pipelines | North America


Figure 1: Comparison of petroleum incident rates by transport mode Transport


mode


Barge/domestic tanker Road Rail


Hazardous Pipeline Natural Gas Pipeline


Incidents per billion miles


Data not available 19.95 2.08 0.58 0.89


Pipelines are also the safest transport means. Last Average billion


ton-miles per year Data not available 34.8 23.9


584.1 338.5


Source: US Department of Transport: Bureau of Transportation Statistics 2013


Figure 2: It will cost around $7 a barrel to move oil using the 1,179-mile Keystone XL pipeline


for the period from 2005 to 2009 show that oil pipelines are around 70 times safer than truck transportation (the latter resulted in the deaths of four times as many people over the period despite carrying only a fraction of the fuel shipments). According to US government statistics, pipelines are the primary means of transporting crude oil, petroleum products and natural gas across the country with some 70% of crude oil and petroleum products transported by pipeline on a ton-mile basis. Domestic tanker and barge traffic accounts for 23% of oil shipments, road tankers 4% and rail tankers 3%. Currently, all natural gas in the US is transported by pipeline.


Cost considerations Of course, cost is also a key consideration. Moving large amounts of crude oil along the proposed 1,179-mile Keystone XL pipeline (Figure 2) will cost around $7 per barrel, according to the US State Department. Pipeline operator Enbridge charges a tariff of $13 per cubic metre for travel of light crude along the 800 mile pipeline linking Kerrobert Station in Saskatchewan to Superior. For refineries located next to major navigable


waterways, such as the Atlantic Seaboard or Gulf Coast, shipment by barge is cheaper than rail or pipeline. “Barges are about 30% cheaper than rail,” according to Steve Clark, commercial manager of shipping and logistics agency GAC Shipping USA. Clark quotes a day-rate of around $8,500 for a


two-barge tow, each carrying 30,000 barrels of West Texas Crude oil. That means the 14 day-round trip of 600 nautical miles from Corpus Christi to refineries in New Orleans works out at around $4 per barrel. An American Petroleum State Class coastal tanker with a carrying capacity of 330,000 barrels of cargo capacity would cost around US$54,000 a day, equivalent to $2.3 per barrel for the same shipping duration. It is, perhaps, fortunate for pipeline operators that the US Jones Act – designed to protect US shipping from foreign competition in home waters – remains in place as it is highly likely barge rates would be even lower if open to global competition. In comparison, transporting crude oil over the 800


miles by rail from the Bakken oil fields to the Gulf Coast will cost between $15.5 to $31 per barrel, according to the US State Department. Leasing costs for a class DOT-111 rail tanker carrying 31,809 gallons can reach $2,500 a month, excluding the additional cost of accessing the rail network and the use of rail operator services (Figure 3). However, the North American rail network is much more extensive than the pipeline network and this presents the opportunity for producers to exploit market conditions and sell to the highest bidders at any given time. Obtaining meaningful investment figures for


Source: TransCanada 22 PIPELINE COATING | May 2014 comparison of the different transport modes is difficult.


year the Congressional Research Service (CRS) 2014 report ‘US Rail Transportation of Crude Oil: Background and Issues for Congress’ presented data showing pipeline transportation is safer than road, rail or barge, when measured by incidents, injuries and fatalities. The report also noted that many road and rail incidents are unreported, suggesting the safety margin of the pipeline industry may be even larger.


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