PipelinesPipelines

Significance of the Industry

• Only unidirectional mode of transportation – no backhaul

• Transport roughly 57.5% of total intercity ton-miles

• 26.5% of total domestic ton-miles

• Employ roughly 150,000 people

Carriers

• Oil Carriers

• Natural Gas Carriers

General Service Characteristics

• Commodities Hauled–Oil & Oil Products

• 57% of all pipeline use

• Average haul of 800 miles

–Natural Gas

–Coal• Slurry Lines

–Chemicals

General Service Characteristics

• Relative Advantages– Low rates– Excellent loss & damage record– Dependability

• Relative Disadvantages– Slow speed– Highly inflexible– Limited type of freight– Small shipment sizes unavailable

• Tenders – minimum shipment sizes ranging from 500 barrels to 10,000

Equipment• Gathering Lines

– 8” diameter– Frequently laid on the surface– Temporary in nature

• Trunk Lines– 30-50” diameter– Typically underground– Permanent in nature

• Tank Farms– Finished product storage prior to shipment

• Batching Pig– Rubber ball used to separate different grades of oil

Cost Structure

• Approximately 30% of costs are variable

• Remainder are fixed– Must provide own rights-of-way– Must construct pipeline & pumping stations– High preventative maintenance– Highly automated