Buoyed by record profits in 2021–22, the oil industry is moving ahead with a massive expansion of the global oil pipeline system, according to new data from Global Energy Monitor (GEM).

The expansion, it suggests, is also creating a potentially huge risk for future stranded assets.

The GEM report, Crude Awakening, Oil Pipelines in Development Across the Globe, says that over 24,000 km of crude oil transmission pipelines are in development, about 40% of which are already under construction. Despite taking a backseat to the global gas boom in recent years, GEM says this expansion of crude oil infrastructure creates a substantial stranded asset risk for project developers and is dramatically at odds with plans to limit global warming to 1.5°C or 2.0°C.

Key points:

• According to GEM analysis, 24,166 kilometres of oil transmission pipelines are in development globally. Of this, 10,351 km are in the construction phase, and the remaining 13,813 km are in a pre-construction phase.

• Led by the United States, India, China, and Russia, GEM says that the projected cost of this buildout is $75.4 billion, much of which risks becoming stranded assets as countries transition to renewables.

• The United States and India have the most new pipeline capacity by length under development. The US has 2,829 km costing an estimated $7.9 billion being developed, the majority of which is associated with the Permian Basin, whose untapped oil and gas reserves make it one of the biggest so-called ‘carbon bombs in the world.

• Tied for first with the US is India with 2,824 km of new oil pipelines in development, costing an estimated $4.0 billion. The third-biggest developer is China with 2,533 km costing an estimated $4.2 billion.

• Facing boycotts by the EU and US over its war on Ukraine, Russia is developing 2,051 km of new pipelines costing an estimated $4.0 billion, with an eye to replacing these lost exports with new exports to India and China. GEM’s data finds several European countries still invested in Russian oil projects, despite these boycotts.

• Regionally, Sub-Saharan Africa leads the world in planned development, with 1,950 km of oil pipelines under construction and an additional 4,540 km proposed.

However, GEM says that poor disclosure of pipeline capacity makes it difficult to estimate total greenhouse gas (GHG) emissions from these expansions. GEM has capacity data for 66% of projects. Globally, projects under construction would add about 8.3 million barrels per day (bpd) of crude oil transmission capacity, and projects that are in pre-construction would add an additional 21.8 million bpd. Together, it suggests, these additional capacities would generate 4.61 billion tonnes of CO2 annually.

Companies leading the oil pipeline buildout

The companies leading the global buildout are a combination of state-owned enterprises, publicly- traded companies, and private developers. Capacity data is available for about 66% of these projects in the GEM database and the estimated potential emissions for the available data would amount to 4.61 billion tonnes of CO2 per year, nearly one third of which is associated with projects already under construction.

Conclusion

GEM says that the current planned oil pipeline expansion will cost an estimated $75 billion. With available capacity data, this infrastructure, if built, would be associated with at least 4.6 billion tons of CO2 each year for decades, if the projects continued operating through the end of their typical lifetimes.

The report adds that the IPCC and the IEA have both stressed the immediate need for deep cuts to fossil fuel emissions to meet the Paris goal of limiting anthropogenic climate warming to 1.5 degrees Celsius:

“Under the constraints identified by the IEA’s Net Zero by 2050, ‘no new oil fields are necessary’ to meet energy needs consistent with the Paris Agreement. This would include the development of any new pipeline infrastructure related to these fields, as well as any infrastructure intended to increase transmission capacity from them beyond what is currently developed, creating a risk of stranded assets.”

“The current proposed oil pipeline buildout therefore implies a deliberate failure to meet these goals and a disregard of their importance by oil majors and the institutions financing them worldwide.”

This is an edited and abridged version of a report from Global Energy Monitor. To access the full report, click here.

The companies leading the global buildout are a combination of state-owned enterprises, publicly- traded companies, and private developers. Capacity data is available for about 66% of these projects in the GEM database and the estimated potential emissions for the available data would amount to 4.61 billion tonnes of CO2 per year, nearly one third of which is associated with projects already under construction.