Safely Transporting Hazardous Liquids and Gases in a Changing U.S. Energy Landscape (2018)

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The U.S. freight transportation sector’s response to the rapid and largely unanticipated growth in demand for the movement of crude oil, ethanol, and natural gas during the past decade has been a remarkable, but some- times overlooked, aspect of the domestic energy revolution. Although by no means flawless, as new safety issues emerged and bottlenecks were cre- ated by temporary capacity shortages, the industry showed a high degree of adaptability and innovation. Freight railroads and barge operators were quick to fill gaps in the nation’s pipeline coverage, and pipeline operators soon expanded, repurposed, and redirected their networks to reestablish their central role in the long-haul movement of oil and gas. This chapter describes how these three freight modes—pipeline, rail- road, and barge—accommodated the escalating volumes of domestic crude oil, ethanol, and natural gas shipments. Background is provided on the size and scope of each mode’s network as well as the specific means of convey- ance used for these energy liquids and gases, from tank barge tows and tank car unit trains to buried pipes that span hundreds of miles. Trends in the amount of crude oil, ethanol, and natural gas shipped by the three modes are reviewed, both before and after the start of the domestic energy revolu- tion. Volume trends, however, reveal only part of the story of the sector’s impressive response. Not only were the three modes asked to move energy liquids and gases in much larger quantities, but they were also asked to do so over new routes, and in some cases by new methods of conveyance. It is the combination of higher traffic volumes, new routings, and new convey- ance methods that make the sector’s response so remarkable. 3 The Role of Freight Transportation in the Domestic Energy Revolution 34

THE ROLE OF FREIGHT TRANSPORTATION 35 PIPELINE TRANSPORTATION Transmission pipelines are responsible for most domestic movements of crude oil and natural gas liquids (NGLs) and nearly all long-distance move- ments of natural gas. They are not used for ethanol, with the exception of a short pipeline in Florida. This section describes the country’s network of oil and gas transmission pipelines, beginning with an overview of the geo- graphic scope of the systems before reviewing key features of their design and operation. Recent trends in the amount of crude oil, natural gas, and NGLs transported by pipeline are then reviewed.1 Transmission Pipeline Network Crude oil and natural gas are transported by pipeline in upstream gathering and midstream transmission systems. In the case of natural gas, downstream systems of distribution pipelines are also used to deliver the commodity to local distribution companies that serve residential and commercial users.2 It is important to distinguish among these pipeline systems because their size, design, operating environments, and uses are quite different. Gathering systems are used to transport raw crude oil and natural gas short distances from the wellhead to nearby processing plants and storage tanks. These systems usually consist of low-pressure steel lines less than 8 inches in diameter. The raw crude oil that exits gathering lines is usu- ally treated and vented at field plants to remove impurities such as water, sediment, and dissolved gasses (e.g., carbon dioxide and hydrogen sulfide). Likewise, natural gas is transported from the production field in gather- ing lines to nearby gas-processing plants to extract valuable NGLs and unwanted gases and liquids. There are about 500 natural gas–processing plants nationwide. The removal of impurities from the crude oil and natural gas streams is necessary to meet the quality specifications of the midstream transmis- sion pipelines, particularly to prevent corrosion. This initial processing is also necessary to meet the commodity specifications of receiving refineries, utilities, and factories. In the case of natural gas, the NGLs removed at gas- processing plants create a third commodity stream that is carried through transmission pipelines to downstream fractionators where NGLs, such as propane, butane, and ethane, are extracted for storage and transportation (often again, by pipeline) to their end-use markets. There are about 100 fractionation facilities in the United States. 1 There are only 16 miles of transmission pipeline used for ethanol. 2 Natural gas distribution systems consist of mains, which can exceed 20 inches in diameter, and service laterals, often made of plastic, which are usually less than 2 inches in diameter. Be- cause distribution lines are not part of this study, they are not discussed further.

36 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES Gas and oil transmission pipelines are made of steel, normally 8 to 48 inches in diameter, and operated at high pressures ranging from 400 to 1,400 pounds per square inch (psi). Lines typically run several hundred miles, often accompanied by other lines in shared rights of way. More detail on the crude oil, natural gas, and NGL transmission pipeline systems are provided next. Crude Oil Transmission Pipelines Crude oil transmission pipelines originate at one or more inlet stations, or storage terminals, where custody of the shipment is transferred from its original owner to the pipeline operator.3 These stations can be access points for tank trucks, railroad tank cars, and tank barges, as well as up- stream gathering pipelines. Different grades of crude oil are often blended at these facilities to meet the specifications of receivers and to create a more transportable product. It is common for crude oil shipment specifications to define the maximum allowable sediment and water content, viscosity, density, vapor pressure, and temperature of the shipment. The specifications are designed to protect the integrity of the pipeline and the ancillary facili- ties, ensure the shipment meets the needs of the refiner, and prevent valuable throughput capacity from being consumed by unwanted sediment and water. Sampling, metering, and blending facilities are usually located at these sta- tions to ensure the commodity injected into the pipeline meets the quality control requirements of the pipeline operator and intended recipients. There are more than 70,000 miles of crude oil transmission pipeline in the United States. This transmission system experienced marked growth between 2012 and 2015 (see Figure 3-1). Most of the capacity of these lines is contained in about two dozen long-line systems.4 As shown in Figure 3-2, the U.S. crude oil pipeline network is centered in the country’s interior, fan- ning out from the Gulf Coast to the Rocky Mountain, Plains, and Great Lakes states. Except for a single crossing from Canada into Maine, there are no crude oil pipelines east of the Appalachian Mountains. Several trunk lines enter from Canada, mainly from the oil-producing regions of Alberta and Saskatchewan. On the West Coast, the Trans-Alaska Pipeline System 3 National Research Council, ed., Effects of Diluted Bitumen on Crude Oil Transmission Pipelines, Special Report/Transportation Research Board 311 (Washington, D.C: Transporta- tion Research Board, 2013). The discussion in this section is informed by this report. 4 Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, “Distribution, Transmission & Gathering, LNG, and Liquid Annual Data,” PHMSA-Data & Statistics, accessed August 20, 2015, http://phmsa.dot.gov/portal/site/PHMSA/menuitem. 6f23687cf7b00b0f22e4c6962d9c8789/?vgnextoid=a872dfa122a1d110VgnVCM1000009 ed07898RCRD&vgnextchannel=3430fb649a2dc110VgnVCM1000009ed07898RCRD&vgn extfmt=print.

THE ROLE OF FREIGHT TRANSPORTATION 37 3-2 FIGURE 3-1 Miles of U.S. crude oil pipeline, 2005–2015. SOURCE: PHMSA, “Annual Report Mileage for Hazardous Liquid or Carbon Dioxide Systems,” accessed August 1, 2016, http://phmsa.dot.gov/pipeline/library/ data-stats/annual-report-mileage-for-hazardous-liquid-or-carbon-dioxide-systems. FIGURE 3-2 U.S. crude oil transmission pipeline network. SOURCE: http://www.pipeline101.com/Where-Are-Pipelines-Located. 3-1 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Miles Crude Oil

38 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES transports crude oil from Alaska’s North Slope to the port of Valdez, while a pipeline from Canada serves the refineries of Washington State. California has several transmission pipelines that do not have interstate connections but carry heavy crude oil from the state’s inland oil fields to refineries on its coast. The Gulf Coast and the Midwest orientations of the transmission sys- tem can be explained by the fact that more than 50 percent of U.S. refining capacity resides in Texas and Louisiana, with the next largest center on the Great Lakes.5 The combination of production fields, large refineries, oil-import facilities, and tank storage hubs has resulted in an especially dense pipeline network in Louisiana, Oklahoma, and Texas. These three states alone account for about 40 percent of the crude oil transmission pipeline mileage. The country’s largest crude oil storage hub is in Cushing, Oklahoma, where eight major transmission pipelines and several smaller ones converge. Cushing is a transshipment point for crude oil moving between the Gulf Coast and the Midwest. Other major pipeline hubs are located in Houston, Texas (i.e., Houston Ship Channel), and St. James, Louisiana; and regional hubs can be found in Patoka, Illinois; Clearbrook, Minnesota; and Guernsey, Wyoming. Natural Gas Transmission Network As shown in Figure 3-3, the country’s natural gas transmission network is much more expansive than the crude oil transmission network. There are some 300,000 miles of natural gas transmission pipeline in the United States, including about 4,000 offshore miles.6 About two dozen companies own 80 percent of this mileage—with each company operating systems that con- tain 1,000 miles or more.7 The natural gas system dwarfs the crude oil sys- tem in large part because the former, a finished fuel, must access thousands of downstream local distribution companies and other large-volume users scattered across the country, as opposed to the fewer than 150 re fineries that receive the most crude oil. Much like the crude oil pipeline network, however, the natural gas net- work is densest on the Gulf Coast, as the large gas-producing and gas- consuming states of Louisiana and Texas account for nearly 25 percent of 5 U.S. Energy Information Administration, “Regional Refinery Trends Evolve to Accommo- date Increased Domestic Crude Oil Production,” Today in Energy, January 15, 2015, https:// www.eia.gov/todayinenergy/detail.php?id=19591. 6 Pipeline and Hazardous Materials Safety Administration, “Annual Report Mileage for Natural Gas Transmission and Gathering Systems,” Data and Statistics, September 1, 2017. 7 U.S. Energy Information Administration, “Interstate Natural Gas Pipeline Segment,” About U.S. Natural Gas Pipelines—Transporting Natural Gas, accessed September 19, 2017, https://www.eia.gov/naturalgas/archive/analysis_publications/ngpipeline/interstate.html.

THE ROLE OF FREIGHT TRANSPORTATION 39 FIGURE 3-3 U.S. natural gas transmission pipeline network, 2013. SOURCE: http://www.pipeline101.com/Where-Are-Pipelines-Located/Natural-Gas- Pipelines-Map. 3-3 the country’s transmission pipeline mileage.8 Because of its central location and large industrial and residential demand, the Midwest also has a dense network of gas transmission pipelines. The Great Lakes states of Illinois, Indiana, Michigan, Ohio, and Pennsylvania account for nearly 25 percent of total line mileage. However, unlike the more geographically limited crude oil network, the natural gas system forms a dense grid that connects all re- gions of the country. In recent years, transmission pipelines have been built to provide natural gas to regions that were once underserved, especially New York and New England.9 At one time, pipeline operators were required by regulation to own the natural gas that moved through their systems. Today the rates charged by 8 Pipeline and Hazardous Materials Safety Administration, “Pipeline Miles and Facili- ties 2010+,” accessed September 19, 2017, https://hip.phmsa.dot.gov/ analyticsSOAP/saw. dll?Portalpages&NQUser=PDM_WEB_USER&NQPassword=Public_Web_User1& PortalPath=%2Fshared%2FPDM%20Public%20Website%2F_portal%2FPublic%20Reports& Page=Infrastructure&Action=Navigate&col1=%22PHP%20-%20Geo%20Location%22. %22State%20Name%22&val1=%22%22. 9 For example, the Rockies Express line was completed in 2009, extending from Colorado to Ohio and bringing more gas to pipeline hubs with connections to the Northeast.

40 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES operators are regulated, but the transportation services are sold indepen- dently to the owners of the commodity. The pipeline systems have there- fore become even more integrated to form a truly national transportation network. NGL Pipeline Network As explained in Chapter 2, NGLs are first recovered at natural gas– processing plants located upstream from transmission pipelines, which then transport them to fractionators to create the purity products butane, ethane, isobutane, and propane. The purity products are then carried in other transmission pipelines or by other means, such as tank trucks and railroad tank cars, to storage hubs and end users such as petrochemical plants. Because the purity product ethane must move under high pressure, it can be transported only by pipeline. Some pure NGLs, such as propane, are also produced by oil refineries (as opposed to raw NGL fractionators), and they too are transported by pipeline and other modes to end-use markets. Because Texas accounts for a large portion of the country’s natural gas production and fractionation capacity (i.e., Mont Belvieu), it contains most of the country’s transmission pipelines used for NGLs. Kansas is also home to another major NGL storage and fractionation center (i.e., Conway), which is connected to transmission pipelines that originate from natural gas–processing plants in Colorado, New Mexico, Oklahoma, and Wyoming. In response to the increasing supply of NGLs from mudstone basins, new fractionators are being built in North Dakota, Pennsylvania, the Rocky Mountain states, and west Texas. The development of this new processing capacity has led to NGLs and purity products being transported by pipeline from these regions to industrial users and storage terminals on the Great Lakes and in Canada. The total size of the NGL transmission pipeline network can be dif- ficult to define because publicly available mileage statistics often include lines used for other hazardous materials such as anhydrous ammonia (see Figure 3-4). NGL pipelines are categorized by the Pipeline and Hazardous Materials Safety Administration (PHMSA) as highly volatile liquid (HVL) pipelines because they pose flammable and toxic hazards when released to the atmosphere. There are about 65,000 miles of HVL transmission pipe- line, including about 40,000 miles on interstate systems (see Figure 3-5). For reasons explained above, Kansas, Louisiana, Oklahoma, and Texas ac- count for about 70 percent of this pipeline mileage.10 Nevertheless, because of the demand for propane and ethane in other regions, such as the South- 10 Pipeline and Hazardous Materials Safety Administration, “Pipeline Miles and Facilities 2010+.”

THE ROLE OF FREIGHT TRANSPORTATION 41 FIGURE 3-5 Network of U.S. transmission pipelines used to transport HVLs (also known as hydrocarbon gas liquids, or HGLs). SOURCE: U.S. Energy Information Administration [EIA]. FIGURE 3-4 Miles of U.S. transmission pipeline used to transport HVLs, 2005–2015. NOTE: These data include mileage for all HVLs, of which NGLs are the predomi- nant shipment. SOURCE: PHMSA, “Annual Report Mileage for Hazardous Liquid or Carbon Dioxide Systems.” 3-5 0 20,000 40,000 60,000 80,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Miles HVLs

42 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES east, some of the transmission pipelines can extend for more than 1,500 miles. As demand for propane and ethane change, there may be further buildout of these systems, especially to accommodate exported shipments. Key Pipeline System Components Pipe segments in transmission pipelines are usually 40 to 80 feet long with a diameter of 8 to 42 inches. Wall thicknesses vary depending on the pipe’s diameter and pressure requirements and may be increased where the line crosses a body of water or in areas that are densely populated, environmen- tally sensitive, or prone to additional external forces such as seismic activity. It is standard practice for transmission pipelines to be coated externally to provide a physical barrier between the steel and the corrosive environment. The inside of the pipe is usually uncoated and unlined bare steel. To maintain desired pressure levels and flow rates, gas compressors or liquid-pumping stations are positioned along the pipeline at intervals of 20 to 100 miles depending on factors such as topography, pipe diameter, operating pressure, and the properties of the product being transported. Be- cause natural gas creates less friction than liquids, it tends to require fewer compressor stations. These stations are often automated and equipped with sensors, programmable logic controllers, switches, alarms, and other instrumentation allowing the continuous monitoring and control of the pipeline as well as its orderly shutdown if an alarm condition occurs or an operating parameter is violated. Pipelines are equipped with shutoff valves that are strategically located at compressor and pump stations, certain road and water crossings, and other points to facilitate the starting and the stopping of flow and to mini- mize the impact of leaks. These valves, many of which can be controlled remotely, ensure that portions of the line can be isolated in the event of a leak or the need for repair or maintenance. In addition, check valves that prevent backflows may be located at elevation changes and other interme- diate points in hazardous liquids pipelines. The opening and the closing of valves are sequenced to prevent problems associated with over- and under- pressurization. Bypass lines, relief valves (e.g., pressure and thermal relief), and surge tanks may be sited at stations to relieve pressure. Operations and Control Pipelines carrying gases and liquids are operated differently because of the nature of the products they carry. For instance, unlike homogenous natural gas, crude oils and NGLs vary in grade and type. This variation in the characteristics of hazardous liquids presents an opportunity for pipeline operators to batch more than one commodity in a single pipeline.

THE ROLE OF FREIGHT TRANSPORTATION 43 Thus, a long-distance hazardous liquids pipeline can transport dozens of commodity types at one time, typically in batches of at least 50,000 bar- rels. To reduce undesirable mixing at interfaces, the batches are sequenced according to characteristics such as density, viscosity, and sulfur content in the case of crude oil. Maintaining batch separation requires that operators closely monitor the flow characteristics of the pipeline, since reductions in flow velocity and loss of flow turbulence can lead to undesirable intermix- ing. Hazardous liquids pipeline operators strive to maintain turbulent flow, characterized by chaotic motion, to reduce intermixing of batches, and to keep impurities, such as water and sediment, suspended to prevent settling that can cause internal corrosion. Choosing a desired gas pressure and liquids flow regime requires the balancing of many technical and economic factors. Increasing operating pressure will increase pipeline throughput, which is generally desired by an operator to increase revenue capacity. Higher operating pressures, however, require a larger investment in pipe materials and compressor and pumping capacity, and will increase energy use and operating costs. In the case of crude oil pipelines, the characteristics of the crude oil are important considerations in establishing a flow regime. For instance, more energy is needed to pump dense, viscous crude oils than light crude oils with lower viscosity. Some crude oils are too viscous naturally to be pumped. The normal response when a highly viscous crude oil is transported entails diluting it with lighter oil, referred to as diluent. When a diluent is too costly or unavailable, an alternative approach is to transport the crude oil in a heated pipeline. Heated oil transmission pipelines are rare, except in California, which produces very viscous crude. Pipeline throughput and flows are usually monitored and controlled by operators from one or more central control centers, where supervisory con- trol and data acquisition (SCADA) systems collect and analyze data signals from sensors and transmitters positioned at compressors and pumps, valves, tanks, and other points en route. Parameters other than flow rate, such as line pressure, pump and compressor discharge pressures, and temperatures, are also monitored for routine operational and maintenance decisions and for leak detection. In the next chapter, further consideration is given to the safety features and maintenance of transmission pipelines. Trends in Pipeline Transportation of Crude Oil, Natural Gas, and NGLs Recent Trends in Traffic Pipelines have long accounted for the dominant share of long-haul crude oil movements in the United States. Since the late 1990s, pipelines have carried more than 70 percent of crude oil shipped as measured in

44 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES ton-miles.11 By 2010, this share had reached 80 percent of ton-miles12 and 85 percent of refinery receipts.13 However, as demand for oil takeaway capacity grew, the less capital-intensive rail and water modes began to account for increasing shares of crude oil traffic. The two modes, par- ticularly rail, offer more flexible routing options, allowing for en-route changes in shipment destination in response to changing market demand and price differentials. In 2012, the pipeline share of crude oil ton-miles was at about 75 percent.14 However, since 2012, as more miles have been added to the network, pipelines have hauled increasingly larger crude oil traffic volumes. As shown in Figure 3-6, trunk pipelines carried about 54 percent more barrels in 2015 than in 2011. Unlike crude oil, all long-distance natural gas shipments move by pipe- line. As a precursor to the domestic energy revolution, natural gas traffic by transmission pipeline increased nearly 20 percent between 2005 and 2010. Growth leveled off after 2010, and by 2015 volumes were comparable to those in 2005 (see Figure 3-7). In the case of NGLs, this traffic is also moved predominantly by pipeline. Like natural gas, NGL shipments grew rapidly from 2005 through 2009, but it has also experienced periods of additional marked growth over the past 5 years (see Figure 3-8). Geography of the Traffic The geographic change in oil pipeline movements has been dramatic over the past decade. Between 2005 and 2015, crude oil shipments from the Midwest increased by an order of magnitude as production in the Williston Basin ramped up (see Figure 3-9). At the same time, movements from the Gulf Coast to the Midwest have been falling as imports are down. The trend reached a milestone in 2015 when Midwest shipments to the Gulf Coast surpassed Gulf Coast shipments to the Midwest by nearly 29 million barrels. In the case of natural gas, it is difficult to track shipments because its fungible quality means that pipelines are in some sense a storage vehicle. However, the routing of individual pipelines has shifted in response to the new supply origins. These changes are the result of new pipelines, conver- sions of existing pipelines to or from natural gas service, and directional 11 Bureau of Transportation Statistics, “Table 1-55: Crude Oil and Petroleum Products Transported in the United States by Mode,” July 2010, http://www.rita.dot.gov/bts/sites/rita. dot.gov.bts/files/publications/national_transportation_statistics/2010/index.html. 12 Ibid. 13 U.S. Energy Information Administration, “U.S. Refinery Receipts of Crude Oil by Method of Transportation,” November 10, 2016, http://www.eia.gov/dnav/pet/pet_pnp_caprec_dcu_ nus_a.htm. 14 Ibid.

THE ROLE OF FREIGHT TRANSPORTATION 45 FIGURE 3-6 U.S. pipeline crude oil traffic volume, 2005–2015. SOURCE: Federal Energy Regulation Commission, https://www.ferc.gov/docs-filing/ forms/form-6/data.asp. FIGURE 3-7 U.S. interstate pipeline deliveries of dry natural gas, 2005–2015. SOURCE: EIA. 3-6 - 2 4 6 8 10 12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Barrels (billions) All Trunkline Barrels 0 10 20 30 40 50 60 70 80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Trillions of cubic feet Natural Gas

46 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES FIGURE 3-8 U.S. pipeline shipments of NGLs. SOURCE: PHMSA, “Data and Statistics,” accessed September 21, 2016, http:// www.phmsa.dot.gov/pipeline/library/data-stats. FIGURE 3-9 U.S. pipeline shipments of crude oil between the Midwest and the Gulf Coast, 2005–2015. SOURCE: EIA, “Crude Oil and Petroleum Products Movements by Pipeline be- tween PAD Districts,” accessed November 8, 2016, http://www.eia.gov/dnav/pet/ pet_move_pipe_a_EP00_LMV_mbbl_m.htm. 3-8 0 200 400 600 800 1,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Barrel-miles (billions) NGLs by pipeline 3-9 - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Barrels (thousands) Midwest to Gulf Coast Gulf Coast to Midwest

THE ROLE OF FREIGHT TRANSPORTATION 47 reversals.15 The U.S. Energy Information Administration (EIA) reports there were 38 line reversals and conversions from 1996 through 2015.16 Since 2013, most reversals have been made to accommodate the growth in natural gas traffic originating in the Marcellus and Utica regions. By comparison, most NGL traffic continues to move along the well-established NGL pipeline network in the Gulf Coast region. However, the supply from hydraulic fracturing has prompted new pipeline traffic on the East Coast; for instance, through Philadelphia where NGL shipments are being ex- ported to European petrochemical plants. RAIL TRANSPORTATION This section describes how freight railroads transport domestic supplies of crude oil, ethanol, and NGLs, including the types of trains and rail cars used. In the decade since the start of the domestic energy revolution, there has been tremendous growth in the amount of ethanol and crude oil moved by rail, with volumes escalating each year from 2008 to 2014. However, traffic levels have varied from stable to declining rates over the past 2 to 3 years. These changing trends, and their causes, are discussed after provid- ing an overview of the nation’s freight rail network, which is best viewed as a continental system because of its integration with Canadian railroads and crossings into Mexico. North American Freight Rail Network Most of the U.S. freight rail system is owned and operated by four major railroads. Union Pacific Railroad and BNSF Railway own most of the mainline track west of the Mississippi River, and CSX Transportation and Norfolk Southern Railway own most of the track to the east (see Figure 3-10). The Canadian Pacific Railway and the Canadian National Railway operate several thousand miles of mainline track in the upper Mid- west, the mid-Atlantic, and the Great Lakes region, as well as southward to the Gulf Coast. The Kansas City Southern Railway Company operates in the Mississippi Valley on mostly north–south routes, including extensions into Mexico as Kansas City Southern de Mexico. Collectively, these seven 15 U.S. Energy Information Administration, “Oklahoma State Profile and Energy Estimates,” January 21, 2016, https://www.eia.gov/state/analysis.cfm?sid=OK. 16 U.S. Energy Information Administration, “Natural Gas,” accessed November 8, 2016, http://www.eia.gov/naturalgas/data.cfm#pipelines. EIA issues a disclaimer about these data noting that they are not part of a survey and rely on several sources. PHMSA reports having begun to collect data on conversions and reversals around 2013, but data are not yet publicly available.

48 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES Class I railroads own, operate, and maintain about 162,000 miles of track in the United States. The Class I railroads provide long-distance freight transportation. Dur- ing the past 30 years, they have fundamentally restructured their networks and operations to concentrate traffic on high-capacity trunk lines by using increasingly longer and heavier trains. They now specialize in the transcon- tinental movement of intermodal containers, as well as the long-haul move- ment of bulk and carload commodities such as grain, coal, and chemicals. As shown in Figure 3-10, the 162,000-mile Class I freight rail network is dense and highly integrated, allowing service to thousands of origin– destination pairs. Not shown in Figure 3-10 are the more than 40,000 miles of branch-line track operated by several hundred regional and short-line railroads (Classes II and III) that provide feeder service. Because no single U.S. railroad spans the entire country from the East Coast to the West Coast, the major railroads also exchange traffic with one another. Ship- ments of wheat or crude oil going from North Dakota to the East Coast, for instance, require at least two railroads to complete the trip. The railroads, FIGURE 3-10 North American Class I freight railroad network. SOURCE: U.S. Department of Transportation. 3-10

THE ROLE OF FREIGHT TRANSPORTATION 49 therefore, have long-established standards for the interchange of rail cars over their networks and for the setting of joint rates. Trains Used for Crude Oil, Ethanol, and NGLs The Class I railroads operate line-haul trains that typically contain at least 70 cars, and often 100 or more. Trains operating west of the Mississippi River tend to be even longer, sometimes exceeding 120 cars. These line-haul trains may be constructed to provide either “mani- fest” or “unit” service. Manifest trains have a mixed consist, meaning they move a variety of cargoes in several different car types and for multiple shippers. The carload shipments are usually traveling between different origin and destination points, and therefore trains are assembled, disassembled, and reassembled in classification yards where car sorting takes place. The sorting schedule, labor, and added circuity that is entailed means that manifest service can be slow and costly, which has led to a steady decline in its use over the past three decades. The railroads can operate far more efficiently when providing train- load, or unit, service from a single origin to a single destination. Typically formed from more than 100 cars, unit trains carry one type of commodity from a single origin to a single destination, often on a set schedule. Unit trains have long been used to provide fast, cross-country transportation of intermodal containers, as well as coal movements from mines to electric utilities. These train configurations have been used increasingly to trans- port grain and other bulk commodities. To benefit from the faster transit times and lower rates, shippers and receivers of commodities moved in unit trains may be required to make substantial investments in track and other facilities that can handle the longer trains and faster loading and unloading. Ethanol began moving in unit trains a few years before a rail market developed for crude oil. As discussed in Chapter 2, low ethanol production volumes and limited national demand had made unit trains uneconomical until the federal Renewable Fuel Standard (RFS) mandate led to increased demand after 2005. Faced with growing demand, ethanol plants began pooling their shipments by using “sweep” trains that pick up cars from the sidings of several plants, usually in blocks of at least two dozen cars.17 These operational changes, as well as the advent of third-party ethanol consolidators and the acquisition of smaller ethanol plants by larger-volume producers, led to an increasing share of ethanol traffic being moved by unit trains as production volumes grew in response to RFS. 17 Union Pacific, “Ethanol Sweep Train Tariff Condition Change,” March 8, 2013, http:// www.up.com/up/customers/announcements/agriculturalproducts/ethanolandbiodiesel/AG2013- 19.html.

50 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES When the rail market for crude oil began to develop as the use of hydraulic fracturing technology grew, the service was often provided in manifest trains because of a lack of volume. Many of the new oil-producing fields lacked high-capacity gathering and storage systems, as well as car- loading infrastructure. Blocks of railroad tank cars were thus filled on sidings by tank trucks and then scheduled for rail pickup two or three times per week. The transfer from truck to tank car was often made using portable transloader platforms, as shown in Figure 3-11. As production vol- umes increased and pipeline gathering and tankage systems were installed, shipper investments in the added trackage, loading, and storage facilities required for unit train service became more attractive. These investments allowed faster and less expensive trainload movements of up 80,000 bar- rels (i.e., more than 3 million gallons) at a time. The largest terminals were built with loop track designs and loading racks with enough positions to simultaneously fill several dozen tank cars (see Figure 3-12). Like the crude oil from hydraulic fracturing sites, NGLs being recov- ered from wet gas drilling often lacked pipeline take-away capacity. These liquids too could be transported by rail using the pressure tank cars tradi- tionally used for hauling propane and butane, as long as the ethane content in NGL was minimal. Indeed, some unit trains were created to bring NGL shipments from the Bakken fields in North Dakota to fractionators in 3-11 FIGURE 3-11 Direct truck-to-rail transloading.

THE ROLE OF FREIGHT TRANSPORTATION 51 FIGURE 3-12 Siding loop (a) and crude oil–loading rack (b) for unit train service. (a) (b)

52 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES Kansas and Texas.18 When compared with their use for crude oil, however, unit trains have had less applicability for NGLs, in part because of the added cost and complexity of preparing shipments and the relative scarcity of pressure tank cars. Tank Cars Used for Crude Oil, Ethanol, and NGLs There are about 350,000 tank cars in the North American rail car fleet. Nearly all are owned by shippers or car-leasing companies. About two- thirds of the fleet is used to carry materials regulated by the U.S. Depart- ment of Transportation (U.S. DOT) and Transport Canada because they are flammable, corrosive, poisonous, or pose other hazards. Through the Federal Railroad Administration (FRA) and PHMSA, U.S. DOT sets the minimum design standards for the cars. Various design features are required to accommodate differences in the physical, chemical, and hazard charac- teristics of the materials shipped. The Association of American Railroads (AAR) Tank Car Committee assists in the development of detailed tank car design specifications that comply with U.S. DOT standards. AAR performs this supportive function in accordance with its traditional role in setting industry rules and standards for the interchange of equipment. There are two basic types of tank cars: pressure and nonpressure. The former are used to transport gases compressed to a liquefied state.19 The pressure designs that can be used for hauling unfractionated NGLs are the DOT-105 and the DOT-112 specifications; the latter is often referred to as a propane car.20 The tanks in these pressure cars can hold about 34,000 gallons. Their safety features include a thermal insulation system, consist- ing of a fiber blanket wrapped around the tank held in place by a metal jacket; pressure-relief devices; steel head shields covering the tank ends to make them more resistant to punctures; and protective housings for valves and other fittings. There are about 50,000 DOT-105s and DOT-112s in the North American tank car fleet. The most common nonpressure tank car is the DOT-111. It is used to carry many kinds of hazardous and nonhazardous liquids, including gasoline, diesel, caustic soda, molten sulfur, and sulfuric acid. It can hold about 30,000 gallons of flammable liquid. While the safety performance of 18 Kelly Van Hull, “The Race Is On and It Looks Like ONEOK—Bakken NGLs Production Growth,” RBN Energy, April 28, 2013, https://rbnenergy.com/the-race-is-on-and-it-looks-like- oneok-bakken-ngls-production-growth. 19 National Research Council (U.S.), Ensuring Railroad Tank Car Safety, Special Report 243 (Washington, D.C.: National Academy Press, 1994). For more details on U.S. DOT tank car specifications, see Ensuring Railroad Tank Car Safety, which describes the varying design standards appropriate for cargo characteristics. 20 The DOT-114 tank car design is also used for propane service.

THE ROLE OF FREIGHT TRANSPORTATION 53 these general-service tank cars when used in hazardous materials service has been questioned for years, their increased use in crude oil and ethanol unit trains has prompted new concerns and several modifications to the design standard, as discussed next. Not satisfied with these modifications, U.S. DOT created an entirely new design specification for tank cars transporting these flammable liquids in 2015. The transition to a new tank car for transporting ethanol and crude oil began shortly after passage of RFS and as oil production from hydraulic fracturing began to grow. The first major modification was the introduc- tion of the AAR Casualty Prevention Circular (CPC) 1232 upgrade to the DOT-111 design. In 2011, the AAR Tank Car Committee required that all new tank cars used for ethanol and crude oil meet the CPC-1232 standard, which added half-height head shields, top rollover protection, thicker tank steel, and bottom skid protection to the DOT-111. However, even as CPC- 1232 tank cars began entering the fleet in larger numbers during 2012, ethanol and crude oil volumes had been escalating, creating more demand for the large fleet of older DOT-111s. Additionally, in March 2012, the National Transportation Safety Board (NTSB) recommended that all tank cars authorized for fuel ethanol and crude oil, not just new ones, be re- quired to have enhanced puncture resistance and top fittings protection. Yet, as accident experience with the new CPC-1232s grew, questions were raised about the adequacy of its protections, particularly its lack of a thermal protection system to withstand heat-induced tears when exposed to a liquid pool fire and its use of half-height head shields instead of full-height head shields. In response to these concerns, U.S. DOT introduced a new DOT-117 specification for tank cars carrying these flammable liquids. The design has a jacketed and thermally protected shell made of thicker steel, 0.5-inch-thick full-height head shields, larger-flow pressure relief devices, bot- tom outlet valve protection, and rollover protection for top fittings. All new tank cars constructed after October 1, 2015, are required to meet the new design standard (or an equivalent performance-based standard) to qualify for flammable liquids service. If they are to remain in crude oil and ethanol service, DOT-111s and CPC-1232s must be made compliant with a retrofit (DOT-117R) standard according to a phase-in schedule ending in 2025. Trends in Rail Transportation of Crude Oil, Ethanol, and NGLs Recent Trends in Rail Traffic Figure 3-13 shows the number of carloads of crude oil and ethanol moved by rail from 2005 to 2015. The data show that crude oil was a minor component of railroad traffic before 2011. Indeed, from the 1980s to the mid-2000s, railroads carried only about 0.1 percent of all crude oil barrels

54 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES FIGURE 3-13 U.S. crude oil and ethanol rail carloads, 2005–2015. NOTE: One carload equals approximately 700 barrels. SOURCE: Association of American Railroads (AAR). shipped each year within the United States.21 Even in 2011, railroads ac- counted for less than 1 percent of domestic receipts of crude oil by U.S. refineries; it was not until 2014 that this share had increased to more than 4 percent.22 In the case of ethanol, rail traffic growth peaked in 2010 and has been flat since. As discussed in the previous chapter, the sharpest increase in ethanol production volumes occurred in response to changes in the federal RFS from 2005 to 2010. The amount of ethanol shipped by rail since 2010 has remained largely stable after the earlier years of rapid growth.23 Geography of the Traffic The spread of crude oil and ethanol shipments through new regions of the country began shortly after 2005, when ethanol production began ramping 21 Bureau of Transportation Statistics, “Table 1-55: Crude Oil and Petroleum Products Transported in the United States by Mode.” 22 U.S. Energy Information Administration, “U.S. Refinery Receipts of Crude Oil by Method of Transportation.” 23 Ethanol volumes are affected by gasoline demand. The amount of driving as measured in vehicle miles traveled (VMT) did not return to early 2008 levels until late 2014; http://www. nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Performance-summary-report-12152014-v2.pdf, p. 4. 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Carloads Ethanol Crude Oil Total

THE ROLE OF FREIGHT TRANSPORTATION 55 up to meet national demand spurred by RFS. Whereas ethanol had previ- ously been produced in the Midwest for consumers in that region, by 2010 it was being transported throughout the country. Figure 3-14 shows how a substantial portion of the demand for ethanol is in the country’s population centers, as nearly half of the ethanol produced in 2015 was transported from the Midwest to the East Coast. By and large, all of this traffic has moved in railroad tank cars over routes that accommodated much less flam- mable liquids traffic before 2005. Likewise, in the case of crude oil, the volumes being produced from basins in Colorado, North Dakota, and Wyoming were being transported on rail routes originating in these states and headed to refineries and stor- age terminals in distant states that had previously received most of their crude oil by pipeline or tanker ship. Figure 3-15 shows the weekly number of crude oil trains originating from North Dakota in 2014, and how the predominant routes were oriented East to West, serving refineries on the Atlantic and Pacific Coasts. The emergence of these new energy routes is evident by a review of the average length of haul of crude oil and ethanol rail traffic. As shown in Figure 3-16, the average distance traveled by crude oil shipments increased dramatically between 2007 and 2010, when North Dakota crude oil started to be transported in large volumes to coastal refineries. By comparison, the average length of haul of ethanol fuel remained relatively stable over the FIGURE 3-14 Volume of ethanol fuel transported by rail interregionally in the United States, 2010–2015. SOURCE: EIA. 3-14 0 20 40 60 80 100 120 2010 2011 2012 2013 2014 2015 Barrels (millions) East Coast from Midwest Gulf Coast from Midwest Rocky Mountain from Midwest West Coast from Midwest West Coast from Gulf Coast

56 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES FIGURE 3-15 Location and volume of rail traffic of North Dakota Bakken crude oil (in green), 2014. NOTE: PADD = Petroleum Administration for Defense District, the EIA term used in delineating U.S. regions. SOURCE: EIA. FIGURE 3-16 Average length of haul of crude oil and ethanol rail shipments in the United States, 2005–2015. SOURCE: Federal Railroad Administration (FRA) review of Surface Transportation Board (STB) Waybill Sample. 3-15 3-16 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Miles Crude Oil Ethanol

THE ROLE OF FREIGHT TRANSPORTATION 57 period, reflecting the more geographically diverse destinations; that is, stor- age terminals and gasoline distribution centers located in all regions, many of which being equidistant from the Midwest. As rail crude oil and ethanol volumes increased over the new routes, many more jurisdictions started experiencing new traffic flows. There are 3,108 counties in the contiguous United States. Figure 3-17 shows the number of counties that experienced crude oil and ethanol rail traffic each year from 2005 to 2015. In 2005, slightly fewer than 1,100 counties were exposed to this rail traffic, but by 2008 the number had increased to more than 1,800, largely because of increases in ethanol movements. This sharp increase can be explained by the growth in production in response to RFS and by the fact that ethanol moves to so many destinations (e.g., gasoline distribution centers nationwide), and mostly by rail when shipped long distances. The effect of increased crude oil traffic can also be seen in Figure 3-17. The largest growth in counties experiencing crude oil traffic occurred after 2010, when production from the Bakken fields and the coun- ties of mudstone basins started to ramp up. In 2005, less than 3 percent of U.S. counties had experienced crude-by-rail traffic, but by 2013 this figure had grown to nearly 40 percent (see Figure 3-18). Railroads carry a small fraction of the country’s NGL traffic, most of which is moved by pipeline. There has been an increase in this traffic, FIGURE 3-17 Total number of counties transited by crude oil and ethanol rail ship- ments in the United States, 2005–2015. NOTE: There are 3,108 counties in the contiguous United States. SOURCE: FRA analysis of STB Waybill Sample. 3-17 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Number of counties Ethanol Crude oil Total Counties Crude & Ethanol

58 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES FIGURE 3-18 Average percentage of counties in each state with crude oil and ethanol shipments passing through by rail, 2005–2015. SOURCE: FRA analysis of STB Waybill Sample data. however, as shown in Figure 3-19.24 It is difficult to know how much of this increase is a result of the movement of raw (unfractionated) NGLs because crude oil–derived liquefied petroleum gas (LPG) and propane have been carried by railroads in manifest service for decades.25 WATER TRANSPORTATION Much of the bulk freight moved within the United States, and the vast ma- jority moved in international commerce, uses the nation’s marine transpor- tation system.26 The system is varied and immense. It consists of thousands of miles of navigable channels and hundreds of port complexes. Thousands of individual terminals are located along the nation’s rivers, lakes, and coastal waterfronts, served by carriers operating a varied mix of vessels. Background on the country’s navigable waterways is provided next, followed by a closer look at how this transportation system is used to trans- port crude oil, ethanol, and NGLs. As with rail, waterborne movements of crude oil grew sharply as a result of the domestic energy revolution. This 24 E. Russell Braziel, The Domino Effect, 2016, 176. 25 Ibid., 95. 26 National Research Council, Funding and Managing the U.S. Inland Waterways System: What Policy Makers Need to Know, Transportation Research Board Special Report 315 (Washington, D.C.: Transportation Research Board, 2015). The discussion in this section is informed by this report. 0% 10% 20% 30% 40% 50% 60% Percent Average % of counties with ethanol shipments Average % of counties with crude oil shipments

THE ROLE OF FREIGHT TRANSPORTATION 59 FIGURE 3-19 NGL rail carload traffic in the United States, 2010 and 2014. SOURCE: Warren Wilczewski, “EIA’s Forthcoming HGL-by-Rail Data: Approaches and Initial Findings,” IHS 2016 International LPG Seminar, Houston, Texas, April 6, 2016. 3-19 traffic has declined in recent years for the many of same reasons it declined for rail. Waterway System Since the country’s founding, the federal government has taken the lead in developing and maintaining the nation’s navigable waterways. The U.S. Army Corps of Engineers (USACE) is the chief federal agency responsible for channel dredging and for building, maintaining, and operating the system of locks, dams, and other infrastructure to control water flows and channel depths. The inland and intracoastal waterways consist of some 36,000 miles of navigable river, lake, canal, and coastal channels, of which nearly 12,000 miles are active commercial routes (see Figure 3-20). Most of the system consists of shallow-draft river and canal channels with control- ling depths of 7 to 12 feet. The coastal channels contain a combination of shallow- and deep-draft channels. River Systems By far the largest network of waterways in the United States is the Mississippi River System, which fans out across the interior of the country for more than 6,000 miles. The system encompasses navigable channels in more than one dozen tributaries—including the Arkansas, Illinois, Missouri, and Ohio Rivers—that pass through 17 states. Navigable from the Gulf Coast to as far north as Chicago, Minneapolis, and Pittsburgh, the Mississippi River System

60 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES FIGURE 3-20 U.S. inland and intracoastal waterways. SOURCE: USACE Navigation Data Center GIS Viewer. 3-20 accounts for more than 80 percent of the length of the country’s navigable river channels. Much of the system is made navigable by locks and dams. North of its confluence with the Ohio River, the 858-mile Upper Mississippi River contains 29 lock sites, while the 981-mile Ohio River contains 20, plus an additional 40 on its many tributaries and canals. While the 956- mile Lower Mississippi River does not have any locks, it requires USACE maintenance dredging and training. The country’s second longest river system is the 596-mile Columbia– Snake Rivers System, which originates in the Rocky Mountains and passes through the states of Idaho, Oregon, and Washington to the Pacific Ocean. The 10 locks on the Columbia River can lift barge tows as much as 110 feet. Although this system and the Mississippi River System account for most of the country’s “brown water” barge traffic, small amounts of freight are shipped on a number of other regional rivers, including the Delaware, Hudson, James, and Sacramento Rivers. While traditionally used for local movements of bulk materials, such as stone, cement, sand, and lumber, some of the ports on these smaller rivers have connections to railroads, which can expand their reach and the types of commodities shipped. Coastal and Intracoastal Systems Large oceangoing vessels operate regularly over what are technically domestic routes between the West Coast ports and Alaska and Hawaii.

THE ROLE OF FREIGHT TRANSPORTATION 61 When considering domestic coastwise shipping, however, the country’s main “blue water” routes are located along the Gulf Coast. The Gulf Intra- coastal Waterway is an interlinked network of canals, bayous, and river channels that runs about 1,100 miles from Texas to Florida, connecting with the Mississippi River north and south of New Orleans. By comparison, the 700-mile Atlantic Intracoastal Waterway, which consists of a series of channels on canals, bays, and sounds extending from Florida to Virginia, is used mainly for short-haul barge movements and by recreational boaters. Great Lakes System Consisting of seven waterways linked by a dozen lock sites, the Great Lakes channels accommodate freight moved lakewise within the region and seawise via connections with the St. Lawrence Seaway. The distance from Montreal, the head of deep-draft ocean navigation on the St. Lawrence River, to Duluth, at the western end of Lake Superior, is about 2,300 miles. The distance to Chicago, near the southern end of Lake Michigan, is about 2,250 miles. The system also accommodates some lake-to-river trade as small vessels and barges can travel from Lake Michigan to the Illinois River via the Chicago Sanitary and Ship Canal. While vessels can also access the Hudson River system from Lake Erie via the New York State Barge Canal (Erie Canal), vessel size restrictions preclude most commercial traffic. Vessels Used for Crude Oil, Ethanol, and NGLs Barges are the cargo-carrying vessels on the inland system. The U.S. in- land waterways fleet comprises nearly 30,000 barges, including about 3,800 shallow-draft tank barges that carry liquids such as crude oil, refined prod- ucts, and chemicals. These barges are usually flat bottomed and rectangular with cargo space below the deck. The tanks may be integrated into the hull or carried independently. Each barge can usually carry 10,000 to 30,000 bar- rels of liquid. Two or three of the larger barges (i.e., 20,000 to 30,000 barrel capacity) are often assembled together in a single “unit” tow, thus moving 20,000 to 90,000 barrels. In addition, smaller barges (i.e., 10,000 barrel capacity) are often integrated into larger barge flotillas (i.e., 15 to 40 barges) that carry both liquid and dry cargoes. Because most refineries have waterside access, barges can bring crude oil supplies with existing water infrastructure, thereby precluding the need for investments in railroad offloading facilities and spur lines. In these cases, crude oil shipments originating on tank cars can be transloaded onto barges for the final leg of the journey to the refinery. As oil volumes from hydraulic fracturing started rising in 2011, the inland tank barge fleet grew by about 25 percent (see Figure 3-21). Because many of these new vessels had tanks

62 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES FIGURE 3-21 Tank barges in U.S. inland waterways fleet, 2000–2015. SOURCE: Kirby Corporation, “Putting America’s Waterways to Work,” February 2017, 16, http://kirbycorp.com/wp-content/uploads/2017/02/Kirby-Corporation- Feb-2017-Roadshow-1.pdf. capable of carrying 30,000 barrels, as opposed to the traditional 10,000 barrel tanks, total hauling capacity grew even more. Contrary to the situa- tion with railroads, most of these tank barges are owned by the operators, as opposed to the shippers. There are more than 40 inland barge operators in the United States, but tank carriage is specialized. About 10 of the larg- est barge operators account for three-quarters of all inland tank barges.27 In the case of the coastwise barges, they are designed specifically for deeper-draft waters. The U.S. fleet comprises about 270 coastwise barges, each having a loading capacity of between 30,000 and 195,000 barrels. In addition, some tank barges can travel on open seas. About 100 articulated tank barges operate off U.S. coastal waters. They can hold as much as 340,000 barrels of oil. On some longer-distance intracoastal routes—such 27 Kirby Corporation, “Putting America’s Waterways to Work,” February 2017, 20, http:// kirbycorp.com/wp-content/uploads/2017/02/Kirby-Corporation-Feb-2017-Roadshow-1.pdf. 3-21

THE ROLE OF FREIGHT TRANSPORTATION 63 as between Baton Rouge and Tampa—self-propelled tank ships are used. There are about 30 of these vessels in the domestic fleet, each capable of carrying between 300,000 and 600,000 barrels. The use of barges to transport ethanol is limited in part because of the small number of ethanol plants that have waterside access. Most of the etha- nol movements made by water originate on the Upper Mississippi River system, typically transported in 10,000-barrel tank barges. In the case of raw NGLs, they can be transported in pressure tank barges used for LPG. These tank barges typically have a capacity of about 16,000 to 17,000 barrels. Trends in Waterborne Transportation of Domestic Crude Oil, Ethanol, and NGLs Recent Trends in Waterborne Traffic Because they had long been used to transport crude oil, NGLs, and ethanol, the waterborne modes were accustomed to hauling flammable liquids when the domestic energy revolution commenced a decade ago. Data for 2005 to 2014 show that even before the growth in crude oil production from hydraulic fracturing, the waterways were handling large volumes of these commodities (see Figure 3-22). Those volumes began to increase sharply, however, after 2010 when crude production from hydraulic fracturing grew dramatically. Crude oil shipments increased by 84 percent from 2010 to 2014. By contrast, shipments of alcohols grew by 27 percent, as ethanol FIGURE 3-22 U.S. waterborne tonnage of crude oil, alcohols (including ethanol), NGLs, and other related commodities, 2005–2014. SOURCE: U.S. Army Corps of Engineers (USACE). 3-22 0 20,000 40,000 60,000 80,000 100,000 120,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Tons (thousands) Crude Oil Hydrocarbon & Petrol Gases, Liquefied and Gaseous Alcohols

64 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES shipments accounted for a much lower share of the mode’s flammable liquids traffic for reasons given in Chapter 2. Geography of the Traffic From 2005 to 2011, coastal crude oil traffic was steadily declining. De- mand for oil produced by hydraulic fracturing spurred new waterborne traffic, especially on inland waterways. The new crude oil fields generated new opportunities for inland barge movement because of their location in the country’s interior. Barge shipments on the Mississippi River System in- creased because of the development of the Bakken fields in North Dakota. The main period of growth in inland waterways traffic occurred from 2010 to 2014. It was accompanied by a notable increase in oil tank barge traffic on the coastal waterways, reflecting the development of hydraulic fractur- ing fields in Texas and movements from the Gulf Coast to refineries in the Northeast (see Figure 3-23). As evidence of the growing use of tank barges, the share of U.S. refinery receipts of crude oil by barge increased from 2 to 7.5 percent from 2010 to 2013 (see Figure 3-24). Although the petroleum traffic data for inland waterways do not distin- guish crude oil shipments, between 2006 and 2015, southbound ton-miles of petroleum oil and products on the Mississippi River System increased by nearly 57 percent.28 The same commodities shipped northbound on the system experienced a traffic drop of nearly 6 percent. Between 2010 and 2014, domestic crude oil tons moved by water increased nearly fivefold (see Table 3-1). Most of the increase occurred on the Gulf Coast. Trends in waterborne crude oil traffic mirror those of railroads; however, as shown in Table 3-1, the percentage increase in rail traffic was much higher, in large part because rail carried very little crude oil before 2010. In the case of NGLs, waterborne carriers have historically hauled these commodities from the Gulf Coast to the lower Atlantic Coast. Most of the traffic consists of purity products such as propane and butane. As shown in Figure 3-25, NGL shipments increased on the coastal waterways for a brief period in 2013, but declined in 2014, the last year of available data. Ethanol waterborne shipments by waterway did not change dramati- cally during the past decade, as volumes are small (see Figure 3-26). As explained in Chapter 2, rail has been, and remains, the dominant mode for this traffic. 28 U.S. Army Corps of Engineers, “Final Waterborne Commerce Statistics for Calendar Year 2015: Waterborne Commerce National Totals and Selected Inland Waterways for Multiple Years” (New Orleans, LA: Institute for Water Resources, U.S. Army Corps of Engineers, 2016), http://www.navigationdatacenter.us/wcsc/pdf/Final-wcsc.pdf.

THE ROLE OF FREIGHT TRANSPORTATION 65 FIGURE 3-24 Percentage of U.S. refinery receipts of crude oil by waterborne vessel type, 2005–2015. SOURCE: EIA. FIGURE 3-23 U.S. waterborne domestic ton-miles of crude oil by waterways type, 2005–2014. SOURCE: USACE. 3-24 0% 5% 10% 15% 20% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % of refinery receipts Tanker Barge 3-23 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ton-miles (millions) Coastal Crude Oil Inland Crude Oil

66 SAFELY TRANSPORTING HAZARDOUS LIQUIDS AND GASES TABLE 3-1 U.S. Domestic Waterborne Crude Oil Tonnage, Compared with Rail Tonnage, 2010–2014 Originating Area 2010 2011 2012 2013 2014 Gulf Coast 10.8 14.9 26.6 38.8 50.5 Mississippi River 0.9 3.4 5.7 10.1 7.3 East Coast 1.4 0.5 2.0 5.8 6.4 Total Maritime 13.1 18.8 34.3 54.7 64.2 Total Rail 2.8 6.2 21.8 39.2 48.1 SOURCE: AAR; USACE Waterborne Commerce Statistics Center data, processed via Channel Portfolio Tool. FIGURE 3-25 U.S. waterborne ton-miles of NGL and related traffic by waterway type, 2005–2014. SOURCE: USACE. 3-25 0 200 400 600 800 1,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ton-miles (millions) Coastal Hydrocarbon & Petrol Gases, Liquefied and Gaseous Internal Hydrocarbon & Petrol Gases, Liquefied and Gaseous

THE ROLE OF FREIGHT TRANSPORTATION 67 FIGURE 3-26 Ton-miles of alcohol, including ethanol, transported domestically by water by waterway type, 2005–2014. SOURCE: USACE. 3-26 0 1,000 2,000 3,000 4,000 5,000 6,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Ton-miles (millions) Coastal Alcohols Internal Alcohols