Regulators Quietly Add New Safety Rules for Keystone Pipeline

Keystone Pipeline
AP/Tony Gutierrez
By JOAN LOWY

WASHINGTON -- Safety regulators have quietly placed two extra conditions on construction of TransCanada Corp.'s Keystone XL oil pipeline after learning of potentially dangerous construction defects involving the southern leg of the Canada-to-Texas project.

The defects -- high rates of bad welds, dented pipe and damaged pipeline coating -- have been fixed. But the federal Pipeline and Hazardous Materials Safety Administration wants to make sure similar problems don't occur during construction of the pipeline's controversial northern segment, which is on hold pending a decision by the Obama administration.

One condition requires TransCanada (TRP) to hire a third-party contractor chosen by the pipeline safety agency to monitor the construction and make reports to the safety administration on whether the work is sound.

The second requires TransCanada to adopt a quality management program to ensure "this pipeline is -- from the beginning -- built to the highest standards by both Keystone personnel and its many contractors."

The level of defects is indeed cause for alarm and indicative of something that is going on in the Keystone organization that isn't satisfactory. - Robert Bea, professor emeritus of civil and environmental engineering, UC-Berkeley

The conditions are buried near the end of the 26 appendices in a voluminous environmental impact statement on Keystone XL released by the State Department on Jan. 31.

Most of Appendix Z is devoted to 57 well-known "special conditions" that TransCanada agreed to three years ago. But conditions 58 and 59 are listed on an additional page.

"Everybody looked at that appendix and said, 'Oh, 57 conditions. Move on.' Well, there are a couple more there," energy analyst Kevin Book said. "They just added them without saying anything."

The new conditions were added four months after the pipeline safety agency sent TransCanada two warning letters last year about defects and other construction problems on the Keystone Gulf Coast Pipeline, which extends from Oklahoma to the Texas Gulf Coast.

"From the start of welding, TransCanada experienced a high weld rejection rate," said one letter dated Sept. 26. Over 72 percent of welds required repairs during one week. In another week, TransCanada stopped welding work after 205 of 425 welds required repair.

Inspections by the safety agency found TransCanada wasn't using approved welding procedures to connect pipes, the letter said. The company had hired welders who weren't qualified to work on the project because TransCanada used improper procedures to test them, the letter said. In order to qualify to work on a pipeline, welders must have recent experience using approved welding procedures and pass a test of their work.

The weld failure rates are "horrible," said Robert Bea, professor emeritus of civil and environmental engineering at the University of California, Berkeley. "The level of defects is indeed cause for alarm and indicative of something that is going on in the Keystone organization that isn't satisfactory."

In high-risk projects such as nuclear submarines or nuclear power plants, even one-tenth of a percent rate of bad welds would be cause for deep concern, Bea said. He is a certified welder and was an expert consultant on the construction of the trans-Alaska pipeline in the 1970s.

"In this case, you are talking about a pipeline that has requirements on its performance that rival those of a nuclear power plant," he said.

Another letter, dated Sept. 10, said a government inspector witnessed TransCanada officials investigating dents in pipeline that had been laid without first sufficiently clearing rock from trenches or from soil used as backfill. The same letter said coating that protects pipeline from corrosion was damaged by weld splatter because a contractor hadn't followed the company's welding procedures. Eventually, pipeline was excavated in 98 places to make coating repairs.

Dents and damaged coatings are serious defects because they can weaken pipes and lead to failures, Bea said.

Davis Sheremata, a spokesman for TransCanada, cautioned against drawing a connection between construction problems found on the southern leg between Cushing, Oklahoma, and Nederland, Texas, and conditions placed on the northern leg, which will extend from Alberta, Canada, to Nebraska's southeast corner. The southern leg's problems are "a separate matter," he said in an email.

"TransCanada had identified and addressed these issues prior to any product being introduced into the pipeline and reported them voluntarily" to the government, Sheremata said. "The fact that the anomalies on the exterior of the pipe were discovered in the first place is a direct result of the 57 special safety conditions we agreed to implement on this project and Keystone XL, many of which are not required by regulation but are standard practice on all TransCanada pipeline construction projects."

But Book said the timing "would seem to suggest (the pipeline safety agency) was uncomfortable with the construction of Keystone south and that was part of their reasoning" for imposing additional conditions on the northern leg.

Damon Hill, a spokesman for the pipeline safety agency, said the additional conditions were the result of "observations in the field during construction projects from several pipeline operators over the past few years," as well as the agency's general knowledge and experience.

Keystone is intended to transport oil from Canadian tar sands to oil refineries on the Gulf Coast. Supporters say the pipeline will create thousands of jobs and aid energy independence. Environmentalists warn of possible spills and say tar sands oil is especially "dirty" and will contribute to global warming.

The project has become a major flashpoint alongside the larger debate over carbon emissions, drilling policies and tax breaks for energy companies.

The administration said in April it was putting off its decision on whether to approve the pipeline indefinitely. A decision now isn't expected until after the November elections.

Increase your money and finance knowledge from home

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Add a Comment

*0 / 3000 Character Maximum

19 Comments

Filter by:
rgkarasiewicz

"And yes, there are plenty of good union welders, but it costs a fortune to have them."


In most cases, you get what you pay for. It will generally cost more for union welders, but these highly skilled people are exactly what one would want to use on a project such as this.

My guess here is that they are using cheap inexperienced trainees and apprentices, and that can only spell disaster for all concerned.

May 27 2014 at 8:09 PM Report abuse +1 rate up rate down Reply
1 reply to rgkarasiewicz's comment
alfrankenfool

You know that, are you a Fitter BA?

May 28 2014 at 3:18 PM Report abuse -2 rate up rate down Reply
numexind

Are these union welders? THis could be the problem!! There are plenty of welders out of work, non-union that would do a great job, without having to hire more inspectors. This will increase the cost, thus giving more chance not to approve it due to cost overrun. The benefit to non-union is if the job is not up to par, they get dismissed without taking an act of God to get them out. And yes, there are plenty of good union welders, but it costs a fortune to have them.

May 27 2014 at 5:33 PM Report abuse +1 rate up rate down Reply
jdykbpl45

More Obstuctions by Obama's Minions!

May 27 2014 at 4:29 PM Report abuse +1 rate up rate down Reply
1 reply to jdykbpl45's comment
teaparty2implode

GOP = GREEDY OBSTRUCTIONIST PIGS

May 28 2014 at 11:37 PM Report abuse +1 rate up rate down Reply
hopey5000

So another barrier to the pipeline, another study, more regulations.

Myths about the pipeline

1. Americans want the pipeline because it will reduce gas prices. Most Americans don't care and like to spend another $100 on gas each month.

2. The pipeline will help reduce our dependency on foreign gas and reduce the power of those who control oil supplies. Russia and Iran are nice guys, no one wants to see their power reduced.

3. A pipeline would increase jobs. The economy is going so good none are needed.

4. The pipeline is being delayed. 147 sets of new procedures, guidelines, etc is not delay.

5. The pipeline would help economies in the state with drilling. Again the economy is doing so well and jobs in manufacturering so plentiful no help is needed.

May 27 2014 at 2:34 PM Report abuse +2 rate up rate down Reply
rgkarasiewicz

Suggestion: Hire union journeymen welders to perform the task instead of the high school flunkies.

May 27 2014 at 1:17 PM Report abuse +1 rate up rate down Reply
1 reply to rgkarasiewicz's comment
unitedpaintings

They most likely are union.

May 27 2014 at 1:32 PM Report abuse -1 rate up rate down Reply
2 replies to unitedpaintings's comment
rgkarasiewicz

I highly doubt that sir. The people that they are currently using over there wouldn't even make good union welder apprentices.

May 27 2014 at 8:18 PM Report abuse +1 rate up rate down
alfrankenfool

RGK, how do you know.

May 28 2014 at 3:19 PM Report abuse -1 rate up rate down
gurusoldier

Even with this pipeline project getting approved it wont bring prices on fuel oil, diesel or gasoline unless Obama and his tyrannical administration's EPA henchmen allow the refiners they shut down for alleged regulations violation but really to artificially inflate gas prices to bring us on line with European prices. Remember when Obama was first running he promised to raise not lower our fuel cost from fossil fuels to everything produce by them including electricity and he is keeping his promises to cripple not help America. Raising our fuel prices does nothing to curb pollution and does everything to cost people their jobs, raise the cost of living i.e. food prices have been steadily rising, clothing costs have risen along with the cost of manufacturing and transporting said commodities and goods to their destinations which of course adds more increased costs which is why milk is now over $4.00 a gallon and beef is over $5.00 a pound for lousy ground chuck! There are those of us who have to feed, house and clothe our families who do not make $150K a year with another spouse who makes as much if not more or have mommy and daddy to bail us out when we get in over our heads financially so we can keep our lifestyle... No, we have to tighten our belts another notch, eat beans and baloney, cancel our trip to the beach, explain to our kids why we can't go to all the amusement parks this summer or buy a community pool membership and instead try to pretend we are enjoying our pathetic "stay-cations". Ask yourselves why would anyone want to make it harder to get the fuel we need to maintain our economy and our lifestyles before we actually have the technology to replace it with one just as easy to sustain when in doing so before we have the means will damage so many people? Why was the idea of hydrogen fuel which all of cars and trucks can run on without any modifications scrapped and it has been shown that hydrogen can easily be manufactured by everyone for pennies on the dollar and that you do not have to worry about storing because you can make it as you need it and when you shut off your car or generator which would cut the power source to the hydrogen tank it simply reverts back to water and when it is actively running your cars etc. it produces nothing but water vapor for exhaust? Yes America you are getting screwed by a president who along with members of the senate and congress and even in his administration and circle of elitist friends all stand to make a lot of money off this country's demise. This president is not your friend nor a friend to the poor or any other group he claims he wants to help and his track record proves it and the same goes for so many elected officials. Rethink your political affiliations and your positions on the big green business machine the government will use to control everything you do.

May 27 2014 at 11:28 AM Report abuse -1 rate up rate down Reply
1 reply to gurusoldier's comment
Al P.

Your rant is full of misinformation. This administration has done more to get us off fossile fuels than anyothers including the Bush administration, someone you probably voted for along with his energy policy of giving Big Oil billions in tax subsidies. By the way the GOP refuses to recind those subsidies even though they are no longer needed to produce more oil. Thanks to Obama,more oil is now produced domestically then ever before reducing our reliance on foreign imports. The cost remains high not because of environmental regulations like you inferred, it remains high due to the world market and Obama can't do anything about that in the short term. In the long term if the GOP starts saying Yes to more alternative fuel research and development and the use of fossiles comes down so will the price and that includes hygrogen fuels. The oil companies are keeping inventories tight and that is another reason why prices are the way they are. Big Oil could easily convert their efforts to other fuels like hydrogen but do you see them doing that on their own ? No they won't unless our government gives them the incentives to do so, the GOP being in bed with Big Oil has refused to do anything in that area including reducing or eliminating tax subsidies for fossile fuels. The President is our friend as evidenced by his energy policies, people have to rethink their political affiliations to determine who is our Enemy and which party is holding this country from moving forward. If you read this article carefully you would have noticed what Big Oil does without government inspection / regulations cut corners to maximize their profits. We have seen that time and time again, their in it to make money my friend even if it means screwing the little guy. The jobs this pipeline will create are mostly temporary and will have little effect on our economy and the oil it transports will be exported. The environmental risks involved are significant as this article pretty well explains.

May 27 2014 at 12:29 PM Report abuse +2 rate up rate down Reply
progressivehoax

Doesn't say much for the UA members.

May 27 2014 at 11:16 AM Report abuse +1 rate up rate down Reply
toosmart4u

We should also add to the contract that NO federal money will be added to fix any oil spills. The states that are doing all the yelling to hurry this project up should foot the bill. We can now see the republicans do not care about any regulations.

May 27 2014 at 10:48 AM Report abuse -3 rate up rate down Reply
avdavy

The Keystone Pipeline is a guarantee of a catastrophic disaster in the states who host it. It isn't even built yet and the thing is falling apart. I thank God this tragic mess isn't going through my state.

May 27 2014 at 9:50 AM Report abuse -2 rate up rate down Reply
xbluboy

The pipeline should be approved by the administration and courts immediately! The opponents are benefiting financially and will continue to do so as long as they can delay the project. Wonder how they get to their rallies and fuel their machinery? The oil will be eventually be extracted regardless. Transport by truck or rail is 1000 times more risky and damaging to the environment. Opponents have only their own selfish desires at heart and utilize scare tactics and lies to support their position. Transport by pipeline has been used since the late 1800's. Safeguards and technology has improved many times over.

May 27 2014 at 9:45 AM Report abuse +2 rate up rate down Reply
1 reply to xbluboy's comment
avdavy

No excuse for destroying the Country in exchange for oil profits. I'm an opponent to this Keystone disaster and I have nothing to gain, except keeping my country, and yours too, from being shredded by oil companies. Who's paying you? You sound like a paid shill for the Koch bros.

May 27 2014 at 10:49 AM Report abuse +1 rate up rate down Reply
1 reply to avdavy's comment
giesekef

But it's okay by you to transport hundreds & hundreds of 90 ton Chlorine gas railcars everyday across this country...right. Chlorine gas is a deadly toxic material. Idiot.

May 27 2014 at 4:23 PM Report abuse -1 rate up rate down