energy transportation

Keystone XL approval errs on side of safety

Pipelines are 2.5 times less likely than rail to experience a release of product when transporting a million barrels of oil.

Trans Mountain pipeline—B.C.’s NDP government should put safety first

Pipelines are 2.5 times safer than rail for oil transportation.

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Safety First: Intermodal Safety for Oil and Gas Transportation

A contentious road lies ahead for the construction of three recently approved oil pipelines (Trans Mountain, Line 3, and Keystone XL). Given continued opposition to oil and gas infrastructure, we have examined the latest data on the safety of oil and gas transport. In general, the transport of oil and gas is quite safe by all modes we examine: pipeline, rail, and tanker, though there are differences between the modes that should be considered when developing infrastructure.

Pipelines suffer few occurrences (accidents and incidents) given the amount of oil and gas that is shipped through them. Overall, between 2004 and 2015, pipelines experienced approximately 0.05 occurrences per million barrels of oil equivalent (Mboe) transported.

When petroleum and natural gas goods are evaluated separately, we find that the transportation of oil results in fewer occurrences than the transport of natural gas. Indeed, transporting petroleum products by pipelines resulted in approximately 0.04 occurrences per Mboe compared to 0.07 for natural gas products. This means that the rate of occurrences for transporting natural gas products was 1.67 times greater than the rate of occurrences for petroleum products.

The focus on the occurrence rate only tells part of the story for pipeline safety. In addition to having low occurrence rates, almost 70 percent of pipeline occurrences result in spills of less than 1 cubic metre (17 percent result in no spill). Only 17 percent of pipeline occurrences take place in the actual line pipe, meaning that the vast majority of spills occur in facilities that often have secondary containment mechanisms and procedures. The results were similar for rail, where the transportation of oil was found to result in fewer accidents per Mboe transported than natural gas. Also similar to the data on pipelines, most rail accidents occurred in facilities rather than in transit.

While both pipeline and rail transportation of oil and gas are quite safe, when comparing the two modes of transportation, pipelines continue to result in fewer accidents and fewer releases of product, when taking into consideration the amount of product moved.

Specifically, based on petroleum product transport data from 2004 to 2015, pipelines were 2.5 times less likely than rail to result in a release of product when transporting a million barrels of oil. This study also evaluated marine tanker safety in light of the additional oil tankers that will result from the expansion of the Trans Mountain pipeline.

Since the mid-1990s there has not been a single major spill from oil tankers or other vessels in Canadian waters. One recent study conducted by the federal government on marine oil spill preparedness estimated that a major spill of over 10,000 tonnes was exceedingly rare and likely to only occur once every 242 years. Likewise, a spill of 100 to 1,000 tonnes is expected to occur once every 69.2 years.

Marine safety has also improved dramatically since the 1970s. For example, when comparing the number of spills in the 1970s to the 2010s (up to 2016) using international data, the number of spills between 7 and 700 tonnes has decreased from 543 to 35 and in this same period the number of large spills (>700 tonnes) has declined from 245 to 12. The amount of oil spilled has also dropped dramatically, falling from three million tonnes in the 1970s to only 39,000 tonnes in the 2010s.

In addition, compared to pipelines and rail, marine tanker transport is found to result in the fewest number of accidents per million barrels of oil transported.

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In the face of expanding production and pipeline bottlenecks, more oil is moving by rail in both Canada and the United States, but transport of oil by rail (or other non-pipeline transportation modes) carries its own set of risks. While pipelines may leak, trains and trucks can crash, hurting individuals. There is no perfectly risk-free way to transport oil, or anything else for that matter.

Rising oil and natural gas production in North America is outpacing the transportation capacity of our pipeline infrastructure. As one of us (Green) discussed in a previous study in this series, The Canadian Oil Transport Conundrum, Canada is poised to dramatically increase production of bitumen from oil sand deposits in Western Canada. In the face of expanding production and pipeline bottlenecks, more oil is moving by rail in both Canada and the United States, but transport of oil by rail (or other non-pipeline transportation modes) carries its own set of risks. While pipelines may leak, trains and trucks can crash, hurting individuals, as we saw in Lac-Mégantic in July 2013, and barges can sink. There is no perfectly risk-free way to transport oil, or anything else for that matter.

Although North America is home to 825,000 kilometres of pipeline in Canada and 4.2 million kilometres in the US, US government authorities still insist on blocking additional pipeline construction.

After reviewing available data on the safety of different oil-transport modes, we conclude that the evidence is clear: transporting oil by pipeline is safe and environmentally friendly. Furthermore, pipeline transportation is safer than transportation by road, rail, or barge, as measured by incidents, injuries, and fatalities.

For North America to realize the massive economic benefits from the development of those oil sands, the transport conundrum must be solved. At present, resistance to pipeline transport is sending oil to market by modes of transport that pose higher risks of spills and personal injuries such as rail and road transport.

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Recent events have elevated the importance of how we transport energy?specifically oil?to high profile status. The long-stalled approval of the Keystone XL pipeline is probably the highest profile political event that has caused oil transport to surge to the fore in energy policy discussions today, but more prosaic economic issues also have played a role. Most importantly, because of limitations in the ability to ship oil to coastal refiners and overseas markets, Canada is forced to sell crude oil into the US market at a considerable discount relative to world oil price markers such as Brent. This is costing Canadians at least $15 billion each year (Beltrame, 2003, Apr. 13). Among other things, this shortfall has been blamed (wrongly, we believe) for problems with the balance sheet of Alberta?s government, bringing the issue to still greater prominence (Milke, 2013). Economic research has shown that eliminating bottlenecks (whether physical or political) can reduce oil price discounting similar to that which Canada currently endures (Bausell Jr. et al., 2001). Aside from price, in a recent Fraser Alert, we also observe that securing additional transport infrastructure is important to Canada?s energy security (Green and Eule, 2013). Most recently, US President Barack Obama has turned up the heat on the discussion, dismissing the importance of the Keystone XL pipeline to the US in terms of job creation, and repeating his requirement that the pipeline may not exacerbate anthropogenic climate change (New York Times, 2013, Jul. 27).

To understand the many challenges Canada faces in fixing its oil-transport problems, we have first to understand the basics of oil transport: how much we produce, where it goes, and how it gets there. Next, we have to consider the different environment, health, and safety considerations attendant on different modes of oil transport. Third, we need to know where the key bottlenecks are in North America?s integrated oil transport networks. We also need to know how Canada might resolve issues pertaining to First Nations? acceptance of needed infrastructure. In this series of essays, the Fraser Institute will explore each of these issues, with the goal of advancing the oil transport discussion in Canada. This first essay is intended to simply provide an overview of the important public policy issues pertaining to transportation of these important energy commodities. Later essays will discuss bottlenecks in the transport system, compare the safety of rail vs. pipeline transport, and discuss Aboriginal affairs that relate to oil and gas transport.

Oil pipeline infrastructure bottlenecks costing Canadian economy billions of dollars

CALGARY, AB—Canada’s economy loses tens of millions of dollars daily because pipeline bottlenecks choke access to more lucrative markets for Western Canadian conventional heavy crude oil and oil sands bitumen, concludes a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

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