T ransferring and transporting energy via railway, pipeline, or over rivers and seas entails risk. Safety concerns like train derailments and subsequent explosions, emissions and spills can create environmental disasters. (See our previous post on North America’s crude-by-rail problem)
To tackle challenges of production, distribution, and consumption of energy in all its various forms, a variety of modeling approaches have been used, many beneficial but all with limitations, as the probability of emissions and spills remains difficult to determine. In order to decrease the risk of harmful environmental impacts, new energy transportation models that consider multimodal transport are needed.
Through the North American Crude Oil Model (NACOM), we present a new modeling approach to energy network analyses that can help decision-makers respond more specifically to environmental and safety concerns. With the goal of considering a “what if” policy analysis under different market scenarios, we chose to use equilibrium problems expressed as complementarity problems. NACOM extends earlier modeling techniques but provides more detailed analyses of emissions and safety risks for each energy conveyance mode. It also incorporates data on cost and technology factors for each mode and can be applied on the basis of geographical region for finer distinctions. By applying this model to the North American crude oil market (with transportation considered via railway, pipeline, and waterway), followed by a scenario analyses to explore avenues for reducing the public-safety and environmental impact of crude-by-rail transport (for example), we see a possible strategy for reducing risky rail transport in the near term.
NACOM can be potentially coupled with climate assessment models for further impact-based decisions and policy analyses, and its multimodal features can be incorporated into existing energy-optimization-complementarity models. To date, no other model for North American crude with transfer mode specificity exists. As well, NACOM’s application and level of node disaggregation at the US state level in the North American market is a first in the academic literature.
Critical advances have been made in US energy policy, but crude oil remains a major component for forthcoming decades. The North American Crude Oil Model shows that a combination of export ban abolishment, pipeline investments, and rail caps provides the lowest crude-by-rail flows, in addition to the highest revenue. (All scenarios were similarly beneficial to the refining sector.) These outcomes suggest that integrated approaches are more likely to be successful in tackling the crude-by-rail problem and its attendant safety and environmental risks.
As Canada’s investments in production and transportation capacities continue to grow, alongside a developing US-Mexico partnership, the need for accurate analyses of transport costs and effects will only increase. These trends indicate a continued need to find optimal intersections of policy and market decisions, not only for multimodal crude oil networks, but also for current and future energy systems.