When it comes to the question of whether pipeline or rail is safer for moving crude, the answer depends somewhat on the source, but pipelines are broadly understood to come out ahead, not only on safety, but also on cost and efficiency. However, newfound oil abundance in areas not traditionally associated with oil and gas make a strong case for using both transportation methods.
A fatal train derailment and explosion in Quebec last month has focused attention on crude-by-rail, prompting a flurry of data releases and commentary about whether it is as safe a mode of crude transportation as pipelines are.
The Association of American Railroads, unsurprisingly, says that the data show that rail is safer. Other analyses – such as one from the Manhattan Institute’s Diana Furchtgott-Roth – suggest that pipelines are not just a safer option, but a much safer one. While the two analyses are derived from the same Department of Transportation data, AAR’s looks at gallons spilled per million ton miles, and Furchtgott-Roth’s looks at incidents per billions of ton miles. Pipelines transport more than two-thirds of the oil and refined prodcuts moved around the United States, according to the Association of Oil Pipelines. If pipelines transport far more oil every year than rail does, it stands to reason that spill volumes would be larger, even if incidents were less frequent.
The Federal Railroad Administration and Pipeline and Hazardous Materials Safety Administration has not sided with either mode of transportation, saying only that which form of transport is safer in a given situation depends on a range of factors.
Charles Dewhurst, US Natural Resources practice leader at accounting and consulting firm BDO, comes down on the side of pipelines. “My take, and this is really borne out by a lot of data, is that pipelines are very clearly the way to go for oil transportation,” Dewhurst said.
From a safety perspective, incidents per barrel shipped using the two forms of transportation shows a clear bias in favor of pipeline, said Dewhurst, detailing similar findings to Furchtgott-Roth’s. Data compiled from 2005-2009 shows that in a comparison of oil volumes moved over the period, “rail had accidents or incidents at almost four times the rate of pipelines,” Dewhurst said.
Cost comparisons of the two forms of transport also frequently show pipelines coming out ahead. Dewhurst cited figures included in the State Department’s Final Environmental Impact Statement for the Keystone XL Pipeline, which indicated that moving oil via the Keystone XL pipeline would cost around $10 per bbl, compared to $13-$20/bbl for rail deliveries of the same crude.
“Cost is clearly a factor for the industry, and that clearly impacts what we as consumers pay for gasoline,” Dewhurst said.
He added that pipelines may also have the advantage from an emissions standpoint, though the picture is not as clear, referring again the the State Department’s FEIS. “What they found is, pipelines fare slightly better than rail in terms of CO2 emissions,” Dewhurst said. “And pipelines are a one-way vehicle – with rail, once you haul product to refineries, the train then has to go back somewhere, so just looking at one-way transportation, CO2 emissions from rail is not telling the whole story.”
But Dewhurst said there is a strong case for rail’s role in US crude transportation infrastructure. “Rail has a very important role to play,” he said. “There are various shale formations now under development in areas that have not traditionally produced oil or natural gas, so there is not really a pipeline infrastructure in place yet.”
“Rail is really stepping into fill that void,” Dewhurst said.
Geoffrey Styles made a similar point in a recent article published on the Energy Collective website. Rail offers a flexibility that pipelines cannot match. No matter how much oil can be pulled out of the ground, it needs to find its way to market to have any value to producers and consumers.
