Analysis of Relative Pollution Risk and Economics of Ship Versus Pipeline Transport of OCS 0: 1 to Onshore Terminals
Authors: Owen John J. , Donovan Leo J. , Weiss David W. 
Published: October 2008

Oil spill risks and the associated economics of transporting Outer Continental Shelf oil has generated substantial controversy in recent years. On the one hand, concern exists with maintaining environmental quality. On the other, energy developers are concerned with the potential added development expense resulting from environmental restrictions. Frequently the arguments for or against a particular mode of transportation are based more on speculation than fact. This paper presents a risk and cost comparison methodology for combining the available cost and spill risk data into a format that can be used for rational decision making.

INTRODUCTION

For the past two years considerable attention has been focused on our Outer Continental Shelf lease sales. A great deal of time and effort has been expended by the Department of Interior's Bureau of Land Management and the several effected states on assessing the environmental impact associated with developing the oil and gas lease areas.

An area that has, not been extensively treated in an analytical fashion is the transportation component of the overall system. No objective and thorough comparison has been made of the economic and environmental merits and risks of these alternatives.

During 1975, the Environmental Protection Agency retained Booz, Allen & Hamilton to provide an independent assessment of alternative OCS transportation methods. The study investigated three proposed lease areas off of southern California and four in the Gulf of Alaska. Figures 1 and 2 identify the lease areas and sites studied.

This paper presents the methodology employed during the study for one of the four sites in the Gulf of Alaska. Subsequently, the results of the analysis of this one site are presented relative to the environmental and economic trade-offs that must be considered by those involved with OCS planning and development.

DESCRIPTION OF THE SCENARIO

Site 3 in the Gulf of Alaska is used in this paper to demonstrate the approach used to evaluate all the alternatives in our California and Alaskan OCS work. The site is approximately 13 miles offshore in water 95 fathoms deep. Reserve estimates for the lease area are highly uncertain, so a range of reserves from 25 million to two billion barrels 1 of oil recoverable over 20 years was investigated.

It is not contemplated that oil produced in the Gulf of Alaska will be refined or consumed in Alaska or adjoining parts of Canada, nor is it anticipated that such oil will be moved to refining or consuming areas overland. This implies that Gulf of Alaska oil will be transported by tanker over sea routes to locations as distant as the U. S. west coast. However, the use of tankers entails a requirement for substantial offshore storage capability that is not necessary if pipelines are employed for transfer to shore, as production continues while the tanker is in transit. Costs and spill risks associated with offshore storage thus must be considered in evaluating tanker alternatives, and such storage facilities effectively become part of the tanker transportation subsystem.