How To Get A Pipeline Built

[phantom power]

A longish description of all the players that have to come together to make a pipeline happen, and what motivates each of them, and how hard it is. An interesting aside is the notion of "stranded reserves," which is basically fossil fuel in the ground that isn't developed because a pipeline deal (or other transportation deal) cannot be put together to get it to market.

In order to help oildrummers better interpret pipeline news, here's a primer on why and how pipelines get built - which essentially means how they get financed.

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From now on, I will only be discussing gas pipelines. The logic is mostly similar for oil, if a bit simpler (I'll comment on the differences where relevant). With this point clarified let us address the components of a pipeline:

* A supply of gas
* A supplier of gas
* A market for gas
* A purchaser of gas
* An entity operating the pipeline
* Government authorisations for pipelines crossing their territory -for each country
* A price for gas transport
* An entity (or more) building the pipeline
* An entity (or more) paying the pipeline

The fundamental point is that all of the relevant components and parties need to be present at the exact same time for the project to exist. And by "being present", I mean "irrevocably making binding commitments, representing large sums of money." And it is a surprisingly difficult job to bring all the parties to the table in that way at the right moment - which is why fewer pipelines than one would expect are built, and why few entities are actually able to pull it off. And, as we will see, being able to pay for the pipeline is not quite enough.

http://www.theoildrum.com/node/2918

[Atman]

1. You could always take the easy way and invade a country under false pretenses

Say, like creating a false pretense to start a war, then using your resources to construct a pipeline from, say, the Caspian sea across Afghanistan. Gotta be easier than dealing with all these suits.

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