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Pipeline construction and operations life cycle costs

Pipeline construction and operations life cycle costs

Pipeline construction and operations life cycle costs

(OP)
Hi all,

I am looking for information on pipeline construction and operations life cycle costs. I have heard about a ratio of around 15% for construction and 85% for operations over a 30 year span. I understand that this ratio could vary depending on pipes, product, etc.

Has anyone got any information or can anyone recommend reference publications/papers that are accessible to the public, so as to gain some more information about the topic?

Thank you

RE: Pipeline construction and operations life cycle costs

That's not a bad rule of thumb for a well designed pipeline.
You can prove it to yourself quite easily by comparing the capital cost of a pump over its lifetime to the cost of the fuel or electrical power it would use in the same period at BEP Head & Flow.

The principle is that fuel is roughly equal to annual operating costs. Of course that is modified by providing for TLC for the pipeline, but not really much. The greatest non-capital expenditures are for fuel ... and taxes.

To include a pipeline,
Calculate the cost of a pipeline as a function of diameter and length and add the capital cost of the pump, then compare that to fuel used.

Let's simplify it a little by totally ignoring some important variables, but it's still not too far wrong,

Capital Costs:
Pump Cost = $2500 / installed HP * HP_installed
Pipeline Cost = $1,000,000/KM * length of line_KM

Operating Cost:
Power Cost/yr = 0.75 * HP * 8760 * $/kWh
Say you can get power for 0.12/kWh

Ignore all that Net Present Valuem=, insterest rate and banker stuff and just assume a 30 year design life (so just divide capital costs / 30)

What do you get?


Independent events are seldomly independent.

RE: Pipeline construction and operations life cycle costs

The way you posed the question makes it hard. I've build pipe that was just connecting stuff (no pump or compressor stations) and the annual operating cost of the pipe is really close to zero, so over the life the capital is around 95% and the op cost (cathodic, pigs, etc.) is 5%. Add a compressor or pumping station and the numbers turn around the other way.

Pipe material has a big role in the capital too. In steel pipe I generally see the capital being 40% material and 60% labor and installation equipment. For the new Spoolable composites the numbers are closer to 80% materials and 20% installation. For HDPE it is more like 10% materials and 90% labor.

BigInch,
There is usually a pipe size component in the $/km number, what size pipe were you assuming in your $1MM/km number?

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
The plural of anecdote is not "data"

RE: Pipeline construction and operations life cycle costs

As you notice, I said ignore some of the more important variables.
Diameter being one of those ignored.
Not to mention where the system will be constructed.
Pipeline Length is "Long".

In New York that could be 3MM/Km.
In Wyoming that could be 0.15 MM/Km.
For a 4", in New York, that could be 0.3 MM/Km
For a 40", in Wyoming, that could be 2 MM/Km
The 1 MM/Km is a "one size fits all", roughest possible estimation number that probably corresponds to an average KM price for a (probably 24") pipeline diameter, built between California and Ohio (in the West to East).
In other words, a WAG.

For example, Keystone Pipeline Cost is currently estimated at just over $5B.
Total length is 2148 miles.
about 2.3 MM/Mile
x 0.62 = 1.4 MM/KM (Note that's roughly 1MM Euros/Km.)
I think Keystone is estimated higher than most pipeline costs due to the politics surrounding it, so on the average I think 1MM/km isn't too far off for an average.
Before yr 2000, I used $1 MM/Mile, but the dollar has lost about 40% since then, and I've gone meteric, hence the 1MM/Km. If your optimistic use $, else Euros.

Independent events are seldomly independent.

RE: Pipeline construction and operations life cycle costs

Thank you.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
The plural of anecdote is not "data"

RE: Pipeline construction and operations life cycle costs

I just this second was transferring files from a stick drive onto another hard disk and bumped into this doc from Schneider Electric. I decided to open it and look at it first and ran into the "exact" same numbers. Here's the excerpt.

Independent events are seldomly independent.

RE: Pipeline construction and operations life cycle costs

(OP)
Thanks BibInch and zdas04

Among the references I have found on the internet on the topic, the "Introduction to Pipeline Economics - Presentation" by Tom Miesner is interesting.

Thanks again.
Sam066

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