	Background

		Location of Oil and Gas Development in the United States

Oil and natural gas are found in a variety of geologic formations  distributed across the country, such as shale and tight sandstone. Increased Oil and Gas Production Presents Challenges for Transportation Infrastructure That Could Pose Environmental and Safety Risks and Have Economic Implications

Increased oil and gas production presents challenges for transportation  infrastructure because some of the growth in production has been in  areas with limited transportation linkages to processing facilities. The limited pipeline capacity to transport crude oil has resulted in the  increased use of other transportation options, in particular rail, truck, and  barge (see fig. The increased use  of rail for transporting crude oil is due to the increases in crude oil  production in North Dakota, Texas, and other states, which have  exceeded the capacity of existing pipelines to move oil from  production areas to refineries, according to a number of studies and  publications we reviewed. In  September 2012, we found that flaring poses a risk to air quality because  it emits carbon dioxide—a greenhouse gas linked to climate change—and  other air pollutants that can increase ground-level ozone levels and  contribute to regional haze. The National Association of Pipeline Safety  Representatives, an association representing state pipeline safety  officials, produced a compendium of state pipeline regulations showing  that most states with delegated authority from PHMSA to conduct  intrastate inspections do not have expanded regulations that cover  increased oversight of gathering pipelines. Historically, federally  unregulated gathering pipelines were low pressure, smaller-diameter  pipelines and were generally in rural areas where there was less safety  risk. PHMSA’s  emergency response planning requirements that apply to other pipelines  do not apply to rural unregulated gathering pipelines. STB data show that rail moved about 236,000  carloads of crude oil in 2012, which is 24 times more than the  approximately 9,700 carloads moved in 2008 (see fig. This has resulted in an increase in demand for tank cars. DOT, primarily through PHMSA and FRA, sometimes jointly, has taken  steps to engage the rail and oil and gas shipping industries and  emergency responders to address the safety of transporting crude oil by  rail, particularly in response to concerns stemming from the July 2013  Lac-Mégantic, Quebec accident:  In August 2013, February 2014, and May 2014, DOT issued  emergency orders to compel shippers and railroads to address safety  risks by taking steps to secure unattended trains, ensure proper  testing and packaging of crude oil, and notify emergency responders  about crude oil shipments. In particular, flammable gases must be packaged in pressure tank  cars, which provide additional safety in the event of an accident. Representatives from railroads and crude oil terminals we spoke to, as  well as from the oil and gas industry, have indicated that clarification  about the requirements for testing and packaging crude oil is needed. However, PHMSA’s requirements for comprehensive  emergency response planning do not apply to unit trains used to transport  crude oil, raising concerns about the abilities of responders and other  stakeholders to effectively handle potential incidents. DOT  began a rulemaking to address this issue in 2011 but did not issue  proposed rules. Recommendation

To address the increased risk posed by new gathering pipeline  construction in shale development areas, we recommend that the  Secretary of Transportation, in conjunction with the Administrator of  PHMSA, move forward with a Notice of Proposed Rulemaking to address  gathering pipeline safety that addresses the risks of larger-diameter,  higher-pressure gathering pipelines, including subjecting such pipelines to  emergency response planning requirements that currently do not apply. Further,  the letter stated that PHMSA is developing a rulemaking to revise its  pipeline safety regulations and is examining the need to adopt safety  requirements for gas gathering pipelines that are not currently subject to  regulations. In the version of the draft report we sent to DOT for comment, we had  also recommended that PHMSA develop and publish additional guidance  on testing, classification and packaging of crude oil for transport by rail  and that PHMSA address emergency response planning regulations for  transporting oil by rail so that they include shipments of crude oil by unit  trains. DOT’s written response stated that PHMSA generally concurred  with these recommendations and was taking steps to address them. Appendix I: Objectives, Scope, and Methodology

This report addresses (1) challenges, if any, that increased domestic oil  and gas production poses for U.S. transportation infrastructure and  examples of associated risks and implications; (2) how pipeline  infrastructure has changed as a result of increased oil and gas  production, the key related safety risks, and to what extent the U.S.  Department of Transportation (DOT) has addressed these risks; and (3)  how rail infrastructure has changed as a result of increased oil production,  the key related safety risks, and to what extent DOT has addressed these  risks.
Why GAO Did This Study

Technology advancements such as horizontal drilling and hydraulic fracturing (pumping water, sand, and chemicals into wells to fracture underground rock formations and allow oil or gas to flow) have allowed companies to extract oil and gas from shale and other tight geological formations. As a result, oil and gas production has increased more than fivefold from 2007 through 2012. DOT oversees the safety of the U.S. transportation system.
GAO was asked to review oil and gas transportation infrastructure issues. This report examines (1) overall challenges that increased oil and gas production may pose for transportation infrastructure, (2) specific pipeline safety risks and how DOT is addressing them, and (3) specific rail safety risks and how DOT is addressing them. GAO analyzed federal transportation infrastructure and safety data generally from 2008 to 2012 or 2013 (as available), reviewed documents, and interviewed agency, industry, and safety stakeholders, as well as state and industry officials in states with large-scale shale oil and gas development.

What GAO Found

Increased oil and gas production presents challenges for transportation infrastructure because some of this increase is in areas with limited transportation linkages. For example, insufficient pipeline capacity to transport crude oil has resulted in the increased use of rail, truck, and barge to move oil to refineries, according to government and industry studies and publications GAO reviewed. These transportation limitations and related effects could pose environmental risks and have economic implications. For instance, natural gas produced as a byproduct of oil is burned—a process called flaring—by operators due, in part, to insufficient pipelines in production areas. In a 2012 report, GAO found that flaring poses a risk to air quality as it emits carbon dioxide, a greenhouse gas linked to climate change, and other air pollutants. In addition, flaring results in the loss of a valuable resource and royalty revenue.
Due to the increased oil and gas production, construction of larger, higher-pressure gathering pipelines (pipelines that transport products to processing facilities and other long-distance pipelines) has increased. However, these pipelines, if located in rural areas, are generally not subject to U.S. Department of Transportation (DOT) safety regulations that apply to other pipelines, including emergency response requirements. Historically, gathering pipelines were smaller and operated at lower pressure and thus posed less risk than long-distance pipelines. But the recent increase in their size and pressure raises safety concerns because they could affect a greater area in the event of an incident. In 2011, DOT began a regulatory proceeding to address the safety risks of gathering pipelines, but it has not proposed new regulations. Although states may regulate gathering pipelines, an association of state pipeline regulators' report on state pipeline oversight shows that most states do not currently regulate gathering pipelines in rural areas.
Crude oil carloads moved by rail in 2012 increased by 24 times over that moved in 2008. Such an increase raises specific concerns about testing and packaging of crude oil, use of unit trains (trains of about 80 to 120 crude oil cars), and emergency response preparedness. Crude oil shippers are required to identify their product's hazardous properties, including flammability, before packaging the oil in an authorized tank car. DOT has issued safety alerts on the importance of proper testing and packaging of crude oil. However, industry stakeholders said that DOT's guidance on this issue is vague and that clarity about the type and frequency of testing is needed. In July 2014, DOT proposed new regulations for crude oil shippers to develop a product-testing program subject to DOT's review. Additionally, unit trains, which can carry 3 million or more gallons of crude oil and travel to various locations through the country, are not covered under DOT's comprehensive emergency response planning requirements for transporting crude oil by rail because the requirements currently only apply to individual tank cars and not unit trains. This raises concerns about the adequacy of emergency response preparedness, especially in rural areas where there may be fewer resources to respond to a serious incident. Also in July 2014, DOT sought public comment on potential options for addressing this gap in emergency response planning requirements for transporting crude oil by rail.

What GAO Recommends

DOT should move forward with a proposed rulemaking to address safety risks—including emergency response planning—from newer gathering pipelines. DOT generally concurred with the recommendation and stated that it is developing a rulemaking to revise its pipeline safety regulations.