LACGEC 2000

The development of Market-based pipeline investments in the international arena has fundamental differences from projects sponsored by consumer or pipeline user needs, government endeavors or producers desiring to sell their product. Whereas these User-driven projects were the traditional way of developing projects in the past, current global political and economical trends are forcing private pipeline companies to develop new ways of creating business opportunities: the development of Market-based Pipeline Projects. A proactive strategy for developing energy transmission businesses comprises of identifying energy market opportunities and finding natural gas in enough quantities to justify building a pipeline infrastructure. This strategy also has to be properly linked with other factors to enable the investment to occur. These Market-based business opportunities have unique characteristics and require a strong corporate vision and support before it can be successfully implemented. This paper will provide an insight to the challenges, risks and uncertainties to be faced when developing Market-based pipeline projects. The discussion focuses on the initial phase of the project, from the moment the business opportunity has been identified to the time when the project sponsors obtain enough confidence in the business to proceed with large capital commitments. The paper includes a description of the pipeline project development process and a review of the variables influencing all the important steps prior to the start of full implementation activities. While the content of this paper is mostly applicable to all types of pipeline projects, the discussion will focus on natural gas transmission pipelines.