Careful Making “Swift” Judgments on the Oil Sands

In a recent Switchboard blog post, attorney Anthony Swift of the Natural Resources Defense Council (NRDC), took a tip from OSFC and developed his own point-counterpoint rebuttal of the facts we’ve continuously laid out on Claiming that the pipeline industry feels it requires no due diligence in transporting oil sands crude, Swift argues that the industry has been disingenuous in explaining the level of safety and regulations with which it must comply before carrying a drop of oil.

Making blanket statements is one way to prove a point, but sticking to the facts is quite another.

OSFC revisited Swifts claims, and we’re staying true to the latter:  the fact is that the pipeline industry has an excellent safety record and a history of continuous improvement. With the help of our industry experts, we’ve reexamined these claims below and we’ll tell you again how the Canadian oil sands is a secure and reliable source of energy that has been, and continues to be, safely transported across the U.S.

Fact #1: Crude from the oil sands has been transported by pipeline since 1968

Swift claims that until recently all the crude that came from the oil sands has always been upgraded to synthetic crude prior to transportation through pipelines, and therefore was not really diluted bitumen (dilbit).  The reality is that a variety of crude oils, in various stages of processing, has been moved in pipelines since 1968. He states that in the past 12 years, the transportation of diluted bitumen has increased. The fact we should be focused on is that there is no indication in pipeline incident data collected by the U.S. Department of Transportation’s over that time that pipelines carrying any Canadian crude, dilbit or otherwise, have had significant issues. Quite the opposite – instances of pipeline failure have continually decreased during that time.

Fact # 2: Diluted bitumen is not heated for transportation in pipelines

Bitumen is heated during the extraction process, but once diluted, it is transported at standard temperatures of about 68 degrees Fahrenheit.  Any extra heat can be attributed to friction, which occurs with all fluids in all pipelines. The TransCanada graph cited by the NRDC indicates maximum pipeline temperatures of 138 degrees Fahrenheit, which is within the regulated limits. Mr. Swift’s assertion that these temperatures will increase the corrosivity of the diluted bitumen, thereby threatening the integrity of the pipeline, is false.  In fact, a report by ASTM International released earlier this week determined that, “…bitumen-derived crude oil is no more corrosive in transmission pipelines than other crudes,” and that the corrosivity of any crude oil does not increase until it reaches temperatures of 390 degrees Fahrenheit.  The temperature of crude oils being transported by pipeline is regularly verified to ensure that the temperatures stay within regulatory limits.

Mr. Swift also cites the 1993 California State Fire Marshall report on pipeline integrity as an indication that higher temperature pipelines are more likely to experience external corrosion, but external corrosion is due to environmental conditions on the outside of the pipe, not from the type of crude oil it transports. Swift also ignores  a key conclusion of the report that pipelines using old coating technology had corrosion rates “nearly as high as bare pipe,” and the authors recommended implementing “external corrosion coating and cathodic protection systems…for pipelines operating at high temperatures.”  The U.S. Department of Transportation states that modern steel pipelines undergo “rigorous fabrication and installation standards” that include coatings and cathodic protection to prevent external corrosion, which has resulted in drastic reductions in pipeline corrosion incidents in recent years.

Fact #3: The U.S. currently refines heavy crude oil blends from Mexico and Venezuela which have similar properties as diluted bitumen.

Mr. Swift agrees that the properties of these crude oils are similar to dilbit but he attempts to make the transportation of them appear new and dangerous. He makes the false assumption that imported crudes are always refined at coastal refineries and are never transported by pipeline. The Capline system, which runs from Louisiana to the Midwest, has transported imported heavy crudes to the Midwest refineries for decades. Those refineries have been processing heavy crudes from Canada for decades.  And heavy crudes produced in California that are also similar to diluted bitumen have been transported to California refineries via pipelines for decades as well.

Fact #4: Stringent regulations are in place to ensure the safety of pipelines carrying diluted bitumen.

Current regulations are developed to ensure pipeline integrity in order to keep the liquids they transport contained and separate from the environment and communities through which they run.  Mr. Swift cites PHMA Administrator Cynthia Quarterman’s testimony to Congress in which she states that regulators did not “have diluted bitumen in mind” when creating pipeline safety standards as “proof” that pipelines are not equipped to safely transport dilbit. That’s a faulty leap in logic.

Regulators did intend to regulate the safety of pipelines carrying a variety of specific commodities, including crudes of all types (light and heavy, sweet and sour). The National Academies of Sciences is currently conducting a study due for release in 2013 to determine if diluted bitumen poses any unique threat to liquids pipelines, but in the interim, three other reports have concluded that it does not.  The Battelle Memorial Institute found that dilbit, “does not behave any differently than typical crudes.” The ASTM Institute concluded that bitumen’s characteristics “are not unique,” and Alberta Innovates stated that dilbit is, “comparable to conventional crude oils.”

Mr. Swift also insinuates that PHMSA is a weak regulator but the facts prove otherwise. In the past 10 years, PHMSA had increased the number of investigations it initiated by over 50 percent and in 2011 alone it took 388 civil penalty actions, collecting more than 2 million dollars in penalties. With the new Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, regulations are even tougher and PHMSA has an “increased ability to enforce them.”  Civic penalties for pipeline safety violations have doubled and powers previously removed from PHMSA have now been returned.

Fact #5: FERC controls the sediment levels in pipelines in their tariff agreements.

Mr. Swift asserts that the Federal Energy Regulation Commission (FERC) does not have oil pipeline safety authority.  In fact, FERC approved tariffs include quality specifications for commodities introduced into pipelines. FERC approves and enforces these tariffs and pipeline operators cannot accept commodities that don’t meet the specified criteria.  One of those specifications limits combined water and sediment at about 0.5 percent for all crude oils, including dilbit. This means that commodities entered into transportation do not have significant amounts of sand or other sediments, as NRDC would have the public believe. Further, pipelines are expensive assets, leaving companies with a vested interest in protecting their investment by ensuring the commodities they transport meet regulatory standards and will not damage the pipeline itself.

Fact #6: Analysis of pipeline failure statistics by Albertan regulators at the ERCB “hasn’t detected any significant differences between pipelines handling conventional crude versus pipeline carrying crude bitumen, crude oil or synthetic crude oil.”

Mr. Swift states that this claim is false, suggesting that the Energy Resources Conservation Board (ECRB) does not have, “…any means of detecting differences between pipelines carrying diluted bitumen and conventional crude.”  The Alberta Innovates report on the corrosivity of dilbit studied failure rates of comparable conventional crude pipelines in the United States with those in Alberta, many of which carry a high percentage of dilbit, and found no significant differences in failure rates.

Fact #7: Alberta Innovates found that Canadian oil sands had properties similar to other heavy Canadian crudes.

Mr. Swift restates his earlier claim that although Canadian oil sands are similar to Mexican and Venezuelan heavy crudes, they aren’t transported in the United States pipeline system.  Neither transporting nor processing oil sands is new in the U.S. As previously stated, West Texas Intermediate is not the only crude oil moved by pipeline, and other American pipelines safely transport these other heavy crude oils as they have for decades (We refer you back to Fact #3).

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