Oil sands' impact on pipes needs study-US lawmakers

Thu Jun 16, 2011 5:54pm EDT

Related Topics

* Regulations not keeping up with industry-Rep. Waxman

* Lawmakers say diluted bitumen needs more study

* Pipeline group says the mix just a "heavy crude"

By Ayesha Rascoe

WASHINGTON, June 16 (Reuters) - U.S. regulators should examine whether crude from Canadian oil sands corrodes pipelines and makes them more vulnerable to accidents, lawmakers said at a hearing on pipeline safety on Thursday.

Congressman Henry Waxman, the top Democrat on the House of Representatives' Energy and Commerce committee, said he was concerned regulatory oversight was not keeping up with the fact that U.S. pipelines were increasingly transporting diluted bitumen.

"I'm concerned that the industry is changing, but the safety regulations are not keeping up with the changes," Waxman said at an Energy and Commerce subcommittee hearing.

"That could be a recipe for disaster down the road," he added.

The issue of whether diluted bitumen, which could involve mixing oil sands crude mixed with a natural gas liquid condensate, is corrosive has come to the forefront recently.

It is a key concern for environmental groups who oppose construction of the TransCanada (TRP.TO) Keystone XL pipeline that would move crude from Canadian oil sands to the U.S. Gulf coast.

They argue that U.S. pipelines were not designed to transport diluted bitumen, and that chemical properties of the mix pose more risks than conventional crude oil.

An increase in pipeline accidents in U.S. Midwestern states may be the result of transporting this form of crude, said Anthony Swift of the Natural Resources Defense Council.

TransCanada's existing Keystone pipeline leaked 10 barrels of oil, due to a faulty fitting at a Kansas pump station last month. That accident followed a 500-barrel spill at a pump station in North Dakota in early May.

"It is in the public's best interest for our pipeline safety for regulators to evaluate the risks that high volumes of heavy, corrosive and abrasive crudes, such as diluted bitumen, will have on the U.S. pipeline," Swift said at the hearing.

A bill passed by a Senate committee last month would require the Pipeline and Hazardous Materials Safety Administration to study the impacts of diluted bitumen on pipelines.

"I think it is something we need to look into," said Republican Representative Joe Barton, an outspoken proponent of oil and natural gas production.

Andrew Black, president of the Association of Oil Pipe Lines, disputed the notion that diluted bitumen poses any special risks, saying it was akin to heavy crudes from Venezuela and other places.

"Diluted bitumen has been moved through pipelines for many years," Black said. (Reporting by Ayesha Rascoe; Editing by Carole Vaporean)

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