Why so much oil from the fracking boom is moving by high-risk rail

REUTERS/Rick Wilking
Rail shipping of crude oil is inherently more dangerous than pipeline transport.

Rail shipments of U.S. crude oil produced in the fracking zones rose by 2,400 percent from 2008 to 2012, according to a report issued Monday by the Government Accountability Office — a period when oil production from the shale and sandstone formations, though booming, increased by less than sixfold.

Main reason: Pipeline construction lagged far, far behind the surging production of both oil and natural gas, because investment in U.S. infrastructure for transporting, processing and storing both oil and natural gas went up just 60 percent in the same five-year period, with new pipelines accounting for only a piece of that.

Main result: More deaths and injuries past and future, because rail shipping is inherently more prone to these than pipeline transport. Also, a much higher risk of catastrophe as oil-laden “unit trains”  of 80 to 120 tank cars move through the nation’s largest, densest metropolitan areas, including the Twin Cities. (More oil is moving by truck and barge as well.)

It is difficult, for some reason, to clearly attribute injuries and fatalities to rail shipments of oil and gas versus other cargo. However, GAO’s auditors found that from 2007 to 2011,

Fatalities averaged about 14 per year for all pipeline incidents reported to the [Pipeline and Hazardous Materials Safety Administration, part of the U.S. Department of Transportation], including an average of about 2 fatalities per year resulting from incidents on hazardous liquid and natural gas transmission pipelines.

In comparison, in 2010, 3,675 fatalities resulted from incidents involving large trucks and 730 additional fatalities resulted from railroad accidents. Therefore, increased transport of oil and gas by rail, truck or barge could only increase safety risks.

Pipelines have problems, too

Of course, pipelines are vulnerable to accidents as well, sometimes with massive environmental consequences. And the report lists a number of reasons why we might not want to see pipeline utilization and expansion move at maximum speed anyway.

Looking particularly at “gathering lines,” which collect gas and oil at drilling sites and move it to central locations for shipment by long-distance pipeline, rail or other means, GAO found that:

  • Much of the existing pipeline network was not built to the size and strength required for today’s volumes, which are larger than in the past and move under higher pressure.
  • Bigger, stronger pipelines are indeed being added to the network, but if they are located in rural areas (as  about 90 percent of them are) they typically aren’t subject to the safety standards applied by the DOT — including, notably, the requirements for emergency-response planning and preparation.
  • Although the DOT has been working on new regulations since 2011, no new rules have yet been proposed.
  • And although states may regulate some of these pipelines, it appears that most don’t bother to do so.

All of which, says GAO, “raises concerns about the adequacy of emergency response preparedness, especially in rural areas where there may be fewer resources to respond to a serious incident.” (my emphasis)

Oil surging faster than gas

Although the “fracking boom” is often thought of in terms of natural gas production, the increase in oil production has actually been proportionally greater:

Average domestic crude oil production from shale and tight sandstone formations in 2012 has increased more than sixfold compared with average production in 2007, from 0.34 million barrels per day in 2007 to 2.25 million barrels per day in 2012.

To put this into context, according to U.S. Energy Information Agency data, the United States consumed an average of more than 18 million barrels of petroleum products per day in 2012. According to EIA officials, oil from shale and tight sandstone formations accounts for 31 percent of total U.S. production. According to EIA, increased production in 2012 and 2013 was the largest annual increase since the beginning of U.S. commercial crude oil production in 1859.

Much of the increase in crude oil production has been from shale formations, such as the Bakken in North Dakota, the Eagle Ford in Texas, and the Niobrara in Colorado. According to EIA officials, U.S. production of crude oil is expected to continue to increase — by 48 percent from 2012 to 2019 — and will remain above the 2012 level through 2040.

As for natural gas:

Domestic natural gas production in 2012 has increased about fivefold compared with production in 2007, from less than 2 trillion cubic feet in 2007 to more than 10 trillion cubic feet in 2012. To put this into context, annual domestic consumption of natural gas was just over 25 trillion cubic feet in 2012, according to EIA data.

In September 2012, we found that, assuming current consumption levels without consideration of a specific market price for future gas supplies, the amount of domestic technically recoverable shale gas could provide enough natural gas to supply the nation for the next 14 to 100 years. Much of the increase in natural gas has been from shale formations, such as the Barnett, Fayetteville, Haynesville, and Marcellus formations.

Old network, slow expansion

But investments in transportation infrastructure have grown far more slowly, the GAO found.

Though capital investments in U.S. infrastructure for oil and gas transportation, processing, and storage have increased significantly in recent years — by 60 percent from 2008 to 2012, according to a December 2013 industry report — expansions in infrastructure have not kept pace with increased domestic oil and gas production.

 In the United States, most oil and nearly all natural gas are transported by pipeline. According to EIA data, U.S. refinery receipts of domestic crude oil by pipeline increased almost 25 percent from 2008 to 2012, from 1.6 billion barrels to nearly 2 billion barrels.  However, according to a number of studies and publications we reviewed, including a 2013 report from the Fraser Institute, oil and natural gas production in the United States is outpacing the capacity to transport the resources through existing pipeline infrastructure. …

GAO found that most of the pipeline infrastructure in use today was built in the 1950s, 1960s and 1970s and sized not only to the demands of those times but to the directional flows as well — south to north, whereas much of today’s flow is from west to east. This means, according to industry figures, that oil production in North Dakota alone exceeds pipeline capacity by 300,000 barrels per day.

Source: GAO
Pipeline construction lagged far, far behind the surging production of both oil and natural gas, because investment in U.S. infrastructure for transporting, processing and storing both oil and natural gas went up just 60 percent in the same five-year period, with new pipelines accounting for only a piece of that.

You might think that this would be reason enough to bring infrastructure investment more in line with production levels and revenues, but if so, you are probably not in the oil and gas business. One consequence of undercapacity is supply constriction, and one consequence of short supply is, ta-dah, higher prices.

An incentive to waste

Another and particularly obnoxious consequence is a far stronger incentive to engage in the ridiculously wasteful and polluting practice of “flaring” excess gas production at the wellhead.

In January 2014, the North Dakota Industrial Commission reported that nearly 30 percent of all natural gas produced in the state is flared. According to a 2013 report from Ceres, flaring in North Dakota in 2012 resulted in greenhouse gas emissions equivalent to adding 1 million cars to the road. …

In addition to the risks to air quality from flaring, we found in October 2010 that flaring natural gas has economic implications, and in April 2014 the Environmental Protection Agency reported that flaring results in the destruction of a valuable resource. …

According to a 2013 report from the North Dakota Pipeline Authority, in August 2013, 2.7 percent of the total economic value and 7.2 percent of the total energy content being produced in North Dakota were lost due to flaring. In another example, a Ceres report found that in May 2013 roughly $3.6 million of revenue was lost per day, at market rates, as a result of flaring in North Dakota.

There’s much more to this report, including sections on tank-car safety, bad barge accidents — including some notable spills in the Mississippi River — but I’ve gone on long enough. The full report can be had right here.

Good luck searching out other media summaries of the content, though. As of this writing, about all I found was a brief piece over at NBC News, which has devoted some serious investigative resource to the issue. You can find its good work on the pipeline side of the issues here, and the railroad side here.

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Comments (12)

  1. Submitted by Neal Rovick on 09/24/2014 - 09:10 am.

    Fracking is not a process that lends itself well to permanent installations like pipelines.

    The wells produce relatively little oil over a short period of time as opposed to the Jed Clampett type of well where there will large volumes of oil for many years. The area where the maximum oil recovery of a fracked field will not be the same as the next year–the center of oil recovery moves as the oil is extracted from one area. Equipment and location of recovered oil/gas will be in a different area this year than next.

    It can be thought of more like a strip mining process which moves from a tapped out area to the next area relatively quickly. The most “juicy” areas will be mined first and as time goes on, only drier and drier areas are mined.

    If the oil and gas recovery peaks and declines relatively fast in the best area, and there is not enough money or time to build permanent infrastructure like a pipeline for the first tapped and best wells, then it will never be built.

    By the time a pipeline get built and certified, the field will be in a different area.

    So trucks, rail and pipeline are in the order of most flexible to least flexible transport facility.

    The fact that a large portion of the Bakken will be tapped out in 10 years means that pipelines are not an option. And building additional rail capacity (new lines) is doubtful.

  2. Submitted by Robert Moffitt on 09/24/2014 - 10:37 am.

    I’m not sure ‘high-risk’ is entirely fair…

    …but it is fair to say that transporting crude via rail carries a higher risk than pipelines.

    It’s our own addiction to petroleum that is the base cause of this. As Pogo observed long ago, “We have met the enemy and he is us.”

  3. Submitted by Greg Kapphahn on 09/24/2014 - 10:39 am.

    Rather Than Spending Billions Expanding Dinosaur Energy

    Why not spend the SAME amount building renewable infrastructures,…

    researching storage methods and technologies,…

    expanding the electric transmission grid,…

    and thereby precluding most of the need for dangerous, volatile, environment-destroying chemicals ever being removed from the ground in the first place.

    If every penny invested in “fracking” had been invested in alternative energy we would no longer need to “frack” anything.

    It’s already too late to prevent the environmental disaster we’ve brought into our future by our failure to act,…

    but the longer we wait, the worse that future disaster will be when it arrives.

    “The market” won’t provide this, of course, but our grandchildren and great grandchildren will (very justifiably) spit on our collective graves if we don’t find a way to do it NOW.

  4. Submitted by James Hamilton on 09/24/2014 - 11:54 am.

    Let’s be honest.

    Mr. Meador would rather the products all remain underground.

    Yes, increased rail and truck traffic likely results in increased injury and death, regardless of the product moved. Be they filled with coal, grain or oil, 1.5 mile long trains will derail, collide with motorists and kill unwary pedestrians.

    Can I safely assume that Mr. Meador does not advocate the construction of pipelines, even assuming that they could be cost-effective, given Mr. Rovick’s comments?

    I’m not advocating for or against oil and gas production or for any specific means of transporting it once produced. I would, however, appreciate an occasional acknowledgment of Mr. Meador’s biases and some attempt on his part to discuss means of addressing the concerns he raises.

    If you’re going to yell fire, you might at least point people toward an exit.

    • Submitted by Logan Foreman on 09/24/2014 - 05:32 pm.

      Next time a train

      Filled with coal or grain blows up, please notify us. Trains generally do not derail and collide with vehicles and pedestrians; the trains carrying oil blow up when they derail and cause disasters. Plus if you’re not aware of Mr. Meador’s opinions that is your problem. Finally as to construction of pipelines, please provide your city or address so we can route the pipelines thru your city or backyard.

  5. Submitted by Mike Downing on 09/24/2014 - 02:04 pm.

    Build pipelines!!

    The Obama administration has blocked the Keystone pipeline for 5 years and counting. The Obama administration has two speeds, one slow and one very slow. We’ll need a new president to make progress on pipelines.

    BTW, Jimmy Carter began the Dept of Energy to invest in “alternative energy” to become energy independent. That was nearly 40 years ago!

    Our current energy boom has been due to private enterprise on private not public land. The federal government has in fact been a hindrance to our current energy boom.

    • Submitted by Greg Kapphahn on 09/24/2014 - 04:35 pm.

      The Good Old Keystone Pipeline

      Would support the most environmentally damaging and destructive form of energy extraction ever devised by humanity,…

      far dirtier and far MORE damaging the fracking ever dreamed of being,…

      and all of THAT for no purpose except to increase already outrageously massive oil company profits by giving them easier access to North American oil that they can refine, then ship offshore.

      Benefit to US citizens? Zero. Zip. Nada.

      Spare us, please!

    • Submitted by Tom Lynch on 09/24/2014 - 06:34 pm.

      BS!

      The Keystone Pipeline has nothing to do with transporting Bakken crude(that’s what this article is about). It’s to transport Canadian Tar Sands crude to Texas to be refined and shipped to China. Try to keep up.

      As to Carter’s investment in alternative energy. That was thrown out the window as soon as Mr. Voodoo Economics came to the White House. Just think of where we’d be at if we had followed Carter’s vision.

    • Submitted by Lance Groth on 09/24/2014 - 08:11 pm.

      Don’t build pipelines!

      Yes, by all means, lets burn as much of the filthiest, most environmentally destructive fossil fuels as possible, so that by the time your grandchildren are grown, the planet will be all but uninhabitable.

      If Obama’s been standing in the way of Keystone, I need to send him a thank you note. And you need to educate yourself about the physics of greenhouse gas emissions. Here’s one hint: physics cannot be bargained with, wished out of existence or voted out of office. Action/reaction, it does what it does regardless of politics, greed or human selfishness. Keep burning fossil fuels, especially coal and tar sands oil (the filthiest of the filthy), the planet warms, the climate becomes unhinged, the biosphere dies and future generations inherit a ruined world – if they are alive at all. They’re not going to thank you for that.

    • Submitted by Todd Hintz on 09/30/2014 - 07:31 am.

      Keystone

      The Keystone pipeline’s purpose is simply to transport oil from Canada to the export terminals in Texas, completely bypassing domestic markets in North America. The Obama administration is correct in dragging their heels on the issue as it does nothing for our energy independence and, in fact, makes it worse as it takes oil out of our market.

      Personally, I would prefer that the pipeline gets outright cancelled. That would be the smart thing to do.

  6. Submitted by Neal Rovick on 09/25/2014 - 08:36 am.

    From a purely logistics standpoint, the tar sands have 25 times the oil content in about a quarter of the land area as the Bakken does. So the building of a pipeline to handle that oil does make more sense.

    From and economic standpoint, both fields require oil prices near $100/barrel in order to be viable–given that the major component of the recovery costs in both areas is energy, I’m not so sure that one can classify the Bakken field as “cleaner” than the tar sands.

    And from an ecological standpoint, the tar sands area is smaller than the Bakken–less area is being affected. The work in the Bakken is disrupting, polluting, and depleting a major aquifer. In the tar sands, a material, that if left in the open by a manufacturer from their processes, would have to be regarded as toxic waste, is being removed from the environment.

    So it is really not clear-cut as to which is better.

    But in the end, we are in as much trouble—whether it is Bakken, tar sands, natural gas, or coal. Carbon-dioxide and
    its equivalents will wreak great changes on our environment for a long, long time.

  7. Submitted by Thomas Swift on 09/25/2014 - 09:38 am.

    Fracking is not going away, and now that the industry has gotten used to the logistics they were forced into, rail transport isnt going away either. Each state is free to enforce safety regulations; do it.

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