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Dakota Access Pipeline Would Lock in Emissions of 30 Coal Plants
By Lorne Stockman
The Dakota Access Pipeline would carry oil from the Bakken formation in North Dakota to Gulf Coast refineries and export terminals via Patoka, Illinois. With a maximum capacity of 570,000 barrels per day (bpd), it could carry more than 50 percent of North Dakota's current oil production. Ultimately, the net greenhouse gas (GHG) impact of the pipe would depend on what future actions we take to end our fossil fuel addiction and address climate change.
Happy American Horse attaching himself to an excavator at the construction site of the Dakota Access Pipeline on Aug. 31.Rob Wilson / Bold Alliance
Building a large, new pipeline that reduces the cost of delivering a large oil reserve to market would undermine our climate goals. Meeting the targets set out in the Paris agreement, now signed by more than 180 countries around the world, will not be possible if we continue to lock into new fossil fuel infrastructure like the Dakota Access Pipeline.
In response to the ongoing protests in North Dakota and the concerns raised regarding the approval process, construction of the project within 20 miles of Lake Oahe has been suspended, yet construction activities continue elsewhere on the route. The statement from the Departments of Justice, Army and Interior that ordered the suspension indicates that a review of the process by which the remaining permits can be considered will be conducted including "under the National Environmental Policy Act (NEPA) or other federal laws." Given the White House recently issued guidance on how federal agencies should assess climate impact, it makes sense that a climate test should now be applied to this misguided project.
How Much Carbon is in the Pipe?
Putting aside broader market impacts for a moment, the total emissions that would be delivered by the pipeline are a factor of the average throughput and the emissions intensity of the crude oil it would deliver. We calculate that at typical utilization rates of 95 percent of capacity, total lifecycle emissions from producing, transporting, processing and burning the products derived from the oil would amount to 101.4 million metric tons of CO2e per year. These emissions are equivalent to 29.5 typical U.S. coal plants or the average emissions of 21.4 million U.S. passenger vehicles.*
How Pipelines Lock In Emissions
The first response of pipeline proponents to estimates of GHG emissions from North American pipelines, will be to claim that the crude will go by rail if there are no pipelines. By asserting that the oil would flow with or without a pipeline, proponents will try to argue that the additional GHG emissions would be zero.
This ignores both the market impacts of shifting from rail to pipe, as well as the potential for climate policy to alter the incentives for oil supply and demand.
First let's look at the difference in costs to shippers between rail and pipe.
According to RBN Energy (behind pay wall), the Dakota Access Pipeline would reduce the cost of shipping Bakken oil from North Dakota to the Gulf Coast by $7 per barrel, with rail costing $15 compared to the pipeline charging $8. These are likely averaged tariffs and the difference may be greater or smaller according to specific contracts, committed volumes over non-committed, length of contract, etc.
This is a 47 percent reduction in shipping costs to the world's biggest refining market, which nowadays also happens to be America's main crude oil export point. There is no doubt that this is an attractive route for Bakken producers to get their oil to major markets at lower cost. And in an oil market that for some time now has seen prices hover between $40 and $50 per barrel, that $7 saving boosts profits and cash flow and can be put toward future investment in more drilling and more production. While the economics in the Bakken are very fluid, making it difficult to estimate with any precision how much more production is triggered by a $7 per barrel increase in netback, it is clear that it can only help producers.
An extra $7 per barrel could be the deciding factor for whether it's worth drilling a new well or not. A good example of the impact a similar increase can have was recently discussed by Bloomberg in response to a presentation by executives at Apache Corporation.
In the presentation, CEO John Christmann explained how a rise in oil prices from $50 per barrel to $60 would enable Apache to drill more than 3,000 more wells at its Permian Basin acreage in Texas, a more than 300 percent increase on the $50 case. These figures may be unique to that acreage but it gives an idea of how an increase in the price a company can expect to receive from its operations can enable it to drill and produce more oil.
Locking in Capital, Locking in Carbon
Another respect in which pipelines impact climate compared to rail is that they lock in oil supply, because they have a higher ratio of capital expenditure (capex) over operational expenditure (opex). The Dakota Access Pipeline is estimated to cost $3.8 billion. In addition, the ETCO pipeline, which is the southern section of the system that would deliver the crude from Illinois to Texas and is mostly comprised of an old gas pipeline, will cost around $1 billion. All together that's a $4.8 billion investment.
Shutting down a $4.8 billion pipeline investment before it's paid off is rare. If markets change due to climate policy, perhaps because of new policies that reduce oil use or rapid market adoption of alternatives such as electric vehicles, companies are likely to keep the oil flowing by cutting tariffs. As long as tariffs are higher than the operating costs of pumping the oil, any capital losses for the pipeline owners will be reduced and any long-term profits increased. So in the climate-action scenario, the tariffs could go a long way below $8—perhaps as low as $1 or 2 per barrel. This will have a powerful effect in maintaining oil flows—and hence emissions—in spite of future climate action.
In contrast, rail terminals are comparatively cheap to build. A rail terminal built to load or unload crude onto and off of rail cars typically costs in the tens to low hundreds of million dollars to build, depending on the size. The capital is paid off quickly but the operational expenses are higher. The reason sending crude by rail is more expensive than pipeline, $7 per barrel more expensive in the case of the Dakota Access Pipeline, is the cost of running the operations. Loading and unloading rail cars, paying rail company freight charges, fuel surcharges, insurance, transporting the crude to and from the rail yard, all of these make rail transport an opex-intensive activity. In contrast to the pipeline, rail operators cannot significantly lower their tariffs, because operating costs are the dominant part of the economics.
The switch from rail to pipe has already played out in the Bakken with the decline in oil prices since 2014. Before the price drop, rail carried around 70 percent of the oil produced in North Dakota. That figure has now declined to less than 30 percent as prices dropped, margins narrowed and pipeline utilization rose to near capacity. Now pipelines carry nearly 60 percent, a figure that is bound to rise if the Dakota Access Pipeline is built (see Figure).
The Shift From Rail to Pipe in the Williston Basin
Oil Change International
The recent price crash illustrates very well the role of pipelines in maintaining high oil production during times of tight margins. If rail had been the only option, some producers would have shut in wells as their operational costs, including sending the crude to market, would have exceeded the price they received. Because pipelines existed as an alternative, existing pipeline capacity filled up instead.
Nobody wants to see a decimation of an industry overnight, with the severe consequences for workers and communities that that entails. But it is a fact that we need to transition to a clean energy economy as soon as possible in order to address a climate crisis that itself will decimate communities and ecosystems forever. By continuing to build infrastructure that perpetuates our use of fossil fuels for decades to come, we are laying the foundations for disaster and not transition.
The Dakota Access Pipeline would be with us decades into the future. Once built and operating, the economic incentives to keep it going will be hard to overcome. Every year it will be the source of carbon emissions equivalent to nearly 30 coal plants. Even though it may be the case that those emissions would anyway occur this year or next year, or five years from now, it cannot be the case that those emissions can occur in 20, 30 or 40 years from now. Building the Dakota Access Pipeline would be yet another barrier to the path to climate safety.
*We used the Oil Climate Index for the life cycle emissions of Bakken crude oil and the EPA Greenhouse Gas Equivalencies Calculator for coal plant and vehicle equivalents. Ninety-five percent utilization equates to average annual throughput of 541,500 barrels per day.
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By Jennifer Molidor, PhD
Climate change, habitat loss and pollution are overwhelming our planet. Thankfully, these enormous threats are being met by a bold new wave of environmental activism.
Trump Makes Strange Claim About Water Efficient Toilets: 'People Are Flushing Toilets 10 Times, 15 Times'
President Donald Trump mocked water-efficiency standards in new constructions last week. Trump said, "People are flushing toilets 10 times, 15 times, as opposed to once. They end up using more water. So, EPA is looking at that very strongly, at my suggestion." Trump asked the Environmental Protection Agency (EPA) for a federal review of those standards since, he claimed with no evidence, that they are making bathrooms unusable and wasting water, as NBC News reported.
By Carey Gillam
Former Monsanto Chairman and CEO Hugh Grant will have to testify in person at a St. Louis-area trial set for January in litigation brought by a cancer-stricken woman who claims her disease was caused by exposure to the company's Roundup herbicide and that Monsanto covered up the risks instead of warning consumers.
A powerful volcano on Monday rocked an uninhabited island frequented by tourists about 30 miles off New Zealand's coast. Authorities have confirmed that five people died. They expect that number to rise as some are missing and police officials issued a statement that flights around the islands revealed "no signs of life had been seen at any point,", as The Guardian reported.
"Based on the information we have, we do not believe there are any survivors on the island," the police said in their official statement. "Police is working urgently to confirm the exact number of those who have died, further to the five confirmed deceased already."
The eruption happened on New Zealand's Whakaari/White Island, an islet jutting out of the Bay of Plenty, off the country's North Island. The island is privately owned and is typically visited for day-trips by thousands of tourists every year, according to The New York Times.
My god, White Island volcano in New Zealand erupted today for first time since 2001. My family and I had gotten off it 20 minutes before, were waiting at our boat about to leave when we saw it. Boat ride home tending to people our boat rescued was indescribable. #whiteisland pic.twitter.com/QJwWi12Tvt— Michael Schade (@sch) December 9, 2019
Michael Schade / Twitter
At the time of the eruption on Monday, about 50 passengers from the Ovation of Seas were on the island, including more than 30 who were part of a Royal Caribbean cruise trip, according to CNN. Twenty-three people, including the five dead, were evacuated from the island.
The eruption occurred at 2:11 pm local time on Monday, as footage from a crater camera owned and operated by GeoNet, New Zealand's geological hazards agency, shows. The camera also shows dozens of people walking near the rim as white smoke billows just before the eruption, according to Reuters.
Police were unable to reach the island because searing white ash posed imminent danger to rescue workers, said John Tims, New Zealand's deputy police commissioner, as he stood next to Prime Minister Jacinda Ardern in a press conference, as The New York Times reported. Tims said rescue workers would assess the safety of approaching the island on Tuesday morning. "We know the urgency to go back to the island," he told reporters.
"The physical environment is unsafe for us to return to the island," Tims added, as CNN reported. "It's important that we consider the health and safety of rescuers, so we're taking advice from experts going forward."
Authorities have had no communication with anyone on the island. They are frantically working to identify how many people remain and who they are, according to CNN.
Geologists said the eruption is not unexpected and some questioned why the island is open to tourism.
"The volcano has been restless for a few weeks, resulting in the raising of the alert level, so that this eruption is not really a surprise," said Bill McGuire, emeritus professor of geophysical and climate hazards at University College London, as The Guardian reported.
"White Island has been a disaster waiting to happen for many years," said Raymond Cas, emeritus professor at Monash University's school of earth, atmosphere and environment, as The Guardian reported. "Having visited it twice, I have always felt that it was too dangerous to allow the daily tour groups that visit the uninhabited island volcano by boat and helicopter."
The prime minister arrived Monday night in Whakatane, the town closest to the eruption, where day boats visiting the island are docked. Whakatane has a large Maori population.
Ardern met with local council leaders on Monday. She is scheduled to meet with search and rescue teams and will speak to the media at 7 a.m. local time (1 p.m. EST), after drones survey the island, as CNN reported.
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