Study warns of leak risks of Canada-U.S. oil pipe

Mon Jul 11, 2011 3:39pm EDT

Related Topics

* 91 major leaks seen, not 11 that company estimates

* Assessment needed before US decision on pipe-professor

* TransCanada strongly disagrees with results

By Timothy Gardner

WASHINGTON, July 11 (Reuters) - TransCanada Corp (TRP.TO), a company that hopes to build a $7 billion pipeline to take crude from Canada's oil sands to Texas, has underestimated the number and volume of leaks that could occur on the duct and hurt water supplies, an analysis released on Monday said.

The independent analysis by a water resources engineer at the University of Nebraska was released by the environmental group Friends of the Earth, which has helped mount a fierce campaign hoping to convince the Obama administration to turn down the pipeline in a decision expected later this year.

In its application to the U.S. government to build the line, TransCanada has not fully assessed possible spill impacts of the Keystone XL line, said the analysis, done by John Stansbury of the University of Nebraska, Lincoln. He did not receive funding from environmental groups for the study.

The pipe is expected to cross the Ogallala Aquifer, a vast water resource in the High Plains states relied upon for irrigation and drinking water, the analysis said.

The U.S. State Department is reviewing the project, which is bitterly opposed by environmental groups and some politicians who do not want the massive pipeline to run across several states or to increase oil sands development in Canada.

"A thorough, adequate assessment of the potential impacts of leaks from the pipeline has not been done," Stansbury said. The analysis can be seen here: link.reuters.com/ryb62s

"It should be done before we make any decisions on this pipeline one way or the other," he said.

DECISION EXPECTED BY YEAR END

TransCanada hopes to get a permit from the State Department before the end of the year for the line that would bring 500,000 barrels per day of petroleum to refineries along the Gulf Coast and could be expanded to 700,000 bpd.

Stansbury's analysis, which looked at federal data on the incidence of spills on similar pipelines, said the duct would likely average 91 major spills of over 50 barrels, including 12 spills from holes greater than 10 inches (25 cm) over its 50-year lifetime. TransCanada has estimated the line would have major spills about 11 times.

In addition, many leaks would release more oil than TransCanada has estimated because it takes more time on average to detect leaks than the company indicated, the analysis said.

TransCanada strongly disagreed with Stansbury. Spokesman Terry Cunha said the company based its assessments on the "industry leading methods to quantify failure frequency."

The leaked oil could flow down rivers including the Yellowstone, the scene of a recent Exxon Mobil (XOM.N) pipeline spill, sending benzene and other hazardous chemicals downstream, Stansbury said.

Water treatment facilities would likely detect the benzene keeping it from drinking water supplies. But efforts to clean the water or get fresh water from other sources could be costly to communities. In addition, some residents near the proposed line depend on well water, he said.

The pipe has stoked a debate within the Obama Administration about whether it should be approved. Some believe the benefits of getting additional crude supply from a friendly neighbor outweigh the environmental risks, while others do not.

Last month, the Environmental Protection Agency asked the State Department for a more extensive review of the pipeline, in a letter citing two small leaks on an existing Keystone line. It said the State Department needs to "carefully consider" both the routes of the planned expansion and what measures are needed to prevent and detect spills. [ID:nN07101222]

Some environmental groups such as the Natural Resource Defense Council have said petroleum from the oil sands contains higher levels of corrosive substances such as diluted bitumen that could cause more leaks than traditional oils.

But TransCanada said oil sands petroleum does not corrode steel. "Why would we construct a ... pipeline system only to put something it it to destroy it?" said Cunha. (Reporting by Timothy Gardner; Editing by Marguerita Choy)

FILED UNDER: