From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Oil and Gas Transportation

Description: Audio interview by GAO staff with Frank Rusco, Director,
Natural Resources and Environment

Related GAO Work: GAO-14-667: Oil and Gas Transportation: Department of
Transportation is Taking Actions to Address Rail Safety, but Additional
Actions Are Needed to Improve Pipeline Safety

Released: September 2014

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[ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and
information from the U.S. Government Accountability Office. It’s
September 2014. Technology advancements, such as hydraulic fracturing,
have greatly increased U.S. production of oil and natural gas. This
increase poses challenges for oil and gas transportation infrastructure,
such as pipeline and rail. A team co-led by Frank Rusco, a director in
GAO's Natural Resources and Environment team, recently reviewed oil and
gas transportation infrastructure issues. GAO's Sarah Kaczmarek sat down
with Frank to talk about what they found.

[ Sarah Kaczmarek: ] What are some of the risks involved in transporting
more oil and gas?

[ Frank Rusco: ] Well, the thing to understand is that a lot of the new
oil and gas being produced in the United States is being produced in
areas where there is no pipeline infrastructure. So, for gas, you
absolutely have to send it by pipeline, so you have to build this new
infrastructure. So there's a big buildout around the country in areas
where they're producing new gas, of new pipelines, and some of these
pipelines are bigger and have higher pressure than the pipelines that
we've seen built in the past, so that's, there, there's some challenges
there. With respect to oil, it's a little bit different. In the absence
of pipelines, you have other options. You can send the oil by truck, you
can send it by rail, you can send it by barge, and so what we've seen is
in areas where there are no pipelines, you've seen a big increase in
truck traffic and big increase in, in oil shipped by rail and by barge,
and, of course, you know, shipping oil, there are risks associated with
that. You can have, you know, accidents on the road, you can have
derailments of train cars, you know, you can have barges that, that, you
know, bump into things and spill oil and all, all of those things have
occurred. But there’s another key element to the oil production. When
you produce oil, you also get natural gas with it, and if you don’t have
pipelines, you really don’t have any option for shipping the gas. It has
to go on a pipeline, so if you don’t have a pipeline, you essentially
have to just burn that natural gas off, and they call it flaring, and so
in places where there's no pipelines to gather the natural gas, and it's
not, it's not enough to, to build new pipelines, then there's a lot more
flaring. So, you know, for example, in North Dakota, there's big flares
at the oil sites where they get associated gas.

[ Sarah Kaczmarek: ] You mentioned some of the transportation risks, and
there may be some concerns about transporting oil by train, especially
after the derailment and explosion last year in Canada that killed 47
people. What are some of the rail safety risks your team found?

[ Frank Rusco: ] Well the, the biggest issue with shipping oil by rail
has seemed to be that some of the oil is being produced from shale
deposits, is more volatile, so it has more volatile substances in the
oil itself. And existing rail stock, the tankers that they put this oil
in for shipment, has, perhaps, not been adequate to contain the
volatile, more volatile oil, and it, it's not designed to withstand,
mitigate, or prevent fires that might occur in the event of a
derailment.

[ Sarah Kaczmarek: ] So what's the Department of Transportation doing to
address these types of issues?

[ Frank Rusco: ] Well, the Department of Transportation just announced
that it has two rulemakings in place, with regard to shipments of oil by
rail. And one is to address the requirements for tanker cars, so that
they, they will be essentially meeting enough, high enough safety
standards for transporting the type of oil that is currently being
shipped. And the other is to update and improve response to accidents,
so they want to, they want to have some, you know, improved
communication across first responders and all of that, so they're,
they're doing rulemakings in both of those areas.

[ Sarah Kaczmarek: ] And what recommendations is GAO making in this
report?

[ Frank Rusco: ] Well, we think that the Department of Transportation
needs to do something similar to what they're doing for rail cars with
respect to this buildout of new pipeline capacity. So because some of
the pipelines are, are larger diameter and higher pressure than what
we've seen in the past, we think they need a rulemaking to look at that
and make sure that, that those pipelines are as safe as they need to be,
and, again, that there is a response strategy in place to deal with any
potential accidents.

[ Sarah Kaczmarek: ] Finally, for taxpayers, what do you see as the
bottom line of this report?

[ Frank Rusco: ] Well, there's sort of two things. One, oil and gas boom
that we've been seeing has been good for the economy. We've seen, we've
seen a lot of jobs, we've seen a lot of economic growth. We're now
producing more oil and gas than we were. We're talking about ex -- being
exporters of oil and gas, as well as, you know, importers for, for oil.
These things have, you know, strong economic effects that are positives,
but as this report discusses, when you're producing oil and gas in areas
where it previously wasn't being produced, you need to build out some
infrastructure in order to make sure that, that you're able to ship
this, this material in a safe and economic fashion.

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