Tuesday, February 4, 2014

Multiple federal agencies have said the Keystone Pipeline poses no environmental risks. It's time for Obama to say yes to jobs and improved economic conditions.

The Verdict On Keystone XL Is In 
By Diana Furchtgott-Roth

February 4, 2014
With the State Department's announcement that the Keystone XL pipeline poses no environmental risks, the verdict is now in, and the pipeline should be approved.

The Keystone XL pipeline would allow oil to be transported from Alberta, Canada, to U.S. refiners near the Gulf of Mexico. President Obama's decision to delay approval for the construction of TransCanada's proposed pipeline was based, in part, on concerns over the safety and reliability of oil pipelines. Mr. Obama had called for a full assessment of "the pipeline's impact, especially the health and safety of the American people."

Coincidentally, the State Department's report follows recommendations issued by the National Transportation Safety Board last month regarding crude oil transportation over railroads. The Board stated that rail transport of oil needed to be made safer. In response to the recent derailment in Quebec, Canada, the NTSB addressed the need for "hazardous materials route analysis and selection, oil spill prevention and response plans, and identification and classification of hazardous materials in railroad freight transportation."

Current regulations regarding comprehensive response plans for oil spills do not apply to most tank cars. The regulations requiring comprehensive plans, as set out by the Transportation Department in enforcing the Clean Water Act, only apply to shipments exceeding 42,000 gallons. Tank cars carrying less than 42,000 gallons are only required to submit a basic response plan. The 2014 NTSB recommendation states that due to the increase in crude oil transportation and the widespread use of unit trains carrying multiple tank cars, the potential for accidents involving large releases of oil and other hazardous materials is much higher than when the regulation was initially developed.

The pipeline would give the United States a safe and efficient supply of oil from Canada, our friend and trading partner.

Ever since Richard Nixon, presidents have been (irrationally) talking about energy independence. Irrationally, because no country wants to be independent in any product that is cheaper to purchase elsewhere. For the sake of independence, Congress funded expensive wind and solar power that are driving up prices of electricity. Advocates of energy independence should prefer that Canadian oil come to the United States rather than be shipped to China.

In June 2013 the National Academy of Sciences released a study entitled "Effects of Diluted Bitumen on Crude Oil Transmission Pipelines" that was required as part of the Pipeline Safety, Regulatory Certainty and Jobs Creation Act of 2011. The report found no evidence that diluted bitumen, the type of crude oil that would flow through the proposed Keystone XL pipeline, would contribute to pipeline failures or corrosion.

The year 2013 saw a series of rail accidents involving crude oil. For example, in March, trains derailed in Minnesota, spilling 30,000 gallons, in June, it was Calgary's turn and in November, a train carrying 2.7 million gallons derailed in Alabama.

Pipelines are far safer than road and rail, and it would be in the interests of the United States and Canada to create a new generation of pipelines to take oil and gas from newly-discovered sources of production to where it needs to be refined and sold to consumers.

Petroleum production in North America is now nearly 18 million barrels a day, and could climb to 27 million barrels a day by 2020. Whether it is produced in Canada, Alaska, North Dakota, or the Gulf of Mexico, it will be used all over the continent. The question of how to transport oil safely and reliably is not a transitory one linked only to Keystone XL or other pipeline controversies of the day.

Pipelines have been used to transport Canadian natural gas and oil, both across Canada and into the United States, for over a century. Canada's first pipeline began in 1853, with the development of a 16-mile cast-iron pipeline that moved natural gas to Trois-Rivieres, Quebec, for street lights.

The United States has a much larger pipeline network. About 2.6 million miles of interstate pipeline crisscross America, carrying crude oil, petroleum products, and natural gas. In the United States these pipelines are primarily regulated by the Department of Transportation.

As the major alternative means of fuel shipment, transport of crude oil by rail has been increasing as limitations on pipeline capacity both in Canada and the United States have become manifest.

RBC Capital Markets estimates that 115,000 barrels of oil per day were shipped by rail to the United States in 2013, 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.

Future growth of oil by rail depends heavily on whether or not large pipelines are built.

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 damages to occur on pipelines. But a review of statistics published by Canada's National Energy Board as well as 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.

This 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, with about three feet of earth over the top of it. 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.

Rising oil and natural gas production in both the United States and Canada is outpacing the transportation capacity of our pipeline infrastructure. Now that the State Department has declared Keystone XL safe, it is time for President Obama to place a call to Canadian Prime Minister Stephen Harper.

Diana Furchtgott-Roth is a senior fellow at the Manhattan Institute.

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