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© 2011 Pipeline Knowledge & Development

Pipeline PredictionsPresented 29 November, 2011

at

O&G PIPES Global Conference 2011

By

Tom [email protected]

www.pipelineknoweldge.com


Tom Miesner• Principal Pipeline Knowledge & Development

– Pipeline Knowledge Transfer (Instructor lead and video)

– Strategy and Project Development

– Expert Testimony and Arbitration

– Management and Improvement Consulting

• Extensive pipeline background

• Author

– Oil and Gas Pipelines in NonTechnical Language

– The Role of Pipelines and Research in the U. S.

– A Practical Guide to US Natural Gas Pipeline Economics

– The Interstate Natural Gas Transmission System: Scale, PhysicalComplexity, and Business Model

– Chapter 26: Pipeline Engineering for McGraw Hill’s TransportationEngineering Handbook

• Currently writing The Final Mile, Natural Gas Distribution Pipelines inNonTechnical Language

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Presentation Outline

• Energy Supply and Demand and Demand and Supply

• Environment (PEST)

– Political/Legal

– Economic

– Sociological

– Technological

• Past Events Create the Current Reality

• Future Themes

• Prognostications

• Conclusions

• Final Thoughts

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Those who ask what and how will always have a job –Those who ask why will always be the boss.


Supply and Demand

Demand and Supply

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Nothing happens unless someone buys something.

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Non-OECD* Countries Drive the Increase

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*Organisation for Economic Co-operation and Development

OECD Priorities•Restoring public finances•Boosting jobs and skills•Restoring public trust•New sources of growth


China and India Account for Half of the Increase

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From a demand perspective, about half of the new pipelinecapacity built over the next twenty five years will likely serve theenergy needs of China and India.

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Liquids and Natural Gas go from 57% to 52%

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Pipelines will movemore than half ofthe world’s energy


OPEC Conventional Production

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5


Non-OPEC Conventional Production

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Unconventional Production

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6


Unconventional Production

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Will Canadian oil sands, U. S.tight oil, and Brazilian pre-saltdeposits “radically alter”theglobal flow of oil as Daniel Yerginnow predicts? OGJ, 7, Nov2011


EIA Liquid Cases Show Changes

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Pipelines tie supply and demand

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Non-OECD is ~75% of the Gas Growth

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168


Natural Gas Production Growth

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From where willOECD Europe getits gas?

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Natural Gas Growth

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Some U.S. LNGimport terminals arebeing converted toexport terminals.


Initial Shale Assessments

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Many areas remain to be assessed

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Supply/Demand Conclusions

• Liquids and natural gas will remain a robust part ofthe energy mix for many years.

• China and India will be primary demand growthareas.

• Middle East, Non-OECD Asia, Europe/Eurasia,Africa, and the U.S. account for the majority of thesupply growth.

• Oil Sands, biofuels, and coal to liquids are forecast toplay a growing and important role in liquids supply.

• Unconventional oil and gas is impacting theimport/export game.

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PEST Analysis

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Political/Legal

• Systems

– Democratic, consensual (ground up)

– Totalitarian, repressive (top down)

• Cross border issues

– Governance and regulations

– Spills

– Rates, charges, and integrity

• Natural gas –the environmental solution

• Green house gas

• Leaders as followers –political polling

• Activism

– Arab Spring

– Occupy Wall Street

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Political/Legal

• Systems

– Democratic, consensual (ground up)

– Totalitarian, repressive (top down)

• Cross border issues

– Governance and regulations

– Spills

– Rates, charges, and integrity

• Natural gas –the environmental solution

• Green house gas

• Leaders as followers –political polling

• Activism

– Arab Spring

– Occupy Wall Street

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Investments requirestability and predictability.

Consent of the those affected.

Environmentalblessing and curseof natural gas.

positioning the oppositionvs. Positioning issues.

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Economic

• Systems

– Free enterprise

– Centrally planned

• Country debt and solvency

• Unemployment

• Rotation of pipeline ownership

• Funding risk and structures

• Outsourcing

• Natural gas distribution vs. electricalgrid

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Economic

• Systems

– Free enterprise

– Centrally planned

• Euro zone crisis

• Unemployment

• Rotation of pipeline ownership

• Country debt and solvency

• Funding risk and structures

• Outsourcing

• Natural gas distribution vs.electrical grid

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Equally poor or… unequallyrich. –T. Friedman

Demand, not supply,causes people to buythings.

There are no bogusproject economics –only bogus assumptions.

Investments requirestability and predictability.

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Supply

Technological

• Communication –flatting the world

• Connectivity –application sharing

• Computing power –analysis

• Memory

• Monitoring and Modeling

• Simulators and training

• Producing oil and gas from the source rock

• Alternatives (Clean coal, Nuclear)

• Carbon capture and storage (CCS)

• Funding for basic research

– Governments

– Vendors

• Technology certification

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Computing andCommunications

Cre

dit

Ste

ve

nH

old

itch


Technological

• Communication –flatting the world

• Connectivity –application sharing

• Computing power –analysis

• Memory

• Monitoring and Modeling

• Simulators and training

• Producing oil and gas from the source rock

• Alternatives (Clean coal, Nuclear)

• Carbon capture and storage (CCS)

• Funding for basic research

– Governments

– Vendors

• Technology certification

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Tools are justtools, they arenot inherently evilor good.

How to use “new”technology in an“old”business.

Who shouldinvest intechnologywhen?

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Sociological

• Social media

• Data –information – knowledge

• Security threats

• Egos and standards

– The laws of physics apply universally

– Local practice causes differences in application

• Safety and the value of human life

• Tolerance for failure

• Entitlement mentality

• Seat at the table

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Sociological

• Social media

• Data –information – knowledge

• Security threats

• Egos and standards

– The laws of physics applyuniversally

– Local practice causes differencesin application

• Safety and the value of human life

• Tolerance for failure

• Entitlement mentality

• Seat at the table

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Posting somethingon the internet doesnot mean it is true.

Life liberty and thepursuit of happiness

Lack of accountabilityleads to anentitlement mind set.

Consent of the those affected.

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Past Events Create the Present Reality


Pipeline Accidents Are Widely Reported

Buncefield Major Incident Investigation Board

Fluxys –Belgium, Utusan Online

http://www.fws.gov/southwest/es/contaminants/NRDAR/SiteInformation/Texas/SanJac.pdf

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Olympic Bellingham, WA U.S.

Source National Transportation Safety Board


El Paso, Carlsbad NM, U.S.

Source National Transportation Safety Board

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BP Release, Alaska North Slope, U.S.

Photo Credit: BPXAPhoto Credit: BPXA


PipelineCompany

InterestedCitizens

Owners/Investors

Government

Employees

Customers(Shippers)

Non-GovernmentalOrganizations

(NGOs)

Industry

Landowners/Right-of-Way

Grantors

Suppliers/Contractors

Stakeholders

Miesner & Leffler, Oil and Gas Pipelines in NonTechnical Language, PennWellPublishing, 2006, Figure 14.1

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Stakeholder Expectations

• Safety– Public

– Employee

• Employees

– Technical knowledge

– Business, people, and other

skills

• Environmental Performance

– Water

– Air

• Reliability– Availability

– Quality

• Return

– Costs

– Returns

– Investment

Excellence in each area is required to be in the business.


Predictions• Gas interconnects will continue to increase making

integrated system operations more critical.

• Eventual harmonization of technical standards.

• Energy (and pipelines) will continue to be a politicaltool.

• Public communication and education will become evenmore critical.

• Stakeholders will require increased government roles.

• Linking demand and supply presents opportunities.

• Growing view of pipelines as investment vehicles.

• Attracting talent will continue to be a challenge.

• Managing processes will continue to develop.

• Knowledge will be critical for success.

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Conclusion

• Strategies to coexist with other infrastructure andpopulations must be developed and implemented.

• Safety, people development, environmentalperformance, reliability and efficiency are allcritical.

• Tools to gather and manage information must bedeveloped, understood, maintained and used.

• Pipelines will continue to be critical to fosteringour standard of living for the foreseeable future.

• It is a great time to be in the pipeline business.


Operators of the Future

• Sound overall understanding of the industry

• Solid technical understanding

• Comfortable with technology tools

• Excellent project management skills

• High sensitivity to stakeholder needs

• Effective communication skills

• Outstanding ability to understand data

• Ability to attract, train, and retain people

Pipeline owners/operators of the future must earn the right toown and operate and continue to prove they deserve that right.

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Suppliers of the Future

• Sound overall understanding of the industry

• Excellent technical skills

• Comfortable with technology tools

• Effective project management skills

• Ability to attract, train, and retain people

• Effective data management skills

• Sensitivity to stakeholder needs

• Appreciation for the value of communicationPipeline suppliers of the future must understand their customers andhelp them deserve the right to own and operate.


API - AOPL Vision Statement

• Since 2001, our vision has been an oil pipelineindustry that:

– Conducts operations safely and with respect for theenvironment, with zero deaths, injuries, or releases;

– Respects the privilege to operate granted to it bythe public; and;

– Provides reliable transportation of the crude oiland refined products to Americans

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Excerpted from DOT Pipeline Safety Forum April 18, 2011 Panel2:Challenges to the Liquid Petroleum Pipeline IndustryHarry Pefanis President and COO, Plains All-American Pipeline

Note: In 2001 Mr. Miesner was the Chairman of AOPL and wasinstrumental in creating this vision.

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Closing Thought

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Contact [email protected]

+1-281-579-8877

Consent of the those affected is necessary.

Investments require stability and predictability.

The two most important items are safety and people

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