US Dept. of Transportation orders TransCanada to halt activity on Keystone I

Keystone Pipeline - Image Courtesy of the Vancouver Sun

Effective immediately, the US Department of Transportation has ordered TransCanada to suspend all activity on the Keystone I pipeline. According to the New York Times, the order was issued by the Transportation department’s Pipelines and Hazardous Materials Safety Administration. “Effective immediately,” the PHMSA claims, “this order prevents TransCanada from restarting operations on their Keystone crude oil pipeline until P.H.M.S.A. is satisfied with the ongoing repairs and is confident that all immediate safety concerns have been addressed.”

The order to suspend all operation seems to have been based on the unbelievably poor performance of the Keystone I in transporting crude oil from northern Alberta to Cushing, Oklahoma. The pipeline that TransCanada boasted would only see one spill (if any) in its first full year in operation has already seen at least 12 reported spills without even completing one full operating year, according to the Sierra Club. The worst of these spills occurred in early May when 400 barrels of oil (10,000 gallons) spilled in North Dakota. I never heard about this in the mainstream news, and I wonder whether we have reached the point where large-scale oil spills are common enough to not be reported? Or has the threshold of ‘large-scale’ skyrocketed after the BP oil spill in the Gulf of Mexico?

Probably both.

What adds greater urgency to the matter is that the US State Department is currently performing an environmental assessment of the Keystone XL, TransCanada’s $7B proposed pipeline to transport crude oil directly from the Tar Sands to heavy-duty refineries in Texas on the Gulf of Mexico. However, many problems exist, aside from the unbelievably obvious problems with the plan! Tar Sands oil is thicker and needs to be diluted with unknown chemicals to thin the solution for ease of shipment; the proposed pipeline would intersect important agricultural and ranching interests, to saying nothing of running above the MidWests aquifer; and to throw just one more problem your way, but I could go on, crude oil is infinitely more corrosive than conventional oil, and will likely eat away at the pipeline over a much shorter period of time. This will drive up repair and maintenance costs, while increasing the likelihood of spills.

But here is the kicker: TransCanada somehow got themselves exempt from having to use thicker steel for the pipeline itself. As the Times points out, “TransCanada has been granted waivers that effectively allow it to use thinner steel than would normally be required in the United States.”

Amazing! Thinner metal, corrosive oil, toxic chemicals in the oil to thin it, and a pipeline running atop the Ogallala aquifer and through parts of Americas breadbasket. What more could you hope for?

Well, we could hope that a cease and desist order from the Deptartment of Transportation would be enough to slow Oilsands production, but that would be naive, wouldn’t it?

Behold – yet another New York Times article in which representatives from TransCanada and Alberta’s Energy Minister say that “one way or another — by rail or ship or a network of pipelines — Canada will export oil from its vast northern Oilsands projects to the United States and other markets,” notably China.

In the absence of a mega-pipeline to transport their crude oil, TransCanada is looking into container shipment by cargo boats to China, or shipment via rail cars from Alberta to the Gulf Coast. Rail cars have the added benefit to TransCanada of being less heavily regulated, so much so that Glen Perry, president of Altex, a Calgary-based company that specializes in shipping oil by rail, could claim – presumably with a straight face – that shipping oil by rail is “no different than shipping grain.”

BP Oil Spill

Sure it is. A lot different. An overturned rail car holding grain will simply mean higher bread prices for a day and 10,000 fewer loaves of Dempsters. Oil spills look like this.

While neither alternative is without danger, I would hope that setbacks like this would give oil companies pause, but they never seem to. There is always a Plan B, typically as fraught or dangerous as Plan A. And if 12 leaks in less than 12 months on a line promised to deliver no more than 1 spill is not enough to force TransCanada to reconsider Keystone XL, nothing will.

And as Alberta’s energy minister Ronald Liepert argued, “while Canada would prefer to sell its oil to the United States, ‘this commodity will go someplace.'”