How is Oil Transported Around the World?

Introduction

Oil, a critical resource for the global economy, is transported through various means across the globe. The primary methods involve pipelines, tankers, railway tank cars, and trucks. This article delves into the logistics of how oil is transported, covering key logistical considerations such as cost, efficiency, and logistics. We explore the advantages and limitations of each method and discuss the pivotal role played by these modes in the global oil supply chain.

Primary Modes of Transportation

Pipelines

One of the most common methods for transporting oil and refined products is through pipelines. Pipelines are the safest and cheapest option, offering a long-term investment return with a high initial cost. They offer a direct and efficient means of transporting crude oil from oil wells to oil tankers.

Railways Tank Cars

Railways are a viable alternative to pipelines, especially in areas lacking pipeline infrastructure. One railway rake consisting of 60 wagons can transport approximately 3000 kilolitres (KL) of oil or petrol. Historically, rail was one of the significant methods for transporting crude oil, as exemplified by the "derailment" of the Berlin to Baghdad rail link during World War I.

Ships

For long-distance transportation, ships remain the predominant means. Different types of ships include coastal tankers, Very Large Crude Carriers (VLCCs), and Ultra Large Crude Carriers (ULCCs). Coastal tankers can carry up to 60,000 KL, while VLCCs can hold up to 350,000 KL, and ULCCs can transport up to 700,000 KL. Ships are crucial in moving crude oil economically, with efficiency being paramount, as the average cost of oil transport by tanker is only two to three US cents per gallon (3.8 L).

Trucks

Petroleum and its refined products are often transported by road using tanker trucks. These lorries have capacities of 10 KL, 18 KL, and 24 KL, among others. While tankers are indispensable for long-distance sea transport, road transportation is essential for delivering refined products to final consumers. However, the cost of transporting oil via truck is significantly greater, with an average of $10-15 per barrel compared to $5 per barrel by pipeline.

Overseas Travel and Refining

For long-distance overseas trips, crude oil is typically moved by tanker and refined at the destination into various products like gasoline, petrol, diesel, kerosene, jet fuel, lubricating oils, grease, and bitumen. Undersea pipelines are an option in certain cases, providing an alternate route to ensure efficient transport.

Logistical Considerations

Pipeline Construction Costs

The costs of pipeline construction vary based on several factors, including the pipe size. Small pipelines, such as a 12-inch diameter, cost around $300,000 per mile, while larger 42-inch pipelines can cost nearly $1.5 million. This high upfront cost supports the idea that pipelines over 3500 km are not highly profitable.

Costs of Transportation Methods

Transporting oil by railway is generally more expensive for producers, with an average cost of $10-15 per barrel compared to $5 via pipeline. Despite this, rail transport remains a viable option, particularly for accessing remote regions and overcoming regulatory and social challenges. By 2014, 59 million barrels of oil were transported to the USA via rail, and although this decreased to 48 million in 2017, it is expected to remain a competitive alternative in the future.

Oil Tankers: Economical and Efficient

Oil tankers, ranging from inland barges to ULCCs, transport approximately 2 billion metric tons of oil annually. Although constructing oil tankers is costly, the operational costs are relatively low, with the average cost of oil transport by tanker being only two or three US cents per gallon (3.8 L).

Specialized Vessels

Produce tankers, designed for carrying bulk refined petroleum products, and edible oil tankers are specialized vessels used in the global oil and food supply chains. The ATLANTIC OLIVE, a chemical/oil tanker built in 2008, exemplifies the efficiency and design of these specialized ships.

Conclusion

The global oil transportation landscape is complex, involving various modes such as pipelines, railways, trucks, and ships. Each method has its unique advantages and trade-offs, and the choice of transportation depends on factors such as cost, efficiency, and logistical requirements. Given the critical role of oil in the global economy, the logistics of oil transportation are indeed crucial.