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More Pipelines in the Pipeline

Thursday, December 5, 2013

Environmentalists continue to resist pipelines such as the Keystone XL, even though pipelines result in fewer spillage incidents and personal injuries, and in a substantial cost advantage, when compared to road and rail.

The Obama administration’s ongoing delay in approving the Keystone XL pipeline – which is intended to transport oil from Canada to U.S. refiners on the Gulf of Mexico – is ostensibly based, in part, on concerns over the safety and reliability of oil pipelines, as well as concerns over climate change. At first, concerns (overblown) focused on the protection of the Ogallala aquifer, but once the pipeline was re-routed to minimize such risks, climate concerns came to the fore. Discussing the pipeline in the summer of 2013, President Obama focused on carbon, insisting that the pipeline would not be approved if it will “significantly contribute to carbon in our atmosphere.”

This is a poor reason for denying the pipeline: Keystone or no Keystone, the oil from Canada’s oil sands will find a path to market – even the U.S. State Department analysis of Keystone recognized that reality. The atmospheric impact will be the same either way.

But there’s another reality that President Obama seems unaware of: the decision to stymie pipeline development simply signals to the market that Alberta’s oil must travel by other means, and until additional pipeline construction advances in Canada to the east and west coasts, the two most readily available means are roadways and rail. But each of these modes comes with its own set of benefits and risks.

The decision to stymie pipeline development simply signals to the market that Alberta’s oil must travel by other means.

The Association of American Railroads reports that between 2008 and 2011, the total share of oil and gas rail shipments grew dramatically, from 2 percent of all carloads to 11 percent. Crude oil shipments via rail have continued to expand at an accelerating rate; U.S. Class I railroads delivered 234,000 carloads of crude in 2012, compared to just 66,000 in 2011 and 9,500 in 2008. RBC Capital Markets estimates that currently 115,000 barrels of oil per day are shipped by rail to the United States from Canada, with a trend toward 300,000 barrels per day by 2015. For perspective, the Keystone XL pipeline, if approved, would carry 830,000 barrels per day.

If safety and environmental damages in the transportation of oil and gas were proportionate to the volume of shipments, one would expect the vast majority of spill incidents to occur on pipelines. But a review of statistics published by the U.S. Department of Transportation clearly shows that in addition to enjoying a substantial cost advantage, pipelines result in fewer spillage incidents and personal injuries than road and rail.

The superior safety and environmental performance of pipelines is hardly surprising: the genius of this technology is that the “shipping container” is static while the commodity it is transporting moves. Moreover, that container is typically buried under about four feet of earth and generally routed away from large population centers. By contrast, in every other means of oil transportation, both the container and the commodity are moving over the surface, often in close proximity to other large containers moving in the opposite direction, and the empty container has then to return to its point of origin to load another consignment. Highway and rail systems are also designed to pass through or near major population centers.

Comparing incident rates (spills or leaks tracked by government regulators) from 2005-2009 for road, rail, and pipelines (carrying crude oil, petroleum products, and natural gas), road had the highest rate of spillage incidents, with 19.95 per billion ton miles.1 This was followed by rail, with 2.08 per billion ton miles. Natural gas transmission came next, with 0.89 per billion ton miles.2 Oil pipelines had only 0.58 incidents per billion ton miles.

In addition to enjoying a substantial cost advantage, pipelines result in fewer spillage incidents and personal injuries than road and rail.

Naturally, not all incidents are alike: pipelines do release more oil per spill than rail. From 2005-2009, for example, pipelines transporting hazardous liquids (including hydrocarbons) released about 11,000 gallons into the environment, roadway incidents released nearly 14,000 gallons, and rail transport of oil and petroleum products was relatively low, releasing just 3,504 gallons.3 But, to add context, of course one has to consider volumes moved: for that same time period, only 35 billion ton miles of oil and petroleum products traveled by road each year, and only 24 billion ton miles traveled by rail. A whopping 584 ton miles of hazardous liquids (including petroleum products) moved by pipeline. And the pipeline spill figure decreases significantly when product-recovery rate for pipelines is considered: recovery rates for pipeline spills average 40 percent, but several spills from 1992-2011 featured recovery rates as high as 67 percent.

A similar safety pattern emerges when comparing fatalities for the different transport modes. Comparing again road, rail, pipelines, and natural gas transmission, natural gas transmission lines had the lowest average fatality rate for operator personnel and the general public between 2005 and 2009, with a rate of one person killed per year. This was followed by oil transport by pipeline and rail, each with an average of 2.4 people killed per year.4

The highest fatality rate is for transport via road, with an average of 10.2 people killed each year in the United States. This is not because members of the public are killed due to road accidents with oil trucks. An average of 8.8 operators died per year, compared to 1.4 members of the public. Rates of injury requiring hospitalization and of injury in general show a similar pattern.

Rising oil and natural gas production in both the United States and Canada is outpacing the transportation capacity of our pipeline infrastructure. Reflexive opposition to pipeline transport by environmental and other interest groups is sending oil to market by modes of transport, such as rail and road, that pose higher risks of spills and personal injuries. These trade-offs need to be considered as debates over pipeline development continue.

Kenneth P. Green is senior director of natural resource studies at the Fraser Institute.

This article is adapted from a study, “Intermodal safety in the transport of oil,” published by the Fraser Institute.

The author wishes to thank Diana Furchtgott-Roth, his coauthor on the original study and a senior fellow at the Manhattan Institute, as well as Alana Wilson and Frazier Fathers of the Fraser Institute, for their assistance preparing this article.

FURTHER READING: Kenneth P. Green also writes “The ‘Science’ of Global Warming, Part 1” and “Depending on Energy, Not Energy Independent,” as well as “Presidential Power: Obama vs. Romney on Energy” with Elizabeth DeMeo. Vaclav Smil discusses “Obama's Indefensible Pipeline Punt,” while Representative Fred Upton suggests “Rethinking America’s Energy Policy.” Benjamin Zycher contributes “Opposition to Keystone XL: Global Warming As the All-Purpose Excuse.” Mark J. Perry writes “Keystone XL Pipeline Is Simply an Extension of an Already Existing Network That Is Working Well and Creating U.S. Jobs” and “Rail Tragedy in Canada Underscores the Reality That Pipelines Like Keystone XL Are the Safest Way to Transport Oil.”

Footnotes:

1. Incident and release volume data for road and railway were extracted from the Office of Hazardous Materials Safety Incident Reports Database Search. A ton mile is the transport of one ton of material (oil or petroleum products in this case) over the distance of one mile. It is a metric that would allow comparison of the movement of different types of freight on an apples-to-apples basis.

2. Ton-Mileage values are based on Tables 1-50 (for Natural Gas Pipeline) and 1-61 (all others) of the Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics National Transportation Statistics.

3. Ton-Mileage values are based on Tables 1-50 (for Natural Gas Pipeline) and 1-61 (all others) of the Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics National Transportation Statistics.

4. The safety data for pipelines includes all hazardous materials, not only petroleum.

Image by Dianna Ingram / Bergman Group

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