Oil and gas is moving around our country, through pristine wilderness, and across our cities and towns. The recent election results are not going to change that. Oil is going to keep moving and will continue to increase in volume in our new energy boom. So, the question from an environmentalist's standpoint should not be how to stop it, but rather how to move it safely.

The recent debates concerning the Keystone XL and Dakota lines have focused the attention on pipelines, and show that few people want pipelines going through their communities. Continuing leaks, breaks and explosions do nothing to calm their fears.

An explosion on the Colonial Pipeline killed one worker and injured five others late in October in a wildlife area outside Helena in rural Alabama, when a nine-man crew in Shelby County hit a line with a large excavator. The same pipeline burst only a month before, close to the same spot, leaking almost 300,000 gallons and causing gasoline shortages across the South.

Reaction in the environmental community was immediate, with many calling for shutdown of pipelines and a moratorium on new pipeline construction. But the correct reaction should have been the opposite. We really must replace old pipelines and build new ones, reducing the stress on each line.

If the electric grid is our nation's nervous system, then oil and gas pipelines are our circulatory system. Aneurisms in these metal blood vessels, like what happened on the Colonial, have to be prevented.

America has over 2 million miles of oil and gas pipelines, and almost half of those are 50 years old. Over 2,000 miles of pipeline are 100 years old. While breaks do occur in young lines, the majority happen in old lines that pre-date many of our modern safety standards. And these pipes have been subjected to pressure and weather-related stresses for a long time. These pipelines should be replaced, or at least upgraded.

But what about getting rid of them altogether, as many people demand? Well, there are only four ways to move oil and gas around the country - pipelines, trucks, rail and boats.

In the United States, all of our natural gas is shipped by pipeline, and 70% of crude oil and petroleum products are shipped by pipe as well. Tankers and barges account for 23% of oil shipments, with making up 4% and rail a mere 3%. In Canada, the discrepancy is even more lopsided. Almost all (97%) of natural gas and petroleum products are transported by pipelines, according to the Canadian Energy Pipeline Association.

So which method is safer? For oil, where death and property destruction are taken into consideration, the short answer is: truck is worse than train, which is worse than pipeline, which is worse than boat. However, concerning the amount of oil spilled per billion-tonmiles, trucks are worse than pipelines, which are worse than rail, which is worse than boat, according to data from the Congressional Research Service (CRS). Then there is the question of environmental impact - dominated by damage to aquatic habitat - in which case boats are worse than pipelines, which are worse than trucks or rail.

The real answer, of course, depends on your definition of "worse." Is it deaths and destruction? Is it amount of oil released? Is it land area or water volume contaminated? Is it habitat destroyed? Is it C02 emitted?

Amid a North American energy boom and a lack of pipeline capacity, crude oil shipping on rail has suddenly increasing. Trains are getting bigger and towing more and more tanker cars. From 1975 to 2012, when trains were not as long, spills were rare and small, with about half of those years having no spills above a few gallons, according to EarthJustice.org. Then came 2013, in which more crude oil was spilled in U.S. rail incidents than in the previous 37 years.

Every crude oil has different properties, such as sulfur content (sweet to sour) or density (light to heavy), and requires a specific chemical processing facility to handle it. Different crudes produce different amounts and types of products, sometimes leading to a glut in one or more of them, like too much natural gas liquids that drops their price dramatically, or not enough heating oil that raises their price.

As an example, the second largest refinery in the United States, Marathon Oil's Garyville, LA facility, can handle over 520,000 bpd of heavy sour crude from places like Mexico and Canada, but can't handle sweet domestic crude from New Mexico. Thus the reason for the Keystone Pipeline or increased rail transport - to get heavy tar sand crude to refineries along the Gulf Coast than can handle it.

The last entirely new petroleum refinery in the United States opened in 1976, and since that time the number of refineries has steadily declined, while refining capacity has concentrated in everlarger facilities. 25% of U.S. capacity is found in only eleven refineries. Recently, Shell's Baytown refinery in Texas, the largest in the nation, was expanded to 600,000 bpd. Most of the big refineries can handle heavy crude, but many smaller refineries can process only light to intermediate crude oil, most of which originates within the United States.

So, the questions remain: which is safest method to move crude oil and most deserving of investment? Take two spills for comparison.

The Quebec train wreck last year killed 47 people and spilled 1.5 million gallons of crude onto land. The Enbridge pipeline rupture in 2010 spilled over a million gallons of similar crude into the Kalamazoo River, but did not kill anyone.

Contamination of water is definitely worse for the environment than land and spreads quickly over more area, effecting more species and habitat, but killing people makes a big difference to the public. I don't want to put a price tag on human life, but the government has, and it's about $8 million a person, according to the New York Times.

So the Quebec train derailment cost over $400 million in human life, plus another $150 million for clean-up and repairing the town. The Enbridge pipeline cost no human lives, but will cost about a billion dollars to clean-up, and, like the Exxon Valdez, the effort will never really succeed. These are not easy questions, and one's vested interest has a great deal of sway in the answer. You really do need to pick your poison.

As always, it will probably come down to money. It's simply cheaper and quicker to transport by pipeline than by rail or by truck. The difference in cost is about $50 billion a year for shipping via the Keystone vs. rail, totally eclipsing any economic effect of jobs in either direction.

A rail tank car carries about 30,000 gallons 700 bbls). A train of 100 cars carries about 3 million gallons (70,000 bbls) and takes more than three days to travel from Alberta to the Gulf Coast. (That's about a million gallons per day.) The Keystone will carry about 35 million gallons per day (830,000 bbls). This puts pressure on rail transport to get bigger and bigger, and include more cars per train, the very reason crude oil train wrecks have dramatically increased.

The CRS estimates transporting crude oil by pipeline is cheaper than rail by about $5/bbl vs. $10-15/bbl. But rail is more flexible and has 140,000 miles of track in the United States compared to 57,000 miles of crude oil pipelines. Building rail terminals to handle loading and unloading is a lot cheaper, and less of a hassle, than building and permitting pipelines.

It isn't acceptable to just say we shouldn't be moving oil, because we will be doing just that for the rest of this century, no matter what happens. So, keeping in mind the difference between death/damage to humans and damage to the environment, which would you choose?

Rail

Consider two seemingly disparate facts:

* From 1980 to 2012, the train accident rate in the United States fell 80%, the rail employee injury rate fell 85%, and the RR crossing collision rate fell 82%, but

* More crude oil was spilled in U.S. rail incidents in 2013 than was spilled in the previous thirty-seven years.

Huh?

Using data from the Pipeline and Hazardous Materials Safety Administration (PHMSA), 1.5 million gallons of crude oil were spilled from rail cars in 2013. On the other hand, from 1975 to 2012, railroads spilled a total of 800,000 gallons of crude oil, according to McClatchy news service. (These data do not include rail accidents in Canada, such as the Lac-Megantic, Quebec incident.)

If crude oil shipping on rail is becoming a preferred mode for oil producers in our North American energy boom, this trend is disturbing. In 2011, crude rail capacity between southern Alberta and the northern U.S. Great Plains tripled to about 300.000 bpd, about a third of the Keystone XL capacity.

U.S. railroads delivered 7 MMbbls of crude in 2008,46 MMbbls in 2011, 163 MMbbls in 2012, and 262 MMbbls in 2013 (almost as much as that anticipated by the Keystone XL alone). To replace the Keystone XL with rail shipments would mean another doubling of rail capacity, but that take just another couple of years given this trend.

The Association of American Railroads points out that over 11 billion gallons of crude were shipped in 2013, so these spills account for only one-hundredth of 1%. Nonetheless, damage to the environment and people's health still took place.

Our railroad infrastructure was not built to handle this mass of crude on its system and doesn't use enough specialty cars. If this trend continues, major infrastructure investments need to occur on both sides of the border, as well as significant changes in protocol and regulation.

The rail industry recently modified its guidelines in response to the Quebec derailment as follows:

* restrict train speeds to less than 50 mph

* increase the frequency of track maintenance

* install wayside defective equipment detectors, such as "hot box" detectors that detect wheels with faulty bearings, every 40 miles, with specific protocols for conductors when defects are indicated

* use only track in good condition to support speeds of 25 mph or higher.

Truck

While we can compare relative risks, the issue with trucking is that it takes a whole lot of trucks to move billions of gallons of crude since a single tank trailer only holds about 9,000 gallons or 200 bbls, a little under a third of a rail car. Our present fleet only handles 4% of our needs, so shipping by truck instead of the Keystone XL would take another million-and-a-half tanker trucks.

Trucking is the most risky form of transport from an accident and also from a spill standpoint. However, it has the least impact from an environmental standpoint since each truck is small and is mainly on land. What is important to note, however, is regardless of the long-hauling mode, most petroleum eventually gets onto a truck for the short moves. This limits the tons-mile risk but increases the incident number risk.

In a white paper, the Canadian Trucking Alliance repeated its long-standing position that "the federal government should introduce a universal mandate requiring all trucks, where the driver is currently required to carry a logbook under the federal hours of service regulations, to be equipped with an electronic recording device; and introduce a manufacturing standard (in lock-step with the United States) requiring all new heavy trucks to be equipped with a roll stability system." In addition, the Alliance wants all Canadian provinces and U.S. states to follow Ontario's and Quebec's lead by requiring truck speed limiters.

Boat

Ship transport is possible along coastal waters and in large rivers and has been used for almost all foreign imports except from Canada. The thing about ships is that each carries a lot of oil and many of the largest spills in history are from boats, such as the Exxon Valdez.

Most important is ship boat incidents have an immediate effect on aquatic ecosystems. Better modern technologies to detect water depth and nearby boats is needed. Human error needs to be better removed from this equation.

Pipeline

The most controversial transport mode is pipeline, mainly because of the Keystone XL debate and the recent ruptures. The industry points to the generally good safety record in terms of percentages. Among oil pipeline workers, the rate of hospitalization was 30 times lower compared to rail workers involved in transporting oil, and 37 times lower than for road transport, between 2005 and 2009, the latest period of data available from the Frasier Institute.

But pipeline spills are inevitable. About 280 pipeline spills occur each year in the United States that are deemed "significant" by the U.S. Department of Transportation (DOT). Significant is defined as involving a fatality or injury requiring in-patient hospitalization, $50,000 or more in costs (measured in 1984 dollars), a highly volatile liquid releases of more than 5 barrels or other liquid releases of more than 50 barrels, or a liquid releases that result in a fire or explosion.

Again, you'll notice that these measures are in human health and property damage, not environmental effects. Environmental impacts are difficult to estimate and, in almost all cases, are not even attempted.

Conclusion

In the end, all of these transportation modes can be made safer if stricter regulatory controls and modern technologies are in place, but the questions remain - can we make the industry comply, and which methods do we want to invest in?

With oil production increasing, the number of refineries decreasing, and capacity concentrating in ever fewer places, pipeline transport is not going to decrease. And there seems no better alternative. P&GJ

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has commented that the Short Term Issuer Credit Ratings of AMB-1+ (Strongest) of Pacific Life Insurance Company’s recently amended commercial paper program remain unchanged following the announcement of an increase in its size to $2.25 billion from the previous $1 billion level, which took effect Sept. 30, 2026.

AM Best recognizes that the amended program will provide benefit to the company’s liquidity profile by matching the size of its commercial paper program to its enterprise revolving credit facility backstop and also increase the financial flexibility through diversification of funding sources, while leverage and coverage calculations remain within levels supportive of the Credit Ratings.

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