HYDRAULICS II

LECTURE 6: PIPELINE ECONOMICS

W. PATELLA
BLOCK 109, OFFICE 05
 INTRODUCTION
• Pipes have been used for centuries for transporting
fluids.
• The available pipe materials include steel, reinforced
concrete, pre-stressed concrete, asbestos cement, PVC,
HDPE, GRP, e.t.c.
• In the 18th centuries, water and sewage were the only
fluids commonly transported by pipeline.
• Nowadays, pipelines are the most common means of
transporting gases and oils over long distances.
• There are many advantages of pipeline transport
compared with other methods such as road, rail,
waterway, and air.
 Advantages of pipeline transport
• Pipelines are often the most economic form of
transport, considering capital cost (CAPEX), running
costs (OPEX), and overall cost.
• Pipelining costs are not very susceptible to fluctuations
in prices, since the major cost is the capital outlay and
subsequent operating costs are relatively small.
• Operations are not susceptible to labour disputes as
little attendance is required. Many modern systems
operate automatically.
• Being hidden beneath the ground, a pipeline will not
mar the natural environment.
 Advantages of pipeline transport
• A buried pipe is reasonably secure against
sabotage.
• A pipeline is independent of external influences
such as traffic congestion and weather.
• There is normally no problem of returning empty
containers to the source.
• It is relatively easy to increase the capacity of a
pipeline by installing a booster pump.
• A buried pipe will not disturb surface traffic and
services.
Advantages of
pipeline transport
• The accident per
quantity per kilometre
is considerably lower
than for other forms of
transport.
• A pipeline can cross
rugged terrain difficult
for vehicles to cross
 Disadvantages of pipeline transport
• The initial capital expenditure is often high.
• There is often a high cost involved in filling a
pipeline (especially long fuel pipelines).
• There are operating problems associated with
pumping of solids, such as blockages.
• It is often difficult to locate leaks or blockages.
 Pipeline Economics
• The main cost of a pipeline system is usually that of the pipeline itself.
• The components making up the cost of a pipeline vary widely from situation
to situation, but for water pipelines, the typical costs are as follows;
- Supply of the pipe - 55%
- Excavation - 20% (depends on terrain and excavation
techniques).

- Laying and jointing - 5% (may increase with labour

costs)
- Fittings - 5%
- Coating and wrapping - 2%
- Structures (valve chambers, anchors) - 2%
- Water hammer protection - 1%
- Land acquisition, access roads, cathodic protection, security structures,
fences - 1%
- Engineering and survey costs - 5%
- Administrative costs - 1%
 Pipeline Economics
• Many factors have to be considered when sizing a
pipeline.
• For water pumping mains, the flow velocity at the
optimum diameter varies from 0.7m/s to 2m/s,
depending on flow and working pressure.
• It is about 1m/s for low pressure heads and a flow of
100 l/s, increasing to 2m/s for a flow of 1000 l/s, and
pressure heads at about 400m of water.
• The capacity factor (ratio of actual average discharge
to design capacity) and power cost structures also
influence the optimum flow velocity, or the diameter
of any particular flow.
 Pipeline Economics
• When planning a pipeline system, it should be borne in
mind that the scale of operation of a pipeline has
considerable effect on the unit cost.
• The optimum design period of a pipeline depends on a
number of factors, including interest rates on capital loans
and rate of cost inflation, rate of growth, scale and
certainty of the future.
• In waterworks practice, it has been found economic to size
pipelines for demands up to 10-30 years.
• For large throughput and high growth rates, technical
capabilities may limit the size of the pipeline, so
supplementation may be required within 10 years.
• Longer planning stages are normally justified for small
 Pipeline Economics
• It may not always be economic to lay a uniform bore
pipe.
• Where pressures are high, it is economic to reduce
the diameter of the pipe.
• Booster pumps may be installed along the lines
instead of pumping to a high pressure head at the
input end and maintaining a high pressure along the
entire line.
• The friction losses along a pipeline increase by about
a square of the flow, consequently power losses
increase considerably at higher flows.
 Pipeline Economics
• The diameter of a pumping main to convey a known
discharge can be selected by a comparison of
alternative sizes (e.g., optimization using DSS).
• The pipeline cost increases with increasing diameter,
whereas the power cost in overcoming friction reduces
correspondingly.
• On the other hand, the power costs increase steeply as
the pipeline is reduced in diameter.
• The power requirement is proportional to , where is
unit weight, is total head, and is pumping rate.
• The pump has to supply the system with head ,
sufficient to overcome friction losses, , and we can write
 Pipeline Economics
• The energy cost per annum is evaluated from the
following equation

• We know that pumps are very inefficient, hence

the power requirement is
• ,
• where is pump efficiency
 Pipeline Economics
• As these schemes are highly capital intensive, loans
(e.g., from the World Bank) are usually acquired to
finance the projects.
• The loans are serviced at an interest.
• The formular for calculating the payment amount is

• Where
– A is payment amount per period
– P is initial Principal (loan amount)
– r is interest rate per period
– n is total number of payments per period
 Pipeline Economics
• The thickness of a pipe can be calculated from
Barlow’s formular;

• Where
• is pipe thickness,
• is outside diameter
• is design pressure in the pipe,
• is allowable stress,
• is factor of safety, usually taken as 2
 Pipeline Economics
• In order to design an efficient pipeline system, basic
calculations that make use the previous equations may
save the client billions of pula.
• Patella (2013) developed a Decision Support System that
can be used to determine the most efficient pipe bore by
optimising the cost on the basis of pipe material price,
head loss, energy requirements, etc.
• Further, the DSS helps with selecting the most suitable
pipe material to use (e.g., steel, concrete, PVC, HDPE, etc),
incorporating such parameters as working pressures,
corrosion potential, local availability of material, jointing
methods, labour requirements, service life, etc.
 Pipeline Economics
• The DSS
• Thank you…