Detailed Feasibility Report on Ennore-Trichy-Madurai LPG Pipeline

Transcription

1 FOR RESTRICTED CIRCULATION ONLY Detailed Feasibility Report on Ennore-Trichy-Madurai LPG Pipeline Ennore Chengalpet Pondicherry Trichy Madurai Pipelines Division January 2013

2 CONTENT Chapter No. Executive Summary Description Page No. (i) I Introduction 1 II Analysis of Alternatives 4 III Need and Justification 13 IV Design Philosophy 18 V Project Description 20 VI Capital Cost 28 VII Operating Cost 32 VIII Financial Analysis 35 IX Conclusions and Recommendations 37 Annexures

3 Executive Summary 1.0 INTRODUCTION 1.1 India is deficit in Liquefied Petroleum Gas (LPG). Industry imports LPG to the tune of 5 MMTPA to meet the domestic demand. South India, comprising Andhra Pradesh (A.P.), Karnataka, Kerala and Tamil Nadu, is also deficit in LPG. 1.2 In and , the deficit of LPG in southern region was about 2.8 MMTPA and 3.0 MMTPA respectively. As per the latest supply-demand assessment, the demand in south India is expected to be about 6.4 MMTPA in and about 7.3 MMTPA by Domestic availability of LPG would be about 4.3 MMTPA and 4.5 MMTPA in those years. The deficit in is projected to reduce from the present level of 3.0 MMTPA to 2.1 MMTPA, mainly due to additional production of LPG after implementation of the proposed expansion plans at Chennai refinery of Chennai Petroleum Corporation Limited (CPCL), Kochi refinery, Mangalore refinery and Vizag refinery, and commissioning of Nagarjuna refinery. However, the deficit is projected to increase again to 2.8 MMTPA in , which would continue. This deficit would be met by import of LPG through coastal receipts at Ennore, Vizag, Mangalore and Kochi ports. 1.3 Presently, IOC operates 11 LPG bottling plants in Tamil Nadu viz. Ennore, Erode, Ilayangudi, Madurai, Mannargudi, Mayiladuthurai, Salem, Trichy, Chengalpet, Coimbatore and CPCL Chennai and 1 plant at Pondicherry. 1.4 M/s IndianOil Petronas Private Ltd. (IPPL), a Joint Venture of IOC and Petronas, Malaysia have set up a LPG import terminal at Ennore, primarily to meet the deficit of LPG in Tamil Nadu. The terminal has been commissioned and is in operation since August 2012, handling about 100 TMT of LPG per month. It presently supplies LPG to IOC s bottling plants at Ennore, Ilayangudi, Trichy and Madurai in Tamil Nadu by road tankers. 1.5 CPCL has monthly output of about 33 TMT of LPG, out of which IOC s share is about 28 TMT. This LPG is predominantly used for meeting non-domestic requirement of all bottling plants in Tamil Nadu, Cuddapah bottling plant in A.P. and about 50% requirement of Devanagonthi bottling plant in Karnataka. Requirement of CPCL s Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( i )

4 bottling plant at Chennai is also met by CPCL refinery. Requirement of domestic LPG in Tamil Nadu, Cuddapah and part requirement of Devanagonthi is met from LPG import terminal at Ennore by road tankers. 1.6 As these bottling plants are situated at considerable distance from Ennore, an optimisation study was carried out in 2011, which indicated that there would be considerable savings if a LPG pipeline system was put in place from Ennore to Trichy via Chengalpet and Pondicherry to substitute the road movement of LPG ex- Chennai/Ennore to the bottling plants in Tamil Nadu and Pondicherry. Further, nodal movement from Trichy was envisaged to reduce road movement to other bottling plants in Tamil Nadu. LPG sourcing for bottling plants in other states of south India would continue from the existing sources at Ennore, Mangalore, Vizag and the proposed import terminal at Kochi. 1.7 Vide Agenda Item No. P/224 dated , Board had accorded first-stage approval to the proposal of laying a pipeline from Ennore to Trichy for transportation of LPG and had approved an amount of Rs.5 crore for carrying out pre-project activities, so as to facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. The Board had also advised to carry out study of various alternatives of pipeline connectivity to more bottling plants in Tamil Nadu. 1.8 Subsequent to the first-stage approval, survey of the pipeline route has been completed and optimisation has been carried out for different pipeline configurations so as to arrive at the optimum configuration. Details are as under. 1.9 Analysis of Alternatives To start with, assumptions considered for optimization study carried out in April 2011 for formulation of feasibility report (FR) were revisited. It emerged that, with materialization of Kochi LPG terminal proposal, which was not considered at the time of preparation of FR, there might be some impact on the throughput of the proposed pipeline. Accordingly, optimization study was carried out again in September 2012, considering LPG import facilities to be available at Kochi by The proposal for Kochi LPG import terminal was subsequently approved by the Board in December Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( ii )

5 1.9.2 Findings of the optimization study of September 2012 were as under. Scenario Delivery locations directly linked with Pipeline 1. 3 (Chengalpet, Pondicherry, Trichy) 2. 4 (Chengalpet, Pondicherry, Trichy, Madurai) 3. 4 (Chengalpet, Pondicherry, Trichy, Salem) 4. 5 (Chengalpet, Pondicherry, Trichy, Madurai, Salem) 5. 6 (Chengalpet, Pondicherry, Trichy, Salem, Erode and Coimbatore) 6. 7 (Chengalpet, Pondicherry, Trichy, Madurai, Salem, Erode and Coimbatore) Projected Throughput and Savings TMT Rs.64 crore 494 TMT Rs.73 crore 494 TMT Rs.74 crore 494 TMT Rs.82 crore 494 TMT Rs.78 crore 494 TMT Rs.82 crore 755 TMT Rs.117 crore 755 TMT Rs.130 crore 755 TMT Rs.132 crore 755 TMT Rs.146 crore 755 TMT Rs.153 crore 755 TMT Rs.165 crore From the above details, it emerged that throughput of the pipeline would remain the same in any combination of linked bottling plants Preliminary analysis of various alternatives was then carried out and the two best options were short-listed for preparation of the detailed scheme and cost estimates, manpower assessment and financial analysis etc. Results of the analysis were as under. Scenario Length (km) Operating Manpower Capex (Rs. crore) Opex (Rs. lakh) RoI (15 years) Rank based on Financial Attractiveness This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most attractive pipeline configurations Based on the above analysis, CO(Optimisation) undertook another study in January 2013, considering updated demand numbers for working out throughput and savings for the said two pipeline configurations. The study considered all-india supply-demand scenario for IOC in and Findings of the study were as under. Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( iii )

6 Pipeline Configuration Throughput (TMT) Savings (Rs.crore) Ennore-Trichy Pipeline Ennore-Trichy-Madurai Pipeline It can be noted that throughput projection and savings for both and have improved from earlier workings in both pipeline configurations IOC already has a petroleum product pipeline from Chennai to Madurai due to which right-of-way (RoW) up to Madurai is already available. Therefore, considering availability of most of the right-of-way up to Madurai and marginal difference in RoI for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it was considered prudent to undertake detailed feasibility study for laying the pipeline up to Madurai. The DFR has been prepared accordingly The DFR broadly deals with the need and justification, system configuration, cost, viability, implementation methodology and allied details in respect of the proposed pipeline from Ennore to Madurai via Trichy. The pipeline would originate at Ennore import terminal and terminate at the existing Madurai bottling plant, providing pipeline connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry and Trichy. 2.0 NEED AND JUSTIFICATION 2.1 The demand of LPG in south India in was about 4.5 MMTPA. As per the latest LPG supply-demand workings by Marketing Division, LPG demand of Industry for south India is projected as under. Fig. in MMT Year South India Demand Considering actual demand of previous year, projected growth rate in the demand and supply scenario, CO(Optimisation) has carried out optimization study for proposed Ennore-Trichy-Madurai LPG pipeline for and The study projects throughput of 617 TMT in and 809 TMT in 2011 for the pipeline and substantial savings in logistics cost. Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( iv )

7 2.3 At present, CPCL refinery is producing about 33 TMT of LPG per month. CPCL s LPG is primarily used for bottling plant at Chennai, non-domestic requirement of bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi bottling plants. 2.4 Most of domestic requirement of LPG at IOC s bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi is met from LPG import terminal at Ennore by Road Tankers. 2.6 Throughput Projections The supply and distribution plans of LPG for various bottling plants linked to the proposed pipeline, for and , have been projected to be as under. Ennore port Fig. in TMT Supply Distribution Chengalpet Pondicherry Trichy Madurai Nodal movement from Trichy (134) (235) - Salem Erode Coimbatore Nodal movement from Madurai (24) (50) - Ilayangudi Tirunelveli 6 7 Bottling Plant at Trichy Bottling Plant at Madurai Total It may be seen from the above table that out of the projected throughput of 617 TMT for , about 134 TMT and 24 TMT of LPG would be transported through road from Trichy and Madurai respectively. Similarly, out of the projected throughput of 809 TMT Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( v )

8 for , about 235 TMT and 50 TMT of LPG would be transported through road from Trichy and Madurai respectively. 2.7 The long-term projected throughput for the pipeline would be as under. For working out projected demand beyond , growth rate of 1.76% has been considered, as assessed by the Planning Cell of Marketing Division. As the pipeline would originate from Ennore import terminal, the additional demand would be met by increasing the imports. Throughput Projections (TMT) It is pertinent to mention here that while some of the bottling plant capacities are projected to be saturated during , the demand in attached markets would continue to increase. Therefore, it would be required to either stretch the capacities of the existing plants or set up new bottling plants in and around the existing markets to meet the increased LPG demand as required. Therefore, the pipeline facilities have been designed considering long-term demand projections. 2.9 For facilitating nodal movement to linked bottling plants from Trichy and Madurai, the existing unloading bays would be converted to loading bays The transportation requirement of LPG volumes indicated in para 2.7 can be met by the following alternative modes. a) By Road b) By Pipeline Railway has not been considered as a feasible transportation option for LPG as the existing bottling plants do not have rail linkage It has been established the world over that pipelines are superior means for transportation of petroleum products compared to other modes viz. rail, road, tankers etc. due to their inherent advantages like reliability, economy, safety, flexibility, low energy consumption, low transit losses and negligible impact on environment. Construction of new pipelines provides relief to other modes of transportation for movement of essential commodities and passengers. Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( vi )

9 2.12 In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline for transportation of LPG from Ennore to the LPG bottling plants at Chengalpet, Pondicherry, Trichy and Madurai. The proposed pipeline would realign movement of LPG for certain other bottling plants viz. Salem, Coimbatore, Erode, Ilayangudi and Tirunalveli from Trichy and Madurai in place of the present practice of movement from Ennore. Thus, the proposed pipeline would considerably reduce distances involved in road movements and thereby, logistics cost. 3.0 Design Capacity 3.1 Taking into account findings of the optimization study and the requirements of linked bottling plants, it is proposed to design the proposed LPG pipeline from Ennore to Madurai for a capacity of 0.9 MMTPA. 4.0 Project Description 4.1 Pipeline Route The proposed pipeline would originate at IPPL s LPG import facilities at Ennore and would follow an independent route for approximately 30 km, where it would meet the existing right-of-way (RoW) of Chennai-Trichy-Madurai Pipeline (CTMPL) at its chainage 27.4 km. Thereafter, the pipeline would follow the RoW of CTMPL up to Madurai via Asanur except for about 5.3 km detour for linking Chengalpet bottling plant, about 55 km to Pondicherry bottling plant and about 19 km to Trichy. The pipeline, after leaving CTMPL RoW near Madurai delivery station of CTMPL, would further follow an independent route for about 28 km to reach the bottling plant at Madurai. 4.2 System Configuration Configuration of the pipeline system broadly comprises the following. Total length: 615 km 419 km long, OD x 0.25 WT pipeline section from Ennore to T-Point location for Trichy bottling plant 55 km long, OD x 0.25 WT branch pipeline from T-point to Pondicherry and 19 km long, OD x 0.25 WT branch pipeline from T- point to Trichy Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( vii )

10 122 km long, OD x 0.25 WT, branch pipeline from T-point location for Trichy to Madurai 2 booster pumps and 3 motor-driven mainline pumping units with variable frequency drive at Ennore Scraper facilities at T-point locations for branches to Pondicherry and Trichy bottling plants Delivery facilities at Chengalpet, Pondicherry, Trichy and Madurai 4.3 Operation Philosophy Operation of the pipeline would predominantly be through heart-cut mode. 4.4 Implementation Methodology It is proposed to take up execution of the project through in-house expertise. 4.5 Statutory Clearances Suitable actions will be taken for obtaining MoE&F clearance and other statutory clearances for the proposed pipeline from concerned authorities, as applicable. 4.6 Construction Schedule The proposed scheme is expected to be completed in a period of about 30 months after receipt of statutory clearances. 4.7 Manpower Requirement The manpower requirement would be about 82 during construction phase and about 76 for operation of the pipeline, excluding Line Patrolmen (LPM). The requirement of LPM for the new portion of right-of-way is envisaged to be outsourced. 5.0 Capital Cost 5.1 The pipeline system from Ennore to Madurai is estimated to cost Rs.711 crore, including a foreign exchange component of Rs.202 crore, at December 2012 price level. This includes Rs.60 lakh required for modifications in unloading bays at Trichy and Madurai bottling plants for their use as loading bays. 5.2 The cost estimates have been prepared on conservative basis without considering benefits under EPCG (Export Promotion Capital Goods) scheme. 6.0 Operating Cost 6.1 Operating cost of the pipeline system includes the cost of power for mainline pumping units, utilities, consumables, salaries and wages, administrative overheads, repair and Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( viii )

11 maintenance etc. The operating cost corresponding to throughput of 0.9 MMTPA is estimated to be about Rs.30 crore per annum at December 2012 price level. 7.0 Financial Analysis 7.1 Capital cost of the project is considered to be financed through internal resources/commercial borrowings. For the purpose of financial analysis, debt:equity ratio of 1:1 has been considered, with 10.75% per annum and repayment in 8 equal annual installments, with one-year moratorium from the date of commissioning. Requirement of working capital will be met through internal resources. 7.2 Financial analysis for the proposed pipeline system has been carried out taking into account the following. Capital cost of the pipeline and its operation for 15 years / 25 years Throughput as indicated in the optimization study for and Corporate savings assessed in the optimization study, as revenue Benefit due to lower transit loss in pipeline transportation compared to losses permitted for transportation through road tankers Savings in loading and decanting charges associated with road tankers on notional basis Results of the financial analysis are as under. 15 years Operation 25 years Operation RoI (%) RoE (%) Sensitivity analysis has also been carried out, the results of which are as under. Case 15 years Operation 25 years Operation RoI (%) RoE (%) RoI (%) RoE (%) Increase in capital cost by 10% Increase in operating cost by 10% Decrease in throughput by 10% All the above together Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( ix )

12 7.4 Economics of Ennore-Trichy Pipeline Sensitivity analysis has also been carried out considering termination of the pipeline at Trichy itself. The return on investment improves marginally in this case. 15 years Operation 25 years Operation RoI (%) RoE (%) Conclusions and Recommendations 8.1 Most of the LPG bottling plants in Tamil Nadu are situated at considerable distance from Ennore. Optimization study indicates that there would be considerable savings by laying a LPG pipeline from Ennore to Madurai via Chengalpet, Pondicherry and Trichy, which would substitute road movement of LPG ex-ennore to these bottling plants. 8.2 Results of the financial analysis indicate that the proposed pipeline is viable under most of the scenarios considering the prevailing hurdle rate of 13%. The pipeline will facilitate cost-effective transportation of LPG from Ennore to different bottling plants in Tamil Nadu and one plant at Pondicherry. 8.3 IOC intends to lay several LPG pipelines to provide connectivity to its major LPG bottling plants. With commissioning of LPG import terminal at Ennore and implementation of Kochi terminal, potential exists to lay new LPG pipelines from these two sources and formation of a LPG grid in south India in future. It would, therefore, be prudent to lay the proposed Ennore-Trichy-Madurai LPG pipeline for providing pipeline connectivity to all major bottling plants en route. Providing pipeline connectivity to other major bottling plants in Tamil Nadu viz. Coimbatore, Salem and Erode could be examined at a later stage. 8.4 Keeping the above in view, it is recommended to lay Ennore-Trichy-Madurai LPG pipeline at an estimated cost of Rs.711 crore, including a foreign exchange component of Rs.202 crore, at December 2012 price level. This includes cost of modifications in Marketing facilities at Trichy and Madurai at an estimated cost of Rs.60 lakh. *** Executive Summary Ennore-Trichy-Madurai LPG Pipeline ( x )

13 CHAPTER I 1.0 INTRODUCTION 1.1 India is deficit in Liquefied Petroleum Gas (LPG). Industry imports LPG to the tune of 5 MMTPA to meet the domestic demand. South India, comprising Andhra Pradesh (A.P.), Karnataka, Kerala and Tamil Nadu, is also deficit in LPG. 1.2 In and , the deficit of LPG in southern region was about 2.8 MMTPA and 3.0 MMTPA respectively. As per the latest supply-demand assessment, the demand in south India is expected to be about 6.4 MMTPA in and about 7.3 MMTPA by Domestic availability of LPG would be about 4.3 MMTPA and 4.5 MMTPA in those years. The deficit in is projected to reduce from the present level of 3.0 MMTPA to 2.1 MMTPA, mainly due to additional production of LPG after implementation of the proposed expansion plans at Chennai refinery of Chennai Petroleum Corporation Limited (CPCL), Kochi refinery, Mangalore refinery and Vizag refinery, and commissioning of Nagarjuna refinery. However, the deficit is projected to increase again to 2.8 MMTPA in , which would continue. This deficit would be met by import of LPG through coastal receipts at Ennore, Vizag, Mangalore and Kochi ports. 1.3 Presently, IOC operates 11 LPG bottling plants in Tamil Nadu viz. Ennore, Erode, Ilayangudi, Madurai, Mannargudi, Mayiladuthurai, Salem, Trichy, Chengalpet, Coimbatore and CPCL Chennai and 1 plant at Pondicherry. 1.4 M/s IndianOil Petronas Private Ltd. (IPPL), a Joint Venture of IOC and Petronas, Malaysia have set up a LPG import terminal at Ennore, primarily to meet the deficit of LPG in Tamil Nadu. The terminal has been commissioned and is in operation since August 2012, handling about 100 TMT of LPG per month. It presently supplies LPG to IOC s bottling plants at Ennore, Ilayangudi, Trichy and Madurai in Tamil Nadu by road tankers. 1.5 CPCL has monthly output of about 33 TMT of LPG, out of which IOC s share is about 28 TMT. This LPG is predominantly used for meeting non-domestic requirement of all bottling plants in Tamil Nadu, Cuddapah bottling plant in A.P. and about 50% DFR Ennore-Trichy-Madurai LPG Pipeline Page 1 of 38

14 requirement of Devanagonthi bottling plant in Karnataka. Requirement of CPCL s bottling plant at Chennai is also met by CPCL refinery. Requirement of domestic LPG in Tamil Nadu, Cuddapah and part requirement of Devanagonthi is met from LPG import terminal at Ennore by road tankers. 1.6 As these bottling plants are situated at considerable distance from Ennore, an optimisation study was carried out in 2011, which indicated that there would be considerable savings if a LPG pipeline system was put in place from Ennore to Trichy via Chengalpet and Pondicherry to substitute the road movement of LPG ex- Chennai/Ennore to the bottling plants in Tamil Nadu and Pondicherry. Further, nodal movement from Trichy was envisaged to reduce road movement to other bottling plants in Tamil Nadu. LPG sourcing for bottling plants in other states of south India would continue from the existing sources at Ennore, Mangalore, Vizag and the proposed import terminal at Kochi. 1.7 Vide Agenda Item No. P/224 dated , Board had accorded first-stage approval to the proposal of laying a pipeline from Ennore to Trichy for transportation of LPG and had approved an amount of Rs.5 crore for carrying out pre-project activities, so as to facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. The Board had also advised to carry out study of various alternatives of pipeline connectivity to more bottling plants in Tamil Nadu. 1.8 Subsequent to the first-stage approval, survey of the pipeline route has been completed. Based on the optimisation study for different pipeline configurations, preliminary analysis of various alternatives was carried out and the two best options were short-listed for preparation of the detailed scheme and cost estimates, manpower assessment and financial analysis etc. This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most attractive pipeline configurations. The study has been covered in details in Chapter-II. 1.9 Based on the above analysis, CO(Optimisation) undertook another study in January 2013, considering updated demand numbers for working out throughput and savings for the two pipeline configuration i.e. Ennore-Trichy pipeline and Ennore-Trichy- Madurai pipeline. IOC already has a petroleum product pipeline from Chennai to Madurai due to which right-of-way (RoW) up to Madurai is already available. Therefore, considering availability of most of the right-of-way up to Madurai and DFR Ennore-Trichy-Madurai LPG Pipeline Page 2 of 38

15 marginal difference in Return-on-Investment (RoI) for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it is considered prudent to undertake detailed feasibility study including viability study for laying the pipeline up to Madurai. The DFR has been prepared accordingly The DFR broadly deals with the need and justification, system configuration, cost, viability, implementation methodology and allied details in respect of the proposed pipeline from Ennore to Madurai via Trichy. The pipeline would originate at Ennore import terminal and terminate at the existing Madurai bottling plant, providing pipeline connectivity en route to the existing LPG bottling plants at Chengalpet, Pondicherry and Trichy. DFR Ennore-Trichy-Madurai LPG Pipeline Page 3 of 38

16 CHAPTER - II 2.0 ANALYSIS OF ALTERNATIVES 2.1 While analyzing the proposal seeking first-stage approval for Ennore-Trichy LPG pipeline, a view emerged that options be explored for minimizing nodal movement through road tankers and, instead, feeding additional bottling plants in the region through the pipeline itself. Accordingly, a preliminary feasibility study was carried out for linking the proposed Ennore-Trichy LPG pipeline with 6 major bottling plants in Tamil Nadu viz. Chengalpet, Trichy, Madurai, Salem, Erode and Coimbatore and one at Pondicherry. The study indicated that Ennore-Trichy pipeline configuration was financially most attractive among various pipeline alternatives. 2.2 Accordingly, IOC Board accorded first-stage approval to the proposal of laying a pipeline from Ennore up to Trichy for transportation of LPG and sanctioned an amount of Rs.5 crore for carrying out pre-project activities, so as to facilitate preparation of Detailed Feasibility Report (DFR) for the proposal. At the same time, Board also advised to carry out study of various alternatives for connectivity of more bottling plants in Tamil Nadu. 2.3 In the mean time, a proposal for LPG terminal at Kochi proposal was revived, and was approved by the Board in December This development was a major change in the basic premises considered for preparation of Ennore-Trichy LPG pipeline proposal, as feasibility report of Ennore-Trichy pipeline was based on the optimization study considering without LPG import facilities at Kochi. Approval of the proposed LPG import facilities at Kochi mandated fresh optimization study for the proposed pipeline. Accordingly, an optimization study was carried out in September 2012, considering import facilities at Kochi functional by Findings of the optimization study of September 2012 were as under. DFR Ennore-Trichy-Madurai LPG Pipeline Page 4 of 38

17 Scenario Delivery locations directly linked with Pipeline 1. 3 (Chengalpet, Pondicherry, Trichy) Projected Throughput and Savings TMT Rs.64 crore 755 TMT Rs.117 crore 2. 4 (Chengalpet, Pondicherry, Trichy, Madurai) 3. 4 (Chengalpet, Pondicherry, Trichy, Salem) 4. 5 (Chengalpet, Pondicherry, Trichy, Madurai, Salem) 5. 6 (Chengalpet, Pondicherry, Trichy, Salem, Erode and Coimbatore) 6. 7 (Chengalpet, Pondicherry, Trichy, Madurai, Salem, Erode and Coimbatore) 494 TMT Rs.73 crore 494 TMT Rs.74 crore 494 TMT Rs.82 crore 494 TMT Rs.78 crore 494 TMT Rs.82 crore 755 TMT Rs.130 crore 755 TMT Rs.132 crore 755 TMT Rs.146 crore 755 TMT Rs.153 crore 755 TMT Rs.165 crore From the above details, it emerged that throughput of the pipeline would remain the same in any combination of linked bottling plants. 2.5 Preliminary analysis of various alternatives was then carried out and the two best options were short-listed for preparation of the detailed scheme and cost estimates, manpower assessment and financial analysis etc. Findings of the study were as under. Scenario Length (km) Operating Manpower Capex (Rs. crore) Opex (Rs. lakh) RoI (15 years) Ranking based on Financial Attractiveness DFR Ennore-Trichy-Madurai LPG Pipeline Page 5 of 38

18 2.6 This study concluded that Ennore-Trichy pipeline and Ennore-Trichy-Madurai pipeline would be the two financially most attractive pipeline configurations. 2.7 Based on the above analysis, CO(Optimisation) undertook another study in January 2013, considering updated demand numbers for working out throughput and savings for the said two pipeline configurations. Summary Report of this study is given in Attachment Considering availability of most of the right-of-way up to Madurai and marginal difference in return on investment (RoI) for pipeline up to Trichy vis-à-vis pipeline up to Madurai, it was considered prudent to undertake proposal for laying the pipeline up to Madurai. 2.9 Accordingly, the DFR has been prepared for 615 km long Ennore-Trichy-Madurai LPG pipeline. DFR Ennore-Trichy-Madurai LPG Pipeline Page 6 of 38

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25 CHAPTER - III 3.0 NEED AND JUSTIFICATION 3.1 The demand of LPG in south India in was about 4.5 MMTPA. As per the latest LPG supply-demand workings by Marketing Division, LPG demand of Industry for south India is projected as under. Fig. in MMT Year South India Demand Considering actual demand of previous year, projected growth rate in the demand and supply scenario, CO(Optimisation) has carried out optimization study for proposed Ennore-Trichy-Madurai LPG pipeline for and This study projects throughput of 617 TMT in and 809 TMT in for the pipeline and substantial savings in logistics cost for transportation of LPG. The financial analysis of laying own LPG pipeline vis-à-vis use of alternate mode i.e. road has been covered in details in Chapter-VIII. 3.3 At present, CPCL refinery is producing about 33 TMT of LPG per month. CPCL s LPG is primarily used for bottling plant at Chennai, non-domestic requirement of bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi bottling plants. 3.4 Most of domestic requirement of LPG at IOC s bottling plants in Tamil Nadu, Cuddapah in A.P. and partial requirement of Devanagonthi is met from LPG import terminal at Ennore by Road Tankers. 3.5 Throughput Projections The supply and distribution plans of LPG for various bottling plants linked to the proposed pipeline, for and , have been projected to be as under. Fig. in TMT Supply Distribution Ennore port Chengalpet DFR Ennore-Trichy-Madurai LPG Pipeline Page 13 of 38

26 Supply Distribution Ennore port Pondicherry Trichy Madurai Nodal movement from Trichy (134) (235) - Salem Erode Coimbatore Nodal movement from Madurai (24) (50) - Ilayangudi Tirunelveli 6 7 Bottling Plant at Trichy Bottling Plant at Madurai Total It may be seen from the above table that out of the projected throughput of 617 TMT for , about 134 TMT and 24 TMT of LPG would be transported through road from Trichy and Madurai respectively. Similarly, out of the projected throughput of 809 TMT for , about 235 TMT and 50 TMT of LPG would be transported through road from Trichy and Madurai respectively. Schematic presentations of section-wise projected throughput and nodal movements for and are given at Attachment 3.1 and The long-term projected throughput for the pipeline would be as under. For working out projected demand beyond , growth rate of 1.76% has been considered, as assessed by the Planning Cell of Marketing Division. As the pipeline would originate from Ennore import terminal, the additional demand would be met by increasing the imports. Throughput Projections (TMT) DFR Ennore-Trichy-Madurai LPG Pipeline Page 14 of 38

27 3.7 It is pertinent to mention here that while some of the bottling plant capacities are projected to be saturated during , the demand in attached markets would continue to increase. Therefore, it would be required to either stretch the capacities of the existing plants or set up new bottling plants in and around the existing markets to meet the increased LPG demand as required. Therefore, the pipeline facilities have been designed considering long-term demand projections. 3.8 For facilitating nodal movement to linked bottling plants from Trichy and Madurai, the existing unloading bays would be converted to loading bays. 3.9 The transportation requirement of LPG volumes indicated in para 3.6 can be met by the following alternative modes. a) By Road b) By Pipeline Railway has not been considered as a feasible transportation option for LPG as the existing bottling plants do not have rail linkage It has been established the world over that pipelines are superior means for transportation of petroleum products compared to other modes viz. rail, road, tankers etc. due to their inherent advantages like reliability, economy, safety, flexibility, low energy consumption, low transit losses and negligible impact on environment. Construction of new pipelines provides relief to other modes of transportation for movement of essential commodities and passengers In view of the above, it is proposed to lay Ennore-Trichy-Madurai LPG pipeline for transportation of LPG from Ennore to the LPG bottling plants at Chengalpet, Pondicherry, Trichy and Madurai. The proposed pipeline would realign movement of LPG for certain other bottling plants viz. Salem, Coimbatore, Erode, Ilayangudi and Tirunelveli from Trichy and Madurai in place of Ennore. Thus, the proposed pipeline would considerably reduce distances involved in road movements and thereby, logistics cost. DFR Ennore-Trichy-Madurai LPG Pipeline Page 15 of 38

28 Attachment 3.1 DFR Ennore-Trichy-Madurai LPG Pipeline Page 16 of 38

29 Attachment 3.2 DFR Ennore-Trichy-Madurai LPG Pipeline Page 17 of 38

30 CHAPTER - IV 4.0 DESIGN PHILOSOPHY 4.1 Introduction This chapter covers the basic data and design parameters adopted for preparing this report. 4.2 Products to be handled The proposed Ennore-Trichy-Madurai LPG pipeline is envisaged to be used for transportation of LPG. 4.3 Product Characteristics The pipeline system has been designed on the basis of the following characteristics of LPG. Specific Gravity : 0.54 Kinematic Viscosity : 0.29 cst 4.4 Design Capacity The pipeline has been designed for a capacity of 0.9 MMTPA under heart-cut operation philosophy. However, it would be possible to stretch the capacity up to 0.95 MMTPA with existing facilities to take care of seasonal variations in demand. 4.5 Design Parameters For mainline as well as station piping, a weld joint factor of 1.00 (one) has been considered Maximum allowable operating pressure (MAOP) of the system is based on 72% of the specified minimum yield strength of the pipe material The pipeline system has been designed considering round the clock operation on threeshifts a day basis. DFR Ennore-Trichy-Madurai LPG Pipeline Page 18 of 38

31 4.5.4 No corrosion allowance has been considered in the wall thickness of the pipe, as effective corrosion mitigation measures would be provided in the system Pipes of higher wall thickness are envisaged to be laid across major rivers, water courses etc. At rail and road crossings, where casing pipe would be provided, the pipe wall thickness would remain same as that for the main pipeline. DFR Ennore-Trichy-Madurai LPG Pipeline Page 19 of 38

32 CHAPTER-V 5.0 PROJECT DESCRIPTION 5.1 Introduction This chapter broadly deals with various features of the project viz. pipeline sizing, pipeline route, system configuration, facilities required, cathodic protection, telecommunication & telesupervisory system, implementation methodology, construction schedule etc. for laying a LPG pipeline from Ennore to Madurai. 5.2 Pipeline Size Optimization Different alternative pipe sizes have been considered for the pipeline system. The alternatives have been compared on the basis of the present value of costs, worked out at 13% rate of discount, over 15 years of operation. Results of the study indicate that the pipeline system using OD x 0.25 WT for Ennore-Trichy section; OD x 0.25 WT for Trichy-Madurai and branches to Pondicherry and Trichy of OD x 0.25 WT would be the optimum pipeline configuration for given projected throughput. 5.3 Hydraulics and System Configuration Based on the pipeline throughput requirements, hydraulic details have been worked out. Details are as under. Length (km) : 615 km Section wise Capacity (MMTPA) / Flow Rate (kl/hr) Ennore to Chengalpet Chengalpet to T-Point for Pondichérry Pondichérry T-Point to T-Point for Trichy T-Point for Trichy to Madurai Branch to Pondicherry Branch to Trichy : 0.90 (208 kl/hr) : 0.80 (185 kl/hr) : 0.70 (162 kl/hr) : 0.30 (69 kl/hr) : 0.10 (23 kl/hr) : 0.45 (104 kl/hr) DFR Ennore-Trichy-Madurai LPG Pipeline Page 20 of 38

33 Line Size /MAOP Line Size MAOP Section OD (inch) Dia (inch) Grade (mcl) (Kg/cm 2 ) Ennore- T Point for Trichy API-5L X T Point for Trichy to Madurai Branch to Pondicherry BP Branch to Trichy BP API-5L X Hydraulics (Considering simultaneous heart cut delivery at all ToPs) S. No. Station Chainage(#) (km) Altitude (m) SDH (mcl) RH (mcl) No. of Pumping Units 1. Ennore (2+1) 2. Chengalpet Pondicherry TP Trichy TP Madurai Pondicherry BP 55 ex-tp # - Trichy BP 19 ex-tp # - km: Kilometre, m: Metre, mcl: Metre Column of Liquid(LPG), SDH: Station Discharge Head, RH: Residual Head # Actual RH before pressure control valve. To be brought down to 222 mcl for delivery. Hydraulic gradient is placed at Annexure-I. 5.4 System requirements Configuration of the pipeline system broadly comprises the following. Total length: 615 km 419 km long, OD x 0.25 WT pipeline section from Ennore to T-Point location for Trichy bottling plant 55 km long, OD x 0.25 WT branch pipeline from T-point to Pondicherry and 19 km long, OD x 0.25 WT branch pipeline from T- point to Trichy DFR Ennore-Trichy-Madurai LPG Pipeline Page 21 of 38

34 122 km long, OD x 0.25 WT, branch pipeline from T-point location for Trichy to Madurai 2 booster pumps and 3 motor-driven mainline pumping units with variable frequency drive at Ennore Scraper facilities at T-point locations for branches to Pondicherry and Trichy bottling plants Delivery facilities at Chengalpet, Pondicherry, Trichy and Madurai Schematic flow diagram of the pipeline system is given in Annexure-II. 5.5 Pipeline route The proposed pipeline would originate at IPPL s LPG import facilities at Ennore and would follow an independent route for approximately 30 km, where it would meet the existing RoW of Chennai-Trichy-Madurai Pipeline (CTMPL) at its chainage 27.4 km. Thereafter, the pipeline would follow the RoW of CTMPL up to Madurai via Asanur except for about 5.3 km detour for linking Chengalpet bottling plant, about 55 km to Pondicherry bottling plant and about 19 km to Trichy. The pipeline, after leaving CTMPL RoW near Madurai delivery station of CTMPL, would further follow an independent route for about 28 km to reach the bottling plant at Madurai. An indicative route map is enclosed as Annexure-III The terrain along the pipeline route is mostly flat and plain with agricultural and paddy field, which also includes stretches of rocky terrain and low lying area in between. The pipeline would be provided with motor operated sectionalisation valves (SVs) at regular intervals all along the pipeline route including providing additional motor operated SVs at both sides of each major river/ canal crossings. These mainline SVs would be provided as per the provisions of OISD The pipeline would cross a number of rivers, canals, nallas, roads and railway tracks. The pipeline across major perennial rivers/canals are proposed to be installed by using Horizontal Directional Drilling (HDD) technique, whereas across minor rivers/ canals, pipeline would be laid by submerged crossing method. Provision has also been kept for installing pipeline by HDD technique across selected National/ State Highways. Pipeline across railway crossings and selected National/State Highways would be laid by using bored cased crossing method. DFR Ennore-Trichy-Madurai LPG Pipeline Page 22 of 38

35 5.6 Pump Station and Facilities Civil Civil structures are envisaged to be erected at the stations to provide shelter to men and machinery. Pump shed and booster shed to accommodate the pumping units with associated facilities have been planned to be of steel structure. The civil structures would also be provided to house control panels, MCC panels, HT/LT panels, batteries, etc. All the safety factors like wind load, seismic load, soil bearing capacity etc. would be taken into account while designing the civil structures. Facilities such as pump shed, control building, HT/LT panel rooms, VFD room, workshop, stores, watchman cabin, etc. have been envisaged at Ennore pump station, whereas facilities like control building, MCC building, workshop, store, watchman cabin, etc. have been envisaged at each LPG delivery station locations Provision of land acquisition/ purchase has been kept for T-Point locations and for new RCP/ SV stations along the mainline route Cathodic protection system Temporary Cathodic Protection system with the requisite design life is envisaged during the construction phase using the Mg anodes in line with OISD guidelines. To mitigate the external corrosion of mainline, impressed current cathodic protection system shall be provided. The system envisages impressed current anodes with AC/AC cum DC operated cathodic protection inputs having uninterrupted power supply arrangement Mechanical Motor driven mainline pumping units (MLPUs) having variable frequency drive (VFD) and horizontal spilt case centrifugal pump shall be installed at Ennore pumping station with 2+1 (2 running and 1 standby) combination. Provision has been kept for booster pumps at Ennore Piping system shall be designed as per ASME B 31.4 standard. Pipes, pipe fittings, flanges etc. will conform to International Standards such as API 5L, ASTM A 106 Grade B / A333 Gr-6, ANSI B-16.5, ANSI B-16.25, WPB-234, MSS-SP-44, MSS-SP- 75 etc. and will be suitable for ANSI-600 and ANSI 300 pressure classes. Gate valves, ball valves, swing check valves will conform to API 6D standards. Electric motor actuators of suitable power ratings will be installed for the operation of valves. Pigging facilities have been considered. DFR Ennore-Trichy-Madurai LPG Pipeline Page 23 of 38

36 5.6.4 Fire Fighting System Fire detection & alarm system: For the Control building, smoke detectors and rate of rise (RoR) heat detectors along with Fire Alarm Panel and SIL-3 rated PLC with HMI have been considered for all attended stations. For Pump house, Ultra Violet/ Infrared flame detectors, RoR heat detectors have been considered. HC detectors and smoke detectors have been considered for all RCPs and T-points Fire Suppression system: Besides portable Fire extinguishers, CO 2 flooding would be provided in cable trenches, hydrants. Water monitors would be provided suitably in the piping area. The numbers and type of extinguisher would be in line with OISD 214. The piping would be hooked with IPPL fire water network at Ennore to meet any exigency requirement. Firewater network (with required number of Water monitors and hydrants with double landing valves) would be provided at LPG delivery locations and the same would be hooked with marketing fire water network at all the exiting bottling plants. Gas Monitoring System has been considered for MLPU and piping area. Medium Velocity Water Sprinkler system considered for MLPU and piping and metering and scrapper barrel area Electrical The electrical system at Ennore would be designed for receiving power supply at 33 KV level through independent feeder from state electricity board/port authority. 33/6.6 KV, 6 MVA outdoor switchyard works have been envisaged for this purpose. The prime movers would be 6.6 KV Motors with AC Variable Speed Drive for energy saving during variable speed requirement. Ennore being the mother station, one 6.6 KV, 2 MVA HT DG Set has been considered for running the station in case of mains power failure Building lighting & air conditioning, HT & LT Panel with battery back-up and High Masts for outdoor lighting would be provided. All cabling would be XLPE insulated as per IS All lighting luminaries would be energy efficient and flame-proof certified for battery area. APFC Panel would also be provided to maintain power factor near unity At Chengalpet, Pondicherry, Trichy and Madurai, incoming grid supply has been considered at LT 415V level through Marketing installation connection. For back-up supply DG Set with Auto-Mains failure would be provided. DFR Ennore-Trichy-Madurai LPG Pipeline Page 24 of 38

37 5.6.6 Instrumentation and Station Control Centre All stations would be provided with hot standby PLC based station control system to perform local control functioning and to monitor and report local conditions (except at block valves (BV) / river MOV locations / sectionalizing valve (SV) locations where non-redundant PLC / RTUs shall be provided) The field instrumentation at all the attended stations would comprise pressure transmitters, pressure switches, pressure gauges, mass flow meters, temperature gauge, temperature transmitter, scraper detector, emergency shut down switches etc All SV locations would be provided with RTUs for operation of MOVs from MCS in case of exigencies Station Control Centre (SCC) would have workstations as operator interface to the station instrumentation and control system, on dual local area network (LAN) in client server mode V UPS system with dual battery back up (4 hours) would be provided at all the attended stations Telecommunication system A dedicated state of the art OFC based, SDH communication system with 99.9% availability along with IP/E1 based new EPABX Systems at all attended stations. This would be over and above existing fibre of CTMPL (in common ROW stretch) serving as a mutual back-up medium for both the pipelines RTU data & CCTV requirements of SV locations all along the LPG pipeline shall be catered by extending the network connectivity using additional/ spare fibre from the nearest attended station Network management system has been considered for the SDH network at Ennore and Madurai Master Network Video Recorder (NVR) at Ennore with failover Network Video Recorder (NVR) at Trichy. The Control Centre for CCTV System with Network Video Recorder (NVR) (with client PC) shall be at all attended stations Dedicated power systems (Battery charger + battery bank), solar power system and electronic perimeter security system considered at all locations VHF System, consisting of one base Station with 4 hand-held sets for delivery stations and one base Station with 6 hand-held sets for pumping station at Ennore has been considered. DFR Ennore-Trichy-Madurai LPG Pipeline Page 25 of 38

38 5.6.8 Supervisory Control and Data Acquisition (SCADA) System The telesupervisory system for the proposed pipeline is envisaged to have dual hot stand-by computer system in client-server mode for monitoring and control of pipeline from Master Control Station (MCS) envisaged at Ennore. In the event of failure of the duty machine, the hot stand-by machine will take over the role of the duty machine instantaneously, without affecting the operational continuity and loss of data, thereby ensuring high reliability of the system. The telesupervisory system will work in Master-Slave configuration, having its slave stations at attended stations and at block valve locations, installed along the entire pipeline network. The master station shall be interfaced with slave stations over OFC telecom system over Wide Area Network for data acquisition and control MCS at Ennore would be equipped with SCADA software running under multiprogramming, multi-tasking real time operating system environment. The SCADA software would have features for control & monitoring of all locations including Block valves. Leak Detection system shall be provided and the Leak Detection Software shall run in a separate machine at MCS. This package will enable the operator to take optimal control actions and thus ensure the safety and security of the pipeline network. Typical MCS, SCC, T-Point configurations and RTU configuration at RCP/SV are indicated in Annexure-IV(a) to IV(d). 5.7 Operation Philosophy Operation of the pipeline would predominantly be through heart-cut mode. 5.8 Implementation Methodology It is proposed to take up execution of the project through in-house expertise. 5.9 Statutory Clearances Suitable actions will be taken for obtaining MoE&F clearance and other statutory clearances for the proposed pipeline from concerned authorities, as applicable Construction Schedule The proposed scheme is expected to be completed in a period of about 30 months after receipt of statutory clearances. The schedule is shown in Annexure-V. DFR Ennore-Trichy-Madurai LPG Pipeline Page 26 of 38