Oil and gas is moving around our country, around pristine wilderness, around our cities and towns. Oil is going to keep moving, will continue to increase in our new energy boom, so the answer is not simply to stop it. The answer is to determine how to move it safely.
While many have called for shutdown of pipelines and a moratorium on new pipeline construction, the correct reaction may just be the opposite. We really should be replacing old pipelines and building new ones, reducing the stress on each line. Particularly good is to supersize them – build bigger pipelines over old ones.
The problem is that oil production is increasing but it can’t get to the refineries along our Gulf Coast. Since there are only four ways to move oil and gas around the country – pipeline, truck, rail and boat – you have to pick one or another of these. If you don’t build new pipelines, then more will probably move by rail, especially from Canada.
In the U.S., 100% of our natural gas is shipped by pipeline. 70% of crude oil and petroleum products are shipped by pipeline. 23% of oil shipments are on tankers and barges over water. Trucking only accounts for 4% of shipments, and rail for a mere 3%. In Canada, it’s even more lopsided. Almost all (97%) of natural gas and petroleum products are transported by pipelines (Canadian Energy Pipeline Association).
But as pipeline projects fail, Canada is investing in more rail transport. Canada’s energy regulator announced in June that 200,000 barrels per day is being exported by rail, an all-time high, and estimates that the amount will double in less than two years. The government is trying to be pro-active, fast-tracking the phasing out of older rail cars that are prone to accidents with crude oil and flammable liquids.
So which mode is safer? For oil, the short answer is: truck worse than train worse than pipeline worse than boat (Oilprice.com). But that’s only for human death and property destruction. For the amount of oil spilled per billion-ton-miles, it’s truck worse than pipeline worse than rail worse than boat (Congressional Research Service). Even more different is for environmental impact (dominated by impact to aquatic habitat), where it’s boat worse than pipeline worse than truck worse than rail.
It depends upon what your definition is for worse. Is it deaths and destruction? Is it amount of oil released? Is it land area or water volume contaminated? Is it habitat destroyed? Is it CO2 emitted?
Amid a North American energy boom and a lack of pipeline capacity, crude oil shipping on rail has been steadily increasing. The trains are getting bigger and towing more and more tanker cars. From 1975 to 2012, trains were shorter and spills were rare and small, with about half of those years having no spills above a few gallons. Then came 2013, in which more crude oil was spilled in U.S. rail incidents than was spilled in the previous thirty-seven years.
Crude is a nasty material, very destructive when it spills into the environment, and very toxic when it contacts humans or animals. It’s not even useful for energy, or anything else, until it’s chemically processed, or refined, into suitable products like naphtha, gasoline, heating oil, kerosene, asphaltics, mineral spirits, natural gas liquids, and a host of others.
Every crude oil has different properties, such as sulfur content (sweet to sour) or density (light to heavy), and requires a specific chemical processing facility to handle it. Different crudes produce different amounts and types of products, sometimes leading to a glut in one or more of them, like too much natural gas liquids that drops their price dramatically, or not enough heating oil that raises their price.
As an example, the second largest refinery in the United States, Marathon Oil’s GaryVille Louisiana facility, can handle over 520,000 barrels a day (bpd) of heavy sour crude from places like Mexico and Canada but can’t handle sweet domestic crude from New Mexico.
Thus the reason for the Keystone Pipeline or increased rail transport – to get heavy tar sand crude to refineries in the American Midwest and along the Gulf Coast than can handle it.
The last entirely new petroleum refinery in the United States opened in 1976. Since then, the number of refineries has steadily declined while refining capacity has concentrated in ever-larger facilities. 25% of U.S. capacity is found in only eleven refineries. Recently, Shell’s Baytown refinery in Texas, the largest in the nation, was expanded to 600,000 bpd. Most of the big refineries can handle heavy crude, but many smaller refineries can process only light to intermediate crude oil, most of which originates within the U.S.
Thirty-three states have refineries, and most refineries can handle tens-of-thousands to hundreds-of-thousands of barrels per day, but the largest capacity sits around the Gulf Coast and in California where the oil boom in America began. However, in the 1990s after production of sweet domestic crude had significantly declined from mid-century highs, the big companies like Exxon, Shell, CITCO and Valero spent billions upon billions of dollars to retool their refineries to handle foreign heavy crudes like Alberta tar sands.
The number of refineries is decreasing, and their capacity is increasing, concentrating them in fewer places, so crude has to be moved longer distances. Each of the four ways to move it over long distances has its unique problems and none is without harm.
The question remains: which is safest and which should we invest in most? Take two spills for comparison.
The Quebec oil train wreck killed 47 people and spilled 1.5 million gallons of crude onto land. The Enbridge pipeline rupture spilled over a million gallons of similar crude into the Kalamazoo River but did not kill anyone.
Contamination of water is definitely worse for the environment than land and spreads quickly over more area and impacts more species and habitat, but killing people makes a big difference to the public. I don’t want to put a price tag on human life, but the Government has, and it’s about $8 million a person.
So the Quebec train derailment cost over $400 million in human life, plus another $150 million for clean-up and repairing the town. The Enbridge pipeline cost no human lives but will cost about a billion dollars to clean-up, and, like the Exxon Valdez, will never really succeed.
Note: using this value of $8 million a person, we 300 million Americans are worth $2.4 quadrillion, hmm…maybe not a good number. If we use our net value for America as a whole, about $75 trillion, divide by 300 million people, then the average value of a human life in America is only $250,000, closer to what the insurance industry uses. So the Quebec train derailment cost less than $12 million in human life. Thus, the danger of trying to gauge the value of a human life.
These are not easy questions and one’s vested interest has a great deal of sway in the answer. You really do need to pick your poison.
Like always, it will probably come down to money. And it won’t be about jobs, regardless of which end of the spectrum you believe, because there just isn’t enough jobs to matter compared to the value of the oil itself and the refinery capacity and locations. It’s simply cheaper and quicker to transport by pipeline than by rail or by truck. The difference in cost is about $50 billion a year for shipping via the Keystone versus rail, totally eclipsing any economic effect of jobs in either direction.
A rail tank car carries about 30,000 gallons (÷ 42 gallons/barrel = about 700 barrels). A train of 100 cars carries about 3 million gallons (70,000 barrels) and takes over 3 days to travel from Alberta to the Gulf Coast, about a million gallons per day. The Keystone will carry about 35 million gallons per day (830,000 barrels). This puts pressure on rail transport to get bigger and bigger, and include more cars per train, the very reason that crude oil train wrecks have dramatically increased lately.
The Congressional Research Service estimates that transporting crude oil by pipeline is cheaper than rail, about $5/barrel versus $10 to $15/barrel. But rail is more flexible and has 140,000 miles of track in the United States compared to 57,000 miles of crude oil pipelines. Building rail terminals to handle loading and unloading is a lot cheaper, and less of a hassle, than building and permitting pipelines.
It isn’t acceptable to just say we shouldn’t be moving oil, because we will for the rest of this century, no matter what happens. So, keeping in mind the difference between death/damage to humans and damage to the environment, which would you choose?