TECHNOLOGY Modernizing crude-oil pipelines critical in new Russian economic climate

Valery Davydovich Chernyaev
Transneft
Moscow

A Russian energy policy under new economic conditions presupposes a fundamental restructuring of the nation's fuel and energy complex and conversion of the Russian economy to energy conservation.

Key in the development of such a policy is the nation's crude-oil pipeline system (Fig. 1 [70569 bytes]) and its development.

Of the several scenarios for Russia's transition to market conditions, the most favorable postulates stabilization of oil production at 2.4 billion bbl/year followed by slight growth.

This production compares with the more than 4.8 billion bbl/year of crude oil being produced in the former Soviet Union up to 1989. The system of oil pipelines operating at that time supported pumping that production.

Implementation of an energy strategy requires solving such strategic problems of oil-pipeline transportation as the following:

• Structural shifts in allocation and development

• Markets and tariff policy

• Investment sources

• Scientific and technical progress, and the introduction of advanced technology and processes

• More intensive production, resource conservation, and ecological safety.

Changed orientation

The Russian oil-pipeline system was built for centralized delivery of crude oil to refineries with specific quality indices and for export. As of Jan. 1, 1996, 48,500 km of main oil pipelines, 13.1 million cu m of tankage, and 403 oil-pumping stations operated in the Russian Federation.

Built in the 1960s and 1970s, the oil-pipeline system was oriented to operate under a centrally planned economy. Oil pipelines acted as an intermediary between producers and refiners, by selling oil at set prices.

As market relationships began to develop, oil and gas-producing associations demanded that contracts with consumers be concluded independently. Moreover, joint ventures with foreign capital were set up with the right independently to choose a buyer.

These conditions necessitated the transition, beginning in 1992, to a tariff system of paying for oil-pipeline transportation.

With this transition, oil-pipeline enterprises are experiencing considerable financial difficulties. As of Jan. 1, 1996, outstanding debt for services rendered has reached $89 million.

To oversee revenues and coordinate operation of oil pipelines in relation to payment for services, the joint stock company Transneft has established a settlement center.

One of the center's principal tasks is to solve nonpayment problems by opening correspondent accounts at the center for regional banks that serve oil-pipeline joint-stock companies. The plan calls for correspondent banks within the settlement system to exchange payment documents.

Tariff review; ownership

Increased electric power tariffs and wholesale prices of materials, fuel, construction and installation work, and communications and air-transportation services require systematic review of oil-transportation tariffs.

Tariff review in 1993-94 was carried out with great difficulty because of increased demands by the Russian Ministry of Fuel and Energy and the Russian Ministry of Economics that tariffs be justified.

To ensure timely review of oil-transportation tariffs, the "Procedure for Indexing Tariffs for Oil Pumping, Transshipment, and Loading" was drawn up in September 1994. This procedure, coordinated with the Russian Ministry of Fuel and Energy and approved by the Russian Ministry of Economics, provides for quarterly indexing of tariffs because of rapid inflation in the Russian economy.

Beginning in 1995, tariffs are being reviewed according to this procedure on the basis of information provided by joint-stock companies and with the participation of their representatives.

Under the new conditions of economic management, the requirements for transported-oil quality are being revised. The oil-pipeline system was not designed to deliver fixed-quality oil but was oriented toward blended delivery of oil with integrated quality indices.

At the same time, the oil-pipeline system is quite flexible, with a degree of manageability and efficiency that derives from the combining of oil-pipeline transportation enterprises into Transneft, founded by the Russian Federation Council of Ministers' Decree No. 810 (Aug. 14, 1993).

Now shippers are requesting that transfers of value associated with commingling of crude oil during pipeline transportation be accounted for through some form of quality-bank arrangement.

A special model of a quality bank was therefore developed by Transneft. In May-June 1995, this model was tested during a special industrial experiment, with good results. Transneft is now ready to introduce the application, only awaiting approval from the Ministry of Fuel and Energy.

State-owned Transneft holds 51% of the stock of its subsidiaries. The process of issuing stock in oil-pipeline transportation enterprises is complete and payment of the company's registered capital amounts to 91.4%.

Transneft provides management of oil deliveries, controls conditions in interregional oil pipelines, manages unusual situations, monitors technology, controls centralized funds directed into capital investments, and develops scientific research.

The executive order of the president of the Russian Federation, "Priority Measures for Improving the Operations of Oil Companies," specifies the structural transformations in oil-pipeline transportation.

The next stage of transformation provides that the 49% of the stock of subsidiaries previously held in federal ownership be turned over to Transneft.

The company's preferred stock, 25% of its registered capital, is to be distributed free of charge among the workers of the subsidiary joint-stock and other companies, and the common stock is to be held in federal ownership.

This restructuring of oil-pipeline transportation presupposes that problems of oil-pipeline transportation will be solved by Transneft under market conditions.

For this reason, decisions made in the interests of the entire Transneft company have priority.

Because the Russian energy strategy is oriented toward conservation of primary energy resources, improved crude-oil processing and reduced crude-oil consumption by oil refineries are anticipated.

Whereas approximately 1.526 billion bbl of oil was refined in 1993, for example, the figure in 1994 was 1.49 billion bbl, and 1.406 billion bbl in 1995.

Thus, the decline in the load on oil-pipelines to nearly 50% of the planned level will persist in the long term, with the exception of export directions, in which the load may even be somewhat higher. And development of export routes is planned.

New markets, new lines

Pricing for oil-pipeline transportation is linked to the existence and development of key sectors of the oil market: the domestic sector, oil-importing countries within the Commonwealth of Independent States, and the world market, with consideration for expected growth of oil consumption throughout the world.

These sectors will define the strategic directions of Transneft operations in relation to existing market conditions.

When oil suppliers were interested in exporting to the world's markets, the most important problems were those of developing the export directions of the oil-pipeline network and using the quality potential of our crude oils (density and sulfur content) without mixing with less valuable oil.

New construction and renovation of oil pipelines should be carried out primarily in these areas.

The need to develop exports is confirmed by forecasts that world oil consumption will increase through 2010. In particular, oil imports by the U.S. will double in this period against a 25% overall increase in oil consumption, and Russia is one of the largest oil suppliers to the world market.

Transneft is taking steps to implement the Russian energy strategy approved by the board of the Russian Federation Ministry of Fuel and Energy.

In new construction of oil pipelines, Transneft is participating in implementation of the Tikoretsk-Novorossiysk-III pipeline and Baltic pipeline system projects.

The proposed Tikoretsk-Novorossiysk-III pipeline is designed to transport oil for export from western Kazakhstan to Azerbaijan to a deepwater terminal on the Black Sea coast of Russia.

This project will consist of 300 km of new construction beginning at the city of Tikhoretsk. The pipeline will connect the existing Russian oil-pipeline transportation system with a newly built sea terminal on the Black Sea.

The pipeline will transport Russian, Azerbaijan, and Kazakhstan crudes (including crude from the Tengiz field) arriving near Tikhoreck via the existing Samara-Tikhoretsk, Samara-Lisichansk-Tikhoretsk, and Tikhoretsk-Malgobek oil pipelines from oil fields of western Siberia, the Volga district, the Urals, and western Kazakhstan, and Azerbaijan.

The purpose of constructing the Baltic pipeline system is to build another export terminal for Russian needs which will enable crude oil to be exported from the Timan-Pechora and western Siberian oil and gas provinces.

To implement the Baltic pipeline system project, Transneft, together with Neste and Dorsch Consult GmbH, prepared a preliminary feasibility study. Now, three Russian and six foreign oil companies have agreed on project components and terms; Willbros will provide field surveys and engineering.

The study calls for the construction of a new oil pipeline in the direction from Yaroslavl (Torzhok) to Kirishi to Primorsk to Porvoo (Finland), construction of a new oil terminal in Primorsk, and modernization of the existing Kharyaga-Usa-Ukhta-Yaroslavl oil pipe lines.

Funding for the design and construction of the Baltic pipeline system is to come from foreign investments on the basis of long-term financial guarantees by oil suppliers and consumers.

Maintenance

In addition to the development of Russian export opportunities, Transneft is paying a great deal of attention to maintaining the existing oil-pipeline system.

As noted, the load on the oil-pipeline system has for several reasons declined in recent years, a fact that has both positive and negative consequences.

Following are some of the positive factors:

• A decrease in specific line hydraulic losses

• An increase in the flexibility of transportation from suppliers to individual consumers

• The possibility of transporting crude oils of different grades (with assignment of grade-specific oil pipelines).

There also is a greater possibility of conducting scheduled repairs and renovation of both the line portion and individual pump stations as a result of the redistribution of flows among oil lines.

It is necessary to plan the work carefully because repairs and renovation will be carried out above all on large-diameter pipelines operated by several enterprises and through which oil is transported in one direction.

These enterprises include the Ust-Balyk-Kurgan-Ufa-Almetyevsk, Nizhnevartovsk-Kurgan-Kuibyshev, Kholmogory-Klin, and Surgut-Polotsk pipelines, the Druzhba pipeline system, and the Samara-Tikhoretsk and Samara-Lisichansk-Tikhoretsk pipelines.

Included among the negative factors is the decrease below critical speeds in the flow rate of oil through some pipelines, making it more likely that water may collect in lower sections of the pipeline, especially at river crossings, and leading in turn to increased internal corrosion.

Furthermore, decreased pumping volumes result in pump units being operated out of effective range, a lowering of their efficiency, and to some extent a decrease in the operational reliability of pumping units.

Repair; diagnostics

Transneft is modernizing its renovation policy and equipment.

The complexity lies in the fact that most of the main oil-pipeline system was developed in the 1960s and 1970s. By 2010 many oil pipelines' operating lives will be approaching their amortization periods.

These conditions necessitate a new approach to organizing pipeline repair. Determining how much repair work is needed, for example, is influenced by the oil pipelines' operating lives which have increased sharply.

It is impossible, if only on purely economic grounds, to increase overhauls by using the existing continuous-repair practices. Therefore, a few years ago Transneft decided to accelerate the transition to selective pipeline repair based on in-pipe technical diagnostics and other modern nondestructive-testing processes and tools.

Understanding the importance of this question, Transneft took steps to build facilities to handle diagnostic work. For instance, in 1992 the Technical Diagnostics Center, which was established in May 1991, inspected 4,221 km of main oil pipelines.

At the end of 1992, Transneft also bought tools for inspection of pipelines' internal geometry and flaw-detection tools that make it possible to inspect pipes 720/820 and 1,020/1,220 mm OD. To ensure effective use of them, intense preparations of oil pipelines for passage of instruments and rebuilding of pig launching and receiving traps were carried out in 1993.

As a result, inspection in 1993 with internal geometry pigs covered 11,154 km (6,927 miles); with caliper pigs, 5,375 km.

The Technical Diagnostics Center received a license from the Russian Gosgortekhnadzor [Committee for Oversight of Work Safety in Industry and for Mine Inspection] to perform inspection on all main oil pipelines.

At Jan. 1, 1996, 26,753 km (16,614 miles) of main oil pipelines had been inspected by caliper tools (fig. 2); 5,094 km by ultrasonic flaw detectors (Ultrascan). This year, Transneft plans to inspect with each of these tools about 14,000 km and 8,000 km, respectively.

In addition to developing work on internal pipe diagnostics, the company has set the Technical Diagnostics Center the task of mastering a process for acoustic-emission testing of tanks, overhead crossings, and valving. In 1994, diagnostics were performed on 23 steel tanks and on all overhead oil-pipeline crossings 300 m long.

The most complex scientific and technical tasks in pipeline diagnostics are to identify a defect, determine the danger it poses and the remaining life of the oil pipeline, and predict the safe operating life of the pipeline.

Work to solve these problems is already under way, and some tasks have been included in the Intergovernmental Scientific and Technical Program for Highly Reliable Pipeline Transportation, which was approved in November 1993 by the governments of Russia and Ukraine.

It is obvious that research at an operating facility is limited by safety considerations and pumping plans; therefore, the Program for Highly Reliable Pipeline Transportation provides for the creation of a test range based at NIIKhIMMASh (All-Union Scientific Research and Design Institute of Chemical Machine Building), a space institute near Sergiev Posad in Moscow Oblast.

Defects bank

Not confining itself to purchases of imported equipment, Transneft is financing the development of Russian technologies and flaw detectors, instruments, and tools for technical diagnostics of oil pipelines, as well as expert engineering systems to evaluate the lives of oil pipelines.

For instance, under an order from Transneft and drawing on scientific organizations, the Technical Diagnostics Center is conducting work to develop a software and method for evaluating and forecasting the remaining lives of oil pipelines, based on the results of in-line inspections.

To this end, a "defects bank" needs to be set up where data would be collected on defects found by such inspections. These data will be used to assess the actual condition of a portion of a pipeline, certify defects, study the effect of various factors found at real facilities on the development of defects, determine relationships, calculate remaining life, and forecast the development of defects with some degree of probability.

The first three methods have already been approved by Russian Gosgortekhnadzor and are being introduced at the Technical Diagnostics Center of Transneft.

Further plans in oil-pipeline diagnostics are linked to development of work on diagnostics for tanks, underwater crossings, valving, and pump and power equipment of oil-pumping stations.

One priority task in improving equipment and processes of oil-pipeline transportation is to review existing technical documents and prepare new ones on design and operation of main oil pipelines that reflect their actual operating conditions.

The following are needed for this purpose:

• Scientific research related to the study of pipeline aging processes due to cyclic loading

• Development of a unified methodology and improvement of the operations and diagnostics services, which monitor pipelines already in operation

• Determination of the remaining life of an oil pipeline, which will make it possible to prevent failures with severe ecological consequences

• Development of an integrated main oil-pipeline control system based on computer networks

• Work on rebuilding existing automatic control systems and using them as the basis for the creation of the distributed dispatcher control system for the Transneft oil-pipeline network as part of the YeASU [Unified Automated Control System]

• Development of data banks on various areas of the operations of main oil pipelines

• Automating oil-pipe line design.

Additionally, development of the production of tanks made by the sheet-assembly method with an internal anticorrosion coating is needed. Introduction of "sublayer" fire-extinguishing systems for these tanks must be undertaken.

Furthermore, the following are needed:

• Creation of a new generation of economical, low-capacity pumping units, including full-pressure electrical pumping units with adjustable speed, a delivery of 500 and 1,250 cu m/hr, and a head of 700 m

• Organization of line pipe production with the manufacturer's anticorrosion coating (with a service life of at least 30 years), and organization of an industrial method of insulating joints

• Adoption of directional drilling for pipeline crossings.

Pipeline control

The communications networks of Transneft are the foundation of the oil-pipeline control systems. Communications technology in the near term must do the following:

• Provide the oil-pipeline enterprises of Transneft with all types of communications equal to the operating standards for Western oil pipelines, including organizing two communications links for each section of pipeline and providing reliable communications on pipeline routes

• Discover and organize for commercial uses any resources of communications networks. Such enterprises would reduce outlays by oil-pipeline transportation for communications services and allow increased investments in the development of communications.

• Extend the service life of fixed assets and increase their return on investment.

  Particular attention should be paid to existing networks of cable communications lines as the most costly part of secondary networks. Their service lives should be increased to 30 years or more by automating control with the latest instrumentation, detection of defective sections, and performance of high-quality overhaul.

Technical policy in the development of engineering communications must take into account Transneft's limited material and financial resources. In the immediate future, emphasis should be placed not on new construction but on modernizing through replacement of obsolete communications equipment with digital equipment and on use of economical new technologies.

Introduction of digital radio-relay lines and satellite communications stations together with radio-telephone systems for communicating with mobile facilities and production-related radio stations for remote control will ensure reliable communications on every section of the pipeline system.

Replacement of analog equipment with digital electronic equipment on all segments and expansion of the packet-switching network will make it possible to integrate the networks into a complete communications system for every pipeline section.

In addition to ensuring reliable, stable, and operational communications in all situations on the pipelines, all these factors should at the same time lower labor costs (especially at communications centers), energy consumption (by a factor of approximately 10), and space requirements.