It's been a year since a broken oil pipeline sent an estimated 210,000 gallons of Canadian dilbit into an Arkansas neighborhood, but there's still a long list of unknowns about the spill.
The most critical mystery yet to be resolved for the public: What caused ExxonMobil's Pegasus pipeline to break apart March 29 while the line was running well below its maximum approved pressure?
All the public knows now is that a metallurgical report concluded that substandard pipe-making methods left tiny cracks near the lengthwise seams on the 1940s-era northern Pegasus pipe. Those micro-cracks grew and merged during service to become dangerous "hook cracks," and then something—or a combination of things—caused at least one hook crack to open up a 22-foot gash in Mayflower, Ark.
The report didn't determine what caused long-dormant manufacturing defects to awaken and expand, and didn't say whether the way the Pegasus was being operated, or the properties of the dilbit had a role in promoting crack growth on the pipe.
The metallurgical report was completed in July. There's been no news about the cause or the pipeline's condition since. Exxon has only said that it was conducting additional tests on the line to ferret out all the factors that contributed to the failure.
The southern leg of ExxonMobil's idled Pegasus oil pipeline, a segment regulators say is susceptible to seam ruptures, might be restarted as early as this week. Residents along the pipeline and others, however, have no idea whether—or how—the pipeline has been made safe because the information is not publicly available.
"We're all still in the dark," said Carl Weimer, executive director of the Pipeline Safety Trust, a nonprofit watchdog group based in Bellingham, Wash.
In a Jan. 31 letter seeking clearance to reopen the 63-year-old Pegasus southern section, Exxon told the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) that it "intends to initiate restart activities no later than March 28, 2014." A copy of the two-page letter was provided to InsideClimate News by PHMSA, but it is one of many important documents that have not been publicly released or made available on the agency website dedicated to Pegasus updates. One of those key documents, the restart plan for the southern leg, is still being withheld.
"I think it's terrible that there's something going on that affects people's lives that you really can't get any information about," said Barbara Lawrence, who said the Pegasus passes under the Richland-Chambers Reservoir, where she lives on the south shore. "Information is very hard to come by ... if you're just an average person going about your life, you know nothing [about the Pegasus]. But you should know about it, because it affects you."
As the nation charges toward energy independence, many Americans learned an important lesson this winter: Just because the country is awash in domestic fuel doesn't mean it will be there when they need it most.
From December into February, when winter temperatures plummeted to record lows across much of the country, residents in the Midwest and Northeast struggled to stay warm amid propane shortages and price spikes. Propane, also known as autogas or liquefied petroleum gas (LPG), is vital because it heats more than six million homes, fuels equipment and vehicle fleets, and is instrumental on farms for drying grain for storage and keeping livestock-filled barns warm in the winter.
This happened despite several years in a row of soaring domestic propane production—calling into question the commonly held belief that an abundance of American-made energy will automatically provide energy security and lower fuel prices for consumers. The nation's supply of propane—a byproduct of natural gas drilling, oil drilling and oil refining—has been surging alongside the oil and natural gas being pulled from shale formations from North Dakota to Texas and from Ohio to New York.
The American oil industry could be on the verge of winning its war on the federal Renewable Fuel Standard (RFS), as the Obama administration weighs changes that could severely undermine the nation's most successful—and most divisive—effort to cut crude oil consumption in the nation's cars.
Faced with what it called an "inadequate domestic supply of renewable fuels," federal regulators in November proposed lowering the 2014 usage requirements for the total volume of renewable fuel and for advanced biofuels. Last month, regulators said they may also grant oil industry requests for waivers on their biofuel obligations for 2014 as well as for fiscal 2013, which ends in June.
The moves triggered howls from biofuels companies and representatives from corn states fearful that those setbacks will lead to others, and that uncertainty over the program will pull the rug from under the fledgling market for advanced biofuels. The Environmental Protection Agency is expected to rule on the proposed biofuel reductions and the oil industry waivers in the coming months.
Of course, the potential unraveling of the RFS is complicated and highly controversial. The program's troubles stem primarily from sinking gasoline demand, overly optimistic biofuels targets and 2012's drought-driven rise in corn prices. In addition, the ongoing dependence on corn-derived ethanol has further inflamed critics who say the rush to produce that kind of ethanol has been gobbling up land and diverting food to U.S. gas tanks.
But, for all its struggles and faults, the RFS accomplished things that almost no other gasoline additive or alternative was in a position to achieve so quickly.
A rash of explosive accidents involving oil-bearing trains has led to a surprising number of headlines and high-profile comments directly linking the fiery derailments to the fate of the long-stalled Keystone XL oil pipeline, the controversial project that would carry heavy bitumen from Canada’s oil sands to Texas refineries.
"North Dakota train fire adds fuel to Keystone XL debate," said a Bloomberg News headline. The Los Angeles Times published "Canada rail crash stirs debate over Keystone XL pipeline delay." And a year-end Fox Business segment asked, "Recent train derailments renewing push for Keystone Pipeline?"
Proponents of the pipeline project have been even more explicit in using the rail accidents to drum up support for the more than $5.4 billion northern segment of the Keystone XL, which the Obama administration has delayed for years over environmental concerns.
ExxonMobil has landed a new deadline extension for telling regulators how it plans to safely resurrect the failed Pegasus oil pipeline, and the new April 7 due date guarantees that the line will still be idle one year after it ruptured and sent heavy crude streaming into an Arkansas neighborhood.
The federal Pipeline and Hazardous Materials Safety Administration (PHMSA, pronounced fimm-sa) granted Exxon its second 90-day reprieve last month, but the change wasn't disclosed by Exxon and PHMSA until yesterday. Jan. 6 was the due date set by PHMSA for the Pegasus "remedial work plan" after Exxon requested a three-month extension from the original deadline of Oct. 6.
The delay worsens the state of limbo that has engulfed the pipeline and further frustrates officials who are still waiting for crucial details about what caused the spill and what remedies are under consideration.
There is substantial interest in the required Pegasus plan because it should disclose or offer clues about when Exxon hopes to restart the pipeline, all the factors that played a role in its failure, and how the company intends to prove that the 65-year-old line can be safely operated.
Emboldened by the recent boom in U.S. crude production, oil company executives and others closed the year by launching a highly public push for the right to freely export U.S. crude oil. The move is a 180-degree change from 40 years of telling Americans that the country needs all the oil it can get to achieve energy independence and to protect consumers and the economy from oil and gasoline price shocks.
It's a particularly dicey appeal to make right now because the call for oil exports—and the industry's rationale for it—run counter to the arguments that oil companies and politicians are still using to justify a host of industry-backed initiatives, including the controversial Keystone XL pipeline project that would import oil from Canada.
What's more, for the American public, every discussion about oil policy ultimately boils down to one question: What would it do to gasoline prices? On that front, unrestricted oil exports would be a difficult sell. So far, the domestic oil boom has lowered the cost of U.S. crude and enriched the industry and nearby communities, but it's provided little relief to consumers at the pump. In the wake of that disappointment, export proponents would have to convince Americans that fuel costs won't be driven higher once homegrown oil starts flowing to the likes of Europe, Latin America and China—and that's an assurance no one can make.
Recent events make it clear, however, that the oil industry is undaunted.
In a move that underscores Wall Street's growing unease over the business-as-usual strategy of the world's fossil fuel companies, Bloomberg L.P. unveiled a tool last week that helps investors quantify for the first time how climate policies and related risks might batter the earnings and stock prices of individual oil, coal and natural gas companies.
The company's new Carbon Risk Valuation Tool is available to more than 300,000 high-end traders, analysts and others who regularly pore over the stream of information that's available through Bloomberg's financial data and analysis service. The move significantly broadens and elevates the discussion of "stranded" or "unburnable" carbon reserves—expanding it beyond climate groups and sustainability investors to the desks of the world's most active and influential investors and traders.
"It demonstrates that there's demand for the information—more and more investors are interested in these issues," said Ryan Salmon, senior manager of the oil and gas program at Ceres, a nonprofit that organizes businesses, investors and public interest groups interested in climate change and other issues.
In the years leading up to ExxonMobil's Pegasus pipeline rupture in Arkansas, the company delayed a crucial inspection, put off urgent repairs, masked pipeline threats with skewed risk data and overlooked its own evidence that the oil pipeline was prone to seam failures, according to federal pipeline regulators.
The assertions are laid out in a bluntly worded notice sent to Exxon and released last week by the Pipeline and Hazardous Materials Safety Administration (PHMSA, pronounced fimm-sa). The preliminary citations, which came with a proposed $2.66 million fine for Exxon, grew out of the agency's investigation into the March 29 Pegasus seam failure that sent an estimated 210,000 gallons of crude into a Mayflower, Ark. neighborhood.
"From my perspective, this is a pretty important notice," said Richard Kuprewicz, a pipeline safety consultant who serves on the PHMSA safety standards advisory committee for oil pipelines. "They've used some fairly strong words ... and they don't choose their words casually."
The ongoing U.S. oil boom has flooded the Gulf Coast with domestic crude to levels not seen in decades, creating a homegrown oil glut in the nation's refining center just as the Obama Administration prepares to rule on a pipeline that would add a torrent of heavy Canadian crude to the same region.
It's just the latest in a string of developments that have surprised and roiled oil markets since 2009, when the combination of falling fuel demand and an unexpected surge in U.S. oil and natural gas production began destroying widely held assumptions about the nation’s need for imports.
"U.S. oil production is at a point that is changing the entire globe, and this is just more evidence that the U.S. producers are far exceeding anybody’s expectations," said Phil Flynn, senior oil analyst at Price Futures Group. "This is part and parcel of the big story—the U.S. energy boom."
Conditions have changed so radically that U.S. refiners are now exporting record amounts of fuel to overseas customers, and there’s a parade of tankers delivering Texas oil to refineries on the east coast of Canada. As these and other surprising trends unfold, it's becoming increasingly clear that the controversial Canadian oil import pipeline, the Keystone XL, is not an urgently needed link.