Ability to transport US oil, gas lags booming output

WASHINGTON: The energy boom of the last decade that has boosted oil and gas production in the United States has outpaced the development of critical infrastructure to transport the raw and refined materials, U.S. Energy Secretary Ernest Moniz said on Thursday.

Reflecting on a spate of accidents involving freight trains pulling tank cars full of volatile crude oil in Canada and the United States, Moniz said that infrastructure development was key, even beyond a reconsideration of rail regulations now under way by U.S. authorities.

"The core approach, really, is that our infrastructure needs to build out," Moniz said in an interview with Reuters Insider.

"Here we have a case, especially with the production in North Dakota, where the Bakken shale (output) zoomed from essentially nothing to past 1 million barrels a day," he said.

"There's not the pipe infrastructure for moving the product out ... you have a slight mismatch in terms of how we add infrastructure to handling our new production."

One way of getting more crude oil out of the Bakken would be TransCanada Corp's proposed Keystone pipeline from Canada to the Gulf of Mexico, expected to have "onramps" to pick up oil in North Dakota.

Moniz did not discuss Keystone, though, in a broad-ranging interview that touched on U.S. liquefied natural gas (LNG) export markets, carbon capture and sequestration, and the Obama administration's "moral obligation" to work on ways to mitigate climate change.

In December Moniz caused a stir by suggesting that a 40-year ban on exports of U.S. crude oil was outdated.

On Thursday he said merely that the "tremendous increase" in oil and natural gas production "is certainly reordering our view of the energy markets and also the reality of the energy markets."

Moniz said the Energy Department has not put a hold its consideration of LNG export terminals. After a flurry of approvals in mid-2013 the most recent announcement was on November 18.

The government has been methodically working down a list of more than a dozen proposals. "We are continuing to evaluate the next one," Moniz said.


Moniz said the Department of Energy is continuing to look for ways to mitigate propane shortages in parts of the country that have caused prices of the heating oil to reach record highs this month.

"We are in direct communication with the Department of Transportation, the Department of Commerce, and the Domestic Policy Council at the White House so we can bring whatever we can to bear on this issue," he said, adding that the Energy Department also has some authority to prioritize how propane is moved.

"I personally and many here at the Department of Energy have been on the phones every day to state governments, to state energy offices, to understand the situation," he said.

The shortages have affected millions of Americans this month as brutally cold weather laid bare the vulnerabilities of the distribution network of a fuel used to heat homes, schools and businesses across wide areas of the United States.

Moniz spoke two days after President Barack Obama, in his annual State of the Union address, reaffirmed the administration's "all-of-the-above" energy strategy, meant to develop a wide range of sources for domestically produced energy.

"Our job here, at the DOE, is to keep investing in all the technologies so that they can be competitive in the future market, where we expect there will be significant restrictions on carbon dioxide emissions," Moniz said.

Existing science is more than adequate for establishing a base of action on climate change, he said.

"We have an economic obligation, we have a security obligation, we have an environmental obligation, and we have a moral obligation to work on this," said Moniz.

"We believe we must show leadership if we are going to get the kind of international response that is ultimately required for us to meet a global threat."- Reuters
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