Feasibility of Pipeline to East Timor

Study by Phillips Petroleum, 1997

Between 1996 and 1997 Phillips evaluated a number of sub-sea pipeline routes and alternative pipeline concepts for exporting gas from the Bayu-Undan field to Timor.

The evaluation concluded that a pipeline to East Timor, while technically feasible, was not commercially viable when compared to a pipeline routed to Australia.

There were several reasons for this conclusion:

1.  The maximum potential gas market in East Timor is smaller than the existing Australian market

2.  There is a high risk of supply interruption and/or failure of a pipeline crossing the Timor Trough

3.  The options for minimising this risk are very costly and technically limited

4.  Greenfield markets prefer lower risk development areas

5.  Investment capital will be scare and expensive

Smaller potential gas market

Compared with the market in Australia, gas market development in East Timor was found to be insufficient to support a pipeline infrastructure to East Timor.

In contrast, several potential gas customers exist in Australia LNG facilities, industrial plants, and extended gas infrastructure for Australian users. The domestic gas market in Australia is significantly larger and the volume of gas that can be transported via the pipeline alone provides a solid economic basis for investment in a pipeline. These greater gas market opportunities increase the commercial viability of a gas development and thus favor a pipeline to Australia.

Higher risk of interruption to supply

While the feasibility of various pipeline technology concepts has been explored, none of these options address the fundamental issue of operating reliability to routinely deliver gas on a daily basis for the full contract term, typically 15-25 years. The reliability of gas delivery is a primary requirement of the LNG customers being pursued by the Bayu-Undan venture.

Physically a pipeline from Bayu-Undan to East Timor is required to cross the Timor Trough, at water depths of 2600 metres. The Timor Trough is seismically active due to the collision of two tectonic plates. In comparison, a pipeline to Australia would pass through a stable shallow water environment with a maximum depth of 120 metres.

The terrain through the deep Timor Trough is steep and rugged. The potential for earthquakes on land and underwater is relatively high as a result of the convergence of the Asian and Australian continental plates as illustrated in the following diagram.

Underwater earthquakes can cause seabed movement and mudslides, both of which can damage a pipeline, even causing it to rupture. The risk of movement and mudslides creates a significant technical design issue.

Even with these geologic and geomorphic challenges, the technical knowledge clearly exists to place a pipeline across the trench. But there is still a risk, and most LNG customers are very risk averse. In contrast, a pipeline to Australia has no special technical design and/or installation issues and can be readily executed with proven conventional technical and equipment. Therefore, the customers of Bayu-Undan LNG prefer a plant located in Australia and consequently a pipeline to Australia because of their desire to avoid any risk of interruption of their gas supply. A simple illustration of the two alternative pipeline routes is shown below.

High cost/limitations of alternative technical solutions

 
Spare pipeline

One option that was investigated to mitigate pipe damage from deepwater / earthquake activity was to install a spare pipeline across the trench with sufficient separation to survive a catastrophic event. However, there is no way to predict the distance that would be required to provide a safe separation in such circumstances. This option was also prohibitively expensive and did not resolve the basic concerns affecting the operational integrity of a pipeline system crossing a deepwater trench.  

Floating/suspended pipeline

Studies have also been undertaken to look at alternatives to conventional methods of laying pipelines on the sea floor. Pipelines located on the surface of the sea are extremely rare because of wave action and interference with shipping. The environmental conditions for the Timor Sea are relatively moderate for many months of the year. However, there is still a high probability of cyclone-generated waves and there are a significant number of ships and vessels crossing the area that would preclude the possibility of a floating pipeline.

Another alternative that was assessed was to hang the pipeline from floats. In this scenario, the pipeline is designed to be heavier than water and is suspended by cables to floats. Schemes such as this have been studied and model-tested for deep-water applications, but have never been used in construction because the whole system is extremely sensitive to wave action even during the construction phase when a relatively calm weather window can be selected.

A further option considered was to make the pipe buoyant, yet restrained by cables attached to anchor weights. The pipe would be held at a great enough depth to be unaffected by waves and ships but not so deep that it would have to be designed to resist high external pressures. A depth of about 200 meters was found to the optimum depth to minimize the effects from shipping and storm induced waves yet still be accessible by divers. However, the pipeline would still be subject to movement induced by currents and this in turn impacted fatigue loads and design life and was found to be unacceptable. This concept is illustrated in the following diagram.

  

Higher maintenance costs

Finally, once an offshore pipeline has been installed, the goal of the pipeline owner is to have the pipeline operate virtually maintenance free over its life. In the case of a pipeline across the Timor Trough, this cannot be assumed to be the case, either at the outset or during the operations phase. The pipeline itself must be designed to anticipate the known problems that could arise, and its maintenance / repair must also be anticipated and the costs thereof calculated as an on-going cost.

Several feasibility studies have assessed alternatives for repair of damage to deepwater pipelines. One method involves cutting the pipeline and pulling it to the surface for repair and then re-installing it. However, this method has not been pursued due to the costs of development of the required equipment and methodology for removal and repair. Even if the technology were available to repair deep-water pipelines, the duration required to retrieve the pipeline to the surface, implement a repair, re-install and re-commission the pipeline is estimated to exceed 9 to 12 months, an interruption of gas supply that would be unacceptable to any gas market that is dependent on a single source of gas.

Summary

In summary, while technically a pipeline can be constructed and installed from Bayu-Undan to East Timor, the economics of such an investment are not acceptable. Routing to Australia is the only option for the Bayu-Undan gas resource that satisfies the criteria of existing and potential gas customers, provides for the lowest technical and operating risk, and is commercially justifiable.