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VicRail Altona - Somerton pipeline

In the late 1970s / early 1980s VicRail moved into the petroleum business, entering into a joint venture with a number of local oil companies to build operate an oil pipeline between the Altona, to a tank farm beside the North East Railway at Somerton, where another pipeline took jet fuel to Tullamarine Airport.

The railways became involved with grand plans to revitalise oil distribution across South Eastern Australia, with block trains running from a city terminal to 10 country terminals in Victoria and southern NSW. These depots would be the hub of road tanker deliveries to all nearby regions.

These plans came to naught - none of the new terminals were built, the pipeline was sold to private interests by the 1990s and has only been used to carry jet fuel to the airport, and since 2008 no fuel has been carried by rail in Victoria.

These notes are taken from the VicRail report "Distribution of petroleum products in Victoria: a rail orientated view" dated February 1980.

Route

Blue shows the VicRail Altona to Somerton pipeline, green shows the oil company owned Somerton - Tullamarine Airport pipeline.

The pipeline runs from the PRA refinery at Altona, along the Geelong railway line to Newport, along the Newport-Sunshine goods lines, beside the main Bendigo line, along the Albion - Jacana goods line, then along the North East railway to Somerton.

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Oil transport

Victoria had 3 major oil refineries - they were opened in the following years:

  • BP owned Westernport in 1966 (no longer operating)
  • Altona PRA (65% Mobil / 35% Esso owned) in 1955
  • Shell Australia at Corio, Geelong in 1954

These refineries distributed two thirds of their product by rail. Filling and receiving terminals were all oil company controlled, and until the 1980s they objecting to despatching their product from other companies depots or in other companies tankers. The majority of oil tankers were company owned, the other 20% of tankers owned by VR and hired out. Scheduling of oil trains was also inefficient, being controlled by oil companies, resulting in low utilisation of rolling stock due to tankers being attached to ordinary goods trains. Most tankers are bottom unloading and top filling, to provide bottom loading would speed up operations and increase safety, but was expensive.

Across Victoria there was a huge number of country oil terminals, with 190 depots in 65 cities and towns. 91 of these depots had no rail deliveries by the 1980s, but still received cheap rent from the railways. Only 89 of the depots were rail serviced in 38 towns, but 33 of these had less than one tanker delivered a week.

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Timeline

  • November 1971: first talks on Somerton to Paisley pipeline with Mobil
  • June 1972: Mobil proposed buying land at Somerton (40 acres) for distribution of oil by road and rail, was considering railing jet fuel from Altona to Somerton, then pipeline to Tullamarine. They wanted to transport 200k to 260k tons / year of fuel, and asked VR for the freight costs. They were quoted 30 cents / ton for 24 wagon trains, 35 cents / ton for 20 wagon trains.
  • October 1972: BP and Shell had taken some interest in Somerton idea
  • May 1973: first VR block fuel train ran to Wodonga
  • October 1975: heads of agreement signed between VicRail, Shell, Mobil and Esso for pipeline
  • 1976 - 1979: negotiations continue, with a May 1979 target
  • May 1979 - February 1980: industrial matters prevent opening of pipeline
  • November 1979: government introduces legislation to ban tankers for Tullamarine Freeway, planned to be gazetted in 1st quarter of 1980.

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Justification

VicPipes (owned by VicRail) had a 25% interest in pipeline, the rest being the oil companies. Negotiations started in 1975, with the initial justification being the transport of jet fuel to the new airport at Tullamarine. Later plans were to convert line to multi-product operation, to allow allow city deliveries to the North and North East of Melbourne by road. Storage tanks at Somerton would permit rail loading for distribution into country Victoria and southern NSW, removing the need for road tankers to pass through Melbourne to access the oil company terminals in Spotswood, Williamstown and Altona. The attractiveness of the plan declined due to changed circumstances, with less market growth in northern Victoria and south NSW. The oil companies also feared of regulation on movement of bulk petroleum on highways, and were concerned the State Government was working to help VicRail through shaping / influencing transport policy.

The oil industry unlikely to support investment at Somerton as being in best interest of industry. By company, their opinion towards the Somerton terminal:

  • Shell wanted to supply north Victoria and southern NSW from Corio, by adding an extra white product pipeline from Corio to Spotswood, ties in with Somerton. The modifications for block train loading at Corio was costed at $250,000 for modifications. Believed Shell would support VR once plans clarified.
  • BP doesn't want to improve Dandenong or Paisley terminals until the Somerton multi product plan is clear. Was worried about government policy, and ROI on pipeline. Believed that without the VR pipeline would not have gone ahead. A neutral / interested bystander.
  • Mobil wants SG access for southern NSW access, does not want to spend money on Altona or Williamstown. Was the main co-ordinator on Somerton scheme, could follow VR but probably not actively promote as in early 1970s.
  • Caltex is opposed to pipeline, wants Victorian refiners to send product via sea to Sydney for NSW distribution. Not actively support.
  • Total will likely support scheme.
  • Esso, Amoco, Ampol, Golden Fleece were of a waning market position and no real significance.

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VicRail five year plan

In 1980 VicRail's five year plan was to introduce 11 wagon long block oil trains on trunk rail routes, the trains being filled as one consist at a city terminal. Only one product would be carried: super grade petrol, which was 50% to 60% of oil freight at the time. The trains would be sent to one of several destinations, where a VR operated discharge terminal and transit storage would be located. From here smaller pipelines would run to the oil company owned country terminals.

The plan allowed the elimination of multiple filling and discharge points, made deliveries to customers more regular, and allowed the retirement of a poor quality tanker fleet. There would be more than enough tank cars for the scheme, with ten TWX and eleven TWF coded tankers to be dehired from oil companies, plus eleven TWF tankers would be freed up from the current Wodonga block train.

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City loading terminal

Oil companies claimed Somerton multi product terminal (phase 2 of pipeline scheme) would cost $30 to 35 million. VR said that a rail only terminal would cost $2.9 only million, with both broad and standard gauges. Two sites were considered for the terminal, Tottenham and Somerton.

Tottenham pros:

  • north of Tottenham Yards
  • supplied with product by an off take from the 14 inch diameter Somerton pipeline.
  • plenty of open space in the area
  • 9000 m3 transit tank
  • 480 m3 slops tank
  • bottom filling connections at 4 points
  • 11 wagons filled in 2 1/4 hours, with 2 man crew
  • provision for 6 tank loading positions

Tottenham cons:

  • issues with multi product
  • need to pay for usage of pipeline all the way to Somerton (as they would be taking up capacity of the pipeline from the 'feed' end)
  • extra cost for rail movements, but more destinations convenient
  • rail staff are already located nearby

The Somerton terminal would have been on the eastern side of the North East Railway, just south of the Melbourne oil terminals (operated Shell / Mobil / Esso / BP) but the area was too small.

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Country terminals

Ten country terminals would be established to be the destinations of block trains, each would then distribute petroleum by short distance pipelines to oil company terminals, or fill up road tankers.

  • Mildura
  • St Arnaud
  • Horsham
  • Ballarat
  • Swan Hill
  • Shepparton
  • Bendigo
  • Wodonga
  • Benalla
  • Traralgon

Costed at $258k each. Each would consist of:

  • 4 pump points
  • 795 m3 receiving tank, which is 25% over the capacity of a block train
  • can empty a train in in 2 hours 5 minutes
  • final delivery in road tankers or 6 inch pipeline to oil company depots

As the rail delivery portion is considered as part of a pipeline, not a delivery, so no excise paid until the country end. With the new block trains and 68-80 kilometres of road haulage all of the state could be serviced.

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Proposed roll out

Plan for roll out of the new scheme:

  • 20 TWF tankers upgraded to roller bearings each year (for 4 years)

Year 1:

  • Tottenham terminal opened
  • Horsham
  • Mildura
  • Wodonga
  • 4.5 block trains / day
  • 450,000 tonnes moved / year by block train
  • Also two NSW terminals (Wagga and Canberra)

Year 2:

  • Swan Hill
  • Shepparton
  • 5.5 block trains / day
  • 550,000 tonnes moved / year by block train

Year 3:

  • Bendigo
  • Ballarat
  • 7.5 block trains / day
  • 750,000 tonnes moved / year by block train

Year 4:

  • Benalla
  • St Arnaud
  • 8.5 block trains / day
  • 850,000 tonnes moved / year by block train

Year 5:

  • Traralgon
  • 9.5 block trains / day
  • 850,000 tonnes moved / year by block train

Capital costs:

  • $2,873,000 on filling terminal
  • $1,200,000 on wagon upgrades
  • $3,300,00 on country terminals ($300,000 each)

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Sources