Is Mobile really the southern leg of the Keystone XL project? Tom Hutchings thinks so, even though corporate officials from Plains Southcap told local leaders its new 45-mile oil pipeline between Ten Mile and Pascagoula will not carry the same diluted bitumen, or tar sands, as the controversial 850-mile pipeline under development in the Midwest.

That revelation didn’t come until after Hutchings arranged an organizational meeting of the Mobile Bay Sierra Club July 2, at which more than 300 people shared what little they knew about the project. But Hutchings says the Gulf Coast Pipeline, which is currently under construction in West Mobile and will cross through areas that could affect Mobile’s drinking water, is related to other petroleum infrastructure being developed along the Mobile River and logically, the two projects will be positioned to receive the same hazardous material environmentalists from Montana to Texas are attempting to keep out of their own backyards.

Plains Southcap’s Gulf Coast Pipeline and a planned 20-tank Arc Terminals petroleum storage facility are each strategically positioned at a southern terminus of Canadian National Railway’s freight network, one also routed through the heartland of Canada’s tar sands production. Arc Terminals is also expanding its recently acquired Saraland rail transloading facility, where the company currently transfers crude from 30,000-gallon tank cars to trucks.

Today, the trucks make a seven-mile trip to one of Arc’s two terminal facilities on the Mobile River south of the Cochrane Bridge. In the future, the company plans to connect the Saraland facility with its 20 new planned tanks via another pipeline. In a February press release, Arc said its goal was to expand its current capacity from 1.2 million barrels to 2.5 million barrels of storage with three rail-unloading operations.

“This rail terminal will initially focus on unloading heavy crude oil from Western Canada and light crude oil from the Bakken basin via the Canadian National Railway Company,” the company said. “This facility will provide ‘rail to deep water’ manifest and unit train unloading capabilities and will be the most efficient solution for the delivery of Canadian crude to the Gulf Coast.”

With both the Plains Southcap and Arc Terminals developments in Mobile, Canadian oil producers will have new outlets for raw export or refinement of whatever products they can ship via rail. While neither company will admit a plan to eventually transport diluted bitumen here, Hutchings says the writing is on the wall.

“You have two separate pieces of the same puzzle,” he said. “When dealing with oil and gas transportation issues you start looking and digging and you find this web of relationships between shippers, pipeline people and storage people and the past few years there has been a lot of consolidation, particularly between pipeline and storage. There is a longer-term plan to consolidate into the least amount of transfers between production and refinement and Mobile is playing right into it.”

Unlike Keystone XL, the Gulf Coast Pipeline does not cross international borders. Therefore, neither the president nor the State Department has any regulatory approval powers and until recently, the project has faced little public scrutiny. Instead, Plains Southcap sought and has been granted a handful of individual permits that some complain did not provide adequate opportunity for input from the community.

While the Gulf Coast Pipeline required approval from the U.S. Army Corps of Engineers, the Alabama Department of Environmental Protection, the Alabama Public Service Commission and Mobile County, each regulate a very narrow scope of guidelines. The Corps, for example, approved the project under a general nationwide permit covering construction crossing wetlands, rivers, streams, creeks, or other “waterbodies.” ADEM followed up with another water quality certification limiting runoff. The PSC only endorsed the pipeline based on its economic prospects and Mobile County simply granted right-of-way access.

At the Sierra Club meeting, the general concern about the pipeline was that it crosses a tributary of Big Creek Lake, Mobile’s primary drinking water supply. And petrochemical tanks on the Mobile River are nothing new, but why approve a 20-tank farm in a highly flood-prone area without any opportunity for public comment? With both projects, the concern was less that they exist and more that state and local agencies can’t see the forest for the trees.

REGULATORY AUTHORITY

Early on, several people at the Sierra Club meeting as well as a couple of local media outlets pointed fingers at the Alabama Public Service Commission for approving the pipeline, citing a public hearing in Montgomery in November 2011. But PSC spokesman David Rountree said the organization’s authority over the pipeline is misunderstood and the Commission actually has less oversight in the petroleum industry than the natural gas industry and also has “no oversight over anything that crosses state lines.”

The hearing in 2011 was to consider a single question, Rountree said, whether the pipeline would be “in furtherance of industrial development.” With a $45 million – $50 million price tag offering a reported 50 construction jobs, the PSC unanimously approved the application. The hearing was conducted by a magistrate judge, so in essence, the PSC’s ruling also granted Plains Southcap condemnation powers if landowners were unwilling to grant easements.

The hearing was advertised four times in the Press-Register, but no one was present to speak in opposition of the development, according to the minutes. Rountree said if anyone had appeared to express environmental or health concerns, the commission likely would have ruled their testimony irrelevant.

Rountree, who himself was not familiar with oil pipeline regulations outside of the PSC, instead referred Lagniappe to federal agencies. But reflective of the ambiguous nature of oil pipeline permitting, both the Federal Energy Regulatory Commission and the Department of Transportation’s Pipeline and Hazardous Material Safety Administration referred Lagniappe back to state agencies.


FERC primarily regulates natural gas pipelines while PHMSA’s jurisdiction is restricted to pipeline engineering and safety, not site selection.

Speaking at the Sierra Club meeting, Mobile Mayor Sam Jones said his office was also in a “position of fact-finding” and said the “overall scheme of things is really alarming.”

“We have not gotten any requests for any permit applications for any of that,” he said. “And our ordinances do require permits for land disturbance and other issues. If something is happening in our community that’s so important and affects the water supply, at least the local government should have been notified.”

Yet the Industrial Development Board of the city of Mobile was aware of the development on the Mobile River as early as November 2010, and the Mobile County Commission actually approved a right-of-way licensing agreement with Plains Southcap at a regular meeting in March. Commissioner Connie Hudson said that agreement was vague and did not include information about the pipeline’s potential impact to the Big Creek Lake watershed.

“It seems to me the system is flawed,” Hudson said. “Basically the Public Service Commission is not dealing with the environmental aspect, it seems to me there should be an agency that takes more of a global perspective than ADEM or the Corps taking a look at their small piece of the segment.”

But according to Brad Leone, a spokesman for Plains Southcap’s parent company Plains All American, the permitting process is plenty comprehensive.

“The U.S. Army Corps of Engineers, the Alabama Department of Environmental Management, the Alabama Public Service Commission and the County of Mobile have granted the appropriate permits or approvals to construct the route as it is currently planned,” Leone said in a statement. “The route for this pipeline was selected after carefully considering a number of factors, including potential impact to the environment, impact to area landowners, terrain, existing rights of way and the directness of the route. As the various permits and approvals are obtained, the right-of-way for the pipeline is obtained and construction can begin.”

The Mobile Area Water and Sewer Service was among the entities kept in the dark about the pipeline until Plains Southcap sought an easement on property it owns within the watershed last year. MAWSS has since compelled the company to pay for a safety study, but Director Tom Hyland told the Sierra Club preferably, the pipeline’s route would be moved out of the watershed.

“The drinking water supply we have, there is only one and we want to make sure we do everything we can to protect the integrity of that system,” he said. “Ideally, there would be a realignment.”

But whether or not MAWSS has any leverage to legally strongarm Plains Southcap so late in the game remains to be seen. According to Mobile County Probate Court, of the 115-or-so easements it needs to construct the pipeline in Mobile County, the company has already obtained 95, including several in Big Creek Lake’s watershed.

HEALTH AND SAFETY

Despite the overwhelming amount of petroleum products the oil industry extracts and transports around the United States every day without a significant incident, there have been several recent examples of why Mobile should be wary of its greater contribution.

Locally, recovery from the Deepwater Horizon spill is ongoing but elsewhere, a 20-inch diameter Exxon pipeline in Mayflower, Ark. ruptured in March spilling 235,000 gallons of diluted bitumen into cul-de-sacs and surrounding wetlands. Two years earlier, a pipeline owned by Canadian company Enbridge ruptured in Kalamazoo, Mich., spilling as much as a million gallons of diluted bitumen into a tributary of the Kalamazoo River. Both cleanups are ongoing. Just last week, a train loaded with crude oil derailed and exploded in Lac-Megantic, Canada, killing at least 14 people and leaving 40 more are unaccounted for.

During Hurricane Katrina, significant oil spills were reported at dozens of facilities in Louisiana, including one incident where a Murphy Oil storage tank in Chalmette dislodged and floated 33 feet, spilling 25,000 barrels of Arabian crude across an entire neighborhood and spoiling 1,800 homes. With the new pipeline, tanks and transport in Mobile, the area naturally assumes similar risks, although the industry suggests today’s technology is safer than ever. In its statement, Plains Southcap said the Gulf Coast Pipeline will be among the most advanced currently deployed.

“Plains has incorporated a number of important safety elements into the Gulf Coast pipeline design and construction including: heavy wall pipe and concrete-coated pipe along the MAWSS crossing for added strength; 24/7 remote monitoring by PAA personnel and real-time leak detection technologies to ensure potential issues are quickly identified and addressed; computer-assisted modeling of valve placement to optimize the retention of crude oil in the pipeline in the event the pipeline is compromised; remotely operated mainline block valves and check valves throughout the line to ensure expedited isolation of pipeline segments; post-construction analysis of the pipeline, including an X-ray examination of all of the welds; deeper burial of the line than is required by regulation, which makes it less susceptible to third-party damage; line-of-sight markers noting the location of the pipeline along its route” weekly aerial surveillance and participation in the Alabama One-Call program, the company said.

And while Plains Southcap officials reportedly told local officials the Gulf Coast Pipeline would only transport traditional, lighter crude oils, Hutchings said there is nothing that would prevent it or Arc Terminals from accepting or transporting heavier diluted bitumen, or tar sands, in the future. And those easements? They allow for two pipelines, not just one.

“They can do what they want once the pieces are in place,” he said. “They can change direction, they can change material, but ultimately, especially if you look at Arc, they want to expand to tar sands storage and exporting and they are drawing the plans for it.”

Arc Terminals did not respond to a request for comment, but diluted bitumen is generally mined for export and as this article is published, Arc Terminals is dredging its docking facility to accommodate larger, ocean-going vessels. Lagniappe was also unable to confirm whether diluted bitumen can be refined at Chevron’s massive Pascagoula refinery, the ultimate destination of the Gulf Coast Pipeline.

According to investment materials, the refinery is currently completing a $1.2 billion “premium base oil” facility, which turns light crude into a lubricant primarily intended for the automotive industry.

If there is any reassurance, perhaps it can be found in a study the National Research Council published a study this year, “Effects of Diluted Bitumen on Crude Oil Transmission Pipelines,” which concluded there is no evidence diluted bitumen is any more likely than other crude oils to cause pipe failures or unintended releases. Or perhaps it is in the economic infusion, whether it is speculative or realistic.

Plains Southcap testified to the Public Service Commission the Gulf Coast Pipeline would contribute $45 million to $50 million and 50 construction jobs to Alabama’s economy, which is part of a $100 million investment with more than 300 jobs when also including the Mississippi portion of the project, according to the company. Hutchings said either way, it was in the community’s best interest to weigh the risk against the reward.

“What’s happening in Mobile is happening all over the country,” he said. “But it’s time for us to slow down and do it right. For the profit of a very few at the cost of many is not the way it should be here.”

This article was updated July 15 to clarify the Gulf Coast Pipeline’s economic impact in Alabama and Mississippi.