Oil Company Looks To Great Lakes As Shipping Demand Booms
North Dakota and western Canada are producing crude oil faster than it can be shipped to refineries.
Rail car manufacturers can't make new tank cars fast enough, and new pipeline proposals face long delays over environmental concerns. So energy companies are looking for new ways to get the heavy crude to market.
One proposed solution is to ship the oil by barge over the Great Lakes — but it's a controversial one.
Crews are working around the clock in North Dakota, where there's a lot of oil under the Bakken Shale formation, and in the Alberta tar sands area in western Canada, where there's tens of billions of gallons more.
"As domestic production of crude oil from unconventional shale plays, such as the Bakken formation, among others, continues to increase, so too will the need to identify the safest, most reliable methods by which to transport crude oil to our nation's refining centers," says Noel Ryan, a spokesman for Calumet Specialty Products Partners, an energy company based in Indiana.
Calumet wants to spend $20 million to upgrade a dock next to a refinery in Superior, Wis., where surplus oil could be transferred from pipeline onto barges, then shipped over the waters of Lake Superior to refineries in the Midwest and eastern U.S.
"Given a lack of sufficient pipeline and rail capacity to transport crude oil from northern production fields to key refining centers, this project has received significant indications of interest from our customers," according to a company statement.
Shipping the oil by barge brings potential economic benefits and jobs. But there are special risks with heavy crude, says Lyman Welch, water quality program director of the conservation group Alliance for the Great Lakes.
"A spill in the open waters of Lake Superior would be very difficult if not impossible to clean up," Welch says. "Tar sands crude oil is heavier than water, so much of it sinks to the bottom of a river or lake water body if there is a spill."
Welch points to the massive spill of tar sands crude into the Kalamazoo River in Michigan in the summer of 2010 from a ruptured Enbridge pipeline. He says cleanup efforts have taken three years and more than $1 billion, and it's estimated that 20 percent or more of that oil remains on the bottom and may never be completely cleaned up.
That spill wasn't too far from where the river empties into Lake Michigan, and current regulations and response readiness aren't adequate to either prevent or clean up a similar spill in the Great Lakes, according to a study from the Alliance for the Great Lakes.
Some oil is already shipped over the lakes, but not the heavy tar sands crude. Regulations for that still need to be developed.
Before any shipping of tar sands crude begins, many permits and approvals will need to be granted by various government agencies, says Jerry Popiel of the Coast Guard, who oversees incidents such as oil spills in the region. The first to come would be the Wisconsin Department of Natural Resources approving the dock upgrades, which could happen early next year.
Popiel agrees heavy tar sands crude presents unique challenges. But he also says if shipping were to be approved, the Coast Guard would strictly enforce safety regulations, and it would respond to any spill as if it were in his own backyard.
"Personally, I grew up on the Great Lakes, and I still live there," Popiel says. "My kids swim in it, we drink the water ourselves, so we have as vested an interest as anyone to keep the system as clean and environmentally sound as possible."
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