pipeline

They have to get permission from any private land they use, and probably pay a fee. Same for public land from the state. They will have to get a permit and do an envoronmental assessment and get inputs from locals (usually a crowd of nimbys appears).

Then they build it. Often land excavation is handled by numerous local excavators and haulers and the pipeline work is done by a main contractor. They may have 10 active sites to get it done faster, or just one site that advances as the pipe is built.

A large company may build the pipeline from internal resources, but smaller ones will invite bids from various contractors. In the USA you may have 10 different contractors building different sections to the same specs as each one will be most efficient close to their home base. Go to Africa = different story. Bribes and corruption rule the day and they will limit the number of foreign workers allowed in to build it so they will be forced to use as much local labor as possible along the way...if suitable

Regarding pipeline construction:

thier many pipeline installation contractors in this busines and it is usually a job that is bid out to find a low bidder the same goes for drilling jobs if an independant driller is required or desired to do the drilling. Can you say Halliburton with a straight face:^)- Many firms also have thier own drilling subsidiaries as well.

I think Syncrude is a tar sand operation (oil from crushed shale), but I'll explain crude oil exploration / drilling / and transportation.

I am a pipeline power consultant having 20 years in pipeline projects mostly in 3rd worlds. The process is long and expensive. Briefly:

1) Year 1-5: Oil companies negotiate with governments for the right to operate in their country or area. The list of promises and contracts is very complex. Free hospitals, roads, cities, employment, clean drinking water systems . . . I have seen all types of promises to help improve the local economy and prosperity. Most promises are kept, actually. Some corrupt governments and oil companies (mostly small 3rd world little known oil companies) give the business a bad name.

2) Year 2-6: Rights to explore areas for oil are purchased from governments or mineral rights and / or land owners in a public auction; Ex: Brazil might lease "Blocks 75 - 82" in some offshore tract known to 'probably' contain oil.

2) Year 6-7: Geologists make a final decision where to explore (drill) and others have been doing the environmental impact study for drilling in those areas.

3) Year 7-8: A drilling contract is awarded to a driller (there are thousands of drilling contractors in the world) and they are generally paid by the day with rates as high as $450,000 day for offshore ultra deep water rigs. Smaller projects might be $20-30 k / day for a land rig. Criteria for selection may be price, type of equipment, experience drilling in a complicated geological zone and quality of the finished well. An inexperienced driller can ruin a producing zone just by the way he drills. Drilling is VERY VERY VERY VERY high tech and complicated. For prices see: http://www.petroleumnews.com/pntruncate/922857898.shtml

4) Year 8-9: Maybe the driller hit oil, maybe not. Dry holes are common. Imagine $300,000 a day for a year and coming up dry? Happens all the time. If you find oil you now must gather it, clean it, and ready it for transport to the market. About half of each barrel of oil is brine water mixed with sand and gasses. And you need to get rid of the waste in an environmentally sound way. There are hundreds of qualities of crude oil, each having a different market value.

5) Year 9-12: One you have all wells producing in an area, you build a Central Treating Facility, CTF, (on land >>> offshore there is a central processing platform), so you hire a huge engineering firm to design it, go for bids to build it, hire a contractor to build it, and build it. Might be $750,000,000 up to $2 billion to build. Note that in all steps of design / build there are environmental and socioeconomic impact studies all along the way. Each study is several thousand pages and can cost several million dollars. The CTF is where you gather, store (several 1 million barrel tanks), and clean the crude oil and get it ready for transportaion to the market.

6) Year 12-15: A pipeline study is done to get the oil from the jungle to a port, so to speak. I have seen these studies take 10 years and be cancelled. Corruption and politics are HEAVY all along the way hindering ethical business. A new president in Country X can kill 5 years of work. Some countries have new Presidents each week during turmoil.

7) Year 16-18: A "Right of Way", (the land area to be utilised to dig / bury the pipeline) is studied and landowners are given a fee to use their land. The pipeline owner has Right of Way to use the land, but the land still belongs to the owner. In other cases the land is purchased outright. So, a pipeline can go right through your city or banana plantation, if you so negotiate. Every pipeline I have been part of has 50-200 possible route deviations studied (land owners who won't sell, national monuments, grave sites, parks, wild life areas, etc). And we will change it during construction if we find a burial grounds or some other unexpected obstacle that has a negative impact on the area. This by far is the most complex commercial negotiation as you have thousands of land owners and 300-400 special interest groups (NGOs) trying to block progress totally, or through a given area. Very complex.

8) Year 19: Once right of way is established, an engineering firm is selected (by bids . . . about $30 - 100 million contract) and the pipeline designed. Then the bid package is offered to pipeline contractors (Bechtel, Techint, KBR, Etc) to bid on it lump sum turn key or on a reimbursable contract. For a normal simple pipeline is it about $2 million per kilometer. See http://images.google.com/images?hl=en&q=pipeline+construction

9) Year 20-23: Pipeline is finished and first oil loads on a oil tanker for transport to a refinery where it is sold (this is the price per barrel number you see in the news). The refinery 'boils' the oil and makes gasoline, propane, diesel, chemicals, etc.

10) Year 24: You get to gas up your car.

The above can be plus 10 years or minus 15 years depending on existing contracts or virgin territory.

The Syncrude operation is truly an oil sand operation, there is no crushed shale involved, just sand coated with bitumen.

They are even talking about building a nuclear power plant to save the natural gas that is being used. I understand that the plant would not just produce electricity but process steam as well

Yep. You are right. I was wrong on the 'shale' comment.

I need to 'get with' the tar sand scene as it is now profitable. If memory serves it costs about US $15-18 per barrel to produce. ?? Am I close? And 2-2.5 tons of sand to get a barrel?

There is more 'recoverable oil' in Canada than all of Saudi Arabia plus 50%. Too bad one must 'mine it' and in Saudi it comes from the bathroom faucet at only a few $ per barrel to produce. Saudi was making money when oil was selling at $12 /bbl.

I did do one study to see the costs of pumping 'sandy' oil versus cleaning it up before entering the pipeline. One big issue of tar sand is pumping it in a pipeline. The costs of cleaning it are tremendous, and if you just pump it dirty, you eat up pipe and equipment. You must also use a diluent to 'thin' it and strip out the diluent and pipe it back upstream to use again, termed a DilBit line. Bit = Bitumen. High tech and expensive to get at this stuff, but with technology comes other 'smarts' we can use in the overall industry.

Thanks for the correction!

George

Often a dictator is faster, you pay him $100M and he says "start tomorrow" and he shoots any landowners that get in the way...of course along comes a new Dictator.....

My main role is to keep myself employed !

Some of the estimates are conservative for timeline, if an oil company wants it done, you can pay more and reduce the time by 50%. I have seen Chevron go through the pipeline process in about 2 to 3 years in California. The biggest delay is the negotiation with the land owners. Particularly since any oil pipeline will substantially devalue your land for future sale, and could lead to environmental impacts that substantially devalue land.

Different law would be applicable in different countries

in general you have to obtain permission

1 servitudes of occupation and right of way over private and state owned land.

2 clearance from the environmental department - including disaster management plans in the event of spills.

3 Permission for water resource crossings

4 permission for infrastructure crossings.

5 any obstacle where the current activities can be detrimentally effected.