Pipelines vs. Rail Transport for Natural Gas
To relieve pressure on the pipeline infrastructure, natural gas transportation by way of rail and truck has grown in the past few years. According to the Association of American Railroads, oil and gas shipments via rail have increased from 2 percent of all carloads to 11 percent. In 2011, rail transportation tripled in the Bakken area.
Until the pipeline infrastructure can be expanded, this is a viable short-term solution, but how does it compare in safety standards?
Diana Furchtogott-Roth, senior fellow of the Manhattan Institute, writes about the safety issues of rail vs. pipeline transportation in her paper dated June 2013.
Her finding is that pipeline is the safest mode of transportation. Right now, there are about 500,000 miles of pipeline infrastructure that transport natural gas, crude oil, and petroleum products. The pipeline as well as the railroad and highway industries are regulated by The Department of Transportation therefore data is available to show the safety and reliability of the two forms of transportation.
It turns out, according to Furchtogott-Roth, “Americans are more likely to get struck by lightning than to be killed in a pipeline accident.”
Natural gas pipeline
Let’s take a look at the data. There are 321,000 miles of large diameter natural gas transmission and gathering pipeline and two million miles of smaller diameter distribution pipeline. This will increase as homes and vehicles convert to natural gas.
The Pipeline and Hazardous Materials Safety Administration Office (PHMSA) requires incidents be reported with pipeline within certain criteria such as, but not limited to:
- Explosion or fire
- Loss of five gallons of liquid or more in the environment
- Fatality or injury
- Property damage
The Manhattan Institute gathered data from PHMSA related to volume of oil and gas transported, number of accidents, property damage and loss of life. It summarizes that while there were a large number of pipeline accidents, most of them would be considered “minor.”
In order to compare apples to apples, the data were segmented to compare incident rates in road and rail, and here is a summary of their findings:
The incident rates for road were the highest (19.95 billion ton miles per year), followed by rail (2.08), and then natural gas transmission (.89) and the safest – hazardous liquid pipelines (.58 incidents per billion ton miles).
The rates of injury per ton-mile show similar results with road being the worst, followed by rail and then natural gas transmission with hazardous liquid pipelines being the safest.
Although we’d all like to see a place where there are no injuries and fatalities, transportation of oil and gas is necessary and unavoidable. The data in the report factually backs up that pipeline transportation is safer than road and rail as measured by incidents, injuries and fatalities.
According to this Bloomberg report, shipping costs by way of rail is about $3 more per barrel than via pipeline.
With the recent rejection of the Keystone pipeline project by the Obama Administration due to safety issues, producers predict a bottle neck. With rail, capacity is easily increase by adding more cars. It’s a much bigger deal to increase pipeline capacity. Railroad investors such as Warren Buffet are ready to handle that gap moving the oil and gas via rail.
While rail might be a short-term solution, pipeline looks like a better long-term solution given the cost, safety, and reliability.