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POLITICS: PennAve

With Keystone XL looming, oil train crash ignites rail-versus-pipeline debate

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Transportation,PennAve,Keystone XL,Energy and Environment,Zack Colman,Oil

Capitol Hill debate on the Keystone XL oil sands pipeline will heat up when lawmakers return to Washington after a train carrying crude oil crashed and went ablaze in North Dakota this week.

The Casselton, N.D., accident forced about 2,000 residents to leave their homes but left no casualties, unlike a July incident in Quebec that killed 47 people. But those incidents illustrate ongoing discussions about whether shipping new bounties of North American crude is safer via rail or pipeline.

The Department of Transportation's Pipelines and Hazardous Materials Safety Administration issued a warning Thursday that the crude from the Bakken shale formation in North Dakota and Montana "may be more flammable than traditional heavy crude oil." The agency said it would "expand the scope" of ongoing efforts to properly classify crude coming from region.

The incident comes as President Obama nears a decision on Keystone, the controversial pipeline that would bring a thick, carbon-intensive crude called oil sands from Alberta to the Gulf Coast. The State Department is currently finishing up a final environmental review -- builder TransCanada Corp. needs a cross-border permit to finish the northern leg -- which will be used to determine whether the pipeline is considered in the national interest.

Lawmakers will look to put fresh pressure on the administration to approve the pipeline in light of the Casselton crash.

“I think it will help create momentum for more pipelines and faster transition to the new rail cars,” said Sen. John Hoeven, R-N.D., adding that trucks and rail will still be needed even with Keystone.

The House Energy and Commerce Committee also plans to dive into the pipeline fray. One of its central energy themes in the new year is expanding and expediting pipeline construction, which has largely failed to keep pace with the rapid United States shale gas and oil boom.

"We are continuing to monitor the situation as federal and local investigations continue. Our focus on energy infrastructure will continue in 2014 and we remain committed to ensuring every American has access to affordable energy and our nation's growing supplies are transported safely and efficiently," said Charlotte Baker, a majority spokeswoman for the committee.

Much of the attention on Keystone has focused on its climate change impact — green groups say it would amount to devastation; industry groups, union organizations and lawmakers that support the pipeline say that's not true, contending oil sands would come to market with or without Keystone.

Originally, though, environmental groups attacked the nation's pipeline infrastructure and regulatory culture when pushing against Keystone. They pointed to the 2010 Enbridge pipeline spill in Michigan's Kalamazoo River, which was transporting a dense form of crude and is still being cleaned up, as a warning sign.

All told, "significant" onshore pipeline incidents involving hazardous liquids -- which covers crude oil -- accounted for $134 million in property damage in 2012, including three deaths, according to the Pipeline and Hazardous Materials Safety Administration. The highest total was in 2010, the year of the Enbridge spill, which amounted to $1.1 billion worth of property damage.

Pipelines also tend to spill more often than shipments via rail — nearly three times as many gallons per million ton-miles for the past decade, according to the Association of American Railroads, which cited Department of Transportation statistics.

But the loss of life from pipeline spills pales in comparison to those via rail, even though 99.9977 percent of rail hazardous material shipments reach their final destination without incident, according to the Association of American Railroads.

Federal regulators in the U.S. are looking to toughen regulations to improve rail safety on the Department of Transportation 111 model tankers that carry crude. Some early recommendations include, "enhanced tank head and shell puncture resistance systems for 111 tank cars, as well as top fittings protection that exceed current requirements," the Pipeline and Hazardous Materials Safety Administration said.

The Casselton accident combined with the July incident in Lac-Mégantic, Quebec, is "likely to add momentum to a U.S. federal regulatory process," said Kevin Book, managing director of consulting group ClearView Energy Partners.

"We think it safe to suggest that new rules are coming and the only questions are how strict and how soon?" he said in an email.

Hoeven, who has pushed for action on that front, agreed.

"I think from a broader perspective we're going to learn from these incidents. But I think everybody recognizes that we need to move as aggressively as we can to these newer, stronger tanker cars and make sure we have the right chemicals and compounds in the right kind of cars," he said.

It's an issue that will continue to draw the attention of federal regulators. U.S. crude shipments by rail have jumped to an estimated 400,000 carloads in 2013, up from 9,500 in 2008.

Rail shipment has become so ingrained in the oil business model that even Harold Hamm, the billionaire chief of Continental Resources, one of the first petroleum firms to enter the Bakken and Mitt Romney's energy adviser for his 2012 campaign, has called Keystone unnecessary.

In a December interview with Reuters, Hamm commented Keystone is not needed "for our Bakken (crude oil). And is it needed for the industry? I don’t think so … not in the U.S.”

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Zack Colman

Staff Writer
The Washington Examiner