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difficult to provide a choice of pipeline providers
to product owners. As some consider this scenario
to be monopolistic, there is a desire to ensure that
the operators of fee-based pipelines feel the need to
continuously improve the effectiveness and efficiency
of their organisation and provide best-value to their
customers. To encourage this, fees are often regulated.
In assessing fees, regulators will seek to ensure a fair
price is paid by both shippers and by final consumers,
while providing opportunity for the most progressive
pipeline owners. Pipeline performance can impact
fee-based decisions, including the manner in which
operating expenditures (OPEX) are reduced, even if
that necessitates additional upfront capital investment
(CAPEX). At the other end of the scale, fees may be
set at a level that forces a less efficient operator to drive
cost out of its business, if it is to remain viable.
Long-term Investment Means
Above-and-Beyond Maintenance
Service companies, in particular, help infrastructure
investment companies qualify and quantify risk
to their pipeline assets through inline inspections
and non-destructive evaluation. In fact, they often
establish partnerships to complement an infrastructure
investment company’s long-term investment strategy.
One example of this risk-based approach is Nord
Stream AG, a consortium of five shareholders that
owns two offshore gas pipelines that operate through
the Baltic Sea from Russia to Germany. “Nord
Stream’s operating life is 50 years,” says Jean-François
Plaziat, the company’s Deputy Technical Director
of Operational Maintenance and Engineering. “To
achieve that amount of time, our company has
developed a long-term pipeline integrity management
strategy. Regular pipeline inspections and maintenance
works are essential parts of the plan, including annual
maintenance of mechanical components and testing of
the automation system.”
Inspections and testing allow the company to
quantify the risk – and consequences – of potential
damage and accidents. And if the potential
consequences are too high, then they will spend the
requisite funds to prevent them. For example, at
Nord Stream, “the main risk of damage is related to
third-party impact such as sinking ships,” says Plaziat.
Therefore, “the pipeline is continuously monitored by
a leak detection system,” ensuring quick emergency
response if needed.
An Investment in Improvement
Perhaps the most important difference of operating
a pipeline as a long-term investment is that the
managing company is likely to pursue integrity
assessments and make improvements beyond
those required by safety inspectors. Infrastructure
investment companies need to completely understand
the condition of their pipeline through testing and
inspections – and they need trusted partners to help
them identify improvements that can enhance the
versatility, safety, and efficiency of their investment for
years to come.
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I N N O V AT I O N S • V O L . V I I , N O. 1 • 2 0 1 5
When it comes to finding ways to decrease OPEX, most
infrastructure investment companies look to engineers,
service companies, and other operators for guidance.
For example, one way to decrease OPEX is to make the
pipeline more efficient. An efficient pipeline system
requires less time and money to operate. This means
that infrastructure investment companies are especially
open-minded if suggested improvements – like tie-ins or
refurbishments – increase the efficiency and versatility of
the pipeline and allow them to reduce OPEX. “More than
ever before, if a pipeline engineer has a sound rationale
to justify an approach, this rationale is given proper
consideration,” explains Bill Rees, General Manager for T.D.
Williamson, Central Europe. “These companies are looking
out for their shareholders, so if they can spend money now
to ensure long-term stable returns, they will.”
CAPEX
OPEX
• Equipment and pipeline inspection,
maintenance and repairs
• Insurance
• Labour
• Consumables
• EPRS and emergency contingency
• Legal
• Local taxes
• Flaring and gas shrinkage (lost gas)
• Buildings and utilities
• Depreciation
• Right of Way
• Construction
• Linepipe
• Cleaning/Scraping facilities
• SCADA
$
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
What Does It Mean
For Operators?
OPEX
vs.
CAPEX
[operating expenditures]
[capital expenditures]