Rolls-Royce Outlines Opportunities for Pipeline Industry
3 October 2000
Rolls-Royce Outlines Opportunities for Pipeline Industry
LONDON, Oct. 3 A future of enormous opportunities and
challenges was outlined at the International Pipeline Conference 2000 in
Calgary, Canada by John Kempster, Managing Director Rolls-Royce Energy
Systems.
Addressing more than 500 representatives of the industry from around the
world, Mr Kempster said the sector could benefit from economic growth and
energy consumption over coming decades helped by abundant supplies of natural
gas.
Outlining a broad picture for the future of the pipeline industry, and the
relationships it has with its suppliers such as Rolls-Royce, he described
natural gas as "the fuel for the 21st century."
He added: "With the present reserves to production ratio of over
60 -- compared with around 40 for oil- the global position for gas is secure.
"However in some areas, such as North America, exploration activity will
have to be increased, and carried out more effectively to ensure adequate
supplies and technology advances will play a major part in this.
"In due course the huge reserves in Russia and the Middle East will need
to be exploited to serve the large and growing European market which, when
Russia is included, is actually larger in consumption than North America.
Mr Kempster said he expected gas consumption to rise and stressed that the
pipeline industry has a "major challenge" ahead to move huge amounts of gas to
North America and the high growth markets of South America and the Asia
Pacific region.
He also outlined that another significant trend in the industry is
consolidation along the value chain. He cited mega mergers such as BP with
Amoco and Exxon/Mobil, the emergence of national and multi-regional pipeline
networks, integration between pipelines and wholesale trading, the increase in
size of distribution businesses, changes in retail energy and convergence
mergers. As an example he showed how the line up of the top 5 North America
pipeline majors has changed between the 1980s and today.
Mr Kempster, who outlined Rolls-Royce capability in the supply of
integrated compression and pumping systems and generating sets and the
component parts of such systems for the oil and gas industry, described the
suppliers' understanding of the demands of the pipeline industry.
He told the audience: "There are fewer pipeline company customers today as
a result of consolidation and we understand your need to move forward
cautiously with new technology to minimise risk. Equipment reliability and
availability is paramount for pipeline operators.
"However, the industry also demands improvements in the performance of
pipeline equipment to reduce the cost associated with transporting oil and
gas.
"You want integrated solutions. You don't want to have to specify in
detail every element of the solution."
Turning to the suppliers' ability to meet the challenge posed by the
pipeline industry over recent years Mr Kempster said: "By working together we
have made enormous improvements in performance, unit cost and reliability.
"Technology advances have increased the thermal efficiency of
aeroderivative gas turbines from about 25 per cent for the first Avons to
today's Trent at 42 per cent. At the same time equipment cost per horse power
has been significantly reduced.
"Environmental concern has resulted in tighter legislation on prime mover
emissions. Rolls-Royce has responded by reducing NOx levels from 280 volume
parts per million(VPPM) down to 25 vppm today.
"Pipeline compressor efficiencies have been driven up from around 80 to 87
per cent today. Higher power availability combined with continuing
improvements in compressor system reliability have made it possible to
significantly improve the economics of gas pipelines by allowing increases in
booster station separation distance and eliminating the need for multiple
units at each station.
"Control systems is another area where there has been considerable change,
he added, culminating in the digital monitoring systems of today which offer
great steps forward in functionality and reliability. With condition
monitoring we can maintain equipment optimally and enhance safety-a major
concern for equipment operators.
"Customers want integrated solutions and in response to this Rolls-Royce
acquired the rotating compression business of Cooper Energy Services so that
we could supply complete compression stations.
"Customers want flexible maintenance services. Rolls-Royce has responded
by developing a range of service contracts tailored to match individual needs.
"By working together we have dramatically improved reliability."
Mr Kempster concluded by identifying the Internet and Distributed Power as
major opportunities. "The internet has the potential to radically change the
business by adding liquidity to each link in the energy chain.
"Power generation is still a major opportunity for gas and Distributed
Power will drive growth in small gas-fuelled power plants close to the point
of demand. For pipeline operators this means more customers and more gas to
move."
He added: "The opportunities facing the pipeline industry far outweigh the
challenges and suppliers such as Rolls-Royce are working with customers to
ensure that the compression needs of the industry are understood and
addressed."
Notes
Rolls-Royce plc is a global company providing power on land, sea and air.
The company has established leading positions in civil aerospace, defence,
marine and energy markets. Its core gas turbine technology has created one of
the broadest product ranges of aero engines in the world, with 55,000 engines
in service in over 150 countries. Customers include more than 500 airlines,
2,400 corporate and utility operators and 160 armed forces, using both fixed
and rotary wing aircraft.
Rolls-Royce is the global leader in marine power systems with a broad
product range and full systems integration capability. Over 2,000 marine
customers and more than 30 navies use Rolls-Royce propulsion. The company is
investing in new products and capabilities for energy markets which include
the oil and gas industry and power generation. It also develops its own power
projects through Rolls-Royce Power Ventures Ltd.
Rolls-Royce pioneered gas turbine technology for aerospace, power
generation and marine propulsion and is involved in the major future
programmes in these fields. These include the Trent aero and industrial
engines, the Eurofighter Typhoon and Joint Strike Fighter combat engines, the
WR21 marine engine and leading edge water jet propulsion systems.