Pro-con: Should Texas invest in pipelines to move oil and gas?

Sara  Sneath By Sara Sneath

Aug. 31, 2014 at 6:21 p.m.

Work crews are busy digging a trench that will hold a flow line bringing oil from a new rig site to holding tanks about a half mile away in the Aransas National Wildlife Refuge. The network of pipe line runs along the roadway making it easier to detect leaks.

Work crews are busy digging a trench that will hold a flow line bringing oil from a new rig site to holding tanks about a half mile away in the Aransas National Wildlife Refuge. The network of pipe line runs along the roadway making it easier to detect leaks.   Frank Tilley for The Victoria Advocate

More than 2.6 million miles of pipelines, enough to circle the Earth about 100 times, transport the majority of oil and natural gas in the U.S., according to the Pipeline and Hazardous Material Safety Administration.

But the ongoing boom in Eagle Ford Shale oil production has outpaced the transit capacity of Texas pipeline infrastructure.

The oil and gas industry is predicted to spend $30 billion this year investing in projects in the Eagle Ford Shale, much of this investment is anticipated to be in pipeline infrastructure, according to GlobalData.

Transport by tanker truck, barge and railroad has increased to fill the gaps.

But risks come with each form of transit. While trucks spill the largest amount of oil, barge spills, such as the one in the Houston Ship Channel in March, pose the greatest danger to sensitive ecosystems.

"I think the oil and gas industry wants to make sure that we work with South Texas to get the best mode of transportation to get the product to market," said Omar Garcia, the president and CEO of South Texas Energy and Economic Roundtable.

An estimated 1.5 thousand barrels of oil and 6.5 million cubic feet of gas will be produced per day in the Eagle Ford Shale Play in September, according to the U.S. Energy Information Administration. There are four modes of transportation to move the product: by rail, truck, barge or pipeline.

Which type of transit should Texas invest in?

Pro: Pipelines are safer and cut down on traffic

Calhoun County Port Authority shipped less fuel this year than last year because of a movement to use pipelines to transport fuel.

The loss in traffic came when BHP Billiton ended its contract for shipping in favor of pipeline transport, the authority's director, Charles Hausmann said.

"BHP Billiton believes pipelines offer the safest means of transporting crude oil from our Eagle Ford well sites to market, and we are seeking to increase the volume we transport via pipeline as more capacity becomes available," BHP spokeswoman Jaryl Strong wrote in an email.

From 2000 to 2009, pipelines transported about 70 percent of crude oil and petroleum products in the U.S., according to the Association of Oil Pipe Lines. Pipelines are still considered the best option for the energy industry to transport its product.

Though ships transporting oil are historically less likely to spill than pipelines, when they do spill, they spill a lot. A March collision in the Houston Ship Channel released more barrels of liquid than all reported oil and natural gas spills in the Crossroads during the past five years. Oil spills in water are also typically more expensive to clean up and damaging to sensitive ecosystems.

But the mode of transport with the worst track record is trucks. Small truck spills at four-way stops are a common occurrence in Karnes County, said Karnes County Sheriff Dwayne Villanueva.

In March, a truck carrying crude oil lost its load, leaving a 9-mile trail of oil along Farm-to-Market Road 81 and Farm-to-Market Road 1144. The company that owned the truck did not own up to the spill, leaving the Texas Department of Transportation to pick up the bill.

The Victoria Advocate submitted a Freedom of Information Act request Aug. 26 for the cost of the cleanup. The request has not been filled.

A game camera caught a glimpse of the truck that spilled the liquid, identifying On Point Services LLC as the responsible party, Villanueva said. The Texas Railroad Commission is pursuing legal action against the company, commission spokeswoman Michelle Banks said.

Finding substantial evidence to identify the responsible company took some leg work, Karnes County Judge Richard Butler said.

"If a pipeline sprung a leak and spilled its contents on to somebody's land, it would be pretty easy to track down who is responsible for it. This took some detective work before they were able to track these folks down," he said.

Once pipeline infrastructure is in place, they become the cheapest mode of transportation, said Omar Garcia, South Texas Energy and Economic Roundtable president and CEO.

Pipelines can also help alleviate heavy traffic and damage to roads because a single truck can only carry about 200 barrels of liquid or about one-third that of a railcar.

With counties having to pick up the cost of maintaining road wear and tear from oil-field traffic, pipeline infrastructures could be a means to eliminate a portion of that cost.

"We're hoping, eventually, that all wells in Karnes County producing liquid hydrocarbons will be piped out. There won't be any need for trucks, and we won't see the presence of any big, heavy tank trucks carrying hydrocarbons to the refinery," Butler said. "That would certainly be a big plus."

Con: Oil should be shipped by barge, truck or rail

The prospect of the Keystone XL pipeline has raised concerns over the most common method of oil transit.

In the context of the 175,000 miles of oil pipeline and more than 2 million miles of natural gas pipelines, spills are uncommon.

But they're not unheard of.

From 2009 to 2013, 601 significant pipeline spills were reported in the U.S. These incidents resulted in 14 deaths, 67 injuries, about $510 million worth of damage and 81,982 barrels of oil spilled, according to the Pipeline and Hazardous Materials Safety Administration.

In late January, a pipeline carrying condensate ruptured on Patsy Warzecha's property, about about 6 miles southwest of Westhoff. The spill affected about 5 acres of her land and a small pond.

"A 2-foot square would be too much, frankly," Warzecha said.

Warzecha was on vacation when the rupture happened and was shocked to hear a break was possible on a pipeline that was only about a 11/2 years old, she said.

Two other pipeline ruptures in DeWitt County happened in about a four-month period, according to Railroad Commission of Texas records. The spills were the result of corrosion issues in portions of BHP Billiton Petroleum's underground gathering pipeline system in rural DeWitt County, Maripat Sexton, the company's spokeswoman, wrote in an email.

The effected sections of the pipelines were immediately shut down, government authorities notified and cleanup efforts initiated, she wrote.

"We have engaged with regulatory authorities and landowners since we first became aware of this issue. BHP Billiton is conducting a full investigation and has mobilized a dedicated team to assess this pipeline system and implement a remediation plan," Sexton wrote.

Tank vessels and barges spill less per ton of oil moved 1 mile than pipelines, railroad cars or trucks, according to data compiled by the Congressional Research Service. Railroad cars also spill less than pipelines, which spill less than trucks.

The Eagle Ford's proximity to ports makes transit by barge a viable option.

Three years ago, the Port of Victoria had no history of shipping oil, port spokesman Mike Sizemore said. But after the first year of Eagle Ford production, the Port of Victoria shipped about a million barrels per month to refineries in Louisiana and Houston.

Last year alone, the port shipped about 18 million barrels, and at a rate of more than 2 million barrels per month, the port expects to surpass that number this year.

Barging oil and natural gas is cheaper than rail and truck transit and emits less, Sizemore said. Railroad transit requires building and maintaining tracks, but the ocean is free.

"It just takes longer. It's a slow process," Sizemore said of shipping oil by barge.

Pipelines are still being built to move oil from production sites to the port, which currently receives cargo by truck.



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