Nord Stream 2 AG Jul-17
Table of Contents Introduction... 3 1. What is concrete weight coating, and why is it necessary?... 4 How it works... 4 Why it s necessary... 6 2. Nord Stream 2 partners with Wasco... 7 3. Logistics: What will happen where?... 8 Four hubs along the pipeline route... 8 Kotka, Finland... 8 Koverhar in Hanko, Finland... 9 Karlshamn, Sweden... 9 Mukran, Germany... 9 Logistics from start to finish... 10 4. Low environmental impact, high social benefits... 12 2
Introduction Each of the Nord Stream 2 pipelines will be 1,200 kilometres long. Building them requires a tailored logistics concept to supply the steel pipes as well as the materials needed for their concrete weight coating. The aim is to do this in an efficient, timely and cost-effective manner that also minimises impacts on the sensitive ecosystem of the Baltic Sea. Lowemission means of transportation such as ships and trains will be used with the shortest possible transportation routes. Local workers, services and service providers around the Baltic Sea will be utilised as much as possible. The proven concept is built on the success of the predecessor project, Nord Stream. On 2 August 2016, Nord Stream 2 announced its decision to partner with Wasco for the concrete weight coating, storage and logistical handling of the steel pipes that will be used to build the Nord Stream 2 twin pipelines across the Baltic Sea. Wasco, which is part of the leading, Malaysia-based energy group Wasco Energy, is responsible for operating the concrete weight coating plants and managing the storage and transport of the pipes out of several ports along the Baltic Sea. To obtain the contract, the company came through an intensive selection process and convinced Nord Stream 2 with its extensive experience in the field of concrete weight coating and logistics, as well as its track record of delivering major energy projects around the world. The company is responsible for coating, storing and transporting about 204,000 pipes 12 metres in length and 1.2 metres in diameter. The steel pipes will be transported from the pipe mills to the coating plants by rail, from where the coated pipes will be transhipped to the storage yards and pipe-lay barges by pipe carrier vessels. The concrete weight coating will more than double each pipe s weight from 12 to 24 tonnes on average, ensuring the stability of the pipeline once it is laid on the seabed and protecting it from external damage. The project will build on the achievements and lessons learned from its successful predecessor, Nord Stream. Wasco together with Nord Stream 2 decided to cooperate with some of the same ports that were involved in the successful implementation of the first project: For example, Wasco is able to use existing infrastructure and operate two weight coating plants: one in Kotka, Finland, and the other in Mukran, Germany. In addition, the port of Karlshamn in Sweden and Port of Hanko s Koverhar in Finland have both been confirmed as logistics hubs for storing the pipes. To optimise the logistics chain, a small number of pipes will be concrete weight coated in Volzhsky, Russia. The various operations involved in the project will provide a positive economic stimulus to the regional ports and contribute to their long-term development. Wasco will employ up to 300 persons in Kotka and in Mukran respectively in its coating plants and around 50 persons in its storage yards in Karlshamn and Hanko for the duration of the project. In addition, the entire logistics concept has been designed to minimise the environmental impact of the project: Almost all transport will be done by the lowest-emission means, namely by rail and ship, and every pipe storage site will be located to optimum location from the pipeline route with respect to the port resources available. Deliveries from the pipe mills to the coating plant in Kotka began in early September, and to Mukran in October 2016. Concrete weight coating started at the plant in Kotka in March, 2017, and in Mukran in July 2017. By the time of the planned start of construction in 2018, 3
half of the pipes will have to be concrete weight coated and readily available at the logistics sites along the pipeline route to meet the challenging construction timeline. 1. What is concrete weight coating, and why is it necessary? Concrete weight coating is the process by which the high-density steel pipes that will make up the twin pipelines are coated with a carefully balanced concrete mix to more than double their weight, from 12 to an average of 24 tonnes each. This extra weight provided by the coating is necessary to ensure the pipeline s stability on the seabed an additional layer that will also afford mechanical protection to the pipes during handling, transport and laying operations, as well as protecting the finished pipeline from external damage for the entire duration of its life cycle. 1: Pipes are inspected upon arrival at the coating plants. How it works Once the pipes arrive at the coating plants in Mukran and Kotka, the first step will be to clean them thoroughly: Upon entering the plant, they will be washed and blow-dried. The goal here will be to get rid of any contaminants that could have an effect on the adhesion of the coating. The pipes will then be measured individually to determine the exact length, weight and outside diameter of each and every one. This step is crucial preparation for the next phase, in which wire cages will be made to measure for each pipe. These cages will serve to reinforce the concrete coating, giving it additional robustness and ensuring that it is homogenously applied. Once a cage is manufactured, it will be fitted at a constant distance from the pipe: Pegs will have to be installed by hand to ensure that the distance of the cage to the pipe is perfectly regular throughout. 4
2: A steel wire cage is manufactured for each individual pipe to provide the required reinforcement for the concrete coating. After this phase is completed for a single pipe, the pipe is ready to be concrete weight coated. The concrete coating will be mixed from raw materials directly at the plant. The cement, magnetite, agglomerate, sand, iron ore and water that make up the coating will be mixed according to a high-precision process to achieve a perfect dosage and balance of each component. For instance, the amount of iron ore in the coating determines its density, while its compressive strength depends on the coating's cement-to-water ratio. The balance of these elements is essential to obtain a coating of sufficient density and strength to be stable and enduring in a marine environment. The concrete coating will then be applied evenly to each pipe at a speed of approximately 190 kilometres per hour, with the thickness of the coating varying between 60 and 110 millimetres from pipe to pipe. Once coated, the weight of each pipe will have more than doubled to reach 24 tonnes. Finally, several tests will be carried out and the concrete coated pipes will be measured once again, including their diameter, weight and cage-to-pipe distance, to ensure the coating meets Nord Stream 2's specifications and quality requirements. Rigorous quality tests and inspections are performed on each product throughout the process to check its conformity with both international standards and project-specific requirements. These involve Nord Stream 2 inspection personnel as well as various bodies for independent verification. 5
3: Concrete weight coating process Why it s necessary The main function of concrete weight coating, as its name suggests, is to weigh the pipeline down providing so-called negative buoyancy to increase its stability on the seabed. However, this outermost coating also protects the pipes from external damage when they are stored, transported and eventually lowered onto the seabed. Crucially, it preserves the pipes from any damage every time they are handled by cranes, exposed to harsh weather conditions during storage or transported to the pipe-lay barges aboard pipe carrier vessels. The concrete weight coating will also play an essential protective role once the pipeline rests at the bottom of the sea, and for the entire duration of its life cycle. For instance, it will prevent any harm caused by dropped objects or trawl boards. 6
2. Nord Stream 2 AG partners with Wasco Logistics provides a crucial backbone for the construction of the Nord Stream 2 pipelines. The tender process for the coating and logistics contract that was awarded to Wasco Coatings Europe B.V. was launched at the end of 2015 and took over seven months to finalise. During this time, Wasco passed an intensive and rigorous selection process and managed to set itself apart from the competition thanks to its extensive and well-proven track record of delivering major energy projects around the world. The contract was subsequently novated to Wasco Coatings Germany GmbH. Wasco set up a German unit given the coating and logistics contract entails operations in Germany, a market where it was not previously present. Indeed, Wasco belongs to the Malaysia-based energy group Wasco Energy, which is made up of a robust network of operations in 17 international locations and provides reliable and competitive solutions to oil and gas players the world over. In 2012, for example, the group successfully completed the ambitious Kebabangan Northern Hub project, providing the concrete weight coated pipes necessary to connect the offshore Kebabangan gas field cluster in the South China Sea to the Malaysian mainland. Going forward, the company will be responsible for the concrete weight coating and the logistics of the 204,000 pipes needed for the project. It will operate two concrete weight coating plants, where a total of 187,300 steel pipes will be concrete weight coated, and handle the logistics involved in storing the coated pipes on behalf of Nord Stream 2. In the process, Wasco will be able to take advantage of existing infrastructure and experience acquired from the predecessor Nord Stream project, as well as bring in its own expertise to optimise every aspect of this large-scale operation. Due to optimisation of the logistics chain, the rest of the pipes from the Russian supplier Chelpipe will be concrete weight coated in a Russian coating plant in Volzhsky by Chelpipe s subcontractor, Pipeline Coating Technology. 7
4: Pipes at the storage yard in Kotka, Finland 3. Logistics: What will happen where? The logistics concept that underpins the delivery, coating, storage and transhipment of the pipes is based on several hubs located in various ports along the Baltic Sea, all of which Wasco will manage independently. The ports have been chosen strategically based on various criteria, including their location, existing infrastructure, water depth, as well as environmental factors like their distance to the pipeline route. As a result, all of the logistics hubs concrete weight coating plants and storage facilities alike are located at an optimum distance to the pipeline route in consideration of the port resources available. Four hubs along the pipeline route Kotka, Finland Kotka is situated in the vicinity of the planned Russian landfall, which is the starting point of the pipelines, in the southern coast of the Gulf of Finland. With a water depth of 14 metres, existing quays of sufficient length and a surface area of 400,000 square metres, it was already identified as the ideal location for a concrete weight coating plant and pipe storage facility during the first pipeline project. For Nord Stream 2, Wasco will be able to operate the same concrete weight coating plant and take advantage of the existing infrastructure for pipe storage and shipping. The coating plant was upgraded to meet the current requirements, and 108,800 steel pipes are due to be concrete weight coated (CWC) in Kotka. From the Kotka storage yard, CWC pipes will be directly transhipped to Koverhar and a small number to Karlshamn for interim storage, while the rest will be transported directly to the pipelay vessel during construction. 8
Wasco will employ up to 300 persons directly, and at least around 100 persons indirectly for the duration of the project. Koverhar in Hanko, Finland Hanko is a port city in the most southwestern part of Finland, placing it very near to the pipeline route in the Western part of the Finnish Exclusive Zone (EEZ). Although the logistics hub was based in the town s historic port during the first pipeline project, Wasco will be using the Port of Koverhar in Hanko outside of the city centre this time around, which will offer more space to run the large-scale storage and transhipping operations. Koverhar is an old industrial port, which the Port of Hanko is currently developing further by investing in the storage area and upgrading the port infrastructure. Nord Stream 2 is contributing with significant investments and serves as a ramp-up project for Koverhar, offering approximately 50 temporary jobs directly for the duration of the project. 61,600 CWC pipes will be stored in Koverhar, the majority of which will be delivered by pipe transhipment vessels from Kotka. 200 kilometres of pipes will be delivered by rail from Russia. Karlshamn, Sweden The port of Karlshamn is one of the leading industrial and commercial ports in southeast Sweden. It is accessible year-round, 24 hours a day, and offers water depths of up to 10.5 metres. Its location is perfect for supplying the pipe-lay barges along the southernmost part of the pipeline route. Nord Stream 2 will be a large-scale project for the Port of Karlshamn, as 52,100 CWC pipes will be stored there. With the investments into developing the storage area and upgrading the port infrastructure, the project offers long-term advantages for the continued expansion of the port operations with new logistics possibilities. Wasco s activities will provide local employment for around 50 people for the duration of the project. Mukran, Germany The publicly owned port of Mukran is located on the German island of Rügen, which is close to the German landfall, or terminating point, of the planned pipelines in Lubminer Heide near Greifswald. The port, which has developed into a major economic and industrial hub over the last few years, stretches across an area of 200 hectares and is directly connected to the German railway network, receiving the pipes directly out of German production by train shuttle. Mukran already hosted concrete weight coating, pipe storage and shipping operations during the predecessor project, Nord Stream. At the time, a new coating plant was built from scratch and existing infrastructures were improved to make an area of 520,000 square metres ready for pipe storage, providing excellent resources for project s purposes. According to the logistics concept for Nord Stream 2, Wasco will use this existing infrastructure to run concrete weight coating operations of 78,500 pipes as well as shipping, either to the logistics hub in Karlshamn (39,800) or straight to the pipe-lay barges (38,700), out of Mukran. Another 11,500 of the pipes produced by Europipe will be either concrete weight coated in Mukran and/or in Kotka, depending on future production progress. 9
Logistics from start to finish The pipes journey with Wasco begins when they are delivered to the coating plants by rail. Trains bring pipes to the plant in Kotka from the Russian pipe mills Chelpipe and OMK, and the same means of transport is used to deliver the pipes from Europipe to Mukran. In addition to the pipes, the raw materials for the concrete weight coating will also be delivered to the two plants to be mixed directly onsite. The plants in Kotka and Mukran will then proceed with the coating: 108,800 pipes will be coated in Kotka, where operations started in March 2017. Mukran followed in the summer of 2017 and will coat 78,500 pipes for the project. A small number of the pipes produced in Germany will be either concrete coated in Mukran and/or Kotka, depending on production progress. A further 200 kilometres of pipes will be delivered readily concrete weight coated from Russia to Koverhar by rail. By the end of the process, about 204,000 pipes will have passed through the coating plants storage yards. 5: Pipes for Nord Stream 2 arrive in Mukran by rail from pipe manufacturer Europipe Once pipes are coated, some of them will be stored at the coating plant s storage yard while the rest will be transhipped either: > From their coating plant to the nearest logistics hub s storage yard. 44,900 of the pipes coated in Kotka will be transported to the port of Koverhar in Hanko and 12,300 to Karlshamn. 39,800 of the pipes that were coated in Mukran will be transhipped to the port of Karlshamn for storage. > Or directly from their coating plant s storage yard to the pipe-lay barges. The pipes will be delivered to the pipe-lay barges from the closest logistics hub along the pipeline route at a rate to be determined by the construction schedule. The pipes that are brought to the logistics hubs in Hanko and Karlshamn will be stored in dedicated storage areas. Wasco will be able to take advantage of the infrastructure that was developed during the Nord Stream project: In Kotka, for example, the port authority 10
invested in an additional quay specially designed for loading pipes onto pipe carrier vessels. 11
4. Low environmental impact, high social benefits As with every other aspect of the Nord Stream 2 project, environmental and sustainability criteria played an important part in designing the logistics solution for the concrete weight coating, storage and transport of the pipes for the twin pipeline. By concrete weight coating the pipes directly at the Baltic Sea ports out of which they will be shipped to the pipe-lay barges or interim storage facilities, and by completing 95 percent of pipe transport operations by rail or ship, up to 200,000 tonnes of CO2 will be saved which is the equivalent of 1 billion kilometres travelled in an average car, or 25,000 trips around the world. Every aspect of the logistics solution, from the choice of ports located at an optimum distance from the pipeline route given the port resources available to the absolute priority given to transport by rail or ship, is designed to minimise the project s environmental impact. The benefits to the chosen ports and their local populations, however, will be maximal. Indeed, Wasco has committed to employing local personnel whenever possible at the various sites it will operate. At the concrete weight coating plants, for instance, the company is expected to directly employ up to 300 local workers respectively for the duration of the project. Furthermore, the operations are estimated to employ over 100 suppliers and service providers indirectly. At the interim storage yards of Hanko and Karlshamn, the project will provide approximately 50 temporary jobs for its entire duration at each location. In addition, the economic stimulus provided by a large-scale project like this one will boost the ports and their surroundings local economies, with benefits that will continue to be felt long after the project is completed. 12
Nord Stream 2 AG Baarerstrasse 52, 6300 Zug, Switzerland info@nord-stream2.com T: +41 41 414 54 54 F: +41 41 414 54 55 Moskauer Branch ul. Znamenka, 7/3, 119019 Moscow, Russia info@nord-stream2.com T: +7 495 229 65 85 F: +7 495 229 65 80 St. Petersburger Branch ul. Reshetnikova 14a, 196105 St. Petersburg, Russia info@nord-stream2.com T: +7 812 331 16 71 F: +7 812 331 16 70 About Nord Stream 2 AG Nord Stream 2 is a planned pipeline through the Baltic Sea, which will transport natural gas over 1,200km from the world s largest gas reserves in Russia via the most efficient route to consumers in Europe. Nord Stream 2 will largely follow the route and design of the successful Nord Stream pipeline. With Europe s domestic gas production projected to halve in the next 20 years, Nord Stream 2 s twin pipeline system will help Europe to meet its future gas import needs, with the capacity to transport 55 billion cubic metres of gas per year, enough to supply 26 million European households. This secure supply of natural gas with its low CO2 emissions will also contribute to Europe s objective to have a more climate-friendly energy mix with gas substituting for coal in power generation and providing back-up for intermittent renewable sources of energy such as wind and solar power. www.nord-stream2.com 13