When Hurricane Harvey made landfall in Texas, U.S. oil refining plummeted to record lows. Now, nearly three weeks later, six key refineries remain shut down and an additional 11 are either struggling to come back on line or operating at a significantly reduced rate. That slowdown, coupled with predictions of decreased demand in the wake of Hurricane Irma and the devastating earthquake that struck Mexico last week, has shifted oil pressures in other places, too. And none may be quite as vulnerable as the tank farms in Cushing, Oklahoma.
Dubbed the “Pipeline Crossroads of the World,” Cushing is the nexus of 14 major pipelines, including Keystone, which alone has the potential to transport as much as 600,000 barrels of oil a day. The small Oklahoma town is also home to the world’s largest store of oil, which sits in hundreds of enormous tanks there. Prior to this recent spate of natural disasters, Cushing oil levels were already high. They’ve increased nearly a million barrels, to nearly 60 million barrels, since Harvey hit.
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This concentration of oil, about 15 percent of U.S. demand, is one reason the Department of Homeland Security has designated Cushing “critical infrastructure,” which it defines as assets that, “whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.”
The biggest potential cause of that incapacitation? According to Homeland Security, it’s not terrorism or mechanical malfunction. It’s natural disaster. And here’s the problem: When most of the Cushing tanks were constructed, the most logical cause of any such disaster seemed like a catastrophic tornado. No one anticipated swarms of earthquakes. But that’s what began occurring about five years ago, when wastewater injection and other fracking-related activities changed the seismic face of Oklahoma in dramatic fashion. Two hours before that deadly quake in Mexico, for instance, a magnitude 4.3 temblor shook Central Oklahoma, knocking out power for thousands. The earthquake, which had an epicenter just 100 miles northwest of Cushing, was the 186th quake in Oklahoma this year to register a magnitude 3.0 or higher.
This man-made seismicity has changed the landscape of Oklahoma significantly, from a state with one of the lowest seismic rates in the country to the most seismically active in the lower 48, says Ken Erdmann, senior vice president at Matrix Engineering, the firm that designs, fabricates and builds many of the tanks in places like Cushing. “It’s not natural. It’s not Mother-nature based.”
That’s a problem, he says, because the statistical analysis used to establish safe environmental loads is based on historical intervals—both the average and maximums of events like snowfall or wind or seismic activity.
“When those levels become man-made induced numbers,” says Erdmann, “statistics are no longer really relevant.”
But while the number of earthquakes and their intensity have increased in recent years, the strength of the regulatory apparatus in place to ensure their safety hasn’t kept pace. Oversight of the tanks has been left to a tiny agency buried inside the Department of Transportation that was never intended to serve this role. And the safety standards, which one earthquake expert calls the weakest permissible, were created by an industry trade group rather than the government agency. For those inclined to contemplate worst-case scenarios, the prospect of an earthquake rupturing the Cushing tanks would be an environmental catastrophe far greater than the Exxon Valdez spill.
When most of these tanks were constructed, seismic activity in Oklahoma was negligible. In 2011, the state experienced a 5.6 quake. Last year, it had a 5.8—the same magnitude as the quake that rocked Washington, D.C., and much of the Eastern seaboard six years ago. That Oklahoma event toppled the exteriors of historic buildings and prompted the Pawnee nation to declare a state of emergency. Seismologists at the United States Geological Survey say the area around Cushing is capable of an even stronger quake—maybe even a 7.0. Earthquake magnitude is measured exponentially, which means that a 7.0 quake would be 15 times larger than the biggest one to hit Oklahoma so far. And it would release over 60 times as much energy.
What would it do to the Cushing tanks? I posed that question to each of the five largest oil companies there.
Michael Barnes, senior manager of U.S. Operations and Project Communications at Enbridge, which holds nearly half the oil at Cushing, says it’s the company’s policy not to comment on speculative questions such as mine “because by their very nature they are hypothetical.” What he would say is that the company regularly participates in safety drills, workshops and other activities. That includes protocols preparing for seismic activity.
“In the event of an earthquake, procedures are in place to respond quickly and confirm Enbridge tanks and other facilities were not impacted and can continue to operate safely,” says Barnes. “This includes dispatching technicians and other experts to perform visual inspections and check instrumentation on tanks, pipes, motors and pumps.”
I received a similar response from the other energy companies with major Cushing holdings: that they have procedures and protocols for natural disasters, but that they would not comment on the specific designs of their tanks, nor how those tanks would fare in a major earthquake.
Getting an answer out of the government can be just as frustrating. A big part of the problem is the Byzantine system of governmental agencies regulating these tank farms. This oversight varies from state to state. In Oklahoma, most energy concerns are controlled by the Oklahoma Corporation Commission. But, says spokesperson Matt Skinner, the OCC only regulates intrastate pipelines and tanks.
“If any part of that oil leaves the state or comes from elsewhere,” says Skinner, “it becomes totally outside of our jurisdiction.”
Determining that jurisdiction is no easy matter. The Environmental Protection Agency regulates “non-transportation-related oil storage tanks,” but that excludes farms like Cushing, which are tied to pipelines. The official I talked to at the EPA couldn’t tell me who regulates Cushing, nor could the spokesperson for the Department of Energy, which oversees our country’s petroleum reserve sites. The Department of Transportation regulates oil and gas pipelines unless they cross federal lands, in which case they are the purview of the Bureau of Land Management or the military. Gas and oil produced on the outer continental shelf falls under the Department of the Interior, which works in concert with the Department of Transportation to regulate its movement.
I called those offices as well, asking whether they knew what agency regulated tanks like the ones at Cushing. No one I spoke to knew—including at the public affairs office of the Department of Transportation. As it turns out, a tiny office in the DOT known as the Pipeline and Hazardous Materials Safety Administration regulates the tanks. Established by President George W. Bush in 2004, PHMSA was intended to increase security around the transportation of hazardous fluids like gas and oil. As such, it was never really meant to govern stationary storage. I asked its spokesperson what seismic regulations are in place for tank farms like Cushing. He referred me to Appendix C of the Pipeline Safety Regulations. And it is true that there are seismic considerations there: provisions regarding safety reporting, any “unintended” or “abnormal” movement of a pipeline, or reduced capacity of a pipeline because of seismic activity. But none of these considerations mentions storage tanks per se. I asked that same spokesperson to direct me toward the language relating to tanks. He has yet to respond.
None of this surprises the OCC’s Skinner. “I’ve gone through the standards a bunch of times,” he says. “I haven’t found any relating to tanks and seismic activity.”
If the government isn’t explicitly regulating the ability of the tanks to withstand an earthquake, then who is? Turns out that what standards do exist are created by the American Petroleum Institute, a national trade organization representing the oil and gas industry. And the standards are not overly rigorous, say seismologists.
Tom Heaton, professor of geophysics and director of the Earthquake Engineering Research Laboratory at the California Institute of Technology, says most, if not all, of the tanks in Cushing are built to the weakest industry design standards. He thinks even a moderate quake could be enough to violently push the oil from one side of the tank to another. In geological terms, the phenomenon is known as a seiche: an internal wave or oscillation of a body of water. The more oil in a tank, the more dangerous that seiche becomes.
That makes tank farms like Cushing particularly vulnerable in the face of other natural disasters like Harvey and Irma as oil and pipeline companies engage in a kind of shell game for oil storage—full tanks do better in high wind conditions like hurricanes and tornadoes; they fare far worse in earthquakes.
And certainly there is precedent for the kind of damage Heaton predicts. In the years after the 1994 Northridge earthquake in California, the National Institute of Standards and Technology found evidence of seismically induced oil-tank damage going back as far as the 1930s and as recently as the 1994 quake, some of which was catastrophic.
But Ken Erdmann is circumspect about just how much damage a major quake might wreak on the Cushing tank farms. In addition to his role at Matrix, Erdmann also heads up the API committee that creates standards for the tanks. He says it’s true that the ones in Cushing weren’t built for moderate or severe quakes, and that the shaking caused by one would almost certainly be “beyond allowable limits” for the API standards utilized at the Oklahoma farms. Probably, he says, you’d see buckling and deformation of the tanks rather than full failure.
The real problem, he says, would be the pipelines themselves, says Ron Ripple, Mervin Bovaird professor of energy business and finance at the University of Tulsa. Ripple estimates that an earthquake or other disaster would have to knock out half those tanks to have a real impact on the market. Of bigger concern to him are the pipelines, which control a larger volume of oil. He points to the October 2016 explosion of the Colonial pipeline in rural Alabama as a corollary. The resulting fire kept crews from repairing the pipeline proper for six days. During that time, oil commodity prices jumped 60 percent—the highest spike in nearly a decade. Exporters clamored to find work-arounds, including tankers capable of moving the oil by sea. As a consequence, freight cargo rates increased by nearly 40 percent. Meanwhile, motorists in Southern states rushed the pumps, elevating prices there, too—forcing the governor of Georgia to issue an executive order warning about price gouging.
It wouldn’t be unreasonable, says Ripple, to see a similar scenario were the Cushing pipelines to go down. The Colonial pipeline moves about 100 million gallons of oil and gasoline a day—about the equivalent of the Seaway pipeline, just one of the more than a dozen that converge on this town. That pipeline was also shut down in late 2016, after authorities in Cushing noticed a spill. The effect of that shutdown had the opposite effect, pushing the price of U.S. oil below $50 a barrel, as international traders worried they wouldn’t get their deliveries.
“Prices move through the markets fairly quickly,” says Ripple. “We tend to see opportunistic changes in prices right after an event. Some of those look like a pretty close cause-and-effect relationship between supply and demand. Other times, you’ll see impacts that leave us all scratching our heads. In the end, you just don’t know how the market and consumers will react.”
Johnson Bridgwater, director of the Oklahoma chapter of the Sierra Club, says he’s mindful of the economic effects of such a spill, but it’s the impact on the landscape and the people who occupy it that most concerns him. Imagine, says Bridgwater, if Ripple’s scenario of losing half the tanks came to fruition.
“That’s 50 million barrels,” he says. “We’d be looking at our own on-land Exxon Valdez.”
Worse, actually. The Valdez was carrying just over a million barrels of oil. A quarter of that spilled. And light crude, the kind of oil stored in Cushing, poses particular challenges to an environment, often killing animals or plants on contact and emitting dangerous fumes that can kill both human and animal residents.
“This would not be a simple cleanup,” says Bridgwater. “You’d have an uninhabitable community for a long time.”
That shouldn’t be acceptable to anyone, says Representative Bobby Rush, the Chicago-area Democrat who serves as the ranking member on the House Committee on Commerce and Energy’s Subcommittee on Energy.
“Over the past five years or so, Oklahoma has become more active as an earthquake zone,” he says. “PHMSA must account for these changing circumstances and implement appropriate regulations that apply to tank farms located in these more sensitive areas to make them more sturdy and secure. The fact of the matter is that we must ensure that these tanks, which hold vast amounts of oil, are designed to withstand seismic activity in order to protect both the public safety and the local, state, and national economies that rely heavily on this resource.”