Case Study 1:
Pipelines
David Levinson
Regional Petroleum balances
Terminal
Restrictions
• Oil Pipelines are Common Carriers
• FERC Regulates Rates and Conditions
of Service
Market Share
Total Crude and Product Pipeline Market
Market Share
Ton Miles
1,400
100
90
1,200
80
1,000
70
60
800
50
600
40
30
400
20
200
10
0
0
1980
1985
1990
1995
2000
Year
Total Crude and Products Ton Miles
Product Ton Miles
Crude Ton Miles
Pipelines
Water Carriers
Motor Carriers
Railroads
2005
Where People Stay
Supplying Refugees
US Crude Oil and Product
Pipeline Network
Refined Products Oil Pipelines
Qu ickTim e™ a nd a
TIFF (Uncompresse d) decompressor
are need ed to see th is picture.
Crude Products Oil Pipelines
Qu ickTim e™ a nd a
TIFF (Uncompresse d) decompressor
are need ed to see th is picture.
Natural Gas Pipeline
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Qu ickTim e™ a nd a
TIFF (Uncompressed ) decompre ssor
are need ed to s ee th is picture.
Natural Gas System in US
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Wolverine Pipe Line System
Map
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Successor companies to Standard
Oil:
•
•
•
•
Standard Oil of Ohio - or Sohio now part of BP
Standard Oil of Indiana - or Stanolind, renamed Amoco - now part of BP
Standard Oil of New York - or Socony, merged with Vacuum - renamed Mobil, now part of
ExxonMobil
Standard Oil of New Jersey - or Esso (S.O.) - renamed Exxon, now part of ExxonMobil
Standard Oil of California - or Socal - renamed Chevron
Atlantic and Richfield - merged to form Atlantic Richfield or Arco - now part of BP - Atlantic
operations spun off and bought by Sunoco
Standard Oil of Kentucky - or Kyso was acquired by Standard Oil of California - now part of
Chevron
Continental Oil Company - or Conoco now part of ConocoPhillips
•
•
•
•
•
•
•
•
•
•
Standard Oil of Iowa - pre 1911 - became Standard Oil of California
Standard Oil of Minnesota - pre 1911 - bought by Standard Oil of Indiana
Standard Oil of Illinois - pre 1911 - bought by Standard Oil of Indiana
Standard Oil of Kansas - refining only, eventually bought by Indiana Standard
Standard Oil of Missouri - pre 1911 - dissolved
Standard Oil of Nebraska - eventually bought by Indiana Standard
Standard Oil of Louisiana - always owned by Standard Oil of New Jersey (Esso)
Standard Oil of Brazil - always owned by Standard Oil of New Jersey (now Esso)
Standard Oil of Colorado - a scam to cash in on the Standard Oil brand in the 1930s
Standard Oil of Connecticut - A fuel oil marketer in Connecticut not related to the Rockefeller companies
•
•
•
•
Pipeline Timeline
(19th Century)
•
•
•
•
•
•
•
1859: Colonel Edwin Drake Strikes Oil in Titusville, Pennsylvania
1863: The Teamsters- Oil initially transported by horse to rail terminals by
Teamsters using whiskey barrels, giving the Teamsters a local spatial monopoly
on delivery. The price to move a barrel of oil 5 miles by horse was greater than
the charge to move from Pennsylvania to New York City.
1865: the first wooden oil pipeline built, about 9 miles long bypassing the
teamsters.
1870: Standard Oil Company formed by John D. Rockefeller, largely produces
kerosene for lighting and oil for heating
1879: Tidewater - The First Crude Oil Trunkline (built by competitors to
Standard Oil, soon acquired by Standard Oil interests, extended to Buffalo,
Philadelphia, Cleveland, New York)
1880s: The Rise of Russian (now Azerbaijani) Oil - Marcus Samuel developed the
first organized kerosene shipping enterprise to compete with Rockefeller and
send kerosene to Europe and the Far East.
1880-1905: Oil discovered in Ohio, Oklahoma, Kansas, and Spindletop, Texas
Pipeline Timeline
(20th Century)
•
•
•
•
•
•
•
•
•
•
•
•
1905: Crude Oil Pipelines built from the fields in Texas, Oklahoma and Kansas to Eastern
refineries.
1908: Henry Ford develops Automobile assembly line, gasoline becomes primary customer
of oil, electricity continues to replace kerosene oil lamps.
1912: Sherman Anti-trust act finalized and Standard Oil dissolved.
1913: the Valuation Act was the first attempt at Federal involvement in US pipeline
ratemaking.
1917: Crude Oil Pipelines
1920s: Pipeline Mileage Triples
1935: The first product pipelines where built from Whiting, St. Louis and Kansas City to the
west.
1945: Product Lines Grow During World War II (oil tankers were sunk frequently, pipelines
seen as more reliable).
1944: pipeline regulation became the responsibility of the US Interstate Commerce
Commission who introduced the notion of reasonable returns in the 8 percent to 10 percent
range.
1954: Stanolind, the Indiana Standard pipeline company, became the largest liquid pipeline
carrier in North America. A position it held until the most recent Enbridge expansion.
1968: import refineries on the US Gulf Coast led to the construction of Colonial pipeline to
supply the eastern seaboard. Colonial was the largest privately financed undertaking in US
history in 1968.
1970 - 1977: The Trans Alaska Pipeline System (TAPS)
Fact Sheet Pipelines
FACILITIES
• Mileage of Oil Pipelines – 1998
– Crude trunk and gathering
lines 114,000
– Product trunk lines 86,500
– Total 200,500
• States in which pipelines
operate 50
PERFORMANCE
• Total ton-miles of crude and
products, 1998 619.8 billion
• Percent of total intercity freight
(ton-miles) carried by pipelines,
1998 17.3%
• Percent of all crude oil and
refined products transported
(ton-miles) carried by pipelines,
1998 66.6%
FINANCIAL
• Capital investment in oil pipelines,
1998 $ 30.2 billion
• Operating revenues, 1998 6.9 billion
• Oil pipelines’ share of national freight
bill, 1998 1.6%
SAFETY
• Total transportation fatalities in 1998
43,920
• Number of liquid pipeline fatalities in
1998 1
REGULATION AND EMPLOYMENT
• Number of oil pipeline companies
regulated by the Federal Energy
Regulatory Commission, 2000 183
• Total employees in oil pipeline
industry, 1998 16,000
How Petroleum Pipelines
Work