Feds: Onshore Oil Boom Raises Concerns


U.S. oil and gas production is booming faster than regulators can manage, creating risks for the public, pipelines and other transportation networks, a new government audit warns.

Chief among the holes in the current regulatory safety net are so-called "gathering pipelines"—traditionally small, low-pressure, low-risk lines that carry products to processing facilities and long-distance pipelines.

At present, these pipelines fall under state jurisdiction, but regulation is minimal and, in rural areas, non-existent, the Government Accountability Office reports, citing admissions by the states themselves.

Unit trains of up to 120 railcars may carry three million gallons of gas and oil, but are not covered by some of the same federal safety regulations as single cars.

These days, however, the energy boom has brought thousands of miles of new gathering pipelines that are approaching transmission pipelines in size and pressure—a high-risk combination that now merits federal oversight, the auditors say.

The federal government does not keep data on gathering pipelines. In March 2014, however, a natural-gas trade organization estimated that shale oil and gas development would add 21,800 miles of new oil and gas gathering pipelines each year from 2011 through 2035.

From 2010 to 2013, Texas added nearly 16,000 miles of federal unregulated gathering pipelines.

Some states say they have increased their regulation of gathering pipelines commensurately. The GAO says it's not enough.

Regulating the Regulators

Thus, the GAO is urging the U.S. Department of Transportation to add gathering pipelines to the portfolio of DOT's Pipeline and Hazardous Materials Administration.

Oil & Gas Transpo

Gathering pipelines are getting larger and operating under higher pressures. One trade group estimates that shale oil and gas development will add 21,800 miles of new gathering pipelines each year from 2011 through 2035.

The recent increase in the size, number and pressure of gathering pipelines "raises safety concerns because they could affect a greater area in the event of an incident," the GAO reports in Oil and Gas Transportation: Department of Transportation Is Taking Actions to Address Rail Safety, but Additional Actions Are Needed to Improve Pipeline Safety, an audit released Sept. 22.

In 2011, the audit said, "DOT began a regulatory proceeding to address the safety risks of gathering pipelines, but it has not proposed new regulations."

"Although states may regulate gathering pipelines, an association of state pipeline regulators' report on state pipeline oversight shows that most states do not currently regulate gathering pipelines in rural areas."

Pipeline regulators at all levels have often been criticized as being too close to their industry. For example, critics have long said California's regulators are too cozy with Pacific Gas & Electric, the state's largest utility—a relationship that critics say allowed decades of problems to fester before the deadly San Bruno pipeline explosion of 2010.

Rulemaking Proposed

Drawing on PHMSA data on pipeline construction from 2010 to 2012, the audit recommends that DOT "move forward with a proposed rulemaking to address safety risks—including emergency response planning—from newer gathering pipelines."

Pipeline - San Bruno

California's regulators have long been accused of being too cozy with Pacific Gas & Electric, the state's largest utility—a relationship that critics say allowed decades of problems to fester before the deadly San Bruno pipeline explosion of 2010.

DOT "generally concurred" with the recommendation, saying in its audit response that PHMSA was working on a rulemaking that would revise its pipeline safety regulations.

However, the agency stopped well short of agreeing that it should take over regulation of gathering pipelines.

<p>Rather, it said it had "proposed rules under development to ensure the safety of natural gas and hazardous liquid gathering pipelines that include collecting new information about gathering pipelines to better understand the risk they pose."

Oil and Gas Production

The U.S. currently has about 2.5 million miles of gas and oil transmission pipelines, which still carry the vast majority of output.

But much of that infrastructure is more than 50 years old. Meanwhile, domestic onshore extraction and production of oil and gas are skyrocketing, and pipelines are not keeping up.

<p> In 2013, oil production in North Dakota exceeded pipeline capacity by 300,000 barrels per day.

U.S. Shale Map

The U.S. shale boom has sent oil producers scrambling for options to overtaxed pipelines.

Nationwide, much of the increase has come from shale and tight sandstone. Annual oil production from shale and sandstone jumped sixfold from 2007 to 2012; natural-gas production from those minerals increased fivefold, the GAO said.

Moreover, companies are increasingly focusing on shale plays that yield natural-gas liquids. Dry natural gas requires pipeline transportation, but liquids can be moved overground, offering a cheaper, faster and more nimble delivery network than pipelines.

<p>Whatever the source of the oil and gas, suppliers are scrambling for transportation options.


Booming oil and gas production is forcing suppliers to find transportation options outside pipelines, straining a variety of infrastructures, the GAO says.

And that has major implications for the U.S. surface and waterway transportation networks, air quality, public safety and the environment, GAO said.

Rail Concerns

<p>Much of the audit details strains on the rail system, which has absorbed a breathtaking increase in transporting crude.

Crude Oil Railcar

The GAO is proposing upgrades in railcars to meet their growing role in oil and gas transportation.

Crude-oil carloads moved by rail increased 24-fold from 2008 to 2012, GAO said. Those shipments, over 200,000 miles of track, move mostly through rural areas.

Unit trains up to 120 cars long can now carry three million or more gallons of crude oil. Ironically, however, these shipments are not covered by DOT's emergency response planning requirement, because those regulations apply only to individual cars.

<p>Especially in rural areas strapped for emergency response resources, "this raises concerns," GAO said.


Tagged categories: DOT; Enforcement; Health & Safety; Health and safety; North America; Oil and Gas; PHMSA; Pipelines; Railcars; Regulations; Roads/Highways

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