Pipeline sharing: A supplementary strategy to enhance 3E performance of multi-product pipelines in China

Abstract

Single-rate pipeline prices have resulted in low competitive flexibility and have led to high costs and consumption in China's refined oil logistics system. This study aims to propose a framework for multi-product pipelines supplementary pricing strategy that creates a win-win situation for both shippers and pipeline carriers while quantifying economic, energy and environmental performance. Based on the objective of cost minimization, a lower limit constraint on pipeline transportation quantity is added, and a discount coefficient is introduced for pipeline prices, thus improving the transportation optimization model. Moreover, this paper develops an implementation approach for a supplementary pricing strategy that can ensure that the discounted price is not lower than the sum of cost and minimum profit. This framework usability is confirmed using a Chinese oil company as an example. The results show that the optimal scheme can increase pipeline revenue by ¥79.8 million while reduce shipper’s logistics costs by ¥1.68 million during the practice cycle. Meanwhile, this work reduces energy consumption by 1.37 tce, CO2 emission by 444 tons, SO2 emission by 5.65 tons, and NOX emission by 7.07 million tons for the logistics system. Compared with past studies, this study is more economical or more in line with market-oriented behavior.