Baker Institute paper calls for alternative to Hormuz oil route

Baker Institute

Improvements to the pipelines crossing the Arabian Peninsula would allow more of the oil produced in the Persian Gulf to avoid the Strait of Hormuz, according to a new paper from Rice University’s Baker Institute for Public Policy.

"Creating a pipeline system that permits a substantial fraction of the Middle Eastern oil to be shipped to markets from Red Sea ports weakens the political influence of Iran by reducing the amount of oil that transits the Strait of Hormuz," wrote Dagobert Brito, Rice’s Peterkin Professor of Political Economy and a Rice Scholar at the Baker Institute.

The latest tensions in the Middle East have policymakers looking for alternative ways to get petroleum from its source to world markets, said Brito, author of a paper titled "Revisiting Alternatives to the Strait of Hormuz."

He cited increased threats to international shipping as Iranian military and Revolutionary Guards have invested in submarines, missile boats and mining capability. Because an estimated 20 percent of the world's oil passes through the Strait of Hormuz, the narrow sea-lane between Iran and Oman, ensuring the safety of that oil is "crucial to the world's economy," Brito said.

He focused on a combination of geography and technology to resolve the dilemma. Two pipelines already transport Persian Gulf oil across Saudi Arabia to ports on the Red Sea, thus obviating the need to transit the Strait of Hormuz in tankers. But neither pipeline currently has the capacity to carry the volume required, so Brito suggested using drag reduction agents, "chemicals that are injected into pipelines to reduce the friction and to increase throughput in pipelines."

Citing an earlier study he worked on with the Center for Naval Analysis, Brito found "that with a relatively low amount of investment, it would be possible to ship as much as 11 million barrels per day of Middle East oil production through the Red Sea."

The growing regional rivalry between Saudi Arabia and Iran, Brito suggested, may make the Saudis "more receptive to proposals to augment trans-Arabian pipelines."

In the end, any decision comes down to economics, Brito wrote. "The question that must be addressed is whether the probability that passage through the Strait of Hormuz will be disrupted and the resulting damage to the world economy is high enough to warrant the investment necessary to bypass it."

Related Articles

Kinder Morgan to invest $1B to expand CO2 network

03/26/2014 Kinder Morgan Energy Partners LP will build and operate a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide from the company’s St. Johns source field in Apache County, Ariz., to ...

Pipeline Week: PennWell's Oil & Gas Pipeline Conference Exhibition, PODS Users Conference to co-locate

03/25/2014 PennWell and the Pipeline Open Data Standard Association have agreed to co-locate the 23rd Annual GITA Oil & Gas Pipeline Conference & Exhibition and the 10th Annual PODS Users Conference. ...

The Dakota Access Bakken Crude Gateway to the Gulf

03/20/2014 No sooner had we finished up our analysis of the divergent fates of two North Dakota crude oil pipeline projects - the Enbridge Sandpiper (going ahead after a successful second open season) and the...

Shields returns to Millennium Pipeline as president

03/20/2014

Millennium Pipeline Co. LLC has named Joseph Shields as president of the company, replacing Rocco D'Alessandro, who served as Millennium's president since May of 2012

Energy Transfer holds pipeline open season

03/10/2014 Energy Transfer Partners LP has launched a binding open season to assess interest in committed service under local and joint tariffs for crude oil pipeline transportation from multiple points of re...

More Oil & Gas Financial Articles

Kinder Morgan to invest $1B to expand CO2 network

Wed, Mar 26, 2014

Kinder Morgan Energy Partners LP will build and operate a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide from the company’s St. Johns source field in Apache County, Ariz., to the Kinder Morgan-operated Cortez Pipeline in Torrance County, NM.

Pipeline Week: PennWell's Oil & Gas Pipeline Conference Exhibition, PODS Users Conference to co-locate

Tue, Mar 25, 2014

PennWell and the Pipeline Open Data Standard Association have agreed to co-locate the 23rd Annual GITA Oil & Gas Pipeline Conference & Exhibition and the 10th Annual PODS Users Conference. The partnership will result in the creation of Pipeline Week to be held October 28-30, 2014.

The Dakota Access Bakken Crude Gateway to the Gulf

Thu, Mar 20, 2014

No sooner had we finished up our analysis of the divergent fates of two North Dakota crude oil pipeline projects - the Enbridge Sandpiper (going ahead after a successful second open season) and the Koch Dakota Express (cancelled in January) – then we learned that competitor Energy Transfer Partners (ETP) had launched a binding open season for a third pipeline proposal following basically the same route.

Shields returns to Millennium Pipeline as president

Thu, Mar 20, 2014

Millennium Pipeline Co. LLC has named Joseph Shields as president of the company, replacing Rocco D'Alessandro, who served as Millennium's president since May of 2012

Energy Transfer holds pipeline open season

Mon, Mar 10, 2014

Energy Transfer Partners LP has launched a binding open season to assess interest in committed service under local and joint tariffs for crude oil pipeline transportation from multiple points of receipt in North Dakota to various Midwest and Gulf Coast refineries and terminals, including Sunoco Logistics Partners LP’s crude oil terminal in Nederland, Texas.

Most Popular

Oil & Gas Jobs

Search More Job Listings >>
Subscribe to OGFJ