Don Howard

Like it or not, the global economy still depends on a large, steady supply of oil, natural gas, and refined petroleum products. That must change if we are to solve the problem of carbon dioxide and methane emissions and associated, global climate change. But the nations of the world have yet to evince either the political will or the technical capability to shift us to a totally green energy economy in the near future. All plausible scenarios still leave us dependent upon fossil fuels for decades to come. That being so, demand for fossil fuels, especially oil and natural gas, will remain strong for the foreseeable future. Which brings us to the question of the Keystone pipeline.

Start with some facts. First, the Keystone pipeline already exists and is moving hundreds of thousands of barrels of oil per day from the oil sands area of Alberta and the Bakken region in North Dakota to refineries, storage facilities, and shipping terminals in Illinois, Nebraska, Oklahoma, and Louisiana. Second, the pipeline carries both heavy shale oil and light crude, along with “dilbit,” which is shale oil diluted by lighter materials that are typical by-products of natural gas production. What generates all the excitement and controversy today is only the completion of phase IV of the pipeline, which would functionally replace the segment of the phase I line from Hardesty, Alberta to Steele City, Nebraska, and make possible also the addition to the pipeline of US-produced crude at a station in Baker, Montana, in the Bakken formation. So, the pipeline is built, and oil has been flowing for over four years. The question now is only whether to replace one segment with another, shorter, higher-capacity line.

There are perfectly reasonable questions about environmental risk in some especially environmentally sensitive areas through which the phase IV pipeline would pass, such as the Sand Hills region of Nebraska, and about impacts on some Native American and First Nations lands. These questions must be addressed in ways satisfactory to all relevant parties.

But many of the pipeline’s opponents object to its construction not only because of such local concerns. They object also on broader environmentalist grounds that boil down to opposition to a fossil fuels energy economy in the first place. That objection, however, misses the point that should be the focus of debate. More or less everyone agrees that a green energy economy is the long-term goal. But oil will be needed for decades to come. Oil will be extracted, shipped, refined, and marketed. The question is not whether we should do that. We have to do that. The question is how to do it in the most environmentally and socially responsible way. Which brings us back to the question of the Keystone pipeline.

There are two main technologies for overland shipping of large volumes of oil: pipelines and rail. So the only real question that should be up for debate concerns which is the safer, more environmentally and socially responsible way to move large volumes of oil from producing fields to refineries and on to markets. And the answer to that question is, indisputably, pipeline transport.

At present, the Bakken region is producing oil at a prodigious rate, about one million barrels per day, far outpacing our capacity to ship it with existing pipelines. The result is that Bakken oil is moving by rail. But US carriers lack the tanker car and engine capacity, as well as bandwidth on the rails, to move the oil. That means that hundreds of thousands of older and poorly designed tank cars (DOT 111 model) have been pressed into service, while engines and track have been diverted from delivering other essential goods, such as grain from the Great Plains, to delivering oil. The economic cost to farmers, food companies, and consumers is huge. We are all paying a hidden tax at the supermarket for our lack of critical oil transport infrastructure. (Federman 2014.)

But that economic cost is minor compared with the huge environmental risks and social impacts of transporting oil by rail in antiquated rolling stock over rail lines pushed well beyond designed capacity. Nor are the risks and impacts merely theoretical.

The single largest, transportation related oil spill on land in the US and Canada over the past ten years was not the Enbridge pipeline spill in Michigan in July 2010 or the Lake Buffalo spill in Alberta in April of 2011. No it was this:

Lac_megantic_burning

Lac-Mégantic, Quebec oil train disaster. July 6, 2013.

July 6, 2013 in Lac-Mégantic, Quebec. A 74-car trainload of Bakken crude exploded in the center of town. Nearly 5,000 metric tons of oil were spilled, at least forty-two people were killed, and thirty buildings were destroyed. This is the price we pay for not being able to ship that oil by pipeline.

And there is more. On November 30, 2013, a train carrying 2.7 million gallons of Bakken crude derailed and exploded outside of Aliceville, Alabama. On December 30, 2013, an oil train collided with another train outside of Casselton, North Dakota, spilling more than 400,000 gallons of oil.

Then on April 30 of this year, an oil train derailed and exploded in downtown Lynchburg, Virginia, spilling perhaps as much as 30,000 gallons of oil, some of it into the James River:

Lyncburg, Virginia oil train wreck. April 30, 2014.

Lyncburg, Virginia oil train wreck. April 30, 2014.

Fortunately no one was killed, and the damage was much less extensive than in the Lac-Mégantic derailment.

These are only the most serious of numerous recent oil train accidents. According to one estimate, in 2013 alone, oil train accidents led to the spilling of more than 1.15 million gallons of oil just in the United States. The spillage from pipeline accidents pales in comparison.

Two additional factors increase the risk from rail transport. The first concerns specifically the Bakken crude that constitutes the bulk of what is now being shipped by rail. It is that some are convinced that Bakken crude is an uncommonly volatile mix of oil and lighter, hence more explosive and combustible components like butane and propane. Some are calling for pre-processing to remove those components before shipping. But this would be less of a problem with pipeline shipment. (Dawson and Gold 2014.)

The other factor increasing the risk from rail transport is that rail lines tend to pass right through the hearts of densely populated urban areas, whereas oil pipelines are deliberately constructed so as to avoid urban areas to the greatest extent possible. For example, Norfolk-Southern alone ships between 13 and 24 million gallons of North Dakota oil through the center of my home town, South Bend, Indiana, every week. That rail line passes two blocks away from my son’s high school. (Widener 2014.) And, yes, there is also the threat of terrorist attacks, a really worrisome prospect in city centers.

The point is simply this. We have to move oil from oil fields to refineries and distribution centers. Pipelines break, but our recent experience has shown that it is far more risky to move the oil by rail, which is the only alternative. And those risks extend not just to environmental consequences but to human suffering and economic loss.

Of course pipelines also fail, and when they do, the consequences can be quite serious. But it is instructive to examine some of the recent pipeline spills, such as the mentioned accidents in Alberta and Michigan. In most such cases, the problems go back to aging pipeline infrastructure combined with poor maintenance and monitoring. But the lesson from those episodes is not to abandon pipelines for rail transport. It is to replace aging pipelines with new ones, which is exactly what Enbridge did after the Michigan spill. (Enbridge 2014.)

The recent decline in oil prices could change the equation, squeezing the profit margin on crude from Alberta tar sands and the Bakken formation. The break-even point for Bakken crude is now estimated to be around $73/barrel. And some of the tar sands producers, especially those smaller firms extracting harder-to-produce oil, are already in trouble. But oil would have to fall well below $70/barrel and stay there for some time before any significant effect on production will be seen, and, as oil prices fall, energy from renewable sources like wind and solar will become less competitive, thus probably increasing demand for fossil fuels. Moreover, other producer nations, like Saudia Arabia, are far more heavily affected by oil price declines, so if there are to be production cutbacks, those are far more likely to occur with other sources of oil. It is, thus, hard to imagine economic circumstances that would lead to a halt or a significant decline in production from the sources served by the Keystone pipeline. (Randall 2014.)

So let’s summarize the argument. Oil will be an essential part of the global energy economy for decades to come. It will be extracted and shipped. Overland shipment is possible only by pipeline or rail. Rail transport of oil is far more risky from both an environmental and social point of view. If, therefore, you are an environmentalist who also cares about human well being, you will support the Keystone pipeline. It – and other such pipeline projects – are the only environmentally and socially responsible choice.

References:

Chester Dawson and Arthur Gold. “Accuracy of Bakken Volatility Tests Face More Challenges.” Wall Street Journal. November 12, 2014.

Enbridge. “Line 6B Phase 2 Replacement Project.” 2014.

Adam Federman. “‘The infrastructure isn’t there’: Why Shipping Bakken Crude Oil by Rail Is a Disaster in the Making.” Salon. June 29, 2014.

Tom Randall. “Break-Even Points for U.S. Shale Oil.” Bloomberg. October 17, 2014.

Adam Widener. “15 Finds Out: Through Your Backyard.” Wane.com. October 30, 2014.