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Exploration & Production: The Oil & Gas Review - 2003, Volume 2
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Research and Development
APIA has been an active supporter of a credible, co-ordinated research and development (R&D) effort for a number of years. One example has been the highly successful programme with Australia’s Cooperative Research Centre for Welded Structures (CRC-WS), which, over two years, has made important contributions and changes to the Standard.
APIA R&D forums have produced outcomes that have been rapidly absorbed into specifications and the Standard, and then applied in the commercial world. One such example of the effective, direct application of R&D findings occurred during the construction of the 840km Carpentaria pipeline (crossing through just six properties) in Queensland, a north-eastern state of Australia, in 1997. With completion necessary before the onset of the wet season in tropical north Queensland, peak lay rates of around 10km to 12km per day for a 12-inch pipe had to be achieved whilst satisfying all third-party obligations, safety and quality objectives. During construction, traditional welding methods, which demanded that internal clamps be maintained 100% of welding time, were challenged by new research, which showed that the clamp could be removed at 75% and, hence, moved to the next position in readiness for the next weld. There was no problem with what appeared to be early movement of pipe during the welding process. Overall welding time was reduced allowing the welding rate to be increased dramatically.
In the end, construction of the mainline was completed at an average lay rate of 7.7km per day (440 welds per day). Peak laying rates were regularly at 12km per day with a record of 21km. With the rapid application of research, new cost-effective and innovative alternatives were implemented at reduced and shared risk.
It is the view of APIA that a commitment to R&D that meets the needs of industry and technical standards is vital to the success of the pipeline industry in order to meet the demands of infrastructure construction in the new century. In late 2002 APIA signed a Memorandum of Understanding with the American Pipeline Research Corporation International and the European Pipeline Research Group, to further technology transfer and pipeline research. Australia has much to contribute with its experience in the construction and operation of longdistance, high-pressure, thin-wall pipelines. Sharing that knowledge and experiences internationally can only multiply the benefits for all pipeliners worldwide.
Environmental Management
The APIA industry model has facilitated the development of an Environmental Code of Practice (“the Code”), which sets out the key issues to be considered and addressed in the planning, construction, rehabilitation and operations phases of pipeline projects. The Code is our industry’s response to an ever-increasing range of environmental approvals necessary for pipeline construction within a timeframe that aligns with the commercial requirements of major greenfields customers, such as remote power generation and minerals processing projects.
While in Australia we are seeing an increasing understanding of the differences between pipeline infrastructure projects and long-term impact, location-specific projects such as mines, APIA believes more can be done internationally to promote the short-term impact of pipelines – limited as it is to their construction phase – relative to the benefits pipelines deliver to communities.
In Australia, the Code has provided an effective mechanism for addressing the environmental concerns raised by governments and other stakeholders.
Prospects for Pipelines in Australia
Together with credible technical standards and relevant research, the setting for commercial success needs to be supported by government policy that encourages private sector infrastructure development. Working against the industry in Australia is the current economic regulatory environment.
While APIA’s relationship with its technical regulators has developed into a productive and progressive collaboration, its relationship with Australia’s economic regulators has become adversarial and counterproductive. As an industry we have concerns about the performance and the consumer bias of our economic regulators.
When the Australian gas industry began a process of reform in the early 1990s through privatisation and the introduction of competition, great hopes were held for a surge in natural gas usage and the development of a sophisticated national market. By 1997, the year the present regulatory regime (the National Third Party Access Code for Natural Gas Pipeline Systems (“the National Gas Code”)) came into effect, a national market had begun to take shape as pipelines crossed state borders and gas was delivered to new industries and their communities. However, the introduction of the National Gas Code and its selective interpretation by regulators created uncertainty. APIA’s economic regulators are highly interventionist and lack accountability and transparency. With a third-party access model based on a cost of service approach, pipeline investment decisions are plagued with a new and at times unacceptable level of risk and, increasingly, the time and energy of Australia’s pipeline companies is taken up in litigation to defend our legitimate property rights.
The development of a national gas grid has effectively stalled over the past five years as evidenced by investor disenchantment, suboptimal plans for new pipelines and foreign companies, who purchased privatised pipelines during the 1990s, exiting Australia. Further evidence of private capital disenchantment is the reinvestment, or pending reinvestment, by government agencies in gas transmission pipelines.
The unhelpful and unproductive distraction provided by the economic regulators is particularly frustrating in view of the strong prospects for growth in natural gas demand. Forecasts point to a sustained growth in demand annually of approximately 4% to 2020 – around double the growth anticipated in energy demand across all sources. If fulfilled, natural gas will represent greater than 25% of primary energy demand by 2020, up from 19.7% in 2000/01. Major areas of growth opportunity are industrial and minerals processing, power generation and, to a lesser extent, commercial and residential. Added to this is an increased awareness of the potential for natural gas to act as a bridging fuel in Australia’s efforts to reduce its greenhouse gas emissions, a fact that, although acknowledged by government, requires support through government policy.
APIA has successfully lobbied that a review of the application of the National Gas Code to transmission pipelines is required: the Council of Australian Governments has been persuaded and a review has now commenced by the Productivity Commission. APIA will co-ordinate and partly fund the industry representation to the review over the next six months or so. The majority of funding will be provided by pipeline owners.
Category:
Transportation
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James K McDonald is President of the
Australian Pipeline Industry Association
(APIA), a member of APIA's Pipeline
Owners Committee and has served
as Chairman of the Environmental
Affairs Committee of APIA. He was
appointed Executive Director of the
Australian Pipeline Trust in June
2002, which he joined from The
Australian Gas Light Company (AGL).
Prior to his roles with AGL, he
spent 15 years with Esso Australia's
Gippsland Production Group. He is a
Fellow of the Australian Institute of
Company Directors and he has served
as a member of the Board of the
Australian Gas Association and The
Australian Council for Infrastructure
Development. Mr McDonald is a past
Chairman of the Gas Transmission
Committee of AGA.
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Dr Allen Beasley was appointed
Executive Director of APIA in January
1999. He has more than 20 years of
experience in the energy sector and
was involved in gas reform issues in
the UK and Australia during the 1990s,
including the sale of the Moomba-
Sydney Pipeline and gas reform
initiatives developed through the
Council of Australian Governments. Dr
Beasley is a science graduate and
holds a PhD in Chemistry.
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