The energy industry has seen a burst of productivity enhancing technological developments, which have helped fuel a substantial increase in domestic energy production over the last decade. The Energy Information Administration recently announced that the United States was the world’s largest producer of petroleum and natural gas hydrocarbons in 2016 for the fifth consecutive year. Just last week crude oil production increased to 9.42 million barrels per day, the 11th highest weekly average recorded, and it could soon reach record highs.
Getting these resources out of the ground is only one part of using them. They have to get to where they need to go, in many cases to far-off end-destinations. Energy transportation infrastructure plays a fundamental role in this process, and in some ways development in this sphere has not kept pace.
Pipelines are the primary component of the overall infrastructure network. They have supported a surge in U.S. production that has helped lead to crude oil and petroleum product exports doubling since 2010 and natural gas exports tripling over the past decade. Even with these gains, the current capacity of pipelines cannot fully accommodate the levels and location of domestic energy production. Some producers struggle to find a viable way to transport their product, and are turning to alternative modes of transportation such as road and rail.
Pipelines offer a safer, more efficient way to transport these products. From 2007 to 2016, road transportation of oil, natural gas, and related products had an average annual incident rate of 7.11 per billion ton-miles, compared to 2.2 for rail, 0.66 for oil pipelines, and 0.73 for natural gas pipelines. Pipelines also compared favorably in terms of related injury and fatality rates.
Pipelines have also grown markedly safer over time. The rates of “serious incidents”—those resulting in a fatality or an injury requiring inpatient hospitalization—have declined substantially over time. Per 1,000 miles of pipeline, the rate fell from an annual average of 0.121 over the period 1997 to 2001 to 0.111 from 2012 to 2016. Related fatalities and injury rates are also lower in the most recent period than they were 20 years ago.
Interstate oil pipeline projects have to navigate a labyrinth of different state regulatory processes, and pipelines that cross national borders, such as the much publicized Keystone XL pipeline, require a presidential permit. Interstate natural gas pipelines fall under the purview of the Federal Energy Regulatory Commission, which coordinates and consults with government agencies at different levels, and must review and give approval before any of these proposals can move forward.
There is currently only one active member on the agency’s five-seat board, and three are required for a quorum. Until a quorum is restored, the agency will be severely constrained in how it operates and the duties it can fulfill, including review and decisions of major pipeline proposals. Thirty major pipelines are at some point in the review process and even more are planning to apply.
Two nominees, Neil Chatterjee and Robert Powelson, have been voted on by the Senate Energy and Natural Resource Committee, and have been referred to the full Senate where they await further action. Confirmation of these two nominees would be enough to restore a quorum to FERC and allow it to resume normal operations. Currently, it is not possible to know when the full Senate will vote on their nomination.
President Trump has also announced his intent to nominate Richard Glick, formerly Democratic General Counsel for the Senate Energy and Natural Resource Committee, and Kevin McIntyre, co-leader of the global Energy Practice at the law firm Jones Day, to the final vacant board seats. Thus far Glick has not officially been nominated. It is not yet clear whether other concerns, such as healthcare reform, will forestall an August recess. But it is likely that the Committee will not be able to hold a hearing on McIntyre or Glick before recess.
The longer the delay for full Senate action on pending nominees, and the longer the agency lacks a quorum, the worse will become the backlog of major natural gas pipelines. Pipelines are vital to energy transportation infrastructure; they provide a safe, reliable mode of transportation for oil and natural gas products.
Charles Hughes is a policy analyst at the Manhattan Institute and author of the new report The Energy Bottleneck: Why America Needs More Pipelines. Follow him on twitter @CharlesHHughes.
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