Docstoc

Trans-European olefins Pipelines Network (TEPN)

Document Sample
Trans-European olefins Pipelines Network (TEPN) Powered By Docstoc
					The Association of Petrochemicals Producers in Europe

Trans European Olefins Pipeline Network (TEPN)

Prepared by Cefic/Appe Tel 32 (0)2 676 7303 Fax 32 (0)2 676 7216 jau@cefic.be

8 April 2004

Trans European olefins Pipeline Network (TEPN)
Table of Contents

Executive Summary ................................................................................................. I-IV Fact sheets ............................................................................................................... 1-12
 The Trans-European olefins Pipelines Network and its European dimension ....... 1  Transport and Environment benefits ......................................................................... 4  Safety benefits .............................................................................................................. 9  Economic benefits ..................................................................................................... 10  Reinforcement of Single Market and EU enlargement ........................................ 12

Annex:
 Maps o o o European Olefins Pipeline Today European Olefins Pipeline 2008 – 2020 Vision European Olefins Pipeline Benelux

 Flowchart – From olefins to consumer products ..................................................A-C

Trans European olefins Pipeline Network (TEPN) Executive Summary
Introduction Olefins - mainly ethylene and propylene - are the main building blocks of the chemical industry, and, as such, are key to the production of essential consumer products (see flowchart ―From olefins to consumer products‖). In Western Europe, the tonnages produced inclusive of refineries in 2003 amounted to 20.7 and 14.7 million tons respectively. In the last 10 years the growth of olefins production in Europe was approximately 3 %, - only slightly lower than the USA (4%). About 60% of the production of these olefins (i.e. 20 million t) is used on integrated & local sites, 40% (i.e. 15 million t/pa) is moved mainly by pipe (70%) and ship (20%); the rest by barge or rail. Most of the chemical derivatives produced out of these olefins are then moved to customers by road, some by rail. Appe's proposal Appe believes that olefins pipelines are an alternative mode of transport addressing key issues identified in the Commission TEN guidance document, such as growth, competitiveness, employment, environment and safety. Considering that - Europe is confronted with an overburdened transportation infrastructure, and that above-ground infrastructure should be kept, as much as possible, for matters directly related to our daily lives, and that it is good policy to shift as much as possible the transportation to underground structures such as pipelines, - Pipeline infrastructure improvement contributes to further strengthening the position of European chemical industry in a global competitive context, Appe proposes to develop a Trans-European olefins Pipeline Network (TEPN), which will enable a safe flow of olefins in Europe, and submits this proposal to the authorities for inclusion in the new Trans-European Network guidance document. A European pipeline network should include the linking of existing olefins pipelines by building new connector lines, and the transformation of existing pipelines. It is recognised that any pipeline project supported under TEN must be economically viable and must be open-access. Trans-European olefins Pipeline Network (TEPN): the benefits The development of a Trans-European olefins Pipeline Network would have a positive impact on transport, environment, safety, economy, society at large and the single market. It would contribute to the EU Transport Policy Strategy, by, amongst other things, shifting the transport of chemicals from surface to underground and enabling connection to remote regions of the EU. It would also allow a higher utilization rate of steam crackers. Some key benefits of a Trans-European olefins Pipeline Network are summarised below. A short list of these benefits is attached (See: 'In a nutshell: Benefits of a Trans-European olefins Pipeline Network), and a detailed description of the proposal and its benefits, as well as supporting data, will be found in the attached fact sheets. Contribution to the EU Transport Policy Strategy In the White Paper 'European Transport Policy for 2010: Time to Decide', the European Commission places users' needs at the heart of its strategy and proposes a number of measures to meet this challenge. The first of these measures is to shift the balance between modes of transport by 2010. 08-04-04

I

Appe believes that olefins pipelines are an alternative mode of transport addressing key issues identified in the Commission document such as congestions affecting growth, competitiveness, employment, safety and environment. A Trans European olefins pipelines Network will offer a sustainable alternative to other modes of transport for the future, in particular by allowing decoupling of transport growth from economic growth. Reinforcement of the Single Market and EU enlargement A unified European network is essential to guarantee free movement of goods, to bring island and land-locked areas closer to central regions and to create a bridge towards the Central / Eastern European countries and the Mediterranean areas. Enlargement is expected to trigger exponential growth in trade between the countries of the EU. The recognised lack of an efficient infrastructure network is a key element to be addressed in the development of the EU, and especially the candidate countries’ integration into the internal market. The inclusion of the development of an olefin pipeline infrastructure as part of TEN guidelines is a unique opportunity to achieve a modern, environmentally-friendly transport infrastructure. This should prevent the re-occurrence of transportation problems already encountered in the EU. Economic benefits It is important for Europe that its industry remains competitive against other regions: US Gulf Coast, Middle East & Far East. Each one of these regions has its own intrinsic advantages; for example, Middle East feedstocks are cheaper than Europe’s, and therefore any hurdles such as disparate olefin networks only add to Europe’s disadvantages and discourage future investment in petrochemicals. Compared to the US situation – almost 100% olefins capacity interconnected by pipelines –, the European petrochemical industry suffers a number of disadvantages due to lack of pipeline infrastructure. One main disadvantage is lower operating rate, which results in reduced margins in Europe when compared to the US. A pipeline network provides an opportunity for companies to run their plants at higher operating rates. In the Benelux and Ruhr area, where the ethylene pipeline links all olefin plants (a situation similar to that in the US), the operating rate was, in 1998 and 1999, as high as 99 %. Every 1 % higher operating rate represents 50 million Euro of additional generated added value across all European producers. Conclusion – TEPN: A network for the future Amongst the existing modes of transport, pipelines are the lowest system for energy consumption, CO2 emissions, air/water/noise pollution, safety and visual impact. In addition to these immediate benefits, the development of an interconnected pipeline network in Europe will provide a better balance spread of economic activity and employment. It will prevent decline of remote regions and provide a cheap alternative to financial and employment impact of regional obsolescence. The external effects and costs of pipelines are almost negligible and limited to the construction of the infrastructures and the energy production for the pumping installation 1. It is therefore obvious that a modal shift in favour of pipelines is in line with the EU Transport Policy and constitutes an excellent opportunity to integrate transport in sustainable development and promote European regional cohesion.

* * * * *
1

European Commission, Green Paper towards fair and efficient pricing in transport, NFRAS (1996), Rothengarten

08-04-04

II

In a nutshell: Benefits of a Trans-European olefins Pipeline Network
Transport, environment and safety  Contribution to the EU Transport Policy Strategy  Decoupling of economic growth/transport growth  Shift chemicals from surface transport to underground transport  Decongestion of road/rail tracks/barges and elimination of cross-border bottlenecks  Shift the balance between modes of transport  Very low emissions: CO2 , NOx, etc. (positive contribution to climate change)  No impact on countryside environment (after installation)  Reduction of impact on environmentally-sensitive areas  Low energy consumption (renewable energy sources) and no noise impact  Pipelines are more compatible with the growth and development of urbanisation. They also offer maximum transportation capacity flexibility (through easy de-bottlenecking with minor impact on environment). Economic  Move from site/company scale to European-wide connected market  Better balance spread of economic activity and employment  Bring alignment and open competition to other modes of transport  Foster better investment climate  Improve cost-efficiency and better land use  Allow higher utilization rate of steam crackers (optimisation of energy efficiency)  Possibility to achieve supply/demand balance of olefins flow at European level  Framework for possible decoupling of crackers from derivatives plants, bringing the latter closer to their customers Reinforcement of Single Market and EU enlargement integration  Aligned with the EU Transport policy  Promote EU harmonization (for interconnection and development)  Enable connection to remote regions/sub regions  Positive factor to industry restructuring  Pipelines network between EU Member States and candidate countries poorly developed so far  Unique opportunity to achieve modern, environment-friendly transport infrastructure between West and East  Key factor in the restructuring of the Central/Eastern Europe industry  Positive element for their economic development and integration into the internal market

* * * * *

08-04-04

III

Trans European Olefins Pipelines, A Network For The Future
Project EPDC Product Propylene Description Rhine/Ruhr to Netherlands Countries Interconnected Belgium Netherlands Germany Belgium France Belgium France France Germany France Germany France UK Netherlands Germany Length km 420 Cost m€ 184

North-South Europe line

Ethylene Propylene

Feluy to Carling Feluy to Carling Carling to Ludwigshafen Carling to Ludwigshafen Carling to Lavera UK to Rotterdam Gelsenkirchen to Wilhelmshafen and other N German connections Stade to Brunsbüttel Rosignano – Ferrara or Rosignano—Ravenna Ruhr to Ludwigshafen Münchsmünster to ARG Münchsmünster to ARG Porto Marghera via Rijeka to Zagreb and onto Schwechat Burghausen to Schwechat Münchsmünster to Litvinov Bhölen to Plock Berre to Tarragona

320 320 200 200 850 525 270

100 100 75 75 300 376 90

North-South Europe line

Ethylene Propylene

North-South Europe Interconnector Chemcoast

Propylene Ethylene Ethylene

Elbe Crossing Italy German connection Bayernverbund Eastern-Southern routing Austrian Connection Czech Connection Polish Connection WestMediterranean Line West-East Line Europe

Ethylene, Propylene Ethylene Propylene Ethylene Propylene Ethylene

Germany Italy Germany Germany Germany Italy Slovenia Austria Germany Austria Germany Czech Republic Germany Poland France Spain Austria Hungary Romania Bulgaria Total

65 200 240 370 370 742

42 50 85 120 120 223

Ethylene Ethylene Ethylene/ Propylene Ethylene

306 373 500 300

92 112 170 100

Ethylene

Schwechat to Burgas

900

320

7471

2734

* * * * *

08-04-04

IV

Fact sheet
The Trans-European olefins Pipelines Network and its European Dimension
Introduction The increasing success of goods transportation by road over the last 30 years has resulted in a growing imbalance between modes of transport in the European Union (1). 2 Paradoxically, failure to exploit the full potential of other modes of transport has resulted in even worsening congestion. The development of a fully connected European pipeline network would be an alternative mode of transport that could contribute to reduce congestion and ensure regional cohesion within the EU. This paper focuses on pipeline networks for olefins chemical products. The proposed Trans-European olefins Pipeline Network (TEPN) Europe is confronted with an overburdened transportation infrastructure. It is good policy to reserve road and rail infrastructure as much as possible for matters directly related to people’s daily lives and to shift as much as possible the transportation of goods to underground structures such as pipelines. At present, there are 5 separate systems in Europe – UK, French, ARA, Italian & Eastern European systems – which are not interconnected to form a complete network. The development of a European interconnected Olefins Pipelines network in Europe would allow this infrastructure to become a true alternative to the other modes of transport. Maps of existing European olefins pipelines and potential future projects are attached. Appe's proposal is to develop a Trans-European olefins Pipeline Network (TEPN) which will enable a flow of olefins between Northern and Southern Europe as well as between Western and Eastern Europe. A number of projects that are currently being carried out by the industry are part of this network. These, plus potential future projects, would allow industry to have an integrated network (see table on the following page). This network would have a positive impact on transport, environment, safety, economy, society at large and the single market. These are explained in detail in the following fact sheets.

2

Commission White Paper : 'European Transport Policy for 2010 : time to decide'

08-04-04

1/12

Trans European Olefins Pipelines, A Network For The Future
Project EPDC Product Propylene Description Rhine/Ruhr to Netherlands Countries Interconnected Belgium Netherlands Germany Belgium France Belgium France France Germany France Germany France UK Netherlands Germany Length km 420 Cost m€ 184

North-South Europe line

Ethylene Propylene

Feluy to Carling Feluy to Carling Carling to Ludwigshafen Carling to Ludwigshafen Carling to Lavera UK to Rotterdam Gelsenkirchen to Wilhelmshafen and other N German connections Stade to Brunsbüttel Rosignano – Ferrara or Rosignano—Ravenna Ruhr to Ludwigshafen Münchsmünster to ARG Münchsmünster to ARG Porto Marghera via Rijeka to Zagreb and onto Schwechat Burghausen to Schwechat Münchsmünster to Litvinov Bhölen to Plock Berre to Tarragona

320 320 200 200 850 525 270

100 100 75 75 300 376 90

North-South Europe line

Ethylene Propylene

North-South Europe Interconnector Chemcoast

Propylene Ethylene Ethylene

Elbe Crossing Italy German connection Bayernverbund Eastern -Southern routing Austrian Connection Czech Connection Polish Connection WestMediterrannean Line West-East Line Europe

Ethylene, Propylene Ethylene Propylene Ethylene Propylene Ethylene

Germany Italy Germany Germany Germany Italy Slovenia Austria Germany Austria Germany Czech Republic Germany Poland France Spain Austria Hungary Romania Bulgaria Total

65 200 240 370 370 742

42 50 85 120 120 223

Ethylene Ethylene Ethylene/ Propylene Ethylene

306 373 500 300

92 112 170 100

Ethylene

Schwechat to Burgas

900

320

7471

2734

The European vs. the US situation A benchmarking study made by Parpinelli Tecnon in 1996 shows that the US petrochemicals industry benefits from a broader pipeline interconnection than that of Western Europe. In the USA almost the total ethylene and propylene capacity is linked by pipeline. In Europe this represents only 50 % of the total ethylene capacity; as for propylene, there are only a number of individual systems, just in the Benelux and France areas.

08-04-04

2/12

This situation arises from:  The European industry’s heritage of national petrochemical industries, and thus of an industry structure which does not take advantage of European scale.  The fact that the pipeline infrastructure has to be financed by the pipeline users themselves, whereas rail, road, waterways infrastructures are publicly financed. In these circumstances, it is clear that any existing olefins pipeline is built or operated only for the benefit of the pipelines owner(s) (limited access) and not for the entire industry or society as a whole.  The lack of EU harmonised legislation regarding the development of new pipelines (legal framework, land legislation, environmental laws, safety standards…). Attached is a map showing the vision of the possible development of a wider olefins network. Ethylene projects Recently completed projects comprise: the 150km extension to the UK system to connect Humberside to Teesside, 400 km of the French system to link the Carling site to sites and storage facilities in central & southern France, and a 400 km pipeline to connect Stade, on the North German coast with Boehlen in Central Germany (bi-directional for ethylene and propylene). Ongoing concept studies include a study to link the North German Coast to the North West European system (Chemcoast), a study to connect the cracker at Münchmüster to the southern German system in the area of Ludwigshafen, and a study to connect the North West European system eastwards across Germany to Litvinov (Czech Republic). The other major area under study is the expansion of the Italian network both westwards within Italy and north eastwards towards central Europe and the Balkans. Possible future connections include an ethylene Interconnector between the UK and Northwest Europe systems, various options for connecting the French system to the Northwest European system and Spain and an idea for linking the central Europe systems to the Mediterranean via the Italian system. Propylene projects Due to the heritage of the industry there are no major pipeline systems for propylene, other than private systems connecting users in the Rotterdam & Antwerp areas. Recently, following two years of study, eight industry participants, who are producers and users of propylene, set up the European Pipeline Development Company (EPDC) to undertake the necessary project development work that will allow a final decision to be made on implementing the so-called propylene U line connecting Rotterdam & Antwerp with the Cologne & Ruhr areas in Germany (see Benelux map). The grouping into ―spines‖ is purely one form of analysis for growth. Equally, the network could develop from West to East, starting from its hubs in Northwest Europe, both southwards and eastwards. It is important to stress that companies will only expand the network - either singularly or in groups – if they find an economic rationale for developing the network and logic for connection in their region. Given the socio-economic benefit of a healthy petrochemical industry to various regions throughout Europe and an equal position to other modes of transportation, the projects could be stimulated by a Public Private Partnership (PPP format). EPDC is the first project to be run in this format, with both regional & federal governments initially contributing development manpower and now contributing financial support to the project under EU-approved rules.

* * * * * 08-04-04 3/12

Fact sheet
Transport and Environment Benefits
Decoupling economic growth/transport growth Economic growth is almost automatically generating greater needs for mobility of goods services. In particular, enlargement of the EU will generate a significant increase in transport flows within the community. Olefins, namely ethylene and propylene and their derivatives ultimately end up in consumer products (see Flow Chart ―From olefins to consumer products‖), and hence are a contributing factor to economic growth. Using a mode of transport such as pipelines is a useful alternative as it allows decoupling between economic growth and transport growth. Decongesting road, rail tracks and waterways Any olefin materials that can be transported by pipelines frees up capacity for other items to be moved by rail, road or waterways. This is particularly important at present, given the challenges and slow time scale for expanding the capacity of Europe’s railways and local regional congestion of waterways. Lorry movements of olefins represent a very small amount of present transport means, but as the olefin grids expand, then those users who are forced to use this mode mainly because of their geographical positioning, should find themselves closer to a pipe. This would also have a positive effect on emissions. In a recent feasibility study showing the impact of the proposed North West European Propylene Grid (EPDC), an analysis showed that approximately 25% of 3.5 million tonnes of propylene movements are by barge and 7% are by rail car. To give a better impression of the volumes we are talking about: approximately 550 barges (1500 tonnes each) and 4800 rail tankcars (50 tonnes each) with propylene are moved in the Rotterdam-Antwerp Cologne triangle over one year. Appe supports the reduction of the use of road transport:  The system costs (from feedstock to polymers) in case of integrated olefins and derivatives plants compared to olefins plants linked by pipeline to polymer derivative plants close to their end markets, are more or less comparable. However, in the case of building derivative plants close to their end markets, this will be a decrease in lorry movements and an inherent cut in emissions.  Another key element is looking to switch deliveries from lorries to railcars, to ensure a significant reduction in the amount and length of lorry journeys in the medium term, reducing the over-crowding on road and cutting emissions. On a daily basis 55kt of polyolefins are transported all over Europe by road, which is 75 % of the total amount transported (20% by rail, 5 % by ship). This represents 2600 trucks (with 21 tonnes) on the road each day, close to 1 million trucks a year. Sea shipment Because of the unbalanced situation of olefins between the UK and the European mainland, significant amounts of product are moved or transported by ship in an already congested area. Connection between the UK pipeline system and the rest of Europe will significantly reduce this traffic.

08-04-04

4/12

Linking up the modes of transport Shifting the balance between modes requires efficient connections between sea, inland waterways and rails. The use of pipelines as experienced with other raw materials significantly reduces the need to switch transport modes – particularly from sea to inland transportation. In this respect pipelines bring further safety and environmental advantages by cutting emissions and removing the need for intermediate storage between modes. Eliminating bottlenecks A pipelines infrastructure, provided it is developed into a complete network, is essentially free of bottlenecks. This mode of transport goes cross border without facing the traditional problems of road and rail connections, thereby achieving the EU vision for Trans European Network projects. Reducing emissions If the majority of this traffic were switched to the pipeline grid then there would be a significant reduction in emissions. Given that the petrochemical industry expects the propylene market to grow significantly driven by its derivative usage (average 4.5% year on year), the use of pipeline grid pro-actively reduces possible emissions, against levels expected as if the material were transported by traditional means. The case study below compares emissions of pipelines versus other modes of transport for the Antwerp-Cologne line.

Case study Antwerp-Cologne CO2 emissions
70 60 50

g/tonne-km

40 30 20 10 0 Inland vessel pipelines electric train diesel train

08-04-04

5/12

Case study Antwerp-Cologne NOx emissions
1.2 1.0

g/tonne-km

0.8 0.6 0.4 0.2 0.0 Inland vessel pipelines electric train diesel train

Case study Antwerp-Cologne VOC emissions
0.15

g/tonne-km

0.10

0.05

0.00 Inland vessel pipelines electric train diesel train

The following case is a comparison between the emissions of a projected connected pipeline between UK and Belgium (the 'Interconnector') with the existing situation, i.e. transport by ship.

Case study UK-Antwerp CO2 emissions
100 80

g/tonne-km

60 40 20 0 ships pipelines

08-04-04

6/12

Case study UK-Antwerp NOx emissions
2.0

g/tonne-km

1.5 1.0 0.5 0.0 ships pipelines

Case study UK-Antwerp VOC emissions
0.30 0.25

g/tonne-km

0.20 0.15 0.10 0.05 0.00 ships pipelines

More important for reduction of lorry emissions is that a developed olefins pipeline grid allows the opportunity of potentially placing of polyolefin and other derivative plants closer to their customers’ plants. This has the benefit of cutting the length of deliveries to customers, thereby reducing emissions and avoiding congestion. Other beneficial effects associated with the switch of Transport mode include: a) As outlined above, pipe transportation decreases the need to switch between transport modes themselves and their interaction with storage facilities. Such loading and unloading always present the risk of hydrocarbon emission. There is no real coherent industry data illustrating amounts of hydrocarbon lost in this way, but similar problems have been recognised by the industries e.g. petrol retail industry, b) Pipelines are more energy-efficient than other modes of transport; as the energy consumed by pumps is a lot less than the energy value of the fuels consumed by barges and trains. Also, pipeline ancillary equipment can be powered by renewable energy sources such as solar panels. Minimising environmental impact Installation does have a short-term and long term environmental impact. Recent projects have shown that the land recovers quickly once installed the long term environmental effect is negligible with the land beeing returned to its original usage.

08-04-04

7/12

Restrictions on land utilization for urban planing can be mitigated through careful coordination with planning authorities and the use of adequate pipeline design techniques. These techniques can be further reused to cope with urbanization development and keep the pipeline and its environment compatible with minimum impacts (therefore at minimum cost). Once a pipeline is installed it is moreover easy to increase its capacity (with the addition of intermediate compressor or pumping stations), and this again with limited impact on safety and environment. BP’s TSEP line in North East UK, 'before' and 'after'

* * * * *

08-04-04

8/12

Fact sheet
Safety Benefits
All modes of olefin transport, e.g. barge, railcar, pipe etc., meet the highest safety standards laid down in the legislation of EU member states and have an excellent safety record. Pipelines can probably be considered the safest mode versus the others, as long as their integrity is well-managed. There are few possibilities for emissions to be found from switching between existing transport modes and storage. In 1999, an analysis was performed by a French consultancy (Sechaud et Metz), covering the years 1992-1998 and using the data collected by the French 'BARPI' (Bureau d'Analyse des Risques et Pollutions Industrielles – Risks and Industrial Pollution Analysis Office) as well as the data of other sources for barge transportation. This study confirms that pipeline transportation is safer than other modes of transportation; on the analysed period the safety ranking (low number is better) is the following: Mode Pipelines Rail Barge Road Safety ranking 1 3 10 300

Other studies about the quantitative Risk assessment for Pipelines have shown that the risks associated with pipelines are 105 smaller than those associated with road and rail transport gas materials. ARIPAR Project 1995.

* * * * *

08-04-04

9/12

Fact sheet

Economic Benefits
Introduction Together with converters of polyolefins and other derivatives, this sector employs approximately 1 million people in Europe. To enable the annual growth of 3 % in olefins and derivatives 1 bn Euro each year is necessary to increase the capacity (excluding replacement investments). Working towards a healthy, competitive growing petrochemical industry in Europe will create an important lever for sustained growth throughout Europe. Eurostat classified the chemical industry as one of the main manufacturing industries, with an added value of 156 billion Euros and a production value of 482 billion Euros. The investment costs of a pipeline are no higher than the costs involved in constructing a road, railway or canal. The investment for 1 km of chemical pipeline is approximately 400,000 euros. Because of their high cost of construction, no single private company can afford to develop pipeline networks alone; future new pipelines funded under the TEN initiative will therefore be common carrier and open access. This will bring alignment with other three modes of transport, aid free and open competition while fitting the model of public infrastructure required by Government support. The flexibility in choosing locations for new investment increases in the case of an existing pipeline. Location of plants can be chosen freely alongside the so-called ―ribbon development‖ line, well-illustrated by the growth of the polyolefin industry east of Antwerp along the Kempen corridor (part of the Flemish region of Belgium). This will lead to a betterbalanced spread of economic activity and employment within Europe. The European parliament at its meeting on the 14 th March 2003 to celebrate 50 years of European Conference of Minister of Transport made the following observation: 'The handling of water, oil, gas or petroleum products in pipelines provides a cost-effective, economic and efficient method of transport, with a minimum of maintenance and little negative impact on the environment. Oil shipments by pipeline have been more or less steadily growing over the past few years both in western Europe and the countries of central and eastern Europe.' European competitiveness On a more global basis, it is important for the industry that Europe remains competitive against other regions: US Gulf Coast, Middle East & Far East. Each one of these regions has its own intrinsic advantages; for example, Middle East feedstocks are cheaper than Europe’s, and therefore any hurdles such as disparate olefin networks only add to Europe’s disadvantages and discourage future investment in petrochemicals. Compared to the US situation – almost 100% olefins capacity interconnected by pipelines –, the European petrochemical industry suffers a number of disadvantages due to lack of pipeline infrastructure. One main disadvantage is limited products distribution, which severely limit the flexibility of operation and results in reduced margins in Europe when compared to the US.

08-04-04

10/12

Improved cost-efficiency and better land use Pipelines provide an important support feature for petrochemical complexes, as any loss of olefin-producing or using capacity can be counterbalanced by use of the pipeline system to either import or export material. As crackers and their derivatives get larger and more cost-efficient, the ―swings‖ become more pronounced; then pipeline links become more important to sustain capacity utilisation and hence efficiency and to maintain competitiveness against imports from outside Europe. Pipeline systems also provide the opportunity for less reliance on individual storage options within complexes, improving cost efficiency and promoting better land use. Higher operating rate A pipeline network provides an opportunity for companies to run their plants at higher operating rates. In the Benelux and Ruhr area, where the ethylene pipeline links all olefin plants, the operating rate was in 1998 and 1999 as high as 99 %. Every 1 % higher operating rate represents 50 million Euro of additional generated added value across all European producers. More cracker / derivative plants decoupling Ultimately, an expanded olefin network of pipes, combined with caverns offering buffer storage, provides a framework for the possible decoupling of derivative plants, from being next to crackers to closer to their customers i.e. in-market. This will only happen if the pipe logistics costs are compatible with other opportunities, and have positive knock-on environmental benefits (see Fact Sheet ―Transport and Environment Benefits‖). The two ethylene lines recently finished illustrate these points:  The extension of the French system to Carling has enabled optimisation and better management of the ethylene balances in the connected sites.  The UK extension to Humberside allows derivative plants to be dislocated from the crackers in Scotland and to be closer to their customers. There are also good environmental reasons associated with the non-shipment of other hazardous feedstock, because the ethylene is piped in and diminishes the impact on the Humber Special Protection Area. Better investment climate Ultimately, an enhanced olefin network should lead to the rationalisation and reinvigoration of the industry with small inefficient crackers being replaced by larger more efficient ones (both in terms of capital cost and environment), connected through pipeline & cavern systems. There is no recent direct evidence of this as yet with the existing network. However, a growing olefin network of pipelines would increase the possibility of such a changeover and foster an enhanced climate for investment, as well as leading to development in different economic areas of the EU. A more integrated system would enable companies to build alliances for new olefin plants, possibly in combination with scrapping older units and taking more advantage of the benefits of increasing scale. Pipelines generally have a much longer payback period than industrial projects. A ROI (Return on Investment) after tax lower than the risk-free rate of government bonds and a pay back period of about 15 years is typical. A pipeline is, moreover, often confronted with under-utilisation during the first years of operation, resulting in a higher risk profile. The financial criteria for investment projects are much more stringent than the already lower government bonds rate. However, government participation and government budgets limit the risks associated with the construction and reduce the financing costs.

* * * * *

08-04-04

11/12

Fact sheet
Reinforcement of single market and EU enlargement
Single Market A unified European network is essential to guarantee free movement of goods, to bring island and land-locked areas closer to central regions and to create a bridge towards the Central / Eastern European countries and the Mediterranean areas. A Trans European Olefins Pipeline Network constitutes an infrastructure necessary for trade to be conducted within the Internal Market and hence to reinforce the territorial cohesion of the European Union. It will also trigger harmonisation inside the EU on areas such as safety standards, land legislation and the legal framework. The imminent EU enlargement will give the Union a significantly larger territorial dimension to the Community on land and sea areas. The enlargement will trigger an enormous increase of exchanges between the countries of the Union. A Trans European Olefins Pipeline Network is key to allow this anticipated growth of movements to take place without major congestion of goods transportation. EU enlargement Enlargement is expected to trigger exponential growth in trade between the countries of the EU. The recognised lack of an efficient infrastructure network is a key element to be addressed in the development of the EU, and especially the candidate countries’ integration into the internal market. For historical reasons, pipelines links between the EU member states and the candidate countries are poorly developed, only a few isolated olefins pipelines lines being available today. The inclusion of the development of an olefin pipeline infrastructure as part of TENs, particularly the connection with the existing and future Western European network, is a unique opportunity to achieve a modern, environmentally-friendly transport infrastructure. This should prevent the re-occurrence of transportation problems already encountered in the EU.

* * * * *

08-04-04

12/12

ANNEXES

 Maps o European Olefins Pipeline Today European Olefins Pipeline 2008 – 2020 Vision European Olefins Pipeline Benelux http://www.petrochemistry.net/ftp/articles/MAP-Europe%20Today.pdf o http://www.petrochemistry.net/ftp/articles/MAP-Europe%20Vision.pdf o http://www.petrochemistry.net/templates/shwArticle.asp?TID=11&SNI D=44

Flowchart – From olefins to consumer products
http://www.petrochemistry.net/flowchart/opener.asp

08-04-04

13/12


				
Lingjuan Ma Lingjuan Ma
About