Logistics Planning For a Northern Pipeline
Authors: O&apos;rourke J.R. 
Published: March 2010

The total cost of a large-diameter pipeline constructed from northern Alaska through the Mackenzie River Valley into Alberta will be in the order of two billion dollars. Material and labour are the major cost components, butit is not difficult to determine that about 10 per cent of the project cost is represented by material transportation. This 200-million-dollar item will be shared by all modes of transport, principally rail, truck and barge and, to a lesser degree, air.

Advance logistics planning is required to ensure (a) informed and co-ordinated effort of the various modal participants and (b) efficient, accurate and timely movement of the many material items through the complex transportation matrix.

Planning must pay due regard to (a) multiple origins with varying material purchase prices, (b) multiple destinations with varying quantity requirements, and (c) seasonal availability and seasonal capacity fluctuations of the various transportation elements in the network.

A linear program model is being developed to facilitate decision-making in material and transportation purchasing, and thereby optimize the total delivered cost of all materials to the right-or-way.

Introduction

IT IS GENERALLY ACCEPTED that solution gas from Prudhoe Bay will be moved to U.S. markets by pipeline through the Mackenzie River Valley, and three major proposals have been advanced covering construction of such a line. Since September 1970, CN has been studying the logistics requirements of one of these proposals - that initiated by Alberta Gas Trunk Line - and this paper outlines the company's experience to date in planning for the transportation of equipment and materials required to construct and maintain the line.

The Pipeline Proposal

A.G.T.L.'s proposal includes 1,550 miles of 48-in. line, extending from northwestern Alberta down the Mackenzie River Valley and across the Yukon and Alaska to Prudhoe Bay (Figure 1). Construction willextend over approximately 21/2 years, with most work being done during the winter months.

The approximate cost of the proposed line is $2.0 billion and, depending on where one starts to detail component costs, transportation can account for 7–10 per cent of the total cost. The necessity for, and financial implications of, good logistics planning are obvious.

Stockpiles

Stockpile sites have been tentatively designated along the pipeline route, but they are subject to change due to pipeline route revisions, new road construction or new delivery methods. Logistics planning incorporates the cost of stockpiling along with other transportation costs and forces early consideration of site selection, site preparation and assignment of proper equipment - cranes, forklifts, etc.

Study Objectives and Approach

The prime study objective has been to:formulate a plan which can optimize the movement of a variety of materials from many origins to many destinations.

Other objectives have been to:identify transportation alternatives which may be used to meet emergent situations;plan for the efficient co-ordination of participating carriers in a very major multi-modal operation;identify and work within ecological constraints;identify and quantify transportation equipment and ancillary facility needs and lead times required to obtain same.