The True Cost of Pipeline Launchers and Receivers - A cost per pig run approach

A pipeline pig launcher/receiver can be thought of as a system that safely and effectively accomplishes two functions:

1.       Allows access in and out of the pipeline for pigs (cleaning, inspection, etc.)

2.       Allows interaction and effectively isolates the low-pressure “outside world” from the high pressure and possibly toxic “product side.”

When explaining the purpose of pipeline launchers and receivers, or “traps” to people unaccustomed to pipeline operations, it can be thought of similar to an “airlock” on a submarine or spaceship. Each time a pipeline operation requires transition between the outside world and the high pressure internal environment of the pipeline, the traps are utilized. The use of these traps to perform operations essential to the maintenance of the pipeline is familiar to most pipeline operators, and most of these operation folks will tell you: 99 days out of 100, the traps don’t get used.

As a business traveler, renting a car is a common practice. When asking ourselves the question “should I continue to rent a car every time I come to this place?” most will quickly recognize that the alternative, purchasing a car, involves:

·         Purchase (cash or financing)

·         Insurance

·         Maintenance

·         Liability

·         Storage

·         Record keeping

·         Licensing

·         Taxes

When this car is only being used occasionally, perhaps one week per month, it is clear that rental makes sense. If the rent vs. buy considerations applied to vehicles is extended to pipeline traps, many similar factors emerge. Does it make sense to purchase an asset, often costing tens or hundreds of thousands of dollars, if that asset is only used occasionally?

 

One factor that is often brought forward during discussions around rent vs. purchase is the fact that rental vehicles, as opposed to traps, are almost always available. When a trip is planned, it is nearly certain that a rental vehicle will be available when and where it’s needed. Traps, on the other hand, are thought of as being “scarce” and long-lead time items. How many sets of traps, in how many locations, would be required to create an inventory of rental traps sufficient for operators and contractors to no longer feel pressured to purchase permanent launchers and receivers that are only used occasionally? TPE Midstream has already created this scenario in the mid-continent region, and is in the process of building similarly massive inventories of equipment in the gulf coast as well as all of the major shale plays. There is no reason to purchase and construct assets that are only used on rare occasions when temporary assets of the highest quality are readily available.

It is not uncommon to compare vehicles on a unit price “total cost of ownership per mile” basis. If launchers and receivers are considered on a “total cost of ownership per pig run” basis, the true cost of each pig run is considerably higher than the equivalent pig run utilizing locally available high quality temporary traps. The example laid out below is a typical case that illustrates the comparison.


This example, similar to many others, illustrates the high unit cost of an asset that is only used occasionally. For many lines, which are pigged once every 6 months or longer the R.O.I does not support spending capital resources on permanent assets. Call on your rental units when they are needed and leave the rest up to us, we provide cost effective, on-demand, equipment solutions. If you’d like to discuss rent vs. lease vs. purchase options, please contact TPE Midstream today. TPE can help you evaluate your pipeline needs and provide solutions that are either dedicated or on-demand reducing you CapEx while lowering you O&M expenses related to your integrity management efforts.