pipeline (La- wal, 1989). Apart from increased length of pipeline, the pipe diameter has increased to allow the free movement greater ca- pacity of oil products. PROPOSALS FOR THE FUTURE PIPELINE DEVELOPMENT: AN AFRICAN EXAMPLE The oil and gas industry is significant to the economy of Nigeria (Table 4). Ithas been estimated that over 90 percent of foreign revenues are derived from theTABLE 3 Lengths of Oil Pipelines in OPEC Countries * + + Country Miles %Mileage Kilometers %Kilometers Algeria 4,457 17.5 TA 2s7 17.5 Ecuador 365 1.4 587.4 1.4 Gabon 326 1.3 524.6 1.3 Kuwait 238.8 0.9 384.3 0.9 Indonesia 1,131 45 1,820.1 45 Iran 3,627 14.3 5,836.9 14.3 Iraq 3,245 12.8 5,222.2 12.8 Libya 2,592 10.2 4,171.3 10.2 Nigeria 773 3.0 1,243.9 3.1 Qatar 220 0.9 354.0 0.9 Saudi Arabia 5,489 21.6 8,833.4 217 United Arab Emirates 257 1.0 413.6 1.0 Venezuela 2,403 9.5 3,867.1 9.5 Saudi Arabia-Kuwait 285 VA 304.8 0.7 Neutral Zone Total 25,408.5 100 40,736.3 100 Source:*OPEC Annual Statistical Bulletin, 1988 **Computed Note 1 Mile = 1.6093 Km. fossil fuel industry in the country. Esti- mates of the total crude oil reserves vary. However, they generally average about 22 billion barrels. Current daily pro- duction is about 1.8 million barrels per day, but has peaked at about 22 million barrels per day (webmaster@nigerianoil. gas.com). Most of Nigerian oil is light sweet crude and is pumped from some 600 fields in the deltaic plain of the Niger River. Additionally, the country is a major focus of natural gas reserves. It has been estimated in 1998 that Nigeria had 3.5 tril- lion cubic meters of gas reserves (Table 4). As a member of OPEC and a producer or potential producer, Nigeria is a major player in world oil and gas markets. Al- though much of the oil and gas is ex- Ported through seven terminals and a number of floating production vessels, pipelines northward through the Sahara into Europe are proposed. Recently, Spain submitted a proposal to the International Energy Agency (IEA) to build a natural gas pipeline from Ni- geria to North Africa and to serve markets in Europe. One of the proposed routes originates at the gas field at Bonny (River State), Nigeria and terminates in Spain. The pipelines would pass through Mo- rocco, Algeria and beneath the Straits of Gibraltar to Spain. The total length of the pipeline is about 1,600 kilometers and its estimated cost of construction is $10 billion. The second optional route for the pipe- line is to originate at the Bonny gas field in Port Harcourt and be routed via the Ni- ger Republic, Mali and Mauritania to Mo- rocco. Here it would be linked to another pipeline from Algeria and cross Gibraltar to Spain. This project is estimated at about $13 billion. A third proposal is more modest. It is proposed to link Algeria and Spain with 97TABLE 4 Natural Gas Reserves in 1998 (000,000 CU.M.) Country 000,000 CU.M. Percent Russian Federation 48,140,000 32.88 Iran 23,000,000 15.71 Qatar 8,490,000 5.80 UAE 6,000,000 4.10 Saudi Arabia 5,790,000 3.96 United States 4,740,000 3.24 Venezuela 4,040,000 2.76 Algeria 3,690,000 252 Nigeria 3,510,000 2.40 Iraq 3,110,000 2.12 Turkmenistan 2,860,000 1.95 Malaysia 2,310,000 1.58 Indonesia 2,310,000 1.58 Uzbekistan 2,050,000 1.40 Kazakhstan 1,870,000 1.28 World Total 146,390,000 (Source: Worldoil.com) the gas pipeline and it is expected to cost about $7 billion. It is, however, not known exactly when the IEA, the western world’s energy monitoring agency, might ap- prove the initiation of the project (Essien, 1983). SUMMARY AND CONCLUSION Evidently, the technology of oil trans- portation and distribution has improved considerably over the years. 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