“Tens of Thousands” Of Safety Defects Plague America’s Oil Train Routes

In this May 1, 2014, file photo survey crews in boats look over tanker cars as workers remove damaged tanker cars along the tracks where several CSX tanker cars carrying crude oil derailed and caught fire along the James River near downtown Lynchburg, Va. | Photo: AP Photo/Steve Helber

New government data obtained by the Associated Press shows that nearly 24,000 safety defects were found when federal inspectors examined rail lines used to transport crude oil around the country. The defects, which included worn rails, broken bolts, and cracked steel bars, were discovered on 58,000 miles of track across 44 states.

What’s more concerning? Federal regulators also reported that railroad operators routinely failed to correct deficiencies after they were identified, according to the Associated Press.

“All of this is a call for continued vigilance,” said Steven Ditmeyer, a former senior official at the Federal Railroad Administration. “One defect or one violation of the right kind can cause a derailment.”

Over the past decade there have been at least 27 oil train accidents in the U.S. and Canada, including a 2013 derailment in Quebec that killed 47 people. In the U.S., defective fasteners were cited in a 2015 derailment in Montana that resulted in a 27,000 gallon crude oil spill. In 2014, unrepaired steel cracks in Virginia caused 15 cars to derail and burst into flames along the banks of the James River.

As former veteran energy regulator Tony Clark recently wrote, “pipelines remain, by far, the safest means by which to transport [our] energy goods.”

Now-Operational Dakota Access Accelerates Bakken Revival

Drilling rig operating in North Dakota’s Bakken region.

Oil production in North Dakota’s Bakken region is expected to rise more than 20 percent this year just as the Dakota Access Pipeline comes online. By offering more affordable and diversifying access to key refining markets, the pipeline can help level the playing field between the Bakken and other U.S. shale plays that have benefited from better access to refineries.

Industry analysts like RBN Energy’s Rusty Braziel say the pipeline will cut shipping costs by $3 to $5 per barrel and amount to at least $540 million in annual savings for producers who previously relied on truck and rail to bring oil to market. “Economics for drilling in the Bakken will look better because of DAPL,” said Braziel.

Market players, including Hess Corporation CEO Jon Hess believe the $3.8 billion pipeline will accelerate output in the region, which reached its lowest point in almost three years last December. “We’re back to growth in the Bakken,” Hess said in a recent interview with Reuters, adding that his company this year plans to triple the number of drilling rigs operating in North Dakota.

Hess isn’t the only company beefing up operations. In fact, the drilling rig count in North Dakota has risen 40 percent since the Trump administration gave the final green light for the project and is forecast to jump another 10 percent or more by years end.

This production bump is not only a win for American energy independence, but also for the State of North Dakota which is expected to gain $100 million or more in annual tax revenue, according to a recent Associated Press report.

As Dakota Access Nears Completion, America Still Needs Pipeline Infrastructure

In recent weeks, the U.S. Army Corps of Engineers handed down the final easement needed for the Dakota Access Pipeline to cross Lake Oahe in my home state of North Dakota. The pipeline is just days away from becoming operational. While legal battles will likely continue to be waged, court rulings to date have consistently validated the process that led to approval of the Dakota Access Pipeline.  As protest camps in the region clear out, it’s worth taking a moment to consider the toll that those activities took on the residents and the environment of North Dakota.

According to the latest reports, clean-up crews have removed as much as 48 million pounds of garbage from the Oceti Sakowin camp, costing taxpayers as much as $1 million. This unprecedented level of negligence stood as a threat to the region’s environment, until the U.S. Army Corps of Engineers and state officials intervened and evacuated the camps. With rising temperatures and spring thaws on the way, the refuse could have been washed directly into the Missouri River system. With all the rhetoric about protecting the water, the trash left behind by protestors posed a far more imminent threat to water than the pipelines buried far underneath it. Thankfully, the authorities intervened before more serious damage was done.

Looking beyond Dakota Access to the future of other pipeline infrastructure projects, some key facts merit consideration.

First, for the foreseeable future, residents of the United States will continue to rely on petroleum products such as crude oil, natural gas, and natural gas liquids like butane, ethane and propane to sustain their everyday lives. Second, pipelines remain, by far, the safest means by which to transport those energy goods. Third, the United States continues to work steadily toward the diversification of its energy sources, utilizing energy goods produced here at home and lessening our reliance on energy from volatile regions elsewhere in the world.  Fourth, a pressing need for infrastructure remains in growing production regions within the United States – such as the Marcellus, Bakken, and Permian shale regions – to markets within and for export to allies abroad.

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Tubes, Tunnels, Pipelines And Progress

The Dakota Access Pipeline that triggered the resistance of the Indians, or Native Americans as some of them want to be called, is nearly complete and ready to take oil to the refineries. The Keystone XL Pipeline project, which endured an on-again, off-again status during the Obama years, is on again. It’s a new day for energy in America.

Soot-stained skies are largely a thing of the past, with tubes and tunnels transporting more and more oil beneath the surface of the land, and barely imagined wonders are soon on the way. Elon Musk, the visionary founder of SpaceX and the Tesla electric automobile, is experimenting with a transportation system that would send a bulletlike passenger pod speeding through a vacuum tube called a hyperloop at speeds of 600 miles an hour. A model is being tested now in the Nevada desert.

Mr. Musk is currently boring an enormous tunnel beneath the streets of Los Angeles, near his Space X headquarters, as part of a hyperloop system and a roadway to enable cars to escape traffic-choked streets above. But all that is in the future. Energy for the present lies in the pipelines.

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Dakota Access Ensures Costs Remain Low For North Dakota Producers

In an article published in Bloomberg Businessweek, recently reviewed energy and economic analyses point to a significantly reduced cost to ship petroleum by pipeline rather than by railroad or truck. This is important because those few dollars difference in cost to energy companies directly relates to the opportunities for companies to expand operations and hire individuals from engineers to craft trades to develop the infrastructure necessary to develop North Dakota resources.

According to the article, “[u]nlike Texas, which has pumped oil for more than a century and is home to thousands of miles of pipelines, North Dakota never had a reason to build much energy infrastructure. As oil gushed out of remote areas miles from any town or pipeline, wildcatters, middlemen, and traders raced to get it out by truck, train, and barge. By 2015, 800,000 barrels of crude a day was being railed out of North Dakota. Moving oil by train costs a lot more than pumping it through a pipeline, but when world crude prices hovered around $100 a barrel—as they did for several years—there was enough profit to go around. Now that prices have fallen, those transportation costs have become critical. Refineries on the East Coast, once among the biggest buyers of Bakken crude, have reverted to importing foreign oil rather than paying to ship it halfway across the country.”

Despite the massive production available in North Dakota, the high cost of transportation has actually led some American refiners to import foreign oil, rather than use domestic supplies, because of the economic realities.

The key to closing that cost gap and reducing dependence is to construct the infrastructure necessary to make North Dakota oil economically viable for the long-term future. An important part of that infrastructure investment is the Dakota Access Pipeline.

According to data compiled from Valero and Bloomberg Intelligence, current costs to ship Bakken oil to refineries across the United States by rail can range as high as $10 per barrel – at roughly $50 per barrel, that’s 10% of the total price. The estimated cost of delivery of a barrel moved by the Dakota Access pipeline would fall to about $5 per barrel, creating long-term stability for producers, refiners, and ultimately, consumers.

With the development of the Dakota Access Pipeline, transportation costs would essentially be reduced by half. Imagine if you could shave 5% off the cost of a gallon of gas, and ensure that the gallon of gas wasn’t supporting a foreign government. Not only that, but by reducing the cost of transportation, opportunities for production increase allowing more North Dakotans the opportunity to work. Right now North Dakota’s major oil producing counties support on average approximately 10% of the state workforce, and that’s with only 38 oil and gas rigs operating in November of this year. Compare that to more than 200 rigs back in 2014.

Lean operation has made production more efficient, but reducing costs for producers allows for greater development and greater economic opportunity.

Dakota Access Review Exemplifies Thorough Energy Permitting Process

It’s safe to say the Dakota Access Pipeline has received one of the most thorough reviews of a domestic infrastructure project in recent memory. For many of us this project has been a long time coming, but even just this weekend, despite all permitting decisions completed, opponents of the project are still attempting to halt its progress because according to their message, nobody was listening.

But the facts show this just isn’t true. Everyone had a fair opportunity to present their interests and multiple jurisdictions approved this project independently of one another.

Don’t believe us? Let’s take a look at the numbers:

  • 3 North Dakota Public Services Commission Hearings
  • 4 South Dakota Public Utility Board Meetings
  • 18 Iowa IUB Meetings in each county along the pipeline route
  • Nearly a month of official testimony in front of the Iowa Utilities Board
  • Nearly a year and a half of review by the U.S. Army Corps of Engineers

And that doesn’t even take into account the thousands of comments and letters sent in to each jurisdiction throughout a nearly two year process. So if two years of time in front of public servants from four states and the federal government isn’t enough time to make a case then it’s hard to imagine any scenario where opponents of Dakota Access would be satisfied.

Hoeven: Pipelines Provide Safe, Efficient Transportation of Energy Products

 

Speaking at a U.S. Senate Energy Committee hearing last week, Senator John Hoeven underscored the importance of upgrading and expanding our nation’s pipeline capacity. Hoeven, a longtime advocate all-of-the-above energy policy, also emphasized the need to remove burdensome regulatory hurdles that too often discourage private investment in pipeline infrastructure.

“Pipelines are a safe and efficient means of transporting oil and gas from where they are produced to where they are consumed,” Hoeven said. “Updating and expanding our pipeline infrastructure means safer communities, better environmental stewardship, more energy production and good paying jobs. Those jobs aren’t just in construction. By making energy more affordable, such infrastructure helps create jobs across industries, especially energy-intensive industries like manufacturing. That is why we need to support policies and pass legislation, like our North American Energy Infrastructure Act and others, to empower investment in this infrastructure.”

Hoeven, who previously served as Governor of North Dakota, relied in part on his own experiences to explain the critical role pipelines play. In North Dakota, he attributed the installation of gathering lines as the key driver behind the state’s drastic reduction in natural gas flaring. According to the U.S. Energy Information Administration, flaring fell from 36 percent in in 2014 to a mere 10 percent in March of this year.

Senator Hoeven has proven to be a reliable, pragmatic leader in the buildout of the nation’s pipeline infrastructure and will no doubt continue to lead as America settles into its newfound role as the world’s leading energy producer