Oil sands pipeline reports sparks fight between U.S. groups and Alberta regulator

As if any more evidence was needed about the passions stirred by oilsands development, the release on Wednesday of a new report on oilsands pipeline safety has sparked quite a tussle between the study’s authors and the Energy Resources Conservatiion Board in Alberta. In a nutshell, the Natural Resources Defense Council report raised concerns that shipping diluted bitumen through pipelines poses an extra safety risk because, it alleges, the product is corrosive, acidic and pumped at higher pressures – potentially speeding up the deterioration of pipelines and raising risk of a major spill. The NRDC and its partners, including the Sierra Club, want the Obama administration to put a hold on new pipelines including TransCanada’s Keystone XL until new regulations are put in place in the U.S. to address the challenges posed by shipping unrefined oilsands crudes. In the report, the NRDC and other environmental groups make some claims about the safety of Alberta pipelines versus U.S. pipelines, and that was the jumping off point for a rapid-fire exchange of accusations and counter accusations. Here’s the ERCB’s first punch: ERCB ADDRESSES STATEMENTS IN NATURAL RESOURCES DEFENSE COUNCIL PIPELINE SAFETY REPORT The Energy Resources Conservation Board (ERCB) is concerned that a report on pipeline safety issued this morning by the Natural Resources Defense Council (NRDC) contains misleading statements on pipeline safety in Alberta and on the characteristics of diluted bitumen. The report implies that the Alberta pipelines have had a higher pipeline failure rate than the U.S. due to leaks caused by internal corrosion from transportation of diluted bitumen (DilBit). The NRDC’s analysis of published ERCB pipeline data is flawed, leading to misleading and incorrect conclusions. The study includes incorrect statements about pipeline safety in Alberta including: “The Alberta hazardous liquid pipeline system has a relatively high rate of pipeline failure posing an early indication of the risks DilBit poses to pipeline integrity.” “Despite its relatively recent construction, Alberta’s hazardous liquid system, which carries a high proportion of diluted bitumen, had over four times as many reportable incidents per mile as the older U.S. System between 1990 and 2005.” These statements are factually inaccurate. The NRDC’s comparison of ERCB data with that collected in the U.S. is flawed, as it selected data from a much broader array of ERCB pipelines than those included in U.S. data as hazardous liquid pipelines. Additionally, the NRDC did not recognize that the ERCB requires all incidents to be reported, regardless of whether or not any product is spilled, and also regardless of spill volume, whereas in the U.S. only spills of five barrels of liquids or more are required to be reported. This results in a misleading comparison of pipeline failure numbers between the U.S. and Alberta. In the category identified by NRDC – pipelines shipping bitumen and blends of bitumen – the ERCB can identify only three spills resulting from internal corrosion between 1990 and 2005 (and only eight from1975 to 2010). The resulting average failure frequency for the grouping of crude oil pipelines from 1990 to 2005 is thus 0.03 per 1000 km per year. This is significantly lower than the U.S. rate quoted in the NRDC study of 0.08 per 1000 km per year. The report also states that “there are many indications that DilBit is significantly more corrosive to pipeline systems than conventional crude.” Analysis of pipeline failure statistics in Alberta has not identified any significant differences in failure frequency between pipelines handling conventional crude versus pipelines carrying crude bitumen, crude oil or synthetic crude oil. Diluent by nature is a lower viscosity, higher-vapour pressure solvent. It could then be considered to be more “volatile” in its natural state, as it consists of lighter end hydrocarbons. However, when blended with bitumen, the resulting blend is a “new” product consisting of thinned bitumen that more closely resembles conventional crude products. Once mixed with diluent, DilBit should behave in much the same manner as other crude oils of similar characteristics. In conventional oils sands processing, sulphur is removed during processing, as well as water (which is a primary concern in regards to corrosivity). The tariff specification for the Keystone XL project, for example, is virtually the same in regards to water content and solids contents as that specified for other heavy oil pipelines, thus there is no reason to expect this product to behave in any substantially different way than other oil pipelines. It should also be noted that pipelines in Alberta have never been safer. In 2009, Alberta posted a record-low pipeline failure rate of 1.7 pipeline failures per 1,000 km of pipeline (considering all substances), bettering the previous record-low of 2.1 set in both 2008 and 2007. If the NRDC had contacted the ERCB for information in compiling their report, the ERCB would have been pleased to assist them in interpreting the published data used to compare Alberta and the United States, eliminate the factual errors in the report, and ensure that readers have access to accurate and complete information about pipeline safety in Alberta. The ERCB response didn’t sit well with the authors of the pipeline report, who promptly rebutted the Alberta regulator’s rebuttal: Response to Alberta Government Statement on Tar Sands Pipelines Safety Risks Report The Alberta Energy Resources Conservation Board (ERCB) statement would have been more relevant had it responded to information in the report released today. Today, ERCB issued a statement that it said was in response to the report Tar Sands Pipeline Safety Risks released on February 16 by the Natural Resources Defense Council, Pipeline Safety Trust, National Wildlife Federation and Sierra Club. However, the ERCB comments refer to information in an earlier version of this information that NRDC produced in December 2010. We hope that after they review the information in the report issued today, we can continue a dialogue with ERCB based on the report’s findings. The report, Tar Sands Pipeline Safety Risks, shows that by its nature raw tar sands oil or diluted bitumen is morecorrosive and more likely to result in pipeline failures. Increasingly, U.S. pipelines are being used to transport diluted bitumen instead of the synthetic crude oil that was already upgraded in Alberta before crossing the border into the United States. The risks of spills from tar sands pipelines are high and U.S. safety regulations are not enough to protect special places such as the Great Lakes, the Nebraska Sandhills and the Ogallala Aquifer. With the proposed Keystone XL tar sands pipeline in the middle of its environmental impact assessment by the U.S. State Department, getting a better understanding of what raw tar sands oil in a pipe means for our environment and safety is more important than ever. There are some simple steps that the U.S. government can take to protect communities from oil spill tragedies. The report spells these out – including the need to put proposed tar sands pipelines such as the Keystone XL project on hold until we can evaluate the need for new U.S. pipeline safety regulations and put a system in place to deal with the special characteristics of raw tar sands oil. We can do better by our communities, our special places and our wildlife. The lack of transparency from the oil industry is part of the issue here. A clear accounting of the public health and safety issues associated with these products and the infrastructure associated with them is simply not available. The example of Enbridge’s CEO denying tar sands were involved with the Kalamazoo River disaster until pushed by reporters with undeniable evidence is one example of this lack of transparency. We stand by the information provided in the report – which is well documented and reviewed. To respond to some of the specific points in the ERCB statement: · In comparing the Alberta and U.S. hazardous liquid system spill rates and incidence of internal corrosion, the report made every effort to make an ‘apples to apples’ comparison. The report only considered spills greater than 26.3 gallons, which are large enough to be tracked by regulators in both the United States and Alberta. While other differences between these lines may contribute to the significant disparity of the Alberta system having sixteen times the rate of spills due to internal corrosion as the U.S. system, this high rate certainly is a warning sign of diluted bitumen’s potential risks to pipeline safety. · In general, diluted bitumen is not used as a formal category and spills are not reported for “diluted bitumen” pipelines or as “diluted bitumen” spills. This is why the NRDC report looks at the whole hazardous pipeline system which in the United States transports all forms of oil – as it does in Alberta. When the ERCB refers to only a few diluted bitumen spills taking place, they seem to only be including pipelines formally designated as “dedicated diluted bitumen pipelines” as opposed to the many other pipelines that at times carry diluted bitumen. · Because of ambiguities in reporting, it is more instructive to assess the entire Alberta hazardous liquid system. It is difficult if not impossible to determine the petroleum blend in any given spill in Alberta. However, in 2010, sixty-ninepercent of the crude oil produced in Alberta was shipped in pipelines as diluted bitumen to Canadian upgrading facilities or to refineries in the United States. · The ERCB statement claims that mixing diluents with bitumen makes a mixture that “more closely resembles conventional crude.” However, this mixture still contains bitumen. Even diluted, bitumen retains its characteristics as documented in the NRDC report. Mixing a very light molecule with a very heavy molecule does not create two medium sized molecules. Also, once escaped from the pipeline in the form of a leak, the natural gas liquid condensate used to dilute the bitumen separates from the bitumen – leaving the unadulterated bitumen for clean up, as well as the additional problems from the hazardous nature of natural gas liquid condensate. · Diluted bitumen has five to ten times higher concentrations of sulfur than benchmark crudes. During the upgrading process, sulfur is removed as raw bitumen is converted to synthetic crude oil which does more closely resemble conventional crudes. However, in the case of diluted bitumen the sulfur is still very much present. So that’s that, right? Well, not quite. The ERCB followed up with a rebuttal to the rebuttal to the rebuttal, acknowleding its first response to the NRDC report was based on a draft version, not the final product. But it’s complaints stand: ERCB RESPONDS TO NATURAL RESOURCES DEFENSE COUNCIL Calgary (February 16, 2010): The Energy Resources Conservation Board (ERCB) acknowledges that its news release issued earlier today regarding a Natural Resources Defense Council (NRDC) pipeline safety report was based on an earlier version of the report. However, in reviewing the final version, the ERCB determined that all of the key data and allegations that the ERCB expressed its concerns over are present in the final NRDC report and remain incorrect, including: 1. Alberta pipelines have had a higher failure rate than similar U.S. pipelines due to leaks caused by internal corrosion from transportation of diluted bitumen (DilBit), and 2. diluted bitumen is more corrosive than conventional crude products and is more likely to result in pipeline failures. The NRDC’s response to the ERCB news release this afternoon did nothing to correct the flaws in their report: 1. The NRDC continues to claim that diluted bitumen is more corrosive to pipelines than conventional crude oil, which it is not. In terms of pipelines potentially shipping bitumen and blends of bitumen, the ERCB can identify only eight spills due to internal corrosion between 1975 and 2010. 2. The NRDC report continues to allege that transporting raw oil sands materials and diluted bitumen would pose risks for transmission lines such as the Keystone pipeline. There is no indication that diluted bitumen, such as that proposed for the Keystone pipeline, is more corrosive than conventional crude oil. The NRDC mention in their response that they would like to “continue a dialogue” with the ERCB. The ERCB would be pleased to engage in a dialogue to assist the NRDC in understanding the facts on Alberta’s oil sands. ((17 FEB 2011))













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