Alberta’s Energy Minister Ron Liepert has certainly been aggressive in his support of the Keystone XL project, urging US President Obama to, “sign the bloody order,” and saying the the President was, “out of touch with Americans,” who he insists want the pipeline to go ahead. Liepert went on, in the same interview, to say that, “the (Obama) administration today is highly influenced by the environmental movement, and there’s a lot of foot-dragging relative to the approval of projects that are seen to have, quote, environmental impact.” He said that, “if we don’t have either increased access to the U.S. Gulf Coast or a pipeline to the West Coast of Canada, we’re going to be a province that’s landlocked in bitumen.”
Minister Liepert should set his sights on a new target, and that target should be TransCanada Pipelines, the proponent of the Keystone XL project. Why? Because right now the biggest enemy of Keystone XL and Northern Gateway, the pipelines which are supposed to expand access to southern US and Asian markets for our oilsands products, is the Keystone pipeline. Today, in what is an extreme measure reflecting the gravity of the situation, the US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) released an order to shut down the pipeline pending further safety tests, concluding that, “continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment.” The latest spill was small, only 10 barrels, but this was the 12th spill on the pipeline since it opened a little over a year ago.
If you are opposed to Keystone XL, today was a great day, as these incidents cannot help but influence the State Department in their pending decision on the pipeline. The Minister, either independently or more likely in conjunction with the National Energy Board which approved Keystone, should immediately order a similar set of safety tests for the northern portion of the line, and ensure that any safety changes recommended in the US be implemented here in Canada where appropriate.
Furthermore, the Minister and/or the ERCB need to clearly address the 800 pound gorilla in the room – what, if any, role does the transportation of diluted bitumen play in pipeline and fitting wear and tear? The NRDC released a report (PDF) earlier this year which called into question the safety of pipeline transportation of diluted bitumen, or dilbit. The NRDC clearly has an agenda, but their report has resonated with many media outlets. With each spill, whether it be Rainbow or Keystone, you can be sure the same quotes and links to this study will continue to appear.
The ERCB was quick to respond to the NRDC report, saying that, “there is no indication that diluted bitumen, such as that proposed for the Keystone pipeline, is more corrosive than conventional crude oil.” That’s simply not good enough. I expect our regulatory agency to be able to provide an answer that slams the door shut on any safety concerns we and others might have. My conversations with many experts in the field suggest that we have those answers, but far be it from me, the economist, to try to convey them to you. We have researchers working on these issues at Alberta Innovates, in industry, and at our universities. Let’s get our experts front-and-center and let’s make it clear that we are prepared to ensure that our products can be delivered safely to the US market, and over our own territory to the coast – even if it costs us a little today, it can’t be worse than being landlocked in bitumen.
As Minister Liepert clearly understands, the key to the future prosperity of this Province is access to a broader set of markets for our energy products. He must recognize that, in this case, it is not the environmental movement which is damaging our access to these markets.
Mr. Leach, the Government of Alberta has addressed the issue of the NRDC’s report with the U.S. State Department.
The oil sands product moving through these pipelines is either upgraded into relatively light crude oil or is pure bitumen, separated from the sand, clays or other minerals and blended with a lighter hydrocarbon. The key concerns with regard to corrosion are sulphur and water, and both are removed.
Product moved in pipelines must meet defined conditions of quality and composition. This is commonly called a “pipeline specification” or “pipeline tariff specification.” The Keystone XL specification is the same for water and solids content as other pipelines completely unconnected to oil sands.
– David Sands, Public Affairs Bureau, Government of Alberta
Hi David,
Thanks as always for commenting. As you indicate, one of the key issues for corrosion is sulfur which, unless I am mistaken, is not removed from dilbit. I believe this is part of the upgrading process, but please correct me if I am wrong. My understanding is that sulfur is at the heart of all the US refinery re-fits to handle heavier and more sour product including oilsands, orinoco heavy, etc.. Furthermore, my understanding is that napthenic acids present significant corrosion issues for refineries, but I am unsure of the pipeline issues they present. I agree that the issues are not oil sands specific, but certainly from a refinery perspective more sour=more corrosive, and that’s certainly the issue for sour gas. I will keep digging, and keep asking around.
BTW, I think the key is that maintenance follows wear, not time or volume…so even if a product is more corrosive, it need not increase spill risk.
Andrew
No, it’s my bad on the dilbit; I have now been schooled that the sulphur content for dilbit vs the upgraded is addressed by the diluent to bring it down to spec.
(And thank you for catching that.)
Using either method, the product still has to meet the specification, so I submit that the claim it’s “more corrosive” is unfounded (and illogical, for what that’s worth).
-ds
Shareholders should be coming down hard on Trans Canada as well for being poor pipeline managers and, by extension, poor guardians of the growth potential in equity valuation from XL.
Given the history of problems with Keystone, and given that America’s decision over XL has reached an apogee, one would think Trans Canada would be putting in overtime on the operations, maintenance and monitoring of Keystone — precisely to avoid an embarrassing, un-timely, leak such as this.
Unfortunately for shareholders, this didn’t happen — leaving shareholders with nothing more than declining share value and a memories of another case where Albertan business practice and policy could not get out of its own way.