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Full Report: MOVING OIL BY PIPELINE: EXAMINING THE FACTS
Decisions about the permitting or construction of pipelines should be based on facts, not fear.
Contributed by Robert Lyman © 2016
The purpose of this paper is to examine the actual safety performance of oil pipeline systems in Canada and the United States, especially as this relates to oil spills. The paper will also describe the measures now being taken by the petroleum industry and governments to prevent oil spills and to ensure that, if they occur, the results are minimized and mitigated. Finally, it will discuss exactly what happens when, despite best efforts, a large spill occurs.
In 2015, the federally regulated oil pipeline system in Canada consisted of 38 companies, including 11 that transport both oil and natural gas. In 2015, they transported 1.4 billion barrels of oil along 21,637 kilometres of pipelines. Under Canada’s Constitution, pipelines entirely within the boundaries of a province are regulated by the government of that province. In Alberta, the Energy Resources Conservation Board (ERCB) regulates 886 licensees operating approximately 415,000 km of pipelines within the province. These pipelines carry various gases and fluids and vary in length and size. Crude oil pipelines constitute about 20,000 km of the total. The British Columbia Oil and Gas Commission (OGC) regulates 120 licensees operating approximate 39,000 km of pipeline within the province. Of these, crude oil pipelines constitute about 2,400 km. In Saskatchewan, the Ministry of the Economy regulates 25 licensees operating about 23,000 km of pipelines, of which about 4,200 are crude oil pipelines.
In both Canada and the United States, the oil pipeline industry has a remarkably good record of avoiding spills. Of the total volume of oil moved annually on federally regulated pipelines in Canada in 2015, 99.999% of the oil was delivered safely with no spills. Of the 1.4 billion barrels of oil transported, less than 400 were spilled. In the United States, the same 99.999% record of safe delivery applies. The number of accidents and incidents on crude oil pipelines has been declining for many years. Similarly, in Alberta, where most of the intra-provincial oil pipeline capacity is located, the number of pipeline incidents and spills has been stable or declining for at least 20 years.
The reason for this is that governments and industry have implemented a comprehensive system of regulation, standards, management practices, and planning to ensure pipeline integrity, to avoid or at least minimize the risk of spills and to ensure effective cleanup if a spill occurs. Within that system, industry bears the primary responsibility to ensure the safe design and operation of pipelines. It exercises this responsibility through constantly researching and applying new technologies; sensing and detecting leaks through systems that operate 24 hours a day; investing in pipeline safety ($1.4 billion per year in Canada); and carrying out regular inspections and audits of pipeline safety systems.
If an incident occurs, the National Energy Board holds the company responsible and accountable for cleanup and site remediation. The federal Pipeline Safety Act sets out absolute liability of $1 billion for companies operating major pipelines. If the pipeline company is at fault or negligent, the liability is unlimited. This provides a powerful financial incentive for companies to operate their pipeline facilities safely.
Of course, it is not possible to entirely eliminate the risk of a spill, any more than it is possible in every other aspect of life to reduce risks to zero. This paper describes the consequences of a major spill near Marshall, Michigan in 2010. In one of the worst cases in twenty years, there were no injuries to people. The use of surface waters affected by the spill for drinking, irrigation and watering of livestock was interrupted for one month. 52 birds, 40 muskrats, 106 turtles and snakes and 42 fish died. The company responsible was required to pay almost $900 million in fines and other expenses to ensure that this does not happen again.
Millions of people depend upon the supply of refined oil products for transportation, industrial production, petrochemicals and the thousands of products and services that people use in our modern industrialized society. Further, hundreds of thousands of people work very hard to ensure that the transportation of crude oil and refined oil products moves across our lands with the utmost care given to oil spill prevention, preparedness and response. Comprehensive liability, compensation and governance regimes are in place to make sure that companies have a strong financial incentive to avoid spills and to clean them up as soon as possible if they do occur. Decisions about the permitting or construction of pipelines should be based on facts, not fear.