Economic evaluation of the information provided by PRIMEFLO about the localization of obstructions in pipelines San Donato Milanese June 28 th 2004

2Introduction PRIMEFLO is a new technology for the internal inspection of pipelines and tubings capable of localizing deposits and obstructions in a non-invasive, low cost and low risk way PRIMEFLO measurements are performed by generating fast flow-rate transients at one end of the pipe, recording the resulting pressure signals and applying mathematical processing Processing Unit Flow rate Transient Pressure sensors Eni E&P EniTecnologie

3 Application considered in the analysis Push or disperse the deposit Push by solvent injection (S) Build-up of a complete obstruction in a pipeline Some possible solutions Pipeline cut and substitution (T) C = 0.2 M€ t = 20 gg C = 4.4 M€ t = 100 gg Eliminate the (section of) line containing the deposit

4 Common economic evaluation: “a posteriori” Complete obstruction S Complete substitution Selective substitution Movable Non movable Effective Not effective Obstruction not localizable or distributed Obstruction localized X X C = 0.2 M€ t = 20 d C = 4.4 M€ t = 100 d C = 3.9 M€ t = 90 d C = 4.4 M€ T = 100 d C = 0.2 M€ T = 20 d C = 4.2 M€ T = 80 d ? ? Decision points supported by PRIMEFLO ? Solvent Injection Line cut Without PRIMEFLOWith PRIMEFLO IS IT RIGHT ?

5 Limits of the economic evaluation “a posteriori” The economic evaluation “a posteriori” (comparison between the repair costs with and without PRIMEFLO) is not meaningful or appealing when the information provided by PRIMEFLO: 1.simply confirm the planned intervention procedure 2.lead to the worst case, e.g. the pipeline abandonment owing to the repair costs 3.(for monitoring) indicate the absence of anomalies and, therefore, no need for intervention Need to develop a quantitative methodology for the evaluation of the information provided by PRIMEFLO independently from the outcome of any particular case

6 Logic of the economic evaluation New methods to perform ACTIVITIES Impact on ACTION Economic evaluation A POSTERIORI New methods to obtain INFORMATION Impact on DECISION Economic evaluation A PRIORI Evaluate AFTER performing actions Evaluate BEFORE making decisions PRIMEFLO

7 “Practical” Decision maker w/o PRIMEFLO Complete obstruction Solvent injection Line cut S Complete substitution Selective substitution Movable Non movable Effective Non localized obstruction Localized obstruction X X C = 0.2 M€ t = 20 d C = 4.4 M€ t = 100 d C = 3.9 M€ t = 90 d C: Repair costs t: Time to repair time Non effective 100%  50%  50% 100%

8 “A priori” economic evaluation Value of the information estimated “a priori” = 0.9 M€. Considering the investment for developing PRIMEFLO (0.7 M€), the analysis indicates a positive R&D return even for the application to this single “average” case. Value of INFO = (Costs w/o INFO - Costs w INFO) when who decides makes MISTAKES P INTRINSIC (S)  P W/O PRIMEFLO (T | best=S)  Cost (T, W/O PRIMEFLO) – P INTRINSIC (S)  P W PRIMEFLO (T | best=S)  Cost (T, W PRIMEFLO) P W PRIMEFLO (T | best=S) = (1)  P W/O PRIMEFLO (T | best=S)   PRIMEFLO information completeness:  = 1  impossible mistaking ! Value= P INTRINSIC (S)  P W/O PRIMEFLO (T | best=S)  (  Cost (T, W PRIMEFLO) + COSTS) = 50%  50%  [90%  3.9 M€ + 50%(0.5 M€)] = 0.94 M€

9Conclusions An economic evaluation of the PRIMEFLO information has been applied, based on the residual probability to make mistakes, without reference to the outcome of any particular case This also allows to estimate the economic value of the level of completeness/accuracy of the provided information To be quantitative, the method requires statistical data about possible system states in order to define their intrinsic probabilities We still have to ascertain the possibility of extending this methodology to other cases related to information-providing technologies

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