Efforts to make pipelines safer are working. There were fewer serious pipeline incidents (those resulting in a fatality or injury requiring in-patient hospitalization) and fewer resulting injuries in 2022 than any year since the US Pipeline and Hazardous Materials Safety Administration started keeping track in 2003.
Some crude oils, however, are not readily transportable by pipeline. Crude produced in Utah’s Uinta basin is among these. Its waxy nature requires it instead be heated to a fully liquid state and shipped in tank cars to refineries in Salt Lake City.
The bottleneck created by this situation has constrained Uinta production. Operators are eager to address this by building a rail line on which the otherwise desirable (low sulfur, 36-42° API) crude could be transported to the US Gulf Coast.
The Uinta Basin Railway (UBR) received final Surface Transportation Board (STB) approval in December 2021. The project is being developed by the Seven County Infrastructure Coalition, Drexel Hamilton Infrastructure Partners Group, and operating partner Rio Grande Pacific Corp. UBR would run 88 miles from Uinta basin to a connection near Kyune, Utah, with an existing Union Pacific Railway Co. line.
UBR LLC—which will finance, build, and operate the railway—has received a favorable environmental impact statement for the project. But the assessment did not include the effects of increased traffic on the Union Pacific line, instead applying data from similar systems to estimate that an accident would occur about once every other year (0.60/year)
Even this rate, however, is significantly higher than STB’s projection that accidents involving a loaded train on UBR would occur “once every 3-10 years.” According to a brief filed by Eagle County, Colo., in a suit against the project, STB’s analysis of environmental impacts from the additional traffic on the Union Pacific line was “limited to compiling data on a few effects including grade-crossing safety and delays and noise and vibrations, impacts that the board described as low,” and neglected to account for factors such as potential impacts to the water resources of the Colorado River.1
Keep it private
In February 2023 the Coalition adopted a resolution seeking Department of Transportation (DOT) certification that UBR could issue $2 billion in tax-exempt “private activity bonds” (PAB) to build and operate the system, roughly 70% of its total estimated cost. PAB so far typically have been used to finance roads, bridges, and other public infrastructure, not industrial projects. The bonds’ tax-exempt nature would allow them to be issued at a lower interest rate than standard corporate bonds, saving UBR’s backers $80 million/year in finance costs and removing millions from annual government revenues.
Colorado Senators Michael Bennet and John Hickenlooper, along with US Representative Joe Neguse, have issued a letter to DOT Secretary Pete Buttigieg urging him to decide against federal financing of the project. “If issued, this would not only constitute the largest PAB the DOT has ever issued; it would also irretrievably sink taxpayer dollars into a project that has proven unable to contain its own costs. If this project truly were economically viable, its developers would have no need to rely on federal subsidies,” they wrote, also noting that “private-sector investments should be based on consumer demand [in instances pertaining] to mature technologies with existing, robust markets.”
UBR has been approved according to existing processes, albeit at what was then a total estimated cost of $1.35 billion. Whether this approval stands will be decided in the courts. That’s the way the current system works. But regardless of the ultimate outcome, the project shouldn’t be publicly financed.
Reference
- US Court of Appeals for the District of Columbia Circuit, Cases #22-1019 & 22-1020 (consolidated), “Petitioner Eagle County’s Final Opening Brief,” p. 22, Mar. 20, 2023.