The Prevalent Issues of the Pipeline Network Within the European Union - Case Study Example

Introduction to Logistics Table of Contents Table of Contents 2 Overview 3 Identification of the Key Issues related to the Pipeline Network 4 Technical Issues 4 Economic issues 5 Political Issues 5 Use of Appropriate Terms and Logistic and Supply Chain Management Related To Pipeline Networking 6 Emphasis on the Trade-Offs With the Other Elements of Logistics and Supply Chain System 8 Conclusion 11 References 12 Overview European Gas Network has seen a gradual establishment within the past 70 years. In terms of its infrastructure need for replacement has been found within few of the member states. The policy pertaining to energy in European Union is considered to be extremely sensitive issue. In this context bilateral agreement has been ascertained to serve as a principle behind the energy policy of EU. The EU energy policy is largely focused upon the aspect such as environment, competition, route of transportation and efficiency aspects. The provisions being provided by the EU to its related pipeline network entails ‘Third Energy Package’ (TEP). In this regard the TEP was enforced with a motive to separate the operations pertaining to the transmission network, which incorporates the gas pipeline and the electricity networks. In order to execute the TEP, there remains the requirement for the approval of Transmission System Operator (TSO). It has been further revealed that the certifications associated with the TSO are conducted by the non-members being presented in the European Union (Smith, 2012; Agrawal, 2003). This paper mainly intends to discuss about the prevalent issues associated with the pipeline network within the European Union. On further note, the paper also discusses about the process involved in the execution of the pipeline network pertaining to the supply chain management. Apart from this objective, the study further intends to focus on the suggesting alternatives associated with supply pipeline system. Identification of the Key Issues related to the Pipeline Network In consideration with the issues, it mainly incorporates the technical, political and economic issues. Considering the pipeline network, it includes two broad segments i.e. gas and oil. On further observations, it has been analysed that the transmission of gas through the pipeline has provided a broader network. In accordance to the storage of the gas, it has been ascertained that it is mainly stored within the caves that endures extensive high pressures and depleted fields among others. In this regard, it has been mentioned that the member states keeps a close control over the daily operations being undertaken pertaining to the gas transmission system. As it involves complex operations, there has been emergence of various issues associated with the gas pipeline network (PR Newswire Association LLC, 2014). Technical Issues Under technical issues, it has been observed that reverse flow is an emerging issues related to gas pipeline network. Reverse flow that is present within the supply chain of the main pipeline network creates hurdle pertaining to the competition. However, reverse flow also decrease the security pertaining to the supply chain. Apart from the reverse flow, there is another issue i.e. energy efficiency. In this regard, it has been observed that focus relating to the energy efficiency has been limited. Therefore, only 5% of the energy is used during the entire transportation. Standards are also regarded as the issue that relates with the policies being undertaken by the member states. It has been regarded that if enhanced standards are applied, it will result in the smoothening of entire process. With regard to oil as the other segment of the pipeline network also faces certain technical issues. Grid balancing is considered to be an issue within the oil pipeline network. In this regard, it has been discussed that the prime risk associated with the oil transportation through pipeline network includes the risk of explosion. Apart from this, another risks associated with the oil pipeline network reflects primary spills along with the transportation costs (European Parliament, 2009). Economic issues With regards to the economic issues, it has been discussed that investments within the pipeline transmission entails three basic diversified areas. At first instance, it is basically locked within the field related to collections along with the delivery. Secondly, specific products are transported and lastly investments are greatly characterized by the accelerated expenditures along with lower operational costs. Apart from the nature of the pipeline, the other major issues related to the pipeline network are market related services associated with the oil transmission. Besides the issue related with the transportation of oil, another vital market related issue can be identified in the context of gas transportation. Considering all the aforementioned issues, regulations related to the Transmission Infrastructure’s has been enacted with a motive to ensure competition (European Parliament, 2009). Political Issues In accordance with the political issues, it has been ascertained that the transnational pipeline structure requires cooperation amidst the member states. The major issues that arise within the cross-border projects associated with the pipeline. It has been analysed that there is absence of proper mechanism associated with the conflict resolution. Apart from this another important issue is related to security areas relative to importing of oil and gas that might get disrupted due to certain external and internal elements. Another political issues associated with the pipeline network is coordination. In this regard, it can be well ascertained that coordination associated with the allocation is necessary within the member states. Terrorism is also considered to be the political issue that lays a greater impact on the pipeline network. Apart from these political issues another vital aspect is the dependency level of the political parties amidst the Transit Routes. In-fact, this scenario provided a scope to determine the various issues that rests upon the pipeline network (European Parliament, 2009). Use of Appropriate Terms and Logistic and Supply Chain Management Related To Pipeline Networking The pipeline networking involves flow of an entire supply chain management process associated with the natural gas. This entire process starts from the wellhead till the end customers’. In this regard, it involves the physical transfer that is associated with the multiple steps. The process starts from the production of the natural gas within the well. After the natural gas has been collected within the pipeline, it is then directly processed within the transmission grid. After this process flow, the processing plant mainly produces the natural gas, which is directly associated with the pipeline quality. Furthermore, this particular gas is then processed and finally reached the customers’ (EIA, 2008). The entire process of the flow of natural gas has been depicted through a pictorial presentation given below. Flow Chart Of Natural Gas Transmission Path (Source: EIA, 2008) The explanation of the entire process has been discussed that involves the wide range of process along with the physical facilities. The entire process has been outlined here under: Gathering Lines: In consideration with the gathering lines, the pipeline consisting small diameters carries the natural gas from the wellhead for the processing plant or it is connected with the mainline pipeline (EIA, 2008). Processing Plant: In this regard, the operations been involved reflect about the extraction of natural gas along with the impurities from the gas stream (EIA, 2008). Mainline Transmission System: These are also considered as the pipeline having larger diameter. Under this system, gas/oil is transported through long-distance pipelines with larger diameter to the market (EIA, 2008). Underground Storage Facilities: Underground storage facilities are generally meant to depleted oil and gas reservoirs, aquifers, and salt caverns where the transported gas is stored for the future use (EIA, 2008). Peak Shaving: Peak shaving generally refers to storage of inventories in order to meet the certain rise in the customer demand (EIA, 2008). Emphasis on the Trade-Offs With the Other Elements of Logistics and Supply Chain System Intermodal transportation is mainly considered as a model that assists in the transportation of people as well as freight. In this regard, it is discussed that the transferring from one mode to other mode as a performance is regarded as the intermodal terminals. On further note, it has been mentioned that application of the intermodal transportation mainly consolidates the loads in order to execute efficient transportation. In consideration of the elements present within the logistic and the supply chain management, there is diversified range of intermodal opportunities within the network. Furthermore, it has also been ascertained that the intermodal transportation further entails the use of multiple modes of transportation. In this regard, apart from the pipeline, the other available modes of transport are sea and road ways among others (Vehvaria, 2010; Crude by Rail & Intermodal Supply Chain Optimization & Opportunities, 2014). With regard to the availability of the intermodal opportunities within the logistic and the supply chain management of European Union, an alternative has been selected. Pipeline mode can be linked with the water as well as the road ways. In this segment a brief explanation has been given with regards to the application of alternative modal of transport. In case of water transport, it can be ascertained that there underlies various advantages and disadvantages with this particular mode of freight transport. Water transport involves low cost associated with the capital and operations. In-fact availability of private ships also ensures proper flow of the freight an in time. However, there are certain limitations associated with this mode of transportation. In this regard, transportation through sea way is often very time consuming and among all transportation channel it is considered as the slowest of all. Apart from this, it is also limited to the presence of number of harbours. In case of roadways, it is regarded as the speedy method of transferring the freight from one end to the ultimate customers’. In-fact, roadways transportation is considered as highly flexible. With respect to limitations, transportation through roadways involves higher operating costs. Apart from this the limited availability of vehicles also creates a hurdle in the effective transportation. Intermodal application basically rests upon the type of freight and the cost and time associated with it. Thus, it depends upon various factors associated with the transportation mode and freights. Conclusion The above study reflects about the process of supply chain management and logistic with regard to the pipeline network. The study reflects about the various issues present within the pipeline network from production to the delivery to the end customers. In-depth analysis of the relevant issues within the pipeline network includes economic, political and technical issues. In consideration with the technical issue, it reflects about the reverse flow. In this regard, it has been ascertained that due to the emergence of reverse flow within the supply chain management, various security problems tends to arise. In consideration with the alternative being selected against pipeline, various intermodal opportunities are present within the elements of logistics and the supply chain management of freight. The paper reflects about two alternatives one is sea transport and the other one is the roadways through tankers. Both the modes of transport endure certain advantages and disadvantages accordingly. References Agrawal, D. K., 2003. Textbook of Logistics and Supply Chain Management. Macmillan. Crude by Rail & Intermodal Supply Chain Optimization & Opportunities, 2014. Related Events. Home. [Online] Available at: http://www.crude-by-rail-destinations-2013.com/ [Accessed February 22, 2014] EIA, 2008. About U.S. Natural Gas Pipelines - Transporting Natural Gas. Home. [Online] Available at: http://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/transpath_fig.html [Accessed February 22, 2014] EIA, 2008. Transportation Process and Flow. Natural Gas. [Online] Available at: http://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/process.html [Accessed February 22, 2014] European Parliament, 2009. An Assessment of the Gas and Oil Pipelines in Europe. Policy Department A: Economic and Scientific Policies, pp. 1-30. PR Newswire Association LLC, 2014. Oil and Gas Pipelines Industry Outlook in Europe, 2013-Details of Operating and Planned Crude Oil, Petroleum Products and Natural Gas Pipelines. News Releases. [Online] Available at: http://www.prnewswire.com/news-releases/oil-and-gas-pipelines-industry-outlook-in-europe-2013---details-of-operating-and-planned-crude-oil-petroleum-products-and-natural-gas-pipelines-198977311.html [Accessed February 22, 2014] Smith, H., 2012. European Union Gas And Electricity Certification Requirements Set To Take Effect For Third Countries. Energy, Infrastructure and Mining Newsletter, Vol. 51, pp. 1-3. Vehvaria, F., 2010. Elements of Logistics Management Notes. Definition of Logistics. [Online] Available at: http://www.bms.co.in/elements-of-logistics-management-notes/ [Accessed February 22, 2014] Read More