Christopher E. Smith
Managing Editor-Technology
The US Government Accountability Office Sept. 22 called on the Department of Transportation to consider making new oil and gas transportation rules as production outpaces both pipeline construction and regulations. GAO's call focused on both rail and pipeline, the 300,000 b/d gap between North Dakota oil production and pipeline capacity it cites placing greater pressure on US rail systems.
Overall, GAO determined DOT had "not kept pace with the changing oil and gas transportation environment," further finding that "without timely action to address safety risks posed by increased transport of oil and gas by pipeline and rail, additional accidents that could have been prevented or mitigated may endanger the public and call into question the readiness of transportation networks in the new oil and gas environment."
GAO also focused explicitly on the larger-diameter, higher-pressure gathering pipelines built in the past few years in response to increased shale production. If located in rural areas, these pipelines might lay outside current DOT jurisdiction for matters such as emergency response despite the heightened potential danger posed by their scale. This hasn't proven a problem historically, since they were too small to pose any risk to life or property in their remote settings.
DOT in 2011 began regulatory proceedings to address the safety risks of gathering pipelines, but has yet to propose new regulation. Most states also do not currently regulate gathering pipelines in rural areas.
Rail
Crude railcar traffic increased by 24 times between 2008 and 2012, according to GAO data. DOT has safety alerts in place regarding testing and packaging of crude oil, but industry stakeholders have described DOT's guidance as vague and called for clarity regarding the type and frequency of testing needed.
DOT earlier this year proposed regulations requiring that trains with 20 or more tank cars carrying crude oil, ethanol, or other flammable liquids be classified as high-hazardous flammable trains (HHFT) and be subject to new lower speed limits and routing risk assessments, among other changes (OGJ Online, July 23, 2014). According to the GAO report, however, unit trains are not covered under DOT's emergency response planning requirements for transporting crude oil by rail because the requirements only apply to individual tank cars and not unit trains.
Coming together
The industry itself is increasingly focused on regulation. Last week's biannual International Pipeline Conference in Calgary had an entire track dedicated to standards and regulations. Williams Cos. Inc. Chief Executive Officer Alan Armstrong delivered a luncheon address at the conference about the need for the industry to be aware of the additional scrutiny, regulatory efforts, and activism lined up against it. Armstrong also emphasized the need for the pipeline industry to improve its own safety and environmental practices if it is to take full advantage of surging production in US shale plays.
A panel later that day, featuring Armstrong as well as upper-level executives from Colonial Pipeline, Spectra Energy Transmission, and TransCanada Corp., also focused on the need to challenge pipeline performance in these areas.
That industry leaders are focused on both the need to improve their safety and environmental practices and the benefits of treating regulation as a collaborative rather than necessarily adversarial aspect of doing business is a good sign that progress can be made. Now we just need to get down to the business of making these missions valued parts of each operator's culture.
There is money to be made in facing safety, the environment, and regulators proactively. By contrast there are likely only increasing restrictions and costs ahead to the degree regulators feel forced to lead on issues currently facing the pipeline industry.