A Macondo Response to Oil Sands?

Provincial authorities in Alberta announced plans to review pipeline safety regulations following a series of oil spills in the region. Plains Midstream Canada, Pace Energy Oil and Gas, and Enbridge Energy all experienced releases, sparking ire from aboriginal groups and environmentalists already upset over plans to move oil to the western coast. In the U.S., protesters are likely to flock to Michigan's state capital this week to mark the two-year anniversary of the costliest onshore pipeline spill on record. With increasing focus on regional oil from tar sands, and the ongoing push to advance the Keystone XL pipeline, regional governments and industry officials will be hard pressed to allay growing concerns over pipeline safety.

Alberta's Energy Minister Ken Hughes said the number of spills involving pipelines in the province was down nearly 30 percent last year when compared with the 885 incidents reported in 2007. At least three separate companies reported recent spills in Alberta, however, leading to widespread criticism of pipeline safety in the province. "If" any action is needed to improve pipeline safety, he said, they'd be sure to happen. Alberta is among the largest sources of U.S. oil imports, meanwhile, and serves as the starting point for a pipeline network known in the United States as the Lakehead system. Two years ago, Line 6B of the Lakehead system ruptured and spilled about 20,000 barrels of crude oil into southern Michigan waters. The National Transportation Safety Board, in its report, said Enbridge knew of the issues that lead to the 2010 rupture five years ago, but did little to address the problem.

"Enbridge knew for years that this section of the pipeline was vulnerable yet they didn't act on that information," said NTSB Chairwoman Deborah Hersman in a statement.

Enbridge recently announced a multibillion dollar effort to overhaul and expand its U.S. network of pipelines, including replacing sections of Line 6B. In Canada, meanwhile, the company is working to allay criticism of its $5.4 billion Northern Gateway pipeline that would deliver an estimated 525,000 barrels of oil per day from Alberta to the west coast for Asian exports. Pipeline company Kinder Morgan, for its part, aims to invest some $4 billion to build a parallel line for its Trans Mountain pipeline in an effort to tap into Asian markets. The 715-mile pipeline has experienced, on average, one leak a year for the past 10 years, but nothing that would compare to the Enbridge track record.

The flurry of incidents, coupled with major expansions tied to Alberta crude, help explain Hughes' reaction to growing concerns. Hersman, for her part, said the 2010 release in Michigan was a "wake-up call" not only to companies like Enbridge, but to the Pipeline and Hazardous Materials Safety Administration, which has "weak" regulations on the books.

Advocates of the Keystone Xl oil pipeline this week said the acquisition by the China National Offshore Oil Corp. of Canadian company Nexen Energy means the latest U.S. candidate for Alberta crude is needed now more than ever. The provincial government in British Columbia, meanwhile, said it wanted "significant improvements" to incident response before it backed the Northern Gateway. Pipeline companies like Enbridge and TransCanada, the company behind Keystone XL, are quick to note safety is a core part of their billion-dollar business strategies. But if the federal response to what seems to be systemic problems with transporting tar sands was even marginally close to the response taken with offshore spills, pipeline expansion, including Keystone XL, would grind to a halt.

By. Daniel Graeber of Oilprice.com