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Posted by on Mar 31, 2013 in Energy, Featured, Society | 0 comments

A Bad Week For Canadian Oil: Exxon Pegasus Pipeline Bursts In Arkansas, Train Hauling Oil Derails In Minessota

Updated 31 March, 12:55 pm Pacific

Tiny Mayflower, AR (population, 1,631; location, 20 miles northwest of Little Rock, AR) may find itself at the center of a debate about Canadian tar sands and the Keystone XL Pipeline after the Exxon Pegagsus pipeline ruptured on Friday.

barrel of crude oil

Via Seeking Alpha, typical disposition of a barrel of oil.

The major spill was Canadian Wabasca Heavy crude from Alberta. The Canadian Energy Pipeline Association (CEPA) calls Wabasca crude “oil sands” according to Reuters.

Exxon’s recovery team is responding as though the spill were up to 10,000 barrels; almost half that amount in oil and water had been recovered by midnight Saturday. News reports note that 22 homes have been evacuated.

The 50-year Pegasus pipeline pipeline originates in Illinois; this Canadian crude oil was bound for Nederland, TX on the Gulf Coast. In 2009, Exxon expanded the Pegasus pipeline in order “to carry more Canadian crude from the Midwest to the Gulf Coast refining hub.”

Canadian tar sands crude contribute to global climate change because “well-to-wheel” greenhouse gas emissions are on average 14%-20% higher (pdf) than “the weighted average of transportation fuels sold or distributed in the
United States.” One reason is a relatively high level of sulfur.

On Friday, the EPA proposed reducing the amount of sulfur allowed in US gasoline by 2017. Gasoline sold in the US can contain a much higher sulfur content than diesel (limited to 15 ppm). In 2011, Mercedes complained that its newest fuel-efficient engines could not be sold in the US because the sulfur content of American gasoline is excessive. Unlike the US, where sulfur limits are currently 80 ppm at the refinery and 95 ppm downstream, the European Union has reduced sulfur content in gasoline “to near zero.”

The timing of the spill is unfortunate for those pushing to expand Canada’s footprint across the lower 48.

keystone map

Proposed Keystone XL Project; State Department EIS (executive summary)

Earlier this month, the US Senate voted 62-37 (non-binding measure) to support the pipeline. There were 17 Democrats who voted in favor; eight are up for re-election in 2014.

The Obama Administration is currently evaluating (again) an 875-mile long pipeline extension proposed by TransCanada. The 830,000 barrel per day (bpd) Keystone XL pipeline would carry crude from Canada’s oil sands to Steele City, NE and on to the U.S. Gulf Coast (pdf). For processing and export.

The recently released State Department draft supplemental environmental impact statement (pdf) was authored with assistance from experts who had once worked for TransCanada and other energy companies that stand to benefit from the pipeline construction, Mother Jones reported earlier in March.

State released documents in conjunction with the Keystone report in which these experts’ work histories were redacted so that anyone reading the documents wouldn’t know who’d previously hired them. Yet unredacted versions of these documents obtained by Mother Jones confirm that three experts working for an outside contractor had done consulting work for TransCanada and other oil companies with a stake in the Keystone’s approval.

In its first year of operation, the original Keystone I pipeline had “at least a dozen major spills.” The US Department of Transportation shut it down in June 2011, writing that “continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment (pdf).”

One of the Canadian tar sands oil spills in 2010 occurred in Kalamazoo County, MI, and was almost a million gallons. The incident is the worst inland spill in US history. The federal Pipeline and Hazardous Materials Safety Administration issued a $3.7 million fine to Enbridge Energy Partners LP.

Early in March this year, Enbridge said clean-up costs are approaching $1 billion. It’s 2.5 years later and “submerged oil and oil-contaminated sediment exists throughout nearly 40 miles of the [Kalamazoo] river.”

For context, TransCanada has budgeted $5.3 billion for Keystone XL, a budget that does not include advanced leak detection technology.

A Cornell analysis (pdf) of historical spill data concluded that Keystone Xl could generate up to 91 major spills over a 50-year period. The record shows more spills with tar sands crude: from 2007 and 2010, pipelines transporting tar sands oil across the mid-west U.S. “spilled three times more oil per mile than the national average for conventional crude.”

Moreover, TransCanada wildly underestimated the risk for spills. The frequency in the first year was 100 times more than the forecast, according to the Cornell analysis.

What, exactly, is the substance that is “spilling”? Tar sands oil (bitumen) is diluted for transport by thinning the bitumen with some other petroleum product, such as light natural gas liquids.

In January 2013, prominent climate scientists opposed the Keystone XL because it would “enabl[e] more tar sands production.”

[T]he Keystone pipeline represents the ability to carry away an additional 830,000 barrels per day—and the Albertan tar sands are already bumping up against constraints in the ability to move their product. That has led some to begin shipping the oil by train, truck and barge—further increasing the greenhouse gas emissions… (emphasis added).

On Wednesday, a train carrying 30,000 gallons of Canadian crude oil derailed in Minnesota. On average, Canada shipped about 40,000 barrels per day (multiply by 42 to get gross gallons) to the US in 2012. One barrel of oil is 42 gallons and produces on average 19.5 gallons of gasoline.

Officials now believe that less than 20,000 gallons spilled from the mile-long Canadian Pacific Railway train. However, on Thursday Canadian Pacific officials could not say whether the crude oil was from conventional oil fields or from the Alberta tar sands.

How common are rail spills?

As crude by rail has increased in the United States, so have spill incidents. Of the 132 incidents that occurred while trains were in transit in the United States between 2002 and 2012, 112 occurred in the last three years, according to data from the Pipeline and Hazardous Materials Safety Administration.

Tar sands oil is dirty and inefficient

One prominent scientist, James Hansen, has been speaking out about climate change since 1988.

“Going after tar sands—incredibly dirty, destroying the local environment for a very carbon-intensive fuel—is the sign of a terribly crazed addict.”

One measure of efficiency is something called Energy Return on Energy Investment (EROI). At least one scientist argues that the ratio between EROI and the net energy to society is critical. Although there is little difference to society when energy sources have EROIs above 8, the drop off is exponential below 8.

For example, a drop in the EROI of oil extraction from 50 to 10 would result in a change in net energy flow from 98% (of the gross energy flow) to 90%. Yet, a drop in EROI from 10 to 2 would result in a net energy change from 90% to 50% of the gross energy flow.

And what is the EROI for tar sands? Much less than 10.

EROI Mar 2013

And the EROI for traditional drilling has dropped dramatically because of diminishing energy returns.

At the turn of the century, it took but one barrel of oil to find and liquidate 100 barrels. But ever since the glory days of the Texas oil fields, the EROI ratio has slowly diminished on the continent. Charles Hall, a prominent energy analyst and ecologist at the State University of New York, estimates that EROI for U.S. oil production has dropped from 24:1 in 1954 to 11:1 in 2007. As companies employ more energy to drill or fracture deeper formations, their overall energy returns grow smaller…

According to Peter Tertzakian, the chief energy economist at ARC Financial Corporation (and a very astute energy commentator), the EROI for the oil sands amounts to 7:1 for extraction and drops to 3:1 after it has been upgraded and refined into something useful such as gasoline … In fact, a detailed energy balance analysis sponsored by the Alberta Government for SAGD suggests that its EROI is close to 1:1. That makes bitumen a source of energy as pathetic and tragic as corn ethanol. (emphasis added).

Yet the oil industry spends almost nothing on R&D, “barely” 0.3% of sales. Big pharma spends 19%, followed “closely” by the auto industry.

Not a good week for Exxon

Earlier in the week, the U.S. Department of Transportation fined Exxon $1.7 million as the result of a 2011 spill in the Yellowstone River. In that spill, the Silvertip pipeline leaked about 1,500 barrels, a fraction of this week’s spills.

In 2011, US daily consumption of oil was 18.83 million barrels. Canadian tar sands produce approximately 1.6 million barrels per day and most of that is exported to the United States.

Also in 2011, we spent $1 billion a day on oil; 16% of that was spent on Canadian tar sand crude.

built to spill