Oil industry launches petroleum infrastructure campaign

 

The American Petroleum Institute (API) is launching a new campaign to bring issues of petroleum infrastructure — such as rail car safety, pipelines and tanker ships — to the attention of the public and policymakers.

API’s push comes at an important time in the transportation of petroleum products, with the Obama administration considering new standards for rail cars that transport crude oil and mulling whether to approve the Keystone XL pipeline for construction.

“We’re facing issues where we need to make sure that we’ve got an infrastructure in place in this country to get the oil from where we’re producing it ... to where it needs to go,” Robin Rorick, who oversees infrastructure for API, told reporters Thursday.

API said domestic oil production has grown to 7.9 million barrels a day in 2013, from 5.1 million barrels a day in 2007. On the natural gas side, U.S. production reached 67.4 million standard cubic feet per day in 2013, compared with 54.6 million cubic feet per day in 2007.

“We’re still, as an industry, continuing with our exploration and production activities with conventional drilling, both offshore and onshore,” Rorick said. “But it’s really the tight shale formations that are presenting new opportunities for us ... but also presenting some unique challenges from the infrastructure standpoint.”

API will soon expand its campaign beyond media outreach, targeting the public and policymakers.

At a Thursday meeting with reporters, API officials focused on the crude-by-rail issues. Recent major accidents, such as a Quebec crash of a train carrying crude oil that killed 47, have brought new attention to the safety of crude-by-rail throughout North America.

“We’re working with the rails and the government, looking at issues such as train crew size, securement, some of those topics,” Bob Greco, director of API’s downstream group, said at the meeting.

Most government attention on tanker cars has been toward phasing out or retrofitting so-called “DOT-111” cars, a standard that the Department of Transportation developed decades ago but hasn’t been updated since. Canadian officials announced this week that the 111 cars would have to be phased out in the coming years, but the United States has not made a similar order.

The department is working on writing new regulations, and API wants the rule to reflect standards that the oil and rail industries developed and have voluntarily followed since 2011. These “1232” cars have thicker sides and extra barriers at the ends, among other features.

By next year, 60 percent of tank cars transporting crude will meet the 1232 standard, and the industry will continue to voluntarily phase out older cars. 

But since November, the Association of American Railroads endorsed even higher standards. API has objected and criticized the association for not sharing the research and data behind its new position.

“We’re a data-driven industry,” Greco said. “So any changes we make, we want to make sure that it’s doing that, and it doesn’t distribute or push the risk elsewhere.”

Of the new standards, Greco said: “We’re not sure if they’re fully baked yet, and we have to see the underlying information before we move forward.”

Most tank cars are owned or leased by oil companies, so the new costs would largely fall to them.