Pipeline Safety, Keystone XL On API Agenda

SAN ANTONIO, TX-Meeting amid the backdrop of several headline-making events, a record attendance of nearly 470 participated in API’s 2011 Pipeline Conference held in San Antonio.

Among the key topics of discussion and conversation were several looming issues, including U.S. Transportation Secretary Ray Lahood’s April 18 summit meeting on pipeline safety in Washington, DC; a coordinated effort to stem resistance to the proposed Keystone XL pipeline project; a need to increase drilling activity; and the continued decline in oil production that is jeopardizing the future of the Trans Alaska Pipeline. As in recent years, a growing number of operations officials actively participated in the 62nd annual event.

In discussing the business outlook for products pipelines, Mark Davidson, director of marketing for Buckeye Partners, said there are three key elements that operators need to keep their eyes on:

1. Demographics-how to keep their growing going forward.
2. Consideration of new energy sources over the next 10-15 years and whether diesel will still have a dominant role and uncertainty about a surge in gasoline.
3. New regulations that could reverse the industry’s course or cause other problems without warning.

“It’s getting harder and harder to lay pipelines because they cost a lot of money. There are other ways to reduce costs and you don’t have to face the regulators,” Davidson said. His company, for instance, has begun diverting its attention to other types of projects though that does not mean they will not be laying any more pipelines, he said.

Companies have begun to create “virtual pipeline” involving ships, trains and terminal aggregation. Highway congestion and a lack of access to inland waterways are increasingly giving the nod to trains as a means of transportation. This has been particularly true for ethanol as more liquids are being transported by train, Davidson said. Gasoline and diesel may be next in line to take advantage of railways. Arbitragers are finding that they can buy the product from the refineries on the Gulf Coast and have it delivered by train to Chicago in five days.

One rail system, CSX, has already built a train facility to transport ethanol. More railroads will likely put in infrastructure as ethanol becomes more integrated with the nation’s economy. Meanwhile, pipelines will still be essential for short-distance deliveries, he said. Pipelines will also be able to find other products to fill up their assets such as isobutyl, he said.

Subsequent to the meeting, API announced that the latest U.S. State Department environmental analysis to TransCanad’a Keystone XL project is a positive indicator for eventual approval of the project. The analysis found “no new issues of substance” and “does not alter the conclusions reached in the draft EIS regarding the need for and the potential impacts of the proposed Project.”