Pipelines

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