Oil and Natural Gas
Nearly half a million miles of pipelines transport natural gas and petroleum products throughout the United States. These gathering and transmission pipelines are integral to US energy supply and support much of America’s critical infrastructure, often including refineries, power plants, airports, and defense installations. The nation’s private pipeline networks are robust, and by necessity widespread, traversing both remote and populated regions.
The ability to move raw and finished energy products by pipelines is however limited by their actual number, location and volumetric capacity. The placement and building of pipelines is subject to unique economic, contractual, siting, and permitting requirements (federal, state, and local), and is also affected by competitive alternatives (e.g., barge, ship, rail, or truck). Moreover, the safe management and oversight of pipelines is also governed by federal, state, and local agencies working in conjunction with the companies that own and operate those pipelines.
Different types of pipelines carry different energy products. Extraction wells on federal, tribal, state, and private lands withdraw crude oil and natural gas. From those wellheads, gathering pipelines transport gases and liquids obtained from the commodity’s source – such as rock formations below drilling sites – and move these natural resources to processing facilities, refineries, or transmission pipelines. Gathering pipelines are generally operated by “midstream” companies; Tesoro Logistics’ operations include these gathering functions, and the processing, conditioning and treating of natural gas and petroleum products.
Gas gathering involves a system of pipes that collect resources from production wells and transports them through compressor stations, treating facilities and processing plants and then on to larger transmission pipelines. Petroleum liquids are moved by pump stations to create sufficient pressure to propel the oil through pipelines and to assist in the extraction process. Oftentimes, oil and gas production fields and gathering lines are dispersed in rural areas.
Transmission pipelines deliver large quantities of saleable natural gas or petroleum over longer distances to power plants, large industrial customers, and to municipalities for further distribution to consumers. Petroleum transmission pipelines deliver crude oil to refineries or finished products to distant markets, like airports or terminals where fuels are loaded into trucks to serve local retail outlets. In the case of natural gas, distribution pipelines transport that product from local utilities or municipalities directly to business and residential customers for their use.
Pipelines of all types are subject to oversight by an integrated array of federal, state, and (occasionally) local government agencies. Interstate pipelines (those crossing multiple states) are subject to safety regulations administered by the US Department of Transportation’s Office of Pipeline Safety (OPS) and the Pipeline Hazardous Materials Safety Administration (PHMSA). Although these oversight functions can be delegated to states by OPS and PHMSA in certain circumstances, enforcement of safety and inspection regulations are exclusive responsibilities of the federal agencies.
In addition to safety, the carriage rates that interstate pipeline owners charge to move energy products across state lines are regulated by the Federal Energy Regulatory Commission (FERC). FERC is responsible for reviewing the rates and shipping practices of these pipelines while ensuring that service conditions provide equal access to all shippers.
Intrastate pipelines (which transport energy products only within a single state) are subject to state government oversight. As previously mentioned, there is some overlap between state and federal agencies regarding safety and operations even for intrastate pipelines.