New study to probe corrosiveness of Canada oil

Reuters News
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Posted: Jan 17, 2012 4:18 PM
New study to probe corrosiveness of Canada oil

By Roberta Rampton

WASHINGTON (Reuters) - A U.S. safety regulator will look at whether pipelines carrying petroleum from Canada's oil sands are at greater risk for spills than those carrying other types of crude, and whether any changes are needed to its rules.

The new study, to be completed by July 2013, could address some of the issues in play in the debate between environmental groups and the oil industry about TransCanada Corp's $7 billion Keystone XL pipeline project, designed to feed 700,000 barrels of oil a day from the Canadian oil sands into the United States.

The Natural Resources Defense Council (NRDC) and other environmental groups have said they believe diluted bitumen from Canadian oil sands is more corrosive than other grades of oil, fueling their concerns about spills.

A study done last year for the provincial government of Alberta, home to Canada's oil sands, found diluted bitumen was no more corrosive to pipelines than conventional oil, but noted there was no definitive peer-reviewed research on the issue.

President Barack Obama signed a new pipeline safety law earlier this month containing a little-noticed provision for a study on diluted bitumen that may answer some of the questions.

The provision mandates the Pipeline and Hazardous Materials Safety Administration (PHMSA) to analyze the risks of the oil, review its regulations, and present its results to Congress in the next 18 months.

"I expect the study, if done fairly, to show there's no news here," said Andrew Black, president of the Association of Oil Pipe Lines, a lobby group for the industry.

The oil is like any other heavy crude already moved through U.S. pipelines, Black said, noting that companies like TransCanada would not invest in massive projects like Keystone XL unless the pipelines could handle the material running through them.

Refiner specifications, terms and conditions or "tariffs" from the Federal Energy Regulatory Commission, and other PHMSA reviews have never identified issues with diluted bitumen, Black said.

But now that larger volumes of Canadian crude are moving through U.S. pipelines, questions about whether the crude is more corrosive deserves closer scrutiny, said Anthony Swift, an energy analyst and attorney with the NRDC.

"The U.S. pipeline system was designed with lighter crudes in mind," Swift said.

"We're going to advocate that the study be interpreted by PHMSA as broadly as possible," he said, explaining the NRDC wants the study to also assess the risks and costs involved in cleaning up spills involving Canadian oil sands crude.

(Editing by Lisa Shumaker)