TransCanada Corporation (USA) (TRP): Why A Spill Like This Could Be A Disaster

If the numerous protests against Keystone XL — the proposed TransCanada Corporation (USA) (NYSE:TRP)-operated pipeline that would link production from Alberta’s oil sands to refiners along the US Gulf Coast — haven’t already made clear by now, a lot of environmentalists and other groups are staunchly opposed to the line’s construction.

In addition to their argument that allowing the pipeline to be constructed would lead to accelerated development in Alberta’s oil sands, which would spew materially greater quantities of greenhouse gases into the atmosphere, environmentalists are against Keystone XL for two additional reasons.

The first is because of the environmentally sensitive areas the pipeline would cross. One of the key areas pinpointed as the most environmentally sensitive is in Nebraska, where Keystone would cross more than 200 miles of the Ogallala aquifer. Some say that a spill near this region could be far more devastating than a spill in virtually any other area, since it would pollute the region’s groundwater, perhaps irreversibly.

TransCanada CorporationThe second cause for concern has to do with the physical qualities of the bituminous crude oil Keystone XL would move. Bitumen is a thick, viscous substance that doesn’t flow unless it’s heated or diluted. For it to be transported via pipeline, it has to be diluted with specialty chemicals that yield diluted bitumen, or “dilbit” crude. Some commentators argue that dilbit crude is much harder to clean up than lighter crude variants, such as those produced in the Bakken or Eagle Ford shales, especially when it spills into water.

For instance, consider the rupturing of an Enbridge Inc (USA) (NYSE:ENB) pipeline in July 2010, which spilled more than a million gallons of dilbit crude into Michigan’s Kalamazoo River in what was the largest bituminous crude spill into a U.S. waterway.

Enbridge’s woes highlight dilbit cleanup issues
Nearly three years later, the cleanup effort isn’t over. When all that dilbit crude was released into the river, the dilutive chemicals rose to the surface and evaporated but left behind bitumen, which began sinking to the riverbed.

Though Enbridge has already been fined $3.7 million for the spill, which it paid in September, according to the federal Pipeline and Hazardous Materials Safety Administration, the Environmental Protection Agency isn’t satisfied yet. It notified the Canadian pipeline operator in October that further cleanup is required in the Kalamazoo River, upstream of the Ceresco and Battle Creek Dams, as well as in the delta upstream of Morrow Lake.

And last month, it gave the company an additional order, which requires it to dredge submerged oil and oil-contaminated sediment that still exists across some 40 miles of the Kalamazoo River. After factoring in these additional costs, the company now estimates the total costs of cleanup to approach $1 billion. That’s more than the company’s entire net income last year.

Lack of information about dilbit’s interaction within aquifer
As Enbridge Inc (USA) (NYSE:ENB)’s example highlights, bad things can happen when dilbit crude spills into a river. But much less is known about dilbit crude’s interaction within an aquifer. Some argue that an aquifer is even more vulnerable than a river because once contaminated, it’s almost impossible for the damage to be reversed. Depending on the quantity of dilbit crude leaked and on its movement within the aquifer, the damage could end up being quite severe.

Though a recent analysis by the Nebraska Department of Environmental Quality found that a dilbit spill in the Ogallala aquifer would be less damaging than the Kalamazoo spill because groundwater contained within the aquifer moves more slowly than surface water, there simply isn’t enough information to make an informed judgment. Maybe a spill would irreversibly pollute the aquifer, maybe it wouldn’t. Nobody knows for sure.

The article Why a Spill Along Keystone XL Could Be Disastrous originally appeared on Fool.com.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners.

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