Pipeline sharing: Potential capacity analysis of biofuel transportation through existing pipelines

Abstract

In response to resource depletion and tightening carbon emissions policies, the product oil is gradually being substituted by biofuels and faced with falling demand. A large number of studies have been done on the optimization of the biofuel supply chain, but few of them have considered the existing petroleum pipelines for policy reasons. Market-based reforms in the oil and gas industry have provided the possibility of pipeline sharing, whereby pipeline owners can use the remaining delivery capacity to transport other liquid fuels that are allowed into the pipeline, such as biofuels, thereby increasing pipeline benefits and reducing biofuel logistics costs. This paper develops a logistics optimization model considering multi-product pipeline scheduling from the perspective of biofuel suppliers and proposes a pipe-rail transportation mode to assess the optimization potential of logistics costs. Finally, this paper verifies the feasibility of the proposed approach using a logistics system in a region of China as a practical case study and conducts a sensitivity analysis on whether changes in the demand for product oil and biofuels affect the choice of pipeline opening location, concluding that there is no effect within a 4-fold increase in biofuel production and a 0.78-fold decrease in product oil demand.