The US Energy Infrastructure: Is it Safe?

Hess To Form MLP For North Dakota Oil, Gas Transport Assets
Pipeline and railcar safety incidents are infrequent, but the safety records for both could be improved, experts say.
Steve Magness
Steve Magness, Partner, Cogent Energy Solutions, LLC
Steve Magness, Partner, Cogent Energy Solutions, LLC

First, the good news regarding energy transportation in the United States: about 99.5 percent of all material transported by either railroad cars or by pipelines reaches its destination. However, the accident rate is still too high, and it is even up slightly for gas liquids, even when adjusted for volumes and miles traveled. And most pipeline incidents are happening on new pipeline systems, not older ones, according to speakers at a recent Energy Symposium hosted by the University of Houston.

In recent years, with horizontal drilling and hydraulic fracturing in unconventional shale formations becoming the new norm, production levels for crude oil, natural gas and natural gas liquids have shot up, leaving the industry racing in the wake to build an infrastructure to catch up.

The quantity and quality of pipeline networks across the country varies, with Texas and the Gulf Coast region having a more established pipeline system than states like North Dakota, where natural gas production from the Bakken shale formation routinely overwhelms the existing infrastructure and soon becomes necessary in the Bakken and in other formations to consider other infrastructure options, Steve Magness, partner at Cogent Energy Solutions, noted.

One aspect of building new pipelines is that it takes time – as much as 17 to 20 years – to complete a project. Building rail does not require very long-term commitments, and large volumes are not needed to justify the incremental cost of building terminals to load crude on railcars and terminals to take crude off of railcars, because the railroad infrastructure already exists. So, large companies typically tend to support rail as a long-term solution for the marketplace.

Advantage and Disadvantages of Pipelines, Railcars

Over land, the two main methods of long-distance transportation for crude oil and gas liquids are pipeline and railcar.

• safer on a per-barrel basis
• more efficient than railcars
• emit fewer emissions than railcars
• require more fill before they can be used

• a quicker response time to new upstream developments
• provide more flexibility with endpoints
• lower initial costs
• can often avoid political obstacles

As noted by Charles Esser, Oil Market Analyst, International Energy Agency


US Pipeline Safety

For pipeline safety to move forward, all of the involved stakeholders need to be involved. That includes the industry, the regulators, and ideally, the public and citizens, according to Carl Weimer, executive director at Pipeline Safety Trust. 

Three types of pipelines were examined for incidents over a period of 20 years: hazardous liquid pipelines and gas distribution pipelines trended down, while larger gas transmission lines trended upwards. However, over the last 8 years, natural gas pipelines – gas distribution pipelines and gas transmission lines – trended down, while hazardous liquid pipeline incidents trended up.

Over the same time frame, new regulations were kicking in that should have made things safer, so “it’s curious why this hasn’t happened,” Weimer said.

The three major types of hazardous liquid pipelines were examined separately, and all three were having increasing incidents, particularly crude oil pipelines. For major transmission pipelines, the new pipelines were failing much quicker than older pipelines.


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