Battle over American pipe dreams

A train filled with crude crashed and exploded in Lac-Megantic, Quebec, in July, fuelling the debate about whether rail is a safe way to transport oil. AFP

With the UAE scheduled to have the first phase of its vast planned freight rail network operational by the middle of next year, Canada's worst train accident in 150 years last month may have future resonance in the Emirates.

And the UAE's recent opening of the Habshan-Fujairah oil pipeline, which runs from the Habshan onshore field in Abu Dhabi and runs to Fujairah on the Gulf of Oman, could also spur a future debate mirroring the present battle in the United States over the relative safety of pipelines and rail.

Etihad Rail's 1,200km network will extend across the UAE, from the border of Saudi Arabia to the border of Oman and from Ghweifat in the west to Abu Dhabi, Dubai and the Northern Emirates in the east, with major connecting points in between, including Al Ain and Madinat Zayed, Etihad Rail says on its website.

The national network will feature freight terminals, distribution centres and depots located close to major transport hubs, warehouses and storage facilities across the UAE, including Mussafah, Khalifa Port, Jebal Ali Free Zone, Port of Fujairah and Saqr Port.

The network will also connect with the GCC network and this - once fully established - will cover the five GCC countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE

While it is not known yet whether the new railway will carry crude at all, what happened on July 6 in North America could feature in any discussions on the subject.

It was then that a runaway train filled with crude oil crashed and exploded in Lac-Megantic, Quebec.

The accident left 47 people dead and destroyed 40 buildings.

The tragedy has fuelled the debate about whether rail is a safe way to transport oil and in particular whether TransCanada's proposed Keystone XL pipeline, a 1,900km pipe that would move 830,000 barrels of oil each day from Alberta's tar sands to the US Gulf Coast and midwestern refineries, is a more favourable option over rail.

Of course, where much of the US rail network is many years old, the UAE's will feature cutting-edge technology and state-of-the-art rolling stock and safety systems.

The use of trains to transport oil has rocketed in the United States. In 2008, US Class I railroads originated just 9,500 wagon loads of crude oil but this has increased to nearly 234,000 loads last year, according to the American Association of Railroads (AAR).

Meanwhile, pipelines are currently being used to transport 96 per cent of oil in the US, says the energy information administration.

In the ongoing debate over rail versus pipeline, there are several factors to consider, including safety and environmental risks, as well as economic benefits.

US criticisms regarding rail have been focused on the impacts of fracking, outdated railroad infrastructure and the costs and dangers associated with railway accidents.

The AAR counters railways "have an excellent safety record regarding crude oil transportation - better, in fact, in recent years than pipelines".

TransCanada says Keystone XL "will be the safest and most advanced pipeline operation in North America" on its website.

Along with safety concerns and environmental impact, there are the potential benefits to the economy to consider when debating rail versus pipeline.

The US$5.3 billion Keystone XL pipeline project is expected to provide an economic boost with the addition of up to 20,000 US jobs for skilled workers, according to the American Petroleum Institute.

"It will not only bring essential infrastructure to North American oil producers, but it will also provide jobs, long-term energy independence and an economic boost to Americans," according to TransCanada.

The Canadian Energy Research Institute predicts Keystone XL will add $172bn to America's GDP by 2035 and will create an additional 1.8 million person-years of employment in the US over the next 22 years.

The pipeline is also expected to reduce American dependence on oil from Venezuela and the Middle East by up to 40 per cent.

However, Cornell's study says the majority of jobs provided by the Keystone XL pipeline project will be temporary and the risks of job loss from potential water contamination far outweigh the benefits.

Both trains and pipelines deliver more than 99 per cent of products without incident, according to the AAR and the association of oil pipelines.

Based on US department of transportation data, the crude oil "spill rate" for railroads from 2002 to last year was an estimated 2.2 gallons per million tonne-miles, compared with an estimated 6.3 for pipelines.

Alex Pourbaix, the president of energy and oil pipelines for TransCanada, claims pipelines are just as safe, if not safer, than rail and have an advantage when it comes to greenhouse gas emissions.

"For every mile you move a barrel of oil by rail, you emit three times the [greenhouse gases] you do by moving it by pipeline and you have an order-of-magnitude higher risk of having some sort of incident, leak or spill," Mr Pourbaix said during an energy conference in New York in March.

Between 2007 and 2010, pipelines transporting tar sands oil in the northern midwest have spilled three times as much oil per mile than the US national average for conventional crude, according to a Cornell University report titled The Impact of Tar Sands Pipeline Spills on Employment and the Economy.

Since the first Keystone pipeline began operation in June 2010, at least 35 spills have occurred in the US and Canada.

In its first year, the spill frequency for Keystone's US segment was 100 times higher than TransCanada's forecast, according to the Cornell study.

The US transportation department's office of pipeline safety, in a 2010 report, proposed that regardless of which mode of transport is more dangerous, the best way to mitigate risk from oil shipments is for states and local communities to develop guidelines for what can be built near pipelines and railroads.

Meanwhile, environmental action groups such as the Sierra Club and the Natural Resources Defence Council oppose the proposed Keystone XL pipeline, claiming the project poses unnecessary safety concerns and intensifies the risk of climate change by promoting development of the oil sands.

"Heavy, carbon-intensive tar sands oil is dangerous every step of the way, from the mine to where you burn it," says Eddie Scher, a spokesman for Sierra Club.

"It's more toxic stuff than conventional oil.

"You have to heat it to move it and mix it, and it takes an enormous amount of energy to pump it through the pipeline, raising the likelihood for leaks."

The US president Barack Obama vowed in his climate change address last month that the Keystone XL tar sands pipeline would not be approved unless it "does not significantly exacerbate the problem of carbon pollution".

The Cornell report says the pipeline project also runs the risk of reducing investment in the clean energy economy as the amount of cheaper oil and gas rises.

Both Sierra Club and the Natural Resources Defence Council emphasise that in light of the recent tragedy in Quebec, the question should not be turned to rail versus pipeline but, rather, about the dangers of oil, regardless of how it is transported.

"The problem isn't rail versus pipeline, because the industry wants to increase the use of both," says Josh Mogerman, a spokesman for the Natural Resources Defence Council.

"The problem is that oil companies have reserves of highly toxic oil and the technology now that allows them to get at it as fast as they can," he adds.

"It doesn't make any sense for our national interests to work on getting this super-dirty, very expensive source of oil just to export," Mr Scher says.

"It just doesn't make any sense except for the guys who own the infrastructure and the oil companies."

The controversial pipeline is currently under US state department review and a decision on whether to approve the line is expected by the end of the summer.