Most of us have seen the horrendous images of the Canadian rail explosion that killed dozens of people on July 6 in Lac-Megantic, a small town in Quebec. The blackened tank cars that were transporting crude oil were strewn about the town like a derailed toy train set with victims incinerated in their homes and cars. The train's driver has been held for questioning, but at this writing we don't know for certain if the derailment was a result of human error, a mechanical malfunction, or a combination of both.
The train was carrying 72 carloads of crude. When they exploded, they instantly wiped out around 30 buildings, killing 50 or more people. Fires from the explosion and burning oil raged for more than a day before they could be extinguished.
As terrible as the accident was, these events are extremely rare. Nevertheless, the Quebec derailment graphically demonstrated that the rail alternative to the Keystone XL pipeline and other pipeline projects has its drawbacks. In fact, the tragedy helps make the point that stationary pipelines are a safer way to transport crude oil and other petroleum products than rail cars that move along fixed tracks or tank trucks that compete with passenger cars for space on our nation's highways.
Yes, pipelines can still rupture or malfunction and there is always the possibility of sabotage, but nothing is without any degree of risk. Serious pipeline accidents involving injuries and fatalities are even less common than fatal railcar accidents. Thus, where available, it makes sense to utilize the safest and most economic form of transportation, and that is clearly pipelines.
Mark J. Perry, a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan – Flint, recently wrote on the AEI's website, "With the ongoing increases in shale oil production in states like North Dakota, Texas, Oklahoma, and New Mexico, it's likely that shipments of oil by rail could double again within a few years, significantly increasing the likelihood of a rail disaster in the US like the one in Canada."
Perry argues that we would be better off moving those new supplies of oil through pipelines rather than by rail because of the inherent danger to people living near railroad tracks.
"The Keystone XL pipeline makes perfect economic and perfect environmental sense," he said. "It's only politics that will hold up its approval."
Many pipeline opponents aren't simply against pipeline transportation of crude oil and petroleum products. They're opposed to oil and gas and all hydrocarbons, however it is transported. They believe it's time we close the door on fossil fuels and moved forward to cleaner and safer forms of energy, such as solar and wind energy. As most scientists and people in the petroleum business understand, a sudden shift to renewable energy simply isn't practical.
The shale revolution is still in its infancy. The natural gas and oil we've founded in places like the Bakken formation in North Dakota and the Eagle Ford shale play in South Texas may be a mere glimpse at what is yet to come. There are similar hydrocarbon-bearing formations all over the globe and under the sea that are now accessible and economic to produce due to technological innovations such as horizontal drilling and multi-stage hydraulic fracturing.
Currently, the White House is still weighing whether or not to approve the 1,179-mile Keystone XL pipeline which would transport Canadian heavy crude oil via a 36-inch diameter pipeline to refineries along the Texas Gulf Coast. It's a political hot potato for the Obama administration and the Democratic Party because labor and the pro-jobs faction are arguing for approval, while the environmentalists are urging rejection.
In March, the State Department issued an environmental impact statement saying the pipeline would cause "no significant impacts to most resources along the proposed [pipeline] route." The department says it is in the "final stages" of evaluating the proposed project. Most industry people seem cautiously optimistic that Keystone XL will be approved, but are more uncertain of how long the process will take.
Meanwhile, oil production continues to surge in North America, and energy companies are increasing rail shipments of crude oil and refined petroleum products. Rail transport of these products grew to 356,000 carloads in the first half of this year – up 48% from last year, according to the US Energy Information Administration.
Pipelines are being constructed, but so far they have been unable to keep pace with production, which is why the need for rail and truck transportation in the first place. Eventually the pipelines will come on stream and pipeline capacity will increase to the point where rail transportation volume will decline.
Rail is filling an important interim role right now. But ultimately new pipeline projects will come on stream and the vast new supplies of oil will be moved through pipelines, not on tracks.
Not only is this the most economic option – it is also the safest.