Oil and Gas Pipelines have a Hard Week

Last Sunday Dominion Energy and Duke Energy cancelled the Atlantic Coast Pipeline announced that they have cancelled the Atlantic Coast Pipeline, despite last month’s victory where the Supreme Court upheld the easement to cross the Appalachian Trail granted by the Forest Service. Nonetheless, after spending an estimated $3.4 billion, the Atlantic Coast still faced legal challenges.

Thomas F. Farrell, II, Dominion Energy chairman, president, and chief executive officer, and Lynn J. Good, Duke Energy chair, president, and chief executive officer, released the following joint statement:
“We regret that we will be unable to complete the Atlantic Coast Pipeline. For almost six years we have worked diligently and invested billions of dollars to complete the project and deliver the much-needed infrastructure to our customers and communities. Throughout we have engaged extensively with and incorporated feedback from local communities, labor and industrial leaders, government and permitting agencies, environmental interests and social justice organizations. We express sincere appreciation for the tireless efforts and important contributions made by all who were involved in this essential project. This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States. Until these issues are resolved, the ability to satisfy the country’s energy needs will be significantly challenged.”

The next day to emphasize the challenges and legal uncertainty faced by large infrastructure projects the U.S. District Court for the District of Columbia, cancelled a federal permit that had allowed the Dakota Access Pipeline to operate while the United States Army Corps of Engineers, which had granted the permits for the pipeline, conducted an extensive environmental impact review. The Court ordered the pipeline that runs from North Dakota to Illinois to shut down pending an environmental review and be emptied of oil by August 5, 2020.

The same day the U.S. Supreme Court upheld a federal judge’s rejection of Nationwide Permit 12, is a key requirement for oil and gas pipelines in the U.S. It allows them to be built across waterways. The court’s order upheld a Montana judge’s April ruling that federal officials violated the Endangered Species Act by issuing the permit to Keystone XL without properly assessing the impact on it could have on wildlife.

Keystone XL is a project of TC Energy (formerly TransCanada). There is currently a pipeline Keystone I that runs east from Hardesty Saskatchewan to Manitoba and then south through the Dakotas to Steel City, Nebraska. It is a less direct route and is a lower volume pipeline than the proposed Keystone XL. The Keystone XL would replace Keystone I with a a new and better pipeline. Keystone I is old and this would be an upgrade to the oil transport infrastructure. The existing Keystone II runs from Steel City to Cushing, Oklahoma at the Oklahoma storage facilities. Keystone III running from the Cushing Oklahoma to the Nederland, Texas began delivering crude oil from Cushing, OK, to the oil refineries in Texas in the beginning of 2014.

 

The Keystone XL Pipeline has been very controversial. At first most of the environmental controversy focused on the porous soils of the Sandhills and fears of a possible oil leak into one of the nation's most important agricultural aquifers. Moving the pipeline away from the aquifer should have mitigate that concern, but the controversy grew. Many who oppose the Keystone XL pipeline want to prevent the development of the oil sands resources in Canada to prevent the acceleration of global warming. The Canadian oil sands have been known for decades, but until oil prices rose and technology improved these oil deposits were too expensive to exploit beyond the limited scope of surface mining. Advances in technology in both oil sand extraction and refining techniques and rising oil prices altered the economics and have made the extraction of oil sand possible, but the oil cost more in energy use to mine and process. Now this controversy has expanded on climate grounds to oppose all pipeline infrastructure.

At the same time as the Keystone XL decision this week, the Supreme Court cleared the use of the Nationwide Permit 12 for some 70 other pipelines, allowing their construction to continue as well as the protests. Protest and litigation have become weaponized. Billions of dollars have be spent for nothing and wasted, when there are real human needs and needs for maintaining our infrastructure. We must stop this waste and be honest about what the questions and issues are.

To some, possibly many, protesting and litigating to stop the pipelines, the issue is simply to stop the use of all fossil fuels. At this moment in time that is unreasonable and unworkable. According to the U.S. Energy Information Administration, the major energy sources in the United States are petroleum-gas and oil (37%), natural gas (32%), coal (11%), nuclear (8%), and renewable energy primarily biomass and hydro power generation (11%). Though renewable energy has been growing at an amazing pace, at 11% of the energy use it will not be able to supply our needs for energy in the short run.

Natural gas is the source of 32% of the energy consumed in the United States and in 2019 was used almost equally for industry, electrical generations and residential and commercial heating. The natural gas consumed in the United States is produced in the United States and moves by pipeline, train and truck. Electrical forms of heat are not as efficient as a gas furnace. Petroleum at 37% is used mostly for transportation (cars, trucks, trains, planes and ships).

Transporting gas can be dangerous. Pipelines are the most reliable and safe way, IF the pipelines are properly maintained, and that is a big if. The U.S. Environmental Protection Agency does not regulate pipelines; the regulations for secondary containment and spill prevention are inadequate. In addition, there are no regulations that limit the maximum life that equipment can continue to be used. Though the occurrences of pipeline failures are rare, the consequences are significant and more investment should be made in preventing a failure from existing infrastructure and improving existing pipelines and storage and delivery systems.

Most companies would rather pay penalties and fines than the costs of capital expenditures and operation and maintenance expense necessary to absolutely control spills. Pipelines are the safest form of transportation for crude oil and gas. We need to ensure that our pipeline are the safest they can be. Our biggest problem is not new pipelines, it is old pipelines.

The abundance of shale natural gas and oil coming from fracking has pushed the price for natural gas and oil very low and has created a glut in natural gas in this country keeping the cost of energy low and ensuring virtually everyone can have 24/7 power in essentially unlimited amounts, a competitive advantage if we do not destroy ourselves in litigation and protest. In Pennsylvania and Ohio where there is an abundance of available and cheap natural gas power companies are building new generation gas fired power plants to replace coal fired plants which are being regulated out of existence.

The new plants use a gas and steam turbine together to produce more electricity per gas BTU. Coal plant generate about twice the CO2 per megawatt of power and have higher particulate pollution than gas fired electrical power plants and the new hybrids are even more efficient. Electric demand is not growing overall nationally, but the pattern of use is changing as the end use changes. We are using more power in the evenings. In addition the closing of aging coal fired power plants has left sections of the grid short of power. There are many things we need to do now:

• Installing energy efficiency measures in buildings, and requiring increased efficiency in industry and transportation.
• Retiring coal-fired power plants. Continuing to increasing the share of power generation from renewable sources and from natural gas.
• Reducing methane released from the processing and distribution of oil and gas by replacing aging infrastructure and improving technology implementation.