Improvement in Supply Chain Management for Oil and Gas Sector
Using Drag Reduction Theory
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Arshad Ali Anjum1*, Arshad Chughtai , Amir Shafeeq , Ayyaz Muhammad

Abstract
Supply Chain Management is an integrative philosophy about managing the flow of distribution channels from supplier to the consumer. PARCO, an oil and gas company in Pakistan has three existing pipelines. Out of three, two pipelines are running parallel from Karachi to Mehmood Kot. One pipeline is of crude oil and meeting the demand of PARCO refinery while second pipeline is of High Speed Diesel (HSD) and third pipeline is of (HSD &
Kerosene) running from Mehmood Kot to Machhike(Sheikhupura).PARCO supply petroleum products from
Shikarpur, Mehmood Kot, Faisalabad & Machhike to oil marketing companies (OMCs) as per their share, standard and demand. The purpose of these pipelines is to meet the country demand for petroleum products at various locations all over Pakistan. In the peak season when OMCs have high demand and receipt of product from PARCO pipelines are less, there is a need to enhance the flow rate of oil inside the PARCO pipelines to fulfill the demand of OMCs. This could be done economically by the application of drag reduction theory. So by injecting drag reducer, dragging of the oil inside the pipeline could appreciably be reduced thereby improving the pumping of oil.

Introduction
Supply Chain is the network of Organizations that are involved, through upstream and downstream linkages, in different processes and activities that produce products and services delivered to the ultimate consumer. Supply Chain Management is a term used to describe the management of the multiple organizations to get a product from the manufacturing stage into the hands of consumers
[1-3].
The Supply Chain involves a variety of tasks such as crude procurement, logistics scheduling, storage scheduling & crude scheduling, which require interaction between several departments and the processing of a large amount of data. Decision at this level has a large impact on chain performance
[4-6].

The new incoming challenges such as volatile crude oil prices, excess refining capacity and fluctuating demands and prices for petroleum products are serious reasons for refiners to look for new business management approaches.
All the petroleum products are delivered to final desired destination, at the due date and with required quantities. Several methods can be used to transport crude oil and its products: tank truck, rail roads tank cars, tankers and pipelines. The option over which one to use depends on distances, product type, cost, quantities and purpose. Pipelines are one of the most economical solutions, being both safe and clearly indicated for large volumes and long term solutions [7].

1

Pak Arab Refinery Ltd. (PARCO)
Institute of Chemical Engineering and Technology, University of the Punjab, Lahore (54590), Pakistan.
Corresponding Author: Arshad Ali Anjum. E-mail: aa_anjum786@hotmail.com
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Journal of Pakistan Institute of Chemical Engineers

Types of Supply Chain
Direct Supply Chain
It consists of a company, a supplier, and a customer involved in the upstream and downstream flows of products, services, finances and information.

Vol. XXXVIII

PARCO has three existing pipelines. Out of three, two pipelines are running parallel from Karachi to
MehmoodKot. One pipeline is of crude oil 16‘‘Ø having length 864 Km and meeting the demand of
PARCO refinery while second pipeline is of High
Speed Diesel(HSD) 26‘‘Ø having length 817 Km and third pipeline is of (HSD & Kerosene) 18‘‘Ø

Extended Supply Chain
This includes suppliers of the immediate supplier and customers of the immediate customer all involved in upstream and downstream flows of products, services, finances and information.

Ultimate Supply Chain
This includes all the organizations involved in all the upstream and downstream flows of products, services, finances and information from the ultimate supplier to the ultimate customer.

1.2

&16‘‘Ø having total length 364 Km running from
MehmoodKot to Machhike (Sheikhupura). PARCO have ten pumping and terminal stations at different locations from Karachi to Machhike near Lahore as shown in Figure 1.The purpose of constructing these stations is to boost up the oil and maintain the pressure inside the pipeline for smooth transportation and distribution at various locations
[8].

Types of Channel Relationships

Problem Statement
In the peak season, OMC’s have high demand of petroleum products and receipt of product from
PARCO pipeline is less therefore a need is there to enhance the flow rate of oil inside the PARCO pipeline to fulfill the demand of Oil Marketing
Companies (OMCs).

Parco’s Existing
Management
Network

Supply

Chain

Figure 1: Parco’s existing supply chain management pipeline network system

Drag reduction Theory to Improve
Supply Chain Management
Drag reducer is defined as any material that reduces frictional pressure during fluid flow in a conduit or pipeline. Drag reducing agents allow increased flow using same amount of energy or decreased pressure drop for the same flow rate of

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Arshad Ali Anjum, Arshad Chughtai, Amir Shafeeq, Ayyaz Muhammad

fluid in pipelines. The frictional pressures observed in laminar flow can not be changed unless the physical properties of the fluid are changed. In turbulent flow regime, the fluid molecules move in a random manner, causing much of the energy applied to them to be wasted as eddy currents and other indiscriminate motion. The flow in a pipe could be divided in three zones for the purpose of study. In the very centre of the pipe, there is a turbulent core. It is the largest region and includes most of the fluid in the pipeline. This is the zone of eddy currents and random motions of the turbulent flow. Nearest to the pipeline wall, there is the laminar sub layer. In this zone, the fluid moves laterally in sheets. In between the laminar layer and the turbulent core, there lies the buffer zone.
Buffer zone is very important because this is where turbulence occurs first. A portion of the laminar sub layer, called a “streak”, occasionally move to the buffer region. The streak begins to form vortex and oscillate, move faster as it gets closer to the turbulent core. Finally, the streak become unstable and breaks up as it throws fluid into the core of the flow. This ejection of fluid into the turbulent core is called a turbulent burst. This bursting motion and growth of the bursts in the turbulence core results in wasted energy. Drag reducing polymers interfere with bursting process and reduce the turbulence in the core. The polymers absorb energy in the streak, like a shock absorber, thereby reducing subsequent turbulent bursts. As such, drag reducing polymers are most active in the buffer zone.
Drag reduction is rapidly becoming an essential aspects of cost saving. Overtime pipeline corrode, no matter how well you look after them (regular pigging, cathodic protection, injecting corrosion inhibitors etc.).As the wall thickness reduces, so does the maximum allowable operating pressure. If you continue to operate a line at high pressures but the wall thickness has reduced, you risk a pipeline rupture. This problem can be overcome by injecting drag reducing agent and we can operate pipeline safely at low pressure with high flow capacity which also fulfills the demand of Oil Marketing
Companies in the peak season.

Important features of Drag Reducing
Agents
Ÿ It has been observed that flow improvers reduce

drag up to 80% and increase flow up to 100%.
Performance depends largely on the properties of the fluid being transported and the condition of the pipeline.
Ÿ Drag

reducers can bring substantial improvement to bottom line profit by maximizing the flow potential and through put capacity of pipelines, saving energy and giving greater flexibility in operations.

Ÿ If the wall thickness of the pipeline is reduced

due to corrosion, it can not with stand high pressure thereby reducing the amount of oil being pumped. By injecting drag reducer, the oil could be pumped even at lower pressure.
Ÿ Drag reducing additives improve flow in

pipelines by reducing turbulence. They can dramatically increase flow using minimal addition of energy.

Parco’s Modified Supply
Management Network

Chain

PARCO, s Supply chain management network is modified with addition of Conoco Drag Reducer
(CDR) which is injected in main pipeline at the discharge of mainline pumps to improve flow capacity as shown in Figure 2. By using a drag reducer, the supply chain has been modified and a significant increase in the profit margin has been observed as shown in Table 1, 2 and 3.

Table 1 Parco’s existing supply chain management network system

Pipelines

Flow capacity without
CDR
(Flo-exl) injection Energy saving Time saving Profit
Margin

Result

Crude
Pipeline

800
Normal Normal Normal Satisfactory
M.Tons/Hr

HSD
Pipeline

1180
Normal Normal Normal Satisfactory
M.Tons/Hr

(HSD
470
&Kerosene)
Normal Normal Normal Satisfactory
M.Tons/Hr
Pipeline

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Conclusion
This paper highlights the importance and different aspects of supply chain management. Supply chain management is very crucial in the context of present economical conditions. The effective supply chain management could bring profit and economize the tasks which are specifically meant for supplying the end product from manufacturer to end user. For the purpose of demonstration, a case study on the existing supply chain network of oil producing company in Pakistan (PARCO) has been conducted. It has been observed that in the peak season existing network is less effective in the context of loosing profit. The profit can be maximize by using drag reduction theory. Drag reducer could significantly improve the flow in the pipeline thus making the supply of oil to OMC’s in order to meet their demand. The in time supply of oil in the peak season could significantly improve the efficiency in terms of profitability.

Table 2 Parco’s modified supply chain management network system

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Table 3 Comparison of costs of drag reducing agents & injection rate

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Arshad Ali Anjum, Arshad Chughtai, Amir Shafeeq, Ayyaz Muhammad

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