GOVERNORS POLICY FORUM ON SHALE ENERGY DEVELOPMENT September 9-10, 2013 Broomfield, Colorado Presented By: John Morton, Senior Vice President HDR Engineering, Inc.
Lower 48 Shale Plays OURCE: EIA, BASED ON VARIOUS STUDIES 1
U.S. Domestic Crude Oil Production by Source, 1990-2040 (million bbl/d) OURCE: EIA, ANNUAL ENERGY OUTLOOK 2013 2
Williston Basin Crude Oil Production and Takeaway Capacity (Thousand bbl/d) OURCE: EIA 3
Bakken Takeaway Transportation Williston Basin Crude Oil Transportation Estimated Rail Pipeline Export Tesoro Refinery Truck to Canadian Pipelines ** November 2012 Estimates OURCE: HTTP://NORTHDAKOTAPIPELINES.COM/ 4
TRANSPORT OF CRUDE OIL BY RAIL 5
Average Weekly U.S. Rail Carloads of Crude Oil and Petroleum Products OURCE: EIA 6
TYPICAL RAIL OFF- LOADING FACILITY 7
BAKKEN LOADING FACILITIES 8
LAC MEGANTIC TRAGEDY Summer 2013 9
National Oil Spillage to Inland Waterways By Transport Mode 1980-2003 Oil Type Total Spill Volume 1980-2003 Oil Spill Per Transport (Gallons Spilled/Billions Gallons Transported) Pipelines Vehicles Rail Pipelines Vehicles Rail Crude 89,648,980 191,301 351,000 38 16 80 Refined Products 20,606,036 7,334,,426 1,749,256 11 38 17 All Oils 110,255,016 7,525,727 2,100,256 27 37 20 OURCE: DR. DAGMAR ETKIN/ ENVIRONMENTAL RESEARCH CONSULTING 10
STATE INVOLVEMENT IN RAIL LOAD OUT FACILITIES» Cooperate with federal entities» Highway at-grade crossings» Highway access and load limits» Air and storm water permits 11
CRUDE OIL TRANSPORTATION» 2009 AOPL data: Pipelines: 70% Barge: 23% Truck: 4% Rail: 3% More crude oil is moving around the U.S. on trucks, barges and trains than at any point since the government began keeping records in 1981, as the energy industry devises ways to get around a pipeline-capacity shortage to take petroleum from new wells to refineries - WSJ, Aug 26, 2013 12
TRANSPORT OF CRUDE OIL BY PIPELINE» 180,000 + miles of liquid petroleum pipelines in the U.S.» 11.3 billion barrels of petroleum transported by pipelines annually 53% crude oil 47% refined petroleum products» Keystone XL pipeline to carry 830,000 bpd = 4,150 trucks or 1,245 train cars OURCE: AOPL AND API 13
OURCE: CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS 14
TRANSPORT OF NATURAL GAS BY PIPELINE» Pipelines slower to be developed in a new shale energy area» Interstate natural gas pipelines regulated by FERC (Federal Energy Regulatory Commission)» Federal nexus triggers NEPA process» Intrastate pipelines regulated by individual states 15
SHALE GAS» Horizontal drilling and hydraulic fracturing in past 10 years has increased access to shale gas previously uneconomical» Shale gas = 40% of total U.S. dry production» In 2011, 95% of natural gas consumed in U.S. was produced in U.S.» Environmental issues: Cleaner burning than oil or coal Fracking requires large volumes of water and results in hazardous wastewater Fracking causes small earthquakes Source: EIA 16
BAKKEN FORMATION- NATURAL GAS» 2007 to 2010: Production of gas increased 20-fold» Sept. 2011: 465 million cubic feet per day produced» Just 97 billion cubic feet from ND to market in 2011 (refer to page 18)» Little existing pipeline or processing infrastructure» 29% of natural gas produced in Bakken is currently flared visible from space Image taken by NASA Earth Observatory November 12, 2012 17
Natural Gas Marketed Production, 2011 (Million cubic feet) OURCE: EIA 18
PUMP STATION 19
TRANSPORT OF CRUDE OIL BY PIPELINE ENVIRONMENTAL CONCERNS» Unlike interstate natural gas pipelines, no FERC jurisdiction over construction or maintenance of production wells, oil pipelines, refineries, or storage facilities & no environmental oversight» Federal environmental oversight by USACE for rivers and wetlands; USFWS for Endangered Species Act; USEPA for discharges to state waters (NPDES)» State oversight for cultural resources, statelisted species; state game lands, etc.» Safety regulated by DOT PHMSA 20
Example Project Comment Themes 21
PIPELINE AND HAZARDOUS MATERIAL SAFETY ADMINISTRATION (PHMSA) MISSION is to protect people and the environment from the risks of hazardous materials transportation. Establish national policy Set and enforce standards Educate Conduct research to prevent incidents Prepare the public and first responders to reduce consequences if an incident does occur 22
National, All Pipeline Systems, Significant Incidents: Count 1993-2012 OURCE: PHMSA SIGNIFICANT FILES, JULY 31, 2013 23
STATE INVOLVEMENT IN PIPELINE SITING» Siting authority generally lies with the states Exception: Keystone XL (border crossing)» Siting laws vary considerably among states, for example: South Dakota: Siting permit issued by PUC Montana: Certificate issued by DEQ Nebraska: Public Service Commission approval 24
STATE INVOLVEMENT IN PIPELINE SAFETY» US Dept of Transportation sets minimum pipeline safety standards» State Pipeline Safety programs adopt the federal regulations and may issue more stringent regulations for intrastate pipeline operators under state law, for example:» Colorado: Interstate gas, all hazardous liquids: DOT s Office of Pipeline Safety (OPS) Intrastate: Colorado Public Utilities Commission's (COPUC) Gas Pipeline Safety Section (GPS)» Texas: Interstate gas and hazardous liquids : DOT OPS Intrastate gas and hazardous liquids: Texas Railroad Commission, Gas Services Division, Pipeline Safety Section» Pennsylvania Interstate gas, all hazardous liquids: DOT OPS Intrastate gas: PA Public Utilities Commission, Bureau of Investigation and Enforcement, Gas Safety Section 25
STATE INVOLVEMENT IN PIPELINE SITING Input from state resource agencies during planning can protect: Stream crossings/water quality Air permits Fish and wildlife/natural resources Cultural resources Roadway construction and crossings Power line routing Residential areas 26
FORMATION OF THE SITING PROCESS IN NEBRASKA» Nebraska Legislature passed new legislation» DEQ required to evaluate impacts of the Keystone XL Nebraska segment» NDEQ charged with evaluating environmental, economic, social and other impacts» NEPA-like document, Environmental Evaluation Report, developed» Public input solicited through via public outreach and involvement program 27
LESSONS LEARNED» Public opposition heightened awareness & pressured state government» Meeting minimum regulatory requirements not enough» Nebraska Legislation passed new legislation requiring a formal evaluation process» States should evaluate regulations in place: Are existing requirements adequate? Are all project components covered? Does the process need overhauling? 28