Pipelines Prove Safer Than Road Or Rail

December 2013, Vol. 240 No. 12

Diana Furchtgott-Roth, Manhattan Institute, and Kenneth P. Green, Fraser Institute

The Keystone XL is intended to transport oil from Canada to U.S. refiners on the Gulf of Mexico. The administration’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. In announcing his decision, President Barack Obama called for a full assessment of “the pipeline’s impact, especially the health and safety of the American people.”

Additional proposed pipelines in Canada are also being challenged on the grounds of environmental safety. Most recently, the government of British Columbia rejected the proposed Northern Gateway pipeline on environmental grounds. Proposals to double the existing Trans Mountain pipeline (which transports oil from Alberta west to British Columbia) and to reverse the flow of Enbridge’s Line 9 pipeline (which runs between Sarnia and West Northover, Ontario) also face environmental challenges.

At the end of June, President Obama put forward another requirement with regard to allowing the Keystone XL to advance. In a speech on climate policy given at Georgetown University on June 25, 2013, Obama said, “Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward.”

The president did not discuss whether U.S. interests might be better served by purchasing oil from our friend Canada rather than from Venezuela, whose government is hostile to the United States and is funding left-wing dictatorships in Latin America.

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.
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. Petroleum production in North America is nearly 18 MMbpd, and could climb to 27 MMbpd by 2020. This oil will have to travel to where it is needed. Whether it is produced in Canada, Alaska, North Dakota or the Gulf of Mexico, it will be used all over the continent.

Pipelines are not new. They 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 25-km cast-iron pipeline that moved natural gas to Trois-Rivieres, Quebec, for street lights. Canada is home to an estimated 825,000-km of transmission, gathering and distribution pipelines. The National Energy Board (NEB), which has regulated interprovincial and international pipelines since 1959, is responsible for 71,000-km of oil and natural gas pipelines.

The United States has a much larger pipeline network – 4.2 million-km 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 (DOT).
Based on the experience of both Canada and the United States, empirical evidence shows that pipeline transport of oil has fewer injuries and fatalities than transportation by road and rail.

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.

In Canada, the Canadian Association of Pipeline Producers reports that transportation of crude oil production by rail in Canada is still quite modest, at 20,000 bpd in 2011.

RBC Capital Markets estimates that currently 115,000 bopd are shipped by rail to the United States, with a trend toward 300,000 bpd by 2015. RBC observes there is no official tracking data available for crude oil shipments by rail. For perspective, the Keystone XL pipeline, if approved, would carry 830,000 bpd.

The Association of American Railroads reports that between 2008 and 2011 the total share of oil and gas rail shipments grew dramatically, from 2% of all carloads to 11%. In 2011 alone, rail capacity in the Bakken area—stretching from southern Alberta to the northern U.S. Great Plains—tripled to almost 300,000 bpd. 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.
Future growth of oil by rail depends heavily on whether large pipelines are built.

Pipelines are the primary mode of transportation for crude oil, petroleum products, and natural gas in both Canada and the United States. In Canada, 97% of natural gas and petroleum products are transported via pipelines, according to the Canadian Energy Pipeline Association. In the U.S., about 70% of crude oil and petroleum products are shipped by pipeline on a ton-mile basis. U.S. tanker and barge traffic accounts for 23% of oil shipments. Trucking accounts for 4% of shipments, and rail for the remaining 3%.

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 NEB as well as the DOT clearly shows that, in addition to enjoying a substantial cost advantage, pipelines result in fewer spillage incidents and personal injuries than road and rail. North Americans are more likely to be killed by a lightning strike than in a pipeline accident.

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 a meter 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.

Data on pipeline safety in Canada are available from the NEB. In Canada, any pipeline failure (rupture or leak) that results in a release of more than 1.5 cubic meters of liquid, or that results in a significant effect on the environment, must be reported to the NEB. Table 1 shows the reported liquid pipeline releases from 2008 to 2012. As shown, while spills do occur periodically, they are infrequent, and the majority release very small quantities of oil to the environment. [Source: National Energy Board (http://www.neb-one.gc.ca/clf-nsi/rsftyndthnvrnmnt/sfty/pplnncdntgrprtng/pplnncdntshydrcrbnsplls/pplnncdntshydrcrbnsplls-eng.html)].

Table 2 compares incident rates for road, rail, oil and petroleum products pipelines, and natural gas transmission. Road had the highest rate of incidents, with 19.95 per billion ton miles. This was followed by rail, with 2.08 per billion ton miles. Natural gas transmission came next, with 0.89 per billion ton miles. Oil pipelines were the safest, with 0.58 serious incidents per billion ton miles.

Table 2 – Comparative statistics for petroleum incident rates: Onshore transmission pipelines vs. road and railway (2005-2009)

*Only incidents involving and ton-mileage carrying those products carried by pipeline (petroleum products, liquid natural gas, etc.) are counted for road and railway

Sources: 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, available at http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/index.html, accessed April 2013. Incident and release volume data for Road and Railway were extracted from the Office of Hazardous Materials Safety Incident Reports Database Search at https://hazmatonline.phmsa.dot.gov/IncidentReportsSearch/, accessed April 2013. HL Pipeline release volumes were extracted from the Pipeline and Hazardous Material Safety Administration Hazardous Liquid Accident Data – 2002 to 2009 file available at http://phmsa.dot.gov/portal/site/PHMSA/menuitem.ebdc7a8a7e39f2e55cf2031050248a0c/?vgnextoid=fdd2dfa122a1d110VgnVCM1000009ed07898RCRD&vgnextchannel=3430fb649a2dc110VgnVCM1000009ed07898RCRD&vgnextfmt=print, accessed April 2013.

Table 3 – Comparison of Hazmat fatality statistics, operator personnel and general public for road, rail and pipeline (2005-2009)

Source: Reproduced from U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration, Office of Pipeline Safety, Building Safe Communities and its Application to Local Development Decisions, October, 2010, Table 3, p. 26.

Data in Table 3 include all hazardous materials (Hazmat), not just petroleum products. With respect to pipeline systems, 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 and rail, each with an average of 2.4 people per year.

The highest fatality rate is for transport via road, with an average of 10.2 people killed each year in the U.S. This is not because members of the public are killed due to road accidents with oil trucks. Only 1.4 members of the public, on average, were killed annually, but an average of 8.8 operators died per year.

As shown in Table 4, rates of injury requiring hospitalization and of injury in general show a similar pattern. On average, annual injuries for 2005 through 2009 were lowest for hazardous liquid pipeline, at 4.0 people with injuries requiring hospitalization per year. The rate was higher for rail, at 4.6 of such injuries per year, although for rail this number was heavily biased by the 2005 observation. Road accidents hospitalized 8.8 people per year, and natural gas pipelines hospitalized 45 people each year.

The rates of injury per ton-mile in Table 4 are most pertinent, however. On this measure, oil pipeline outperforms rail and road by a wide margin, causing just 0.00687 injuries requiring hospitalization per billion ton-miles. Rail causes nearly 30 times that many injuries requiring hospitalization on a per-ton-mile basis. Rail is also outperformed by natural gas pipelines on this measure, causing more than 1.4 times as many serious injuries per ton-mile. Road is the worst performer on this measure, averaging one quarter as many serious injuries per billion ton-miles. This is 37 times the oil pipeline rate.

Table 4: Injuries resulting from petroleum incidents:

Some claim that pipelines carrying Canadian oil sands crude, known as diluted bitumen, have more internal corrosion, and are subject to more incidents. However, the DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) data show that oil releases from corrosion are no more common in pipelines carrying Canadian diluted bitumen than in other lines. Oil sands crude has been transported in American pipelines for the past decade.
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—even though more road and rail incidents go unreported. (Reliable data on water borne spills, which fall under the jurisdiction of the Coast Guard, are not readily available.)

Despite their safety, pipelines release more oil per spill than rail—but less than road. As Table 5 shows, typical release volumes on rail, particularly of petroleum products, are relatively low at 3,504 gallons per billion ton-miles. While it outperforms road in terms of product release per ton-mile, pipeline transport of petroleum products still experienced product release of 11,286 gallons per billion ton-miles. This figure does decrease by about one third if the high product-recovery rate for pipelines is considered, however.

Table 5 – Comparative statistics for petroleum product release rates: Onshore transmission pipelines vs. road and railway (2005-2009)

*Only incidents involving and ton-mileage carrying those products carried by pipeline (petroleum products, liquid natural gas, etc.) are counted for road and railway.
**No release volume data are available for gas pipeline in the PHMSA incident database.

Sources: 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, available at http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/index.html, accessed April 2013. Incident and release volume data for road and railway were extracted from the Office of Hazardous Materials Safety Incident Reports Database Search at https://hazmatonline.phmsa.dot.gov/IncidentReportsSearch/, accessed April 2013. HL Pipeline release volumes were extracted from the Pipeline and Hazardous Material Safety Administration Hazardous Liquid Accident Data – 2002 to 2009 file available at http://phmsa.dot.gov/portal/site/PHMSA/menuitem.ebdc7a8a7e39f2e55cf2031050248a0c/?vgnextoid=fdd2dfa122a1d110VgnVCM1000009ed07898RCRD&vgnextchannel=3430fb649a2dc110VgnVCM1000009ed07898RCRD&vgnextfmt=print, accessed April 2013.

Rising oil and natural gas production in both the U.S. and Canada is outpacing the transportation capacity of our pipeline infrastructure. At present, reflexive opposition to pipeline transport by environmental and other interest groups is sending oil to market by modes of transport that pose higher risks of spills and personal injuries, such as rail and road transport. Such risk trade-offs need to be considered when debates over pipeline development erupt, as they have quite visibly since the Keystone XL pipeline erupted into the public eye in the 2012 presidential election.

This article is an excerpt from a policy study published by the Fraser Institute in 2013. The study, “Intermodal safety in the transport of oil can be downloaded at http://www.fraserinstitute.org/research-news/display.aspx?id=20490.

Authors:
Diana Furchtgott-Roth is senior fellow and director of Economics21 at the Manhattan Institute for Policy Research. She has served as chief economist of the U.S. Department of Labor and written five books, most recently, “Regulating to Disaster: How Green Jobs Policies Have Damaged America’s Economy.” www.manhattan-institute.org.

Kenneth P. Green is senior director, Natural Resource Studies at the Fraser Institute, where he has studied environmental, energy, and natural resource policy at think-tanks, including the Reason Foundation in Los Angeles American Enterprise Institute in Washington, DC, and the Fraser Institute, where he ran the Centre for Risk. He holds a doctorate in environmental science and engineering from UCLA. www.fraserinstitute.org.

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