The Primary Purposes of Transport and Delivery - Term Paper Example

 Table of Contents Introduction 2 The Network 2 History 3 Present Distribution System 4 Transport Methods 5 Pipelines 5 Transport by Sea 6 Rail and Road 7 Terminals 8 Regulatory Controls 8 Future Supply 8 Hubbert’s Peak Theory 9 The Reality of the Situation 10 Conclusion 12 Bibliography 13 Introduction It is not wrong to say that petroleum and oil products have become the lifeline of out modern economy over the years. It is the blood without which our civilisation and way of life would simply cease to exist. One of the issues with using oil is that the production, extraction, and refinement often take place thousands of kilometres away from the location where it may be sold and used. This of course demands a huge support network with the primary purposes of transport and delivery. The Network The network for petroleum begins with a separation of the process into two streams i.e. upstream and downstream. Upstream is the first division and deals with the exploration, discovery and production of oil from untapped resources. Once oil has been found in a locality, upstream producers start the installation processes for their rigs and install extraction equipment that lets them get to the petroleum wherever it may be (Wikipedia, 2006). Figure 1 Location of Countries with Largest Oil Reserves. From http://en.wikipedia.org/wiki/Petroleum The table below shows the top ten nations with proven reserves of oil Rank  Country 109 Barrels 1 Saudi Arabia 261.9 2 Canada 178.8 3 Iran 125.8 4 Iraq 115.0 5 Kuwait 101.5 6 United Arab Emirates 97.8 7 Venezuela 77.2 8 Russia 60.0 9 Libya 39.0 10 Nigeria 35.3 Table 1 From http://en.wikipedia.org/wiki/Petroleum The downstream network is what actually transports the oil as raw material or petroleum as a finished good to the actual consumers of the commodity. This is the network than involves seafaring oil tankers, refineries, petrochemical plants, pipelines, large oil companies and the end user. The total size of this global system is massive to say the least and the amount of money involved in the operation runs in the trillions of Euros (Wikipedia 2006). Not only does the network generate huge profits, it also generates huge controversies concerning its operations. History By the 1890s, the automobile had been invented and it required petrol to run. The popularity of the ‘horseless carriage’ meant that there were nine million American cars which needed fuel in 1920 and petrol stations could be seen across all American cities. Continued exploration and the development of the first transport network came into effect and oil was soon being sent from America to across the world. By the 1940s, other countries and companies made their own discoveries of oil and the present network started to emerge from the shadows (NOIA 2006). Present Distribution System The first step in the downstream infrastructure is the movement of oil from the well to the refinery. Quite often, refineries are located in geographically close regions so a pipeline is often laid down to transport the oil. The U.K is one example of a country which has a tremendous pipeline system for the transportation of petroleum products across the land and a representation of that is given in Figure 1. Figure 2. U.K. Pipeline Network From: http://www.ukpia.com/Portals/0/Repository/map_key.pdf Transport Methods Pipelines Every year, more than seventy five million tonnes of petroleum products are transported over British soil. The main pathways of this transport are pipelines followed by rail lines, ship transport and road. The reason why pipelines are used for almost half the transport requirements is simply due to the cost effectiveness of the pipeline. Once a pipe has been laid to connect two points on the map, it requires very little maintenance and can provide years of service without breakdowns (Clo 2000). However, there may be a new threat to pipelines in terms of terrorism since they can be easy targets (IAGS 2004). To make them more secure, safer and environmentally friendly, pipes can be placed underground and not be an eyesore on the landscape. They also eliminate the negative effect on the environment which might have been required if the same quantity of oil needed transport via road or rail networks. These are the reasons which make pipelines the best choice for carrying more than 30 million tonnes of petrol diesel and jet fuel. Had there been no pipelines, the transportation of this quantity would have needed more than 1 million more road tanker trips (UKPIA 2004). Transport by Sea Despite their advantages of low running cost, pipelines are limited by the distance they can travel and can not deviate from their path once they have been put into place. Oil which is transported by sea is not restricted by such measures and oil tankers have become the primary means for taking long distance trips (Ratcliffe 1985). For instance, both crude and refined oil is brought from the Persian Gulf to locations around the world where it is divided and distributed (Chapman and Khanna 2001). Oil tankers play a large role in this transport network and it has gotten to the point where the oil tanker traffic is facing chokepoints for transport (EIA 2006).While oil tankers are a very safe means of transport for large quantities of oil over great distances, there have been a number of accidents which have caused disasters for the ecology of the region and like aircraft crashes; these are given a lot of attention by the media. Even then, Air travel remains the safest way to travel and similar to that, hundreds of oil tankers have been transporting oil for many years with an excellent safety record (Ratcliffe 1985). In fact, there is more risk to oil tankers from a terrorist attack than from any other source (Klare 2001). Rail and Road The last link and least used systems of transport are via rail and road. Since the cost of moving large volumes of petroleum products in such a manner is very high, it is only used when there is no other option left. Transporting petrol via road going trucks is the way the common man is most familiar with since these travel our roads on a daily basis. The size of the tanker is normally 44 tonnes or 18 tonnes depending on where it is going and how much fuel is estimated by the company to be required at the station it serves. The process of loading petrol from the terminal onto the truck is often an automated system which protects the environment as well as ensures that no amount of fuel is wasted or spilt (UKPIA 2004). Terminals Modern terminals have loading systems which are efficient enough to even capture escaping vapour and add that to the fuel supply. While the nine major refineries around the UK have their own storage facilities, there are several other storage and distribution terminals across the nation. Computerized systems at the handling terminals ensure that schedules are maintained and the volatile liquids are contained securely until they are to be used. Regulations like COMAH (Control of Major Accidents Hazards Regulations) consider such storage and terminal facilities their top priorities since an accident here could cause massive damage to the infrastructure and might even be dangerous to human lives (UKPIA 2004). Regulatory Controls The regulatory controls have mandated that all such locations where there is a change of a major accident do not operate without complying with safety requirements. The sites are required to have accident prevention and containment plans. All risks at the site must be evaluated and mitigated to the satisfaction of the government. Tools like fire suppression systems and fluid containment barriers must be present at the location to control the situation if an accident ever occurs. Future Supply Despite all our efforts, the world may face a situation where the extensive infrastructure created by the transport network for oil is simply rendered useless if the total world oil supply runs out. Although scientists have been predicting that the known oil reserves would finish in a matter of years, it has not come to pass yet. We do know however, that we are consuming oil at a much faster rate than we were a few decades ago and it can be expected that eventually oil will run out (Deffeyes 2001). Hubbert’s Peak Theory It’s a simple case of supply and demand in economic terms, at any given time, fossil reactions are producing a minute quantity of oil which is being added to the world storage but that addition is minuscule compared to the reserves and the demand on those reserves (Wikipedia, 2006). This idea is also supported by Hubbert’s peak theory which assumes that the overall reserves of oil in the world will not be added to in any significant way or may not be added at all to begin with. Since animal fossils turn into useable oil over millions of years in geological time, we can not hope that the oil reserves will increase before we use it all up (Deffeyes, 2001). While the theory suggests that oil supply will reach a peak level at some point and then give a few decades of high production before tapering off to consistently low levels, it is considered to be controversial. The supply estimates of oil and the figures on proven/estimated oil reserves vary between analysts. The date of this peak can be adjusted forward or backwards depending on who is making the calculation and the date of the figures which are being used for calculations (Wikipedia, 2006). While this theory may be difficult to apply on a global scale it has seen itself being applied on a regional scale as in the case of the United States. Hubbert showed that the number of discoveries of new oil sources peaked in the 1930s and said that production in America would peak in the 1970s. This prediction came out to be true and once the U.S. production peaked in 1971 (Deffeyes, 2001). After this, OPEC was able to control global oil prices that spiked with the oil crisis of 1973. Britain’s North Sea resources peaked in the 1990s and China has said that two of its largest oil taps are cutting down on production. One of the world’s largest offshore fields ‘Cantarell’ is expected to peak in 2006 and decline in output by 14% annually, according to Mexico’s national oil company, Pemex (Wikipedia, 2006). The Reality of the Situation The plain fact of the matter is that we know that the peak will come sooner or later after which production of oil will go down. The problem with the theory is that peaks can only be recognized after they have occurred as in the 1971 U.S. oil peak. Without a clear drop in the output, the peak is only an estimate which makes people fear for a while and then be elated when the time for oil running out comes and goes (Deffeyes, 2001). It can be seen as the case of crying ‘wolf’ one too many times, but it must be realized that oil will certainly run out sometime in the future (it could be ten years or even a hundred years from today) even if we can not come to a firm date as to when it will be finished. Before this happens we would need to find alternate sources of energy which can be utilized as efficiently as petrol or we could be pushed back into the stone ages (Rifkin 2002). The increasing price of petrol is one automatic way in which people would have to conserve fuel or move towards cheaper alternative fuel sources once the price goes high enough. As shown in the char below, in only a period of two years, 2004-2006 the price of oil has gone from less than $35 per barrel to almost $70 per barrel. Figure 3 Recent Prices for Oil From http://en.wikipedia.org/wiki/Petroleum Conclusion In conclusion, while we have a reliable and efficient petroleum transport network today, there are still threats which exist that can hamper with this vital supply as they have done in the past (Ressa 2002). Our dependence on oil will not be changed or removed in a matter of weeks and I think it will take several decades before we have alternate renewable sources of energy which can successfully replace petrol and oil products. Till then, we can only hope that the transport network that gets petrol from the oil field to our gas tank continues to run smoothly as it has over the years. Bibliography Chapman, D and Khanna, N. 2001, ‘An Economic Analysis of Aspects of Petroleum and Military Security in the Persian Gulf’, Contemporary Economic Policy, vol. 19, no. 4, pp. 371-381. This is a paper on the economic issues which could develop as a result of negative military and terrorist activities in the mid-east region. Clo, A. 2000, Oil Economics and Policy, Kluwer Academic Publishers, Boston. This book discusses the supply and demand situation of oil and how government policies on conservation can help to alleviate the problems. Deffeyes, K. 2001, Hubbert's Peak: The Impending World Oil Shortage, Princeton University Press, Princeton. The book talks about the scientific concept of Hubbert’s peak which can be applied to fossil fuels and other non-renewable resources. It shows that at some point in the future oil supply will start diminishing with serious consequences for the economy. EIA (Energy Information Administration), 2006, World Oil Transit Chokepoints: General Background. [Online] Available at: http://www.eia.doe.gov/emeu/cabs/World_Oil_Transit_Chokepoints/Background.html This page provides general information about oil transport problems around the world. IAGS (Institute for the Analysis of Global Security). 2004, Threats to Oil Transport. [Online] Available at: http://www.iags.org/oiltransport.html In view of the latest terrorist threats, the IAGS examines how oil transport could be affected if a terrorist group attacks one or more of the oil supply lines. Klare, M. 2001, Resource Wars: The New Landscape of Global Conflict, Henry Holt and Company, New York. This book discusses how global conflicts of the present and the future could depend on access to resources which are finite in nature and how their value could be increased exponentially if they are in a conflict zone. NOIA. 2006, ‘About Petroleum’ National Ocean Industries Association, [Online] Available at: http://www.noia.org/info/petroleum.asp. The webpage gives basic information about petroleum and provides information about the transport and retrieval methods. Ratcliffe, M. 1985, Liquid Gold Ships: a History of the Tanker, Lloyd's of London Press, London. The book describes how tankers have changed the way oil moves around the world and why they have been the method of choice for moving oil in large quantities around the globe. Ressa, M. 2002, ‘Maritime terror attack alert’ Cnn.com, [Online] Available at: http://edition.cnn.com/2002/WORLD/asiapcf/southeast/10/23/singapore.sealane/ This news report details how an oil transportation vessel was attacked and the damage which resulted from this terrorist action. Rifkin, J. 2002, The Hydrogen Economy, Putnam Publishers, New York. The book discusses the future of alternative fuels and how Hydrogen could become one of the factors in future economics. UKPIA. 2005, ‘Industry Information: Distribution’ U.K. Petroleum Industry Association, [Online] Available at: http://www.ukpia.com/industry_information/distribution.aspx This source provides excellent information about the supply and distribution of oil throughout the U.K. in terms of distribution, pipelines and refinery locations. Venn, F. 1986, Oil Diplomacy in the Twentieth Century, St. Martin’s Press, New York. This book gives inofmraiont about the relationships which have developed between countries as a result of the oil trade. Wikipedia. 2006, ‘Petroleum’ Wikipedia the free encyclopaedia, [Online] Available at: http://en.wikipedia.org/wiki/Petroleum Basic information about petroleum including its production and extraction as well as the other associated products which are created during the extraction process. Read More