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SPECIALTY PIPELINES FOR RENEWABLE

AND ALTERNATIVE ENERGY SUBSTANCES

DECEMBER 2010

Specialty Pipelines for Renewable and Alternative Energy Substances has beenprepared by SBI Energy. Our market intelligence reports are specifically designed to aidthe action-oriented executive by providing a thorough presentation of essential data andconcise analysis.

Vice President of Publishing Don Montuori

Publisher Shelley Carr

Author Robert Eckard

Research Director David Sprinkle

Marketing Manager Jenn Tekin

Communications Associate Daniel Granderson

Publication Date December 2010

Copyright 2010 SBI Energy

SB2793780 1-59814-364-6


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Specialty Pipelines Table of Contents

December 2010 SBI Energy i

Table of Contents

Chapter 1:Executive Summary .................................................. 1Scope..........................................................................................................1

Renewable and Alternative Energy Substances and the Role ofSpecialty Pipelines ................................................................................1

Specialty Pipelines Requirements and Components .............................2

Environmental Impact of New Specialty Pipelines .................................3

Market Assessment Methodology............................................................4

Market Origins and History .......................................................................4

Trends in Renewable and Alternative Energy Substances

Production..............................................................................................5Specialty Pipeline Project Viability and Operational Profitability..........6

Specialty Pipeline Markets........................................................................7Carbon Dioxide Transportation Pipelines Market ................................................7Figure 1-1: CO2Transportation Pipelines Market Size, 2006-2015

(in million $) ....................................................................................................8Ethanol Transportation Pipelines Market ............................................................8Figure 1-2: Ethanol Transportation Pipelines Market Size, 2006-2015

(in million $) ....................................................................................................9Biodiesel Transportation Pipelines Market ..........................................................9Figure 1-3: Biodiesel Specialty Pipelines Market Size, 2006-2015

(in million $) ..................................................................................................10Biogas and Biomethane Transportation Pipelines Market.................................10Figure 1-4: Biogas and Biomethane Transportation Pipelines Market Size, 2006-

2015 (in million $) .........................................................................................11

Product Trends and Pricing....................................................................11Figure 1-5: U.S. Plastic and Steel Pipes Price Changes, 2001-2010................12Figure 1-6: U.S. Special Purpose Coatings Price Changes,

2001-2010.....................................................................................................13Figure 1-7 U.S. Industrial Pump and Air/Gas Compressors Price Changes,

2001-2010.....................................................................................................14Figure 1-8: U.S. Industrial Valve Price Changes, 2001-2010............................15

Industry Trends........................................................................................15

Growing Regional Demand for Renewable and Alternative EnergySubstances ..........................................................................................16

Specialty Pipeline Components Supply Chain......................................16Figure 1-9: Specialty Pipeline Components Supply Chain................................17


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Table of Contents Specialty Pipelines

ii SBIEnergy December 2010

Specialty Pipeline End Users................................................................. 17

Summary.................................................................................................. 18Figure 1-10: Specialty Pipelines Market Size, 2006-2015 (in million $) ............19

Chapter 2: Specialty Renewable and Alternative EnergyPipelines.. ................................................................................21

Scope ....................................................................................................... 21

Pipeline Technology and Operation ...................................................... 21

Role of Specialty Pipelines..................................................................... 23Greater Market Availability and Consumption of Renewable and Alternative

Energy Substances ...................................................................................... 23Higher Efficiency Transportation of Renewable and Alternative

Energy Substances ...................................................................................... 24

Renewable and Alternative Energy Substances .................................. 26Carbon Dioxide.................................................................................................. 26Ethanol ..............................................................................................................28Biogas/Biomethane ...........................................................................................29Biodiesel............................................................................................................ 31

Specialty Pipelines: Requirements, Systems and Methods................ 32Resource Requirements.................................................................................... 32Components ...................................................................................................... 34Operational Requirements ................................................................................36

Demand for Specialty Renewable and Alternative Energy Pipelines . 40

Environmental Impact of New Specialty Pipelines............................... 42

Development of Pipeline Tract Areas................................................................42Environmental Contamination through Pipeline Leaks......................................42Pipeline Explosion Risks ................................................................................... 43Emissions..........................................................................................................43

Summary.................................................................................................. 44

Chapter 3: Specialty Renewable and Alternative EnergyPipelines Market Size and Growth ....................................45

Scope ....................................................................................................... 45

Market Assessment Methodology ......................................................... 45Project-Based Analysis ..................................................................................... 46

Analytical Factors for Market Size and Growth ................................................. 47

Market Origins and History .................................................................... 47Carbon Dioxide Enhanced Oil Recovery........................................................... 47Carbon Capture and Sequestration...................................................................48Ethanol ..............................................................................................................49Biodiesel............................................................................................................ 50


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December 2010 SBI Energy iii

Biogas / Biomethane .........................................................................................52

Specialty Pipeline Projects .....................................................................54Eastern Shelf Pipeline .......................................................................................54Table 3-1: Eastern Shelf Pipeline......................................................................55Green Pipeline...................................................................................................56

Table 3-2: Green Pipeline .................................................................................56Snhvit Pipeline ................................................................................................57Table 3-3: Snhvit Pipeline ...............................................................................57Central Florida Pipeline .....................................................................................58Table 3-4: Central Florida Pipeline....................................................................58PMCC Pipeline ..................................................................................................59Table 3-5: PMCC Pipeline.................................................................................59Plantation Pipeline............................................................................................. 60Table 3-6: Plantation Pipeline ...........................................................................60Huckabay Ridge Biogas Project ........................................................................ 61Table 3-7: Huckabay Ridge Biogas Project .......................................................61Brlanda Biogas Project....................................................................................62

Table 3-8: Brlanda Biogas Project...................................................................62Factors Affecting Market Size and Growth............................................63Greater Production of Renewable and Alternative Energy Substances............63Spatial Distribution of Renewable and Alternative Energy Substance Production

and Consumption..........................................................................................65Specialty Pipeline Project Viability and Operational Profitability .......................66

Specialty Pipeline Markets......................................................................68Market for Carbon Dioxide Transportation Pipelines.........................................69Figure 3-1: CO2Transportation Pipelines Market Size, 2006-2015

(in million $) ..................................................................................................70Table 3-9: World Market Shares for CO2Transportation Pipelines

(United States, European Union, Asia) .........................................................71Market for Ethanol Transportation Pipelines .....................................................72Figure 3-2: Ethanol Transportation Pipelines Market Size, 2006-2015

(in million $) ..................................................................................................73Table 3-10: World Market Shares for Ethanol Transportation

Pipelines (United States, Brazil) ...................................................................74Market for Biodiesel Transportation Pipelines ...................................................75Figure 3-3: Biodiesel Transportation Pipelines Market Size,

2006-2015 (in million $) ................................................................................76Table 3-11: World Market Shares for Biodiesel Transportation

Pipelines (United States, European Union) ..................................................77Market for Biogas and Biomethane Transportation Pipelines ........................... 77

Figure 3-4: Biogas and Biomethane Transportation Pipelines Market Size, 2006-2015 (in million $) .........................................................................................78Table 3-12: World Market Shares for Biogas and Biomethane Transportation

Pipelines (United States, European Union, Asia) .........................................79Market for Specialty Pipeline Lengths ...............................................................79Figure 3-5: Pipeline Lengths Market Size, Steel, 2006-2015

(in million $) ..................................................................................................81Table 3-13: World Market Shares for Steel Pipeline Lengths

(United States, European Union, Brazil, Asia) ..............................................82


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iv SBIEnergy December 2010

Figure 3-6: Specialty Pipeline Lengths (Polymers), Market Size,2006-2015 (in million $) ................................................................................83

Table 3-14: World Market Shares for Polymer Pipeline Lengths(United States, European Union, Brazil, Asia).............................................. 84

Market for Specialty Pipeline Pumps and Compressors ...................................84Figure 3-7: Specialty Pipeline Pumps Market Size, 2006-2015

(in million $) .................................................................................................. 85Table 3-15: World Market Shares for Specialty Pipeline Pumps

(United States, European Union, Brazil, Asia).............................................. 86Figure 3-8: Specialty Pipeline Compressors Market Size, 2006-2015

(in million $) .................................................................................................. 87Table 3-16: World Market Shares for Specialty Pipeline Compressors (United

States, European Union, Brazil, Asia) .......................................................... 88Market for Specialty Pipeline Flow Control, Leak Detection, and Management

Systems and Technologies .......................................................................... 88Figure 3-9: Specialty Pipeline Flow Control Equipment Market Size, 2006-2015

(in million $) .................................................................................................. 89Table 3-17: World Market Shares for Flow Control Equipment

(United States, European Union, Brazil, Asia).............................................. 90Figure 3-10: Inline Pipeline Management and Leak Detection

Systems Market Size, 2006-2015 (in million $) ............................................ 91Table 3-18: World Market Shares for Inline Pipeline Management

and Leak Detection Systems (United States, European Union,Brazil, Asia) .................................................................................................. 92

Summary.................................................................................................. 92Figure 3-11: Specialty Pipelines Market Size, 2006-2015 (in million $) ............93

Chapter 4: Specialty Renewable and Alternative Energy

Pipelines Market and Product Trends...............................95Scope ....................................................................................................... 95

Product Trends and Pricing ................................................................... 95Specialty Pipeline Materials ..............................................................................96Figure 4-1: U.S. Plastic and Steel Pipes Price Changes, 2001-2010 ............... 97Specialty Pipeline Coatings...............................................................................98Figure 4-2: U.S. Special Purpose Coatings Price Changes,

2001-2010 .................................................................................................... 98Specialty Pipeline Compressors and Pumps ....................................................99Figure 4-3: U.S. Industrial Pump and Air/Gas Compressors Price Changes,

2001-2010 .................................................................................................. 100Flow Control, Pipeline Management, and Leak Detection Systems................ 100Figure 4-4: U.S. Industrial Valve Price Changes, 2001-2010..........................101Figure 4-5: U.S. Industrial Process Instruments Price Changes,

2001-2010 .................................................................................................. 102

Industry Trends..................................................................................... 102Midstream Industry Growth and Consolidation, 2001-2008 ............................ 103Financial Crisis and Global Economic Turndown, 2008-2009......................... 104


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December 2010 SBI Energy v

Developments Leading towards Specialty Renewable andAlternative Energy Substance Pipelines.....................................................105

Project Development and Financing Trends .......................................107

Cost and Pricing Trends for Renewable and Alternative EnergySubstances ........................................................................................110

Carbon Dioxide................................................................................................110Figure 4-6: West Texas Intermediate Average Monthly Spot Prices

for Crude Petroleum, January 2001-August 2010 ......................................112Ethanol ............................................................................................................113Figure 4-7: Ethanol Fuel and Gasoline Prices, U.S. Midwest and

East Coast ..................................................................................................114Figure 4-8: Ethanol Fuel Prices in Nebraska (United States) and

So Paulo State (Brazil), 2001-2010 ..........................................................115Figure 4-9: U.S. Rail Transportation Price Changes, 2001-2010....................116Biodiesel..........................................................................................................116Figure 4-10: Average U.S. B20 (20% Biodiesel / 80% Petroleum

Diesel) and Petroleum Diesel Prices, 2001-2010.......................................117

Figure 4-11: Average German Biodiesel (100%; B100) andPetroleum Diesel Prices (in Euros). 2005-2009.........................................118

Biomethane .....................................................................................................119Figure 4-12: Average U.S. Residential, Commercial, Industrial,

Power, and Vehicle Consumer Natural Gas Prices, 2001-2010.................120Figure 4-13: Average EU Residential, Commercial, Industrial,

Power, and Vehicle Consumer Natural Gas Prices, 2001-2010.................121

Growing Regional Demand for Renewable and Alternative EnergySubstances ........................................................................................122Carbon Dioxide United States ......................................................................123Figure 4-14: U.S. Carbon Dioxide Pipeline Deliveries for Enhanced

Oil Recovery (EOR), 2001-2010 .................................................................125Figure 4-15: Operationally-Active U.S. Carbon Capture and Sequestration(CCS) Projects, 2001-2010........................................................................126

Carbon Dioxide European Union .................................................................127Figure 4-16: Operationally-Active EU Carbon Capture and

Sequestration (CCS) Projects, 2001-2010 .................................................129Carbon Dioxide Brazil...................................................................................129Carbon Dioxide Asia.....................................................................................130Figure 4-17: Operationally-Active Carbon Capture and Sequestration

(CCS) Projects in Asia, 2001-2010............................................................131Ethanol United States...................................................................................131Table 4-1: EISA Renewable Fuel Volume Requirements, 2010

(billion gallons)............................................................................................133Figure 4-18: U.S. Ethanol Fuel Consumption, 2001-2010...............................133Ethanol Brazil ...............................................................................................134Figure 4-19: Brazilian Ethanol Fuel Consumption, 2001-2010........................135Biodiesel United States ...............................................................................136Figure 4-20: U.S. Biodiesel Consumption, 2001-2010 ....................................137Biodiesel European Union...........................................................................138Figure 4-21: EU Biodiesel Consumption, 2001-2010......................................139Biomethane United States...........................................................................139


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vi SBIEnergy December 2010

Figure 4-22: Operationally-Active U.S. Biogas / Biomethane ProductionProjects, 2001-2010 ...................................................................................140

Figure 4-23: New U.S. Biogas/Biomethane Production Projects and U.S.Wellhead Natural Gas Prices, 2001-2010 ..................................................141

Figure 4-24: New U.S. Biogas / Biomethane Production Projects withPipeline Injection and U.S. Wellhead Natural Gas Prices, 2001-2010.......143

Biomethane European Union ...................................................................... 143Figure 4-25: EU Biogas Production, 2001-2010.............................................. 145Figure 4-26: EU Biogas / Biomethane Production Projects with Pipeline

Injection and Average EU Residential/Commercial Consumer NaturalGas Prices, 2001-2010...............................................................................146

Summary................................................................................................ 146

Chapter 5: Specialty Pipelines and Components:Distribution and Promotion .................................................149

Scope ..................................................................................................... 149Specialty Pipeline Components Supply Chain................................... 149

Figure 5-1: Specialty Pipeline Components Supply Chain.............................. 150

Renewable and Alternative Energy Substance Supply Chain........... 151Figure 5-2: Ethanol Fuel Supply Chain ........................................................... 152Figure 5-3: Biodiesel Fuel Supply Chain ......................................................... 153Figure 5-4: Biogas/Biomethane Supply Chain ................................................ 154Figure 5-5: Carbon Dioxide Supply Chain.......................................................155

Specialty Pipelines Project Promotion................................................ 156

Summary................................................................................................ 157

Chapter 6: Competitive Profiles..............................................159

Scope ..................................................................................................... 159

Methodology and Selection of Profiles ............................................... 159

3M ..............................................................................................160

Corporate Background ......................................................................... 160

Product Portfolio................................................................................... 161

Performance .......................................................................................... 161

Figure 6-1: Annual Revenues of 3M, 2006-2010 (in billion $) .........................162Company News ..................................................................................... 163

Acquisitions and Divestitures .......................................................................... 163Outlook............................................................................................................164Personnel Changes.........................................................................................164


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December 2010 SBI Energy vii

Ameron ..................................................................................... 165

Corporate Background..........................................................................165

Product Portfolio....................................................................................166

Performance...........................................................................................166

Figure 6-2: Annual Revenues of Ameron, 2006-2010 (in million $).................167 Company News ......................................................................................167

Acquisitions and Divestitures ..........................................................................167Outlook ............................................................................................................168Personnel Changes.........................................................................................169

Ashland..................................................................................... 170



Performance...........................................................................................171

Figure 6-3: Annual Revenues of Ashland, 2006-2010 (in billion $) .................172Company News ......................................................................................172Acquisitions and Divestitures ..........................................................................172Outlook ............................................................................................................173Personnel Changes.........................................................................................173

Boreal Laser ............................................................................. 174



Performance...........................................................................................175

Flowserve ................................................................................. 176Corporate Background..........................................................................176


Performance...........................................................................................177Figure 6-4: Annual Revenues of Flowserve, 2006-2010 (in billion $).............178

Company News ......................................................................................178Acquisitions and Divestitures ..........................................................................178Outlook ............................................................................................................179Personnel Changes.........................................................................................179

GE Oil & Gas ............................................................................ 180



Performance...........................................................................................181Figure 6-5: Annual Revenues of General Electric Oil & Gas, 2006-2010

(in billion $) .................................................................................................182

Company News ......................................................................................182


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viii SBIEnergy December 2010

Acquisitions and Divestitures .......................................................................... 182Innovation........................................................................................................183Outlook............................................................................................................183

International Protective Coatings ...........................................184



Performance .......................................................................................... 185Figure 6-6: Annual Revenues of Akzo Nobel Performance Coatings,

2006-2010e (in billion !) ............................................................................ 186

Company News ..................................................................................... 186Acquisitions and Divestitures .......................................................................... 186Innovation........................................................................................................187Outlook............................................................................................................187Personnel Changes.........................................................................................187

Siemens.....................................................................................188Corporate Background ......................................................................... 188


Performance .......................................................................................... 189Figure 6-7: Annual Revenues of Siemens, 2006-2010 (in billion !) ................ 190

Company News ..................................................................................... 191Acquisitions and Divestitures .......................................................................... 191Innovation........................................................................................................191Outlook............................................................................................................191

Sulzer Pumps............................................................................193



Performance .......................................................................................... 194Figure 6-8: Annual Revenues of Sulzer Pumps, 2006-2010e

(in billion CHF)............................................................................................195

Company News ..................................................................................... 195Outlook............................................................................................................195Personnel Changes.........................................................................................196

Tyco Flow Control ....................................................................197

Corporate Background ......................................................................... 197Product Portfolio................................................................................... 198

Performance .......................................................................................... 198Figure 6-9: Annual Revenues of Tyco Flow Control, 2006-2010e

(in billion $) .................................................................................................199


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December 2010 SBI Energy ix

Company News ......................................................................................199Acquisitions and Divestitures ..........................................................................199Outlook ............................................................................................................200Personnel Changes.........................................................................................200

Pipeline Operator Profiles.....................................................................200

Kinder Morgan ......................................................................... 201


Business Activities ................................................................................201

Performance...........................................................................................202Figure 6-10: Annual Revenues of Kinder Morgan, 2006-2010e

(in billion $) .................................................................................................203

Company News ......................................................................................203Acquisitions and Divestitures ..........................................................................203Specialty Renewable and Alternative Energy Pipeline Projects......................204

Petrobras .................................................................................. 205Corporate Background..........................................................................205

Business Activities ................................................................................206

Performance...........................................................................................206Figure 6-11: Annual Revenues of Petrobras, 2005-2009 (in billion $).............207

Company News ......................................................................................207Acquisitions and Divestitures ..........................................................................207Specialty Renewable and Alternative Energy Pipeline Projects......................208

Uniduto Logstica..................................................................... 209

Corporate Background..........................................................................209Business Activities ................................................................................209

Company News ......................................................................................210Specialty Renewable and Alternative Energy Pipeline Projects......................210

Chapter 7: End Users .............................................................. 211

Scope......................................................................................................211

Specialty Pipeline End Users................................................................211

Carbon Dioxide................................................................................................211Ethanol ............................................................................................................213Biodiesel..........................................................................................................215Biogas/Biomethane .........................................................................................215

Summary ................................................................................................216


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Specialty Pipelines Chapter 1: Executive Summary

December 2010 SBI Energy 1

Chapter 1 Executive Summary

Scope

Specialty pipelines convey renewable and alternative energy substances from points of

production to points of blending, storage, or end use. Renewable and alternative energy

substances considered in this report are carbon dioxide, ethanol, biodiesel, biomehane, and

biogas. Specialty pipelines are required for several renewable and alternative energy

substances due to corrosivity, lack of compatibility with conventional fuels distribution

systems, industry and regulatory requirements, and distributed locations of the renewable and

alternative energy substances considered in this report.

This chapter provides a brief overview of renewable and alternative energy substances and

their transport by specialty pipelines, specialty pipelines requirements and components, and

potential environmental impacts associated with pipeline installation and use. The methods

used and market origins and history that form a basis of this analysis are summarized. This

chapter then provides a summary of market trends for carbon dioxide, ethanol, biodiesel, and

biogas/biomethane markets, as well as a review of pricing and product trends for the

following specialty pipelines components: plastic and steel pipes, special purpose coatings,

air/gas compressors, and industrial valves. Finally, the chapter reviews specialty pipeline

industry trends, regional demands for renewable and alternative energy substances, supplychain, and specialty pipeline end users. For additional information regarding each of these

topics, and other topics included in the scope of this report, please refer to the remaining

chapters of this report.

Renewable and Alternative Energy Substances and the Role ofSpecialty Pipelines

Renewable and alternative energy substances are integral to the development of a low-carbon

economy through their application in GHG emissions reduction and mitigation strategies.Renewable and alternative energy substances treated within this report include renewable

fuels (ethanol, biodiesel, biogas/biomethane) and CO2.

Specialty pipelines enable the bulk delivery of renewable energy and alternative energy

substances to long-distance markets. Specialty renewable and alternative energy pipelines

are advantageous to renewable fuels producers due to transportation cost reductions, which


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Chapter 1: Executive Summary Specialty Pipelines

2 SBIEnergy December 2010

can reduce prices to consumers and inflate profit margins. Midstream energy partners and

logistics companies that transport renewable and alternative energy substances by pipeline are

able to increase service revenues and the value of their infrastructure by accepting new orders

and diversifying their portfolio of handled substances.

Without adequate midstream transportation assets or infrastructure, otherwise marketable

renewable and alternative energy substances are excluded from major energy markets and

consumers. For instance, logistics and product distribution have been identified as a leading

challenge to renewable fuels producers,1 and carbon dioxide capture program

implementation will depend on the expansion and greater distribution pipelines capable of

transporting carbon dioxide (CO2) for enhanced oil recovery (EOR) or geologic carbon

sequestration.2 Currently, rail and tanker transportation are the predominant forms of long-

distance delivery for ethanol and biodiesel. As stable short-term markets for renewable and

alternative energy substances develop due to energy regulation and recovering fossil fuel

prices, specialty pipelines will be integral to supplying major markets with bulk deliveries

adequate to demand.

Other benefits of pipeline transportation for renewable and alternative energy substances

include substantially lower transportation costs during pipeline operation, reduced energy

intensity of transport, reduced GHG emissions associated with transport, and increased ability

to meet and exceed lifecycle GHG emissions targets under existing and anticipated

regulation. Drawbacks of specialty pipelines include their material and installation cost, as

well as challenges related to the installation of such facilities, including gaining rights of

ways, easements, meeting environmental process requirements, and related issues associated

with pipeline installation.

Specialty Pipelines Requirements and Components

Like all transportation pipelines, specialty pipelines are resource-intensive through their

construction and operation. Transportation pipelines are constructed over long distances of

miles to hundreds of miles and require significant amounts of resources for their completion

1Biofuels Must Overcome Distribution Challenges to Achieve Market Success, Bulk Transporter,August 1, 2007, www.bulktransporter.com; Pipeline Potential, Biodiesel Magazine, February 2007,www.biodieselmagazine.com; Dedicated Ethanol Pipeline Feasibility Study, U.S. Department ofEnergy (DOE), 2010, www1.eere.energy.gov2Developing A Pipeline Infrastructure for CO2Capture and Storage: Issues and Challenges, INGAAFoundation, February 2009, www.ingaa.org


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and successful operation. Pipeline projects are associated with high capital costs such as land

purchases, labor, and material procurement. Pipeline installation, in particular, is challenging

in terms of cost, permitting, and acquisition of access to land. For instance, specialty pipeline

lengths are constructed from steel, metal alloy, plastics, or composites depending on the

length, operating conditions, and primary renewable or alternative energy substanceassociated with the pipeline. The cost of materials for pipeline lengths typically represents

between 20-40% of the total cost for a pipeline project. One long-distance transportation

pipeline project can require over one million tons of steel, alone representing nearly 0.1% of

annual global production.

Specialty pipelines include unique components required for the transportation of renewable

and alternative energy substances as well as components used commonly in existing

transportation pipelines for petroleum, natural gas, and petroleum products. Relevant

components include pipeline lengths/pipe sections, injection and receiving stations,

compressor and pump stations, valve stations, control systems, and leak detection systems.

The operational requirements of specialty pipeline projects depend on the application of

technical and procedural solutions towards the unique requirements of renewable and

alternative energy substance transportation. For instance, depending upon the substance

being transported, specialty pipeline operations must consider compatible pipeline materials

for corrosive substances; requirements for low contamination rates; and issues surrounding

use for batch transportation.

Environmental Impact of New Specialty Pipelines

Specialty pipelines for renewable and alternative energy substances represent both major

construction projects and infrastructure with high usage levels under tremendous operational

pressure. Although chiefly associated with efforts to mitigate climate change and improve

environmental conditions, specialty pipelines are also associated with various environmental

risks. In developed countries, construction and operation of specialty pipelines are typically

closely regulated to ensure that incidents are minimized. Common to most extensive energy

sector projects, specialty pipelines have an unavoidable footprint relating to their land usageand transportation of potentially environmentally hazardous substances. Specific

environmental issues that are commonly encountered for a specialty pipeline project include

land disturbance to natural and built environments; potential environmental contamination

from pipeline leaks; pipeline explosion risks; and energy use/air emissions associated with

pumping and compression needed to move substances within the pipelines.


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injection and permanent CO2 sequestration. While CO2pipeline networks linking multiple

sources and CCS reservoir sinks have been proposed, the industry remains hampered by

regulatory uncertainties and a lack of financial organization or project experience among

stakeholders.

Brazil and the United States represent the two largest national producers of ethanol and the

largest global consumption markets. Both countries have fostered major ethanol industries

due to the abundance of agricultural ethanol crops (sugarcane and corn) and national

regulation establishing significant markets for ethanol through transportation fuel blending. In

the U.S., many dedicated ethanol pipeline projects are waiting regulatory and tax law

revisions, loan guarantees, or partial project funding from the U.S. federal government.

The market consumption of biodiesel in its dominant form as a blend and the difficulties of

pumping 100% biodiesel (B100) and preventing its congealment at low operatingtemperatures (particularly during winter seasonal operation) have to date slowed the

construction of dedicated biodiesel pipelines. Midstream companies have found sufficient

commercial success supplying end users and fuel retailers with low biodiesel blends and do

not have significant incentive to transport pure biodiesel or higher biodiesel blends (that

would require infrastructure investments) in the current market.

Recent market developments for biogas and biomethane in the European Union have favored

centralized biogas production and increased the prevalence of biogas and biomethane

transportation pipelines. Centralized biogas production at large facilities require access totransportation fuel, utility natural gas, and power generation markets that have high market

thresholds for biomethane due to active renewable energy targets. Diverse and unrestrained

demand for biogas and biomethane across much of the European Union has also resulted in

the emergence of specialty biogas and biomethane project developers and contractors, putting

increased pressure on biogas and biomethane transportation infrastructure.

Trends in Renewable and Alternative Energy Substances Production

Rising renewable and alternative energy substance production represents a market trend with

significant long-term implications for both renewable fuel industries and energy sector

compliance with governmental energy regulations. Production alone does not ensure

compliance or access to renewable and alternative energy substance markets. Specialty

pipeline infrastructure remains essential to accommodating long-term organic growth for

production industries. For instance, without the development of source-linked CO2pipelines,


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pipelines due to lifetime energy cost savings that exceed initial project investment and

operational costs.

Specialty pipeline projects incorporated into the analysis presented in this report are

distinguished by their potential to operate profitably in current and likely market conditions inthe short-term future. Numerous projects for ethanol, biodiesel and for CO2transportation

have not been included within this report due to feasibility studies that identified them as

unprofitable. The history of government support for renewable energy and past specialty

pipeline projects is supportive of projections of further direct support and the profitability of

specialty pipeline projects for midstream operators.

Specialty Pipeline Markets

High market growth for specialty renewable and alternative energy pipelines is based uponthe projected increase of pipeline modification and specialty pipeline construction projects

through 2015. Investment in specialty pipelines is an emergent trend resulting from rising

demand for renewable fuel and CO2 transportation and the inability of current logistics

networks to meet projected regional and international demand for those substances. The

development of regional renewable and alternative energy substance production outside of

dominant regions of consumption will strain existing logistical operations and capacities.

The following market projections are consistent with the project investment necessary to

facilitate future growth in the demand for renewable and alternative energy substances and

compliance with relevant governmental energy policies and renewable fuel targets.

Carbon Dioxide Transportation Pipelines Market

For carbon dioxide transportation pipelines, market growth from 2006-2010 has varied year-

to-year with the phases of active pipeline construction projects. In the past five years, the

global market for CO2 transportation pipelines has increased from approximately $102

million to $376 million (at a compound annual growth rate [CAGR] of 38.6%). Pipeline

projects for EOR within the United States represented approximately $668 million (or 53.0%)

of the cumulative global market volume of $1,260 million between 2006 and 2010. The

remaining 47.0% of the 2006-2010 market resulted from CCS projects distributed throughout

the United States, European Union, and the Asian countries of China and Australia.

Increasing CCS technology development in the global markets of the United States, European

Union and some Asian countries following 2012 will contribute to the global CO2


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$2 $3

$5 $5

$9

$11

$15

$22

$27

$31

0

5

10

15

20

25

30

35

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GlobalMarketSize(inmillion$

)

through 2009. Subsequent market growth is anticipated due to steadily growing demand for

biodiesel in the U.S. and EU markets and the ability of midstream companies to facilitate

transportation through select infrastructure. With access to pipelines shared with jet fuel

batches anticipated within the next several years, biodiesel will sustain growth within its

relatively small market increasing from $2 million to $31 million during 2006-2015 (CAGR35.6%) (Figure 1-3).

Figure 1-3Biodiesel Specialty Pipelines Market Size, 2006-2015(in million $)

Source: Calculated and estimated by SBI Energy.

Biogas and Biomethane Transportation Pipelines Market

The global market for biogas and biomethane transportation pipelines is characterized by a

high volume of projects with short-distance pipelines used to connect anaerobic digesters and

landfills with points of consumption or interconnection with natural gas pipelines. The global

market for biogas and biomethane pipelines exhibits consistent growth through 2016 due to a

higher volume of smaller projects. Smaller projects require less capital investment and can

be financed with less difficulty than other specialty pipeline projects. With rising natural gas

prices, the market for biogas and biomethane production projects and associated pipelines

will be guided by increasingly favorable project economics that allow end users to displace

natural gas consumption for operational savings or sale biomethane at market price. After


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growing nearly $150 million between 2006 and 2010 (CAGR 38.6%), the global market for

biogas and biomethane transportation pipelines is projected to increase by over $450 million

between 2011 and 2016 (CAGR 28.0%) (Figure 1-4).

Figure 1-4

Biogas and Biomethane Transportation Pipelines Market Size, 2006-2015(in million $)


Product Trends and Pricing

The prices and associated costs of specialty renewable and alternative energy pipelines are

determined by trends in demand and costs for their constituent materials and components.

The materials costs of specialty renewable and alternative energy pipeline projects are

predominately represented by the price of specialty pipeline lengths fabricated from carbon

steel, epoxy resins, polyethylene, and fiberglass reinforced plastic (FRP).

Global demand for commodity materials such as construction-grade steel and petroleum-

based plastic feedstocks can significantly impact the material costs of a given transportation

pipeline project. Recent developments in the markets for carbon steel and construction

plastics are reviewed below as they are relevant in determining the input costs for pipeline

fabricators. The prices of plastic and steel pipe lengths in the United States market (Figure 1-

5) illustrate substantially inconsistent price trends through the period of 2001-2010.

$55

$99 $118

$140

$203

$271

$327

$510

$620

$727

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400

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

Price%Changefrom

PreviousYear

Steel

Plastics

Significant spikes in year-to-year prices are evident prior to 2008 that correspond to project

activity within the oil & gas industry as well as other industrial sectors.

Figure 1-5U.S. Plastic and Steel Pipes Price Changes, 2001-2010

4

Source: U.S. Bureau of Labor Statistics*2010 Price Change represents increase of prices from January-August 2010 over January-August 2009

The application of pipeline coatings in the upstream (oilfield production), midstream, and

downstream (distribution pipelines) segments contributed to average annual growth of over

15% in the pipeline coatings market between 2004 and 2007.5 High demand for pipeline

coatings and other specialty coatings during 2004-2007 led to price increases of 4-7%

annually during the period (Figure 1-6). Project investment in the oil & gas industry

subsequently fell in late 2008 and 2009, decreasing demand for petroleum (used as a

feedstock for pipeline coating production) and pipeline coatings. In 2010, the price of

specialty coatings has consequently risen little more than 1% over 2009 due to inflation rather

than demand.

4The cited U.S. price for steel pipe is derived from the price index for iron and steel pipe and tubingfabricated following their purchase from metal manufacturers. The cited U.S. price for plastic pipeincludes only pipe sold to the oil & gas industry.5Challenges for Pipeline Coatings Market Discussed at Recent Conference, AZoM, 2008,www.azom.com


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0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

Price%ChangefromPreviousYear

Industrial Pumps

Air and Gas

Compressors

Figure 1-7U.S. Industrial Pump and Air/Gas Compressors Price Changes, 2001-2010

Source: U.S. Bureau of Labor Statistics*2010 Price Change represents increase of prices from January-August 2010 over January-August 2009

The U.S. price of valves increased significantly between 2004 and 2007 due to the volume of

energy projects pursued in the United States and globally (Figure 1-8). Valves are essential

components to flow control systems at power plants, refineries, chemical manufacturing

plants, water management facilities, and upstream and midstream oil & gas facilities. The

subsequent financial crisis in 2008 significantly reduced project activity globally and demand

for industrial valves, resulting in negligible price increases in 2009 and 2010 (at a little over

2% and 1% respectively).


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completion of specialty pipeline projects are becoming more common as contractors and

midstream companies accumulate experience and greater markets for specialty pipelines

become available. Leveraging technologies, products and construction procedures available

for conventional transportation pipelines, specialty pipeline developers are currently able to

pursue and complete commercial projects.

Figure 1-9Specialty Pipeline Components Supply Chain

Specialty Pipeline End Users

The end user markets for specialty pipelines are populated by a limited number of companies

capable of operating midstream infrastructure and having significant incentive to invest in

pipeline projects. Midstream companies represent the most common end users for CO2

transportation pipelines, ethanol transportation pipelines, and pipelines suitable for biodiesel

transportation. Oil & gas companies with midstream operations represent a related group of

end users for dedicated ethanol pipelines. Stakeholders in CO2EOR, CCS, and biomethane

production development have also emerged as a secondary group of end users that have been

active in the financing and operation of limited midstream assets.

The end user markets for specialty renewable and alternative energy pipelines are in the

process of ongoing diversification as their overall markets continue to grow with renewable


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energy demand. Similar to oil & gas companies, the producers of biogas, biomethane, CO2

and ethanol are increasingly active in the development and construction of associated

midstream infrastructure. Comprehensive oil & gas companies have begun to integrate

midstream renewable and alternative energy operations into their business activities through

the construction of specialty pipelines for CO2and ethanol, which are projected to representthe two largest specialty pipeline markets of this report by 2015.

Summary


substances to long-distance markets. Specialty renewable and alternative energy pipelines

are advantageous to renewable fuels producers due to transportation cost reductions, which

can reduce prices to consumers and inflate profit margins. Without adequate midstream

transportation assets or infrastructure, otherwise marketable renewable and alternative energy

substances are excluded from major energy markets and consumers. Other benefits of

pipeline transportation for renewable and alternative energy substances include substantially

lower transportation costs during pipeline operation, reduced energy intensity of transport,

reduced GHG emissions associated with transport, and increased ability to meet and exceed

lifecycle GHG emissions targets under existing and anticipated regulation.

The contemporary development of operations and infrastructure for the pipeline

transportation of renewable and alternative energy substances represents the response of the

midstream industry to the rising supply requirements of renewable fuel and CO2 markets.

The specialty pipeline market has precedents for each renewable and alternative energy

substance through the completion and current construction of renewable fuel and CO2

transportation pipelines. The global market for specialty renewable and alternative energy

pipelines is projected to exhibit double-digit rates of growth through 2015 for a projected

annual average of 31.2% that will lead the market volume from $807 million in 2010 to

$3,142 million in 2015 (Figure 1-10). Growing volumes of transportation pipeline projects

are anticipated for each renewable and alternative energy substance in the short-term future

market, with CO2 transportation pipelines and ethanol transportation pipelines representingspecialty pipeline markets with value in excess of $1,000 million by 2015.


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0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Glob

alMarketSize(inmillion$)

Biodiesel

Biogas/Biomethane

Ethanol

Carbon Dioxide

Figure 1-10Specialty Pipelines Market Size, 2006-2015(in million $)


In the past decade, relevant global developments that contributed to several specialty pipeline

market and product trends included the rising demand for energy products accelerated by

developing economies, the increasing implementation of regulation aimed at decreasing GHG

emissions, the global financial crisis and global economic recession. Rising global demand

for petroleum and natural gas until mid-2008 led to price increases in many global

economies, spurred the implementation of renewable energy regulation and incentives,

improved the market competitiveness of renewable fuels with high production costs and led

to asset acquisitions, expansions and development within the midstream energy industry.

Growing private sector and governmental awareness of the environmental effects of GHG

emissions led to the development of regulation and corporate strategies that impacted markets

associated with renewable fuels and energy sector CO2 activities. In 2008, the global

financial crisis and global economic turndown decreased petroleum products and natural gasconsumption by approximately 5% in some national economies. Growth in carbon dioxide

emissions and energy demand subsequently faltered with business activity.

Specialty pipelines are present as a link in the supply chain for renewable and alternative

energy substances and the culmination of specialty pipeline component supply chains.

Despite their integral status in both supply chains, specialty pipelines are not thoroughly


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represented in marketing or promotional campaigns by renewable fuels producers or

midstream companies. With current industry activity limited largely to existing multi-

product pipelines, the solicitation of public approval and government support has not been

required to secure investment.

The development and construction of dedicated specialty pipelines for renewable fuels will

require the development of promotional strategies to secure governmental funding and the

support of affected communities along the pipeline ROWs. Initial promotional efforts have

been limited to the publicizing of operational trials of moving renewable fuels such as

biodiesel and ethanol through multi-product pipelines or minor transportation pipelines.

Promotion within the energy sector has focused upon collaboration between renewable fuels

producers and the organization of investment consortiums and associations.


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Specialty Pipelines Chapter 2: Specialty Renewable & Alternative Energy Pipelines


Chapter 2 Specialty Renewable andAlternative Energy Pipelines

Scope

Specialty renewable and alternative energy pipelines (specialty pipelines) are differentiated

from conventional fossil fuel pipelines through their unique operational, material, and

equipment requirements. Specialty pipelines are midstream infrastructure able to transport

large quantities of renewable and alternative energy substances: carbon dioxide, ethanol,

biodiesel, biogas, and biomethane. These substances commonly require dedicated pipelines

due to high pressure requirements, resistance to corrosive substances, impurities, and/orincompatibility with substances transported along conventional pipelines. Specialty pipelines

transport these substances between points of production, storage, distribution, and/or

consumption. The scale of demand for renewable and alternative energy substances has

necessitated the development and implementation of pipelines to enable efficient bulk

delivery to distribution terminals and consumers. This chapter reviews the operational

requirements, resource requirements, equipment and materials, history of development,

environmental impacts, and renewable and alternative energy substances associated with

specialty pipelines.

Pipeline Technology and Operation

Pipelines are commonly used in the energy sector for the efficient bulk transportation of fuels

and other low-value/high volume fluid energy commodities between points of production and

points of storage or consumption. Pipelines delivering energy commodities are classified as

gathering, transportation, and distribution pipelines. Gathering pipelines are present at oil &

gas fields and production sites to facilitate the flow of produced oil and gas from reservoirs to

surface facilities. Distribution pipelines are most common as natural gas piping to individualresidential and commercial consumers. Transportation pipelines deliver substances across

long distances and at higher rates than gathering or distribution pipelines. Some renewable

and alternative energy substances included in this report are not presently associated with

gathering or distribution pipelines, but all renewable and alternative energy substances are

associated or projected to be delivered through transportation pipelines within the next five


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Chapter 2: Specialty Renewable & Alternative Energy Pipelines Specialty Pipelines


years. As a result, transportation pipelines represent the most broadly relevant midstream

infrastructure for renewable and alternative energy substances, as defined above.8

Generally, transportation pipelines are used for long-distance substance delivery and require

large amounts of materials, equipment, and project capital. Transportation pipelines are alsofrequently defined through their greater capacities for handling and delivering substances

than gathering or distribution pipelines. Transportation pipelines can be operated between

facilities responsible for the production or preparation of renewable fuels and alternative

energy substances, transloading9 and storage terminals, distribution terminals, distribution

facilities, and major consumers (e.g. industrial facilities, utilities, power plants).

Various operational and market factors determine the logistics for renewable and alternative

energy substances and their potential delivery through pipelines. The typical transportation

pathways for ethanol and biodiesel are provided here as examples.10

Unlike petroleumrefineries and natural gas treatment facilities, most facilities producing ethanol and biodiesel

do not have direct access to transportation pipelines. When transported via pipeline, ethanol

and biodiesel are typically first transported by truck, rail, or maritime transport (barge and

tanker) to transloading and storage terminals. At these terminals, the renewable fuel is stored

and prepared for batch delivery through the pipeline. Batches of ethanol and biodiesel are

received at distribution terminals and may be stored prior to their loading into trucks or rail

cars for further transportation or distribution to points of consumption (e.g. gas stations, fuel

depots, industrial facilities).

This report focuses on transportation pipelines for renewable and alternative energy

substances (also referred to in the report as specialty pipelines) and their components:

pipeline lengths, compressor stations, pump stations, valve stations, pipeline control systems,

leak detection systems, injection stations, and receiving stations. Through their selection and

precise engineering, these components ensure the proper transmission of renewable and

alternative energy substance substances. Specialty pipelines represent numerous operational

and manufacturing challenges to the energy sector, but are increasingly essential to the

8Midstream refers to the companies, infrastructure and services responsible for linking the supply sideof energy sector commodities to the demand side (distributors, marketers, major consumers, etc.).Midstream activities in the energy sector include the processing of energy commodities, their storage,transportation, marketing, and delivery to distributors and major consumers.9Transloading is the process of transferring a product from one mode of transportation to anothermode of transportation.10Further details regarding the pipeline pathways and operational requirements for all renewable andalternative energy substances are provided later in this chapter.


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greater distribution and market availability of competitive renewable fuels, as well as industry

and public efforts aimed at reducing lifecycle greenhouse gas emissions (GHG) associated

with the production, refining, transportation, and distribution of renewable and alternative

energy substances.

Role of Specialty Pipelines


substances to long-distance markets. The use of specialty pipelines enables renewable and

alternative energy substance producers, their midstream partners, and other logistics

providers to reduce the usage of truck, rail, or marine transport. Specialty renewable and

alternative energy pipelines are advantageous to renewable fuels producers due to

transportation cost reductions, which can reduce prices to consumers and inflate profit

margins. Midstream energy partners and logistics companies that transport renewable and

alternative energy substances by pipeline are able to increase service revenues and the value

of their infrastructure by accepting new orders and diversifying their portfolio of handled

substances. These participants in the midstream industry are able to promote and benefit

from the operational and technical advantages of specialty pipelines: lower lifecycle GHG

emissions associated with the substance, more cost-efficient delivery than vehicular

transportation, and greater market distribution and availability of renewable and alternative

energy substances.

Greater Market Availability and Consumption of Renewable and AlternativeEnergy Substances

Without adequate midstream transportation assets or infrastructure, otherwise marketable

renewable and alternative energy substances are excluded from major energy markets and

consumers. For instance, logistics and product distribution have been identified as a leading

challenge to renewable fuels producers.11 Likewise, the implementation of carbon dioxide

capture programs (commonly referred to as carbon capture) will depend on the expansion

and greater distribution pipelines capable of transporting carbon dioxide (CO2) as an

alternative energy substances for use in enhanced oil recovery (EOR) or geologic carbon

11Biofuels Must Overcome Distribution Challenges to Achieve Market Success, Bulk Transporter,August 1, 2007, www.bulktransporter.com; Pipeline Potential, Biodiesel Magazine, February 2007,www.biodieselmagazine.com; Dedicated Ethanol Pipeline Feasibility Study, U.S. Department ofEnergy (DOE), 2010, www1.eere.energy.gov


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sequestration projects.12 Frequently, renewable and alternative energy substances are

produced in areas not commonly associated with respectively high demand. Ethanol and

biodiesel produced in rural, agricultural areas are able to access larger consumption markets

when transported to distant urban areas or large industrial consumers. Similarly, CO2

produced from geographically distant geological formations or captured from industrialemissions must be transported to oil fields for EOR and/or sequestration.

Currently, rail and tanker transportation are the predominant forms of long-distance delivery

for ethanol and biodiesel. Pipeline delivery of methane produced through anaerobic digestion

(known as biogas and biomethane) and CO2is comparatively much more prevalent than for

ethanol and biodiesel. In the case of each renewable and alternative energy substance,

however, the delivery of significantly greater quantities for local and regional distribution can

be achieved through pipelines with associated distribution terminals. As stable short-term

markets for renewable and alternative energy substances develop due to energy regulation

and recovering fossil fuel prices, specialty pipelines will be integral to supplying major

markets with bulk deliveries adequate to demand. For example, hypothetical regulation

mandating 5% biodiesel blending into heating oil would generate demand for 450 million

gallons a year (MMgy) of biodiesel in the northeastern United States, equivalent to 16,000

railcars moving biodiesel from the U.S. Midwest. At such levels of demand, logistics

companies and midstream companies would find significant operational savings through the

construction of a long-distance specialty pipeline.13

Higher Efficiency Transportation of Renewable and Alternative EnergySubstances

Pipelines have significantly lower transportation costs per unit of delivered substance than

rail and truck transportation. A comparison of the energy intensity of transport for renewable

and alternative energy substances provides a useful metric for comparison. Energy intensities

can be expressed through the amount of energy consumed (measured in British Thermal

Units [BTUs]) by weight-distance (ton-mile; one ton of substance moved one mile) of

substance. Available energy intensity figures for crude oil transportation provide a basis for

judging the relative efficiencies of transporting liquid renewable fuels by pipeline, rail, truck,

and marine transport. Government lifecycle studies for crude oil and petroleum products

12Developing A Pipeline Infrastructure for CO2Capture and Storage: Issues and Challenges,INGAA Foundation, February 2009, www.ingaa.org13Biodiesel Magazine, February 2007


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have established pipelines as having a lower energy intensity range (200-300 BTU/ton-mile)

than rail (300-400 BTU/ton-mile), truck (1,700-2,500 BTU/ton-mile), and barge (350-450

BTU/ton-mile).14 In some cases, very large ocean tankers can prove to be more efficient than

pipelines, although their application in substance transportation remains limited to long-

distance oceanic transport, due to extensive required berthing area and other limitations.Energy intensity figures for natural gas pipelines demonstrate a similar but slightly higher

range of pipeline energy intensity of 350-400 BTU/ton-mile for transporting gaseous

substances with in-pipeline compressors.15 Vehicular modes of transporting gaseous

substances are assumed to have similar energy intensity ranges as those stated above due to

the common use of internal combustion engines for gaseous and liquid substance

transportation.

Rail, truck, and barge represent the major competitive modes of transportation for specialty

pipelines. Ocean tankers remain unchallenged in transoceanic transportation of energy

commodities due to industry inability to construct pipelines over such extraordinary distances

underwater. Over continental distances, operational costs for pipeline transportation are

lower than rail, truck and barge transportation due to the lower energy intensity of pipeline

transportation and lower personnel costs. However, initial capital costs for a pipeline are

extraordinarily greater than the purchase of freight transportation vehicles. Advantages in

lower operational costs allow specialty pipelines to be cost-effective and competitive with

more conventional modes of transportations, but only when high enough substance volumes

are transported to secure delivery fees (pipeline tariffs) needed to repay pipeline investmentcosts. As discussed in greater detail through the remainder of this report, pipelines have

historically seen minimal use in the transportation of several renewable and alternative

energy substances due to their low volumes of production. However, the greater scales of

production of renewable fuels such as ethanol and biodiesel have tremendously raised

prospects for new specialty pipelines that would be able to operate economically due to

increased delivery volumes.

Aside from the ability of (?)specialty pipelines energy efficiencies to reduce operational costs

associated with the transportation of renewable and alternative substances, greater midstream

14Trans-Alaska Pipeline System Environmental Impact Statement, Argonne National Laboratory(ANL), 2001, www.tapseis.anl.gov; California Reformulated Gasoline Program Pathway InputValues, California Air Resources Board (ARB), 2008, www.arb.ca.gov15Detailed California-Modified GREET Pathway for Compressed Natural Gas (CNG) from DairyDigester Biogas, California Air Resources Board (ARB), 2009, www.arb.ca.gov


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energy efficiency is correlated to lower lifecycle GHG emissions for renewable and

alternative energy substances. With renewable fuels mandates active in both the United

States and European Union, biofuels producers must qualify under the mandates by achieving

lifecycle reductions in GHG emissions compared to the replaced conventional fuel, such as

gasoline or diesel fuel. Lifecycle assessments of renewable fuels typically include GHGemissions from midstream transportation and distribution. More energy-efficient specialty

pipeline transportation will be integral for renewable fuels industries seeking to meet

thresholds for the lifecycle GHG emission reductions of their products. Specialty pipelines

will maximize the potential of companies involved in the production, transportation,

distribution, and marketing of renewable and alternative energy substances to achieve

significant net reductions in GHG emissions.

Renewable and Alternative Energy Substances

As energy sector commodities, renewable and alternative energy substances are integral to

the development of a low-carbon economy through their application in GHG emissions

reduction and mitigation strategies. The inclusion of both renewable fuels (ethanol, biodiesel,

biogas/biomethane) and CO2within the scope of this report reflects their common potential to

mitigate or reduce GHG emissions through their consumption by a variety of end users. As a

mode of midstream transportation, pipelines are able to facilitate the distribution and

consumption of these renewable and alternative energy substances and are therefore

meaningful contributors to broader energy sector climate change mitigation strategies. Ageneral overview of each renewable and alternative energy substance included in this report

is provided below, with particular emphasis upon its production, characteristics relevant to its

handling during transportation, and its application towards GHG emissions reduction and

mitigation strategies.

Carbon Dioxide

Carbon dioxide is the leading anthropogenic GHG in terms of its annual emissions volume

and is a major area of emphasis in both regulatory and private sector GHG emissionsabatement schemes.16 The gas is a byproduct of fuel combustion, various petroleum refining,

and gas processing and transport procedures within the industrial and energy sectors. With

relatively few applications and little utility for most emitters, CO2is commonly released into

16U.S. Environmental Protection Agency, www.epa.gov


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the atmosphere through flues and flares. However, CO2represents an emerging commodity

for upstream oil & gas industries. Carbon dioxide has been injected into oil reservoirs since

the 1970s to produce additional oil in the tertiary phase of oil production operations and has

found rapidly increasing use through the past decade. The method of injecting CO2into an

oil field to recover more oil is commonly known as CO 2EOR. Captured from industrial andenergy sector process streams or geologic reservoirs, CO2 extends the operational life of

oilfields and can be sequestered permanently within the depleted oil reservoir following the

completion of EOR operations.

Under carbon credit and carbon offset programs, CO2is attributed an indirect value through

its delivery to sequestration sites. Emittin

ethanol pipeline market report

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