BRIEF-Josef Mandelbaum to step down as CEO of Perion
* Says board of directors has begun a search for company's next CEO Source text for Eikon: Further company coverage:
* Environmentalists, oil patch at odds over safety
* Precise studies have yet to be done
* Engineers can't see major differences in crudes
By Jeffrey Jones and Timothy Gardner
CALGARY/WASHINGTON, Aug 2 A recent series of oil spills has amplified a debate over the safety of shipping oil sands-derived crude through pipelines, but there is little hard evidence that the Canadian oil is more corrosive than conventional crude, scientists and regulators say.
Environmental groups, led by the New York-based Natural Resources Defense Council (NRDC), contend that the oil from the Alberta tar sands, when blended with light hydrocarbons to allow it to flow, eats away at the insides of long-haul pipelines because of its high acidity and mineral content.
It is one argument they use in their staunch opposition to TransCanada Corp's (TRP.TO) $7 billion Keystone XL pipeline to Texas from Alberta, now being reviewed by the U.S. State Department. It arose again after a pipeline to an Exxon Mobil (XOM.N) refinery in Montana burst last month.
Keystone XL would add more than half a million barrels per day of Canadian oil exports to the United States and, its proponents say, that would enhance U.S. energy security.
TransCanada and petroleum industry groups say there is no evidence that shipping oil sands crude over long distances is more dangerous than moving any other fossil fuel, arguing that it would be pointless to spend all that money on a mega-project knowing that it would fail.
Experts are hard-pressed to say if the crude mixture, known as dilbit, weakens the interior walls of pipelines quicker than other oil does. Some are surprised there has been no specific study to link oil sands crude and pipeline corrosion.
"I'm not aware of any significant differences in terms of corrosion or anything like that," said Harvey Yarranton, an engineering professor and heavy oil specialist at the University of Calgary's Shulich School of Engineering.
"For the heavy oils and bitumens, the biggest difference is they are much richer in the heavy components than the light components." Light components are more volatile, so they vaporize more quickly, he said.
TRANSPORT, REFINING DIFFER
Environmental groups argue the petroleum has a high sulfur content compared with other crudes, and that can corrode pipelines faster. They also say it is more viscous than most other crudes, which causes friction and raises the temperature within pipelines, and that dilbit contains bits of quartz an other rocks that can damage pipelines.
The groups rely mostly on industry documents, books, and reports in making conclusions rather than specific scientific studies of the pipelines.
The NRDC, in a report issued earlier this year, pointed out that material from petroleum service provider Baker Hughes shows that heavier, higher-sulfur Canadian crudes are harder on refinery equipment than conventional oil, requiring desalting, corrosion- and fouling-control programs.
However, crude reacts differently in refining than it does in transport, Yarranton said.
"Refineries are at much higher temperatures, so that's a big difference. They are also reacting materials and creating components in the mixture," he said. "The biggest difference is they need equipment to handle the heavy components because those components tend to form coke."
The report also relied on a page in a 1992 book by Russell Jones called "Stress Corrosion Cracking Materials Performance and Evaluation," which suggested high-sulfur crude can lead to problems when exposed to steel. Jones told Reuters that it can be a concern in pipelines, but he was not aware of it causing a pipeline rupture.
"Corrosion that has caused pipeline leaks is always from the outside in. I can't think of a case where it was from the inside out," he said.
Still, the NRDC and other groups argue there is enough doubt and have urged the Pipeline Hazardous Materials and Safety Administration, or PHSMA, a division of the U.S. Transportation Department, to conduct an independent, peer-reviewed study on how oil sands petroleum affects pipelines.
'EASIER TO STOP AN ACCIDENT'
"There have been no independent studies on the impacts of oil sands on pipelines ... essentially there are numerous indications this stuff is a problem," said Anthony Swift, an NRDC lawyer.
"It's much easier to stop an accident from happening than to clean one up after it's happened," said Swift.
The National Energy Board, Canada's main energy regulator, has already approved the Canadian portion of Keystone XL, and the prospect of oil sands crude being more corrosive as contended by green groups did not arise as an issue, said Adrian Luhowy, senior engineer at the NEB.
"I think that's interesting, given that I am an engineer," he said. "I can't say definitely that they're 100 percent wrong, I just have never seen any evidence to prove that."
Luhowy said design codes for pipelines vary based on the materials they transport. That includes wall thickness and other variables including how long it would take to respond if there was a rupture.
He points out that many of the impurities in the heavy crudes are removed before being transported in long-haul pipelines, making them more like conventional oil, even if they are not upgraded into synthetic light oil.
Still, Luhowy said he would be interested in seeing the results of a study of the issue.
(Editing by Rob Wilson)
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