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GAO: Oil, Gas Boom Brings Increased Transport Risks

Based on a recently completed year-long study for Congress, the U.S. Department of Transportation (DOT) plans a rulemaking on the safety of transporting shale oil and natural gas.

The U.S. Government Accountability Office (GAO) report recommends that the DOT, in conjunction with its Pipeline and Hazardous Materials Safety Administration (PHMSA), move ahead with a proceeding to address pipeline safety in terms of the risks of larger-diameter, higher-pressure gathering pipelines. GAO said this should apply to pipelines' emergency response planning requirements, which currently are not applied.

PHMSA generally concurred with GAO's report; their technical comments have been incorporated in the report, and recommendations for a crude-by-rail proceeding have been modified to reflect PHMSA's July 23 rulemaking under way in conjunction with the Federal Railroad Administration (FRA). A letter from PHMSA to GAO has confirmed that it is developing a rulemaking to revise safety regulations and the need to adopt safety requirements for gas gathering pipelines.

Oil, natural gas and natural gas liquids pipelines are all included in the PHMSA effort.

"While the DOT has worked to identify and address risks, its regulation has not kept pace with the changing oil/gas transportation environment," GAO said, adding that some large-diameter, high-pressure gathering pipelines in rural areas are not being regulated because they fall outside the agency’s traditional safety framework. "The growth in the use of rail to move crude oil has likewise revealed risks not fully addressed by the current safety framework."

Noting it wouldn't be making any recommendations related to crude-by-rail transport, GAO said DOT's recent proposed rulemakings on the subject "signal the department's commitment to addressing these important safety issues."

On the pipeline side of the transportation network, however, GAO concluded that DOT has not "fully addressed safety risks" outlined in its report outlined that have risen with the accelerated expansion of the nation's gathering pipeline systems.

"We focused our work on pipeline and rail because pipelines are the most [commonly] used mode for transporting oil and gas production, and rail has seen the largest percentage increase in use in recent years," GAO said. Part of the assessment was a literature search, and it, too, pointed to what GAO called "key examples" of transportation infrastructure limitations and associated implications."

A performance audit was conducted by GAO between August 2013 and August 2014, and the evidence gathered provides a reasonable basis for the ultimate findings and conclusions, the congressional unit said. It used historic data from PHMSA on pipelines and the Surface Transportation Board on rail shipments.

In addition, GAO interviewed  officials with various state agencies, particularly focused on four states with heavy shale developments: North Dakota, Pennsylvania, Texas and West Virginia.

"We selected these states because of their significant shale oil/gas development and varying geographic locations," the GAO report said.

"Historically, gathering pipelines were smaller and operated at lower pressure, and thus posed less risk than long-distance pipelines, but recent increases in their size and pressure raise safety concerns," GAO said. "Crude oil carloads moved by rail in 2012 increased 24 times over that [total] moved in 2008, and such an increase raises specific concerns about testing and packaging."

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