A recent report, Oil & Gas Pipelines Market Report 2014-2024, clearly stated that pipelines are the most efficient and economic means of transporting oil and gas from where it is extracted to where it will be processed and consumed. Pipelines are increasingly being used to transport oil and gas as it combines efficiency and safety. Increasing demand for energy in regions where production is limited necessitates the need for safe and economic transportation from producers to consumers through pipelines. This supports the growth of the pipelines market, particularly in the Asia Pacific and Africa regions.
According to this report the global oil and gas pipelines market will worth $55.01bn in 2014, while the new pipelines length to be added during that year will be 10,812km (6,487 miles). The lead analyst of the report cited that:
“The outlook for oil and gas pipelines for the next five years is positive. Spending will increase in both oil and gas for this period while the market will experience stability during the latter years of the ten year forecast. The new pipelines length will mostly be added in the Asia Pacific region due to increasing spending and smaller development costs per kilometre. Africa will experience strong growth in the longer term.”
Oil prices, energy demand and emerging market growth are key factors in determining the future of oil and gas pipelines. The higher the oil prices the larger the incentive for new pipeline developments. Even though the oil price is inevitably uncertain, thus making long term investments less appealing, forecasts predict rising prices over the next 30 years. The largest part of energy demand growth over the next ten years will come from the emerging markets, boosting the need for hydrocarbon sources in these regions.
Energy is critical to Canada’s economy and Canadians’ well-being. In 2012, Canada produced over 537,000 cubic meters per day (3.38 million barrels per day) of crude oil and almost 400 million cubic meters per day (13.9 billion cubic feet per day) of natural gas. Most of this energy was shipped by pipeline from western provinces to markets in other provinces or the United States. Canadians depend on pipeline transportation systems to deliver natural gas, natural gas liquids, crude oil, and petroleum products across Canada. These pipelines deliver energy safely, reliably and efficiently, connecting markets in North America and the world which is regulated by the National Energy Board (NEB). The Board regulates approximately 73, 000 km (43,800 miles) of pipelines which transported over $134 billion worth of energy products in 2013 at an estimated transportation cost of $7.1 billion.
The NEB is an independent federal agency established in 1959 by the Parliament of Canada to regulate international and interprovincial aspects of the oil, gas and electric utility industries. The purpose of the NEB is to regulate pipelines, energy development and trade in the Canadian public interest. These principles guide NEB staff to carry out and interpret the organization’s regulatory responsibilities. The NEB is accountable to Parliament through the Minister of Natural Resources Canada.
Interprovincial and international oil and gas pipelines and additions to existing pipeline systems under federal jurisdiction require the Board’s approval before they may be built. Public oral or written hearings are held for pipeline construction applications exceeding 40 kilometres in length or any other applications at the discretion of the Board. Pipelines which lie completely within the borders of a single province are regulated by that province’s regulatory body.
In determining whether a pipeline project should proceed, the Board reviews, among other things, its economic, technical and financial feasibility, and the environmental and socio-economic impact of the project.
To ensure that engineering, safety and environmental requirements are met; the Board audits and inspects the construction and operation of pipelines. Since February 1987, Board inspectors have also been responsible for enforcing Part II of the Canada Labour Code, applying to the occupational safety and health of pipeline workers in the field.
The NEB shares responsibility with the Transportation Safety Board for incident investigation. The NEB investigates pipeline incidents to determine whether its regulations have been followed and if those regulations may need to be changed. The Transportation Safety Board investigates the cause and contributing factors. The NEB also monitors excavation activity by third parties near pipelines to ensure compliance with existing regulations.
On May 14, 2014, the federal Minister of Natural Resources, Minister of Transport, and Minister for the Federal Economic Development Initiative for Northern Ontario announced new measures designed to strengthen Canada’s pipeline safety system. These new measures reinforce the polluter pays principle and give the NEB greater regulatory control over Canada’s pipeline system, and include the following:
- Introducing absolute liability for all NEB-regulated pipelines, meaning that companies will be liable for costs and damages irrespective of fault, and companies continue to have unlimited liability when at fault or negligence;
- Developing a strategy with industry and Aboriginal communities to increase Aboriginal peoples’ participation in pipeline safety operations, including planning, monitoring, incident response, and related employment and business opportunities;
- Providing the NEB with authority to order reimbursement of any cleanup costs incurred by governments, communities, or individuals;
- Giving the NEB the ability to provide guidance on the use of the best available technologies used in federally-regulated pipeline projects, including materials, construction methods, and emergency response techniques; and
- Providing the NEB with authority and resources to assume control of incident response if a company is unable or unwilling to do so.
In July 2013, the federal government had also instituted administrative monetary penalties for individuals and companies that violate the National Energy Board Act. The penalties are up to $25,000 for individuals and $100,000 for corporations for each day of non-compliance with federal safety requirements.
Pursuant to the federal plan for Responsible Resource Development, the NEB has increased annual inspections of oil and gas pipelines by 50 percent, and doubled the number of comprehensive audits to improve pipeline safety across Canada. The federal government reports that between 2008 and 2011, 99. 999 percent of oil and petroleum products transported on federally regulated pipelines were carried out safely. On these pipelines, the rate of spillage in Canada was 57 percent lower than in Europe and 60 percent lower than in the United States over the past decade.
The fact of the matter is that the biggest risk to pipelines arises when a landowner or a contractor conducts unauthorized excavation on the right of way. To minimize this risk, TransCanada runs an ongoing public awareness program to ensure local governments; businesses and residents notify them before they plan construction activities.
TransCanada invest hundreds of millions of dollars each year to maintain the integrity of their system. Their operators monitor their pipeline system through a centralized high-tech Operational Control Centre (OCC) – 24 hours a day, 365 days a year. They use satellite technology that sends data to their monitoring centre every five seconds. If a drop in pressure is detected, they can isolate any section of their pipeline within minutes by remotely closing valves on the system.
TransCanada will put in place the following safety measures to keep pipelines operating safely:
- Shut-off valves are located at pump stations and at regular intervals along the pipeline between pump stations. If there is a drop in pressure, the shut-off valves can be remotely closed within minutes, shutting down the pipeline;
- Regular inspections of the pipeline route are performed by low-flying helicopters and airplanes. Pilots look for potential hazards (e.g. unauthorized activity, soil disturbances) that could compromise the integrity of the system. They also regularly use leak detection equipment to identify small leaks;
- State-of-the-art satellite technology sends data from multiple data points to their monitoring centre every five seconds;
- Cover surveys are conducted when we suspect wind or water erosion may have reduced the depth of ground cover over a pipeline section;
- Geotechnical monitoring is used to detect signs of erosion or movement where the pipeline crosses bodies of water or significant slopes;
- Corrosion is prevented with an extremely low-voltage electric current called “Cathodic Protection”;
- Their highly trained staff monitor their pipeline system through a centralized high-tech control centre — 24 hours a day, 365 days a year;
- Regular maintenance is performed on all portions of the pipeline system. All pump stations and valves undergo routine maintenance in accordance with industry and government standards;
- In-line inspection, which is also referred to as “pigging”, searches for any locations where corrosion may have occurred. Specialized internal inspection devices, called Smart PIGS, periodically travel through the pipeline collecting data. The data is then analyzed to determine if there are areas of concern requiring further investigation; and
- TransCanada conducts investigative digs based on the data analysis from “pigging” and other information. Sections of pipeline are excavated to investigate their condition and to ensure integrity. Detailed engineering assessments are used to determine if and when repairs are required.
Pipelines are the safest form of oil transportation that exists. According to Canadian Energy Pipeline Association, the amount of liquid spilled from pipelines in Canada compared to the total amount transported between 2002 and 2011 is equivalent to three teaspoons dripped out of a gasoline nozzle over the course of 50 fill-ups of 50 litres each.
TransCanada has safely and successfully converted pipelines in the past, the most recent example being the conversion of Line One of the original natural gas mainline for the Keystone Pipeline. Their construction standards are the highest in the industry. Using the latest, most proven technology and techniques, they will ensure the safe and reliable delivery of oil with minimum impact to land and the environment.
Here are some of the industry-leading safety measures that TransCanada uses during construction of their pipelines:
- Only high-strength steel and top quality welding and inspection techniques are used for our pipelines;
- Use of corrosion-resistant protective pipeline coating;
- Subsoil is carefully screened to remove any rocks or sharp objects that might scratch the epoxy coating on pipes;
- Thicker-walled pipes and other safety precautions are taken when the pipeline crosses roads or railway tracks, or is near waterways and communities;
- X-rays or an ultrasonic process is used to test welds for even the most minuscule defects;
- A record is kept of each weld;
- After passing inspection, each weld is coated with epoxy resin; and
- Completed sections of pipeline are pressure-tested by pressurizing them to a level far greater than they will experience during normal operation. If a leak occurs during testing, they repair or replace the affected section of pipe.
According to the Final Supplemental Environmental Impact Statement on Keystone XL Project published by the Department of State Bureau of Ocean and International Environmental and Scientific Affairs, the proposed Project would include processes, procedures, and systems to prevent, detect, and mitigate potential oil spills.
Many commenters raised concerns regarding the potential environmental effects of a pipeline release, leak, and/or spill. Impacts from potential releases from the proposed Project were evaluated by analyzing historical spill data. The analysis identified the types of pipeline system components that historically have been the source of spills, the sizes of those spills, and the distances those spills would likely travel. The resulting potential impacts to natural resources, such as surface waters and groundwater, were also evaluated as well as planned mitigation measures designed to prevent, minimize, and respond to spills.
To assess the likelihood of releases from the proposed Project, risk assessments were conducted addressing both the potential frequency of releases and the potential crude oil spill volumes associated with the releases. The assessments used three hypothetical spill volumes (small, medium, and large scenarios) to represent the range of reported spills in the Spills Database of the Pipeline & Hazardous Materials Safety Administration (PHMSA).
PHMSA collects information that is available to the general public on both reportable pipeline incidents that have occurred and the total length of pipelines in operation from which the incidents have occurred.
Information collected for each incident includes:
- The date of each reportable incident;
- The hazardous liquid commodity associated with the pipeline involved in the incident;
- The volume of hazardous liquid commodity spilled in the incident;
- The part of the pipeline system from which the spill occurred;
- The diameter of the hazardous liquid pipeline involved in the incident; and
- The cause of the incident.
The total mileage of pipelines in operation in the United States is collected for each of the following:
- The type of hazardous liquid commodity transported; and
- The diameter of the pipeline.
In addition, for each individual pipeline system in operation in the United States, the number of breakout tanks in use is also collected. Defined in this document, linear elements refer to mainline pipe and girth welds, and discrete elements are pipeline components such as pump stations, mainline valves, and breakout tanks.
Most spills are small. Of the 1,692 incidents between 2002 and 2012, 79 percent of the incidents were in the small (zero to 50 bbl) range, equivalent to a spill of up to 2,100 gallons. Four percent of the incidents were in the large (greater than 1,000 bbl) range. Here is a brief description of each category:
- Small Spills:
The potential impacts from small spills of oil would typically be confined to soil immediately surrounding the spill, and would have little effect on nearby natural resources. These types of spills would generally be detected by maintenance or operations personnel and addressed through repair of the leak and remediation of the impacted area by removal of impacted soil and cleaning of stained concrete or containment areas;
- Medium Spills:
With medium spills, a release could occur as a subsurface or surface event depending upon the cause. Similar to a small spill, a slow subsurface leak could potentially reach a groundwater resource and, if the leak is faster than the soil can absorb the oil, could seep to the ground surface. Once the migrating oil leaves the release site, impacts to soil, vegetation, wildlife, and surface water along the flow path would occur. Depending on how quickly it is remediated, some of the oil might tend to pool in low areas and potentially infiltrate back into the soil and to groundwater depending on the depth to groundwater; and
- Large Spills:
With a large spill, the majority of the spill volume would migrate away from the release site. The potential impacts from a large spill would be similar to the impacts from the medium-sized spill, but on a much larger scale. More oil would seep into the soil over a larger area and could infiltrate deeper into the soil. Once the spill reaches the surface, the oil would flow following topographic gradient or lows (e.g., gullies, roadside drainage ditches, culverts, or storm sewers) and eventually to surface water features.
If the release enters flowing water or other surface water features, the extent of the release could become very large, potentially affecting soil, wildlife, and vegetation along miles of river and shoreline. As has been seen in recent large spills, sinking oil can be deposited in river or stream bottoms and become a continual source of oil release over time.
As far as the “Prevention and Mitigation” is concerned in order to reduce the risk of spills, if permitted Keystone has agreed to incorporate additional mitigation measures in the design, construction, and operation of the proposed Keystone XL Project, in some instances above what is normally required, including:
- 59 Special Conditions recommended by PHMSA;
- 25 mitigation measures recommended in the Battelle and Exponent risk reports; and
- 11 additional mitigation measures.
Many of these mitigation measures relate to reductions in the likelihood of a release occurring. Other measures provide mitigation that reduces the consequences and impact of a spill should such an event occur. Mitigation measures are actions that, if the proposed Project is determined to be in the national interest, Keystone would comply with as conditions of a Presidential Permit.
If a spill occurred, the degree of impact to water, people, livestock, soil, and other natural resources would depend on the distance from the spill source. A large spill of 20,000 bbl, for example, could have a combined overland and groundwater spreading of up to 2,264 feet (or 0.42 miles) from a release point. Oil could spread on flat ground up to 1,214 feet from the proposed pipeline, depending on the volume spilled. If oil reached groundwater, components in the oil, such as benzene, could spread in groundwater up to an additional 1,050 feet down-gradient (essentially, downhill underground and on land) of the spill point.
The proposed Project would, if permitted, include processes, procedures, and systems to prevent, detect, and mitigate potential oil spills that could occur during construction and operation of the pipeline. These would include a Spill Prevention, Control, and Countermeasure Plan as well as a Construction, Mitigation, and Reclamation Plan (CMRP). In the event of a large leak, Supervisory Control and Data Acquisition sensors would automatically detect noticeable changes in pipeline pressure and flow rates. Leaks and spills could also be identified during routine.
The reality is that pipeline incidents, while rare, do still happen. Pipeline operators prepare for the unlikely event of an incident through control room technologies and training to stop the flow of a pipeline quickly upon a release. Operators also develop emergency response plans, deploy resources, and work frequently with local first responders in order to reduce the impacts of any release. Pipeline operators work with the NTSB and PHMSA to determine incident causes, fix problems, and pay fines when appropriate.
Liquid petroleum pipelines are usually the only feasible way to transport significant volumes by land over long distances. Without pipelines, our streets and highways would be overwhelmed by the trucks trying to keep up with the nation’s demand for petroleum products.
- Oil & Gas Pipelines Market Report 2014-2024 by Visiongain;
- Canadian Pipeline Transportation System by Canadian National Energy Board (2014);
- The National Energy Board (NEB);
- Historical Pipeline Incident Analysis;
- Safety Operations – TransCanada;
- The Basics of Safety – TransCanada;
- Designed to Last for Decades – TransCanada;
- Operating Safety – TransCanada;
- Federal Government Announces New Measures to Strengthen Regulations for Pipeline Safety;
- Executive Summary – Final Environmental Impact Statement for the proposed Keystone XL Project; and
- Pipeline 101.