More ethanol-to-crude rail facility conversions unlikely in California: analyst
Orlando, Florida (Platts)–24Mar2014
More conversions of California ethanol rail unloading terminals to crude service are unlikely, following Kinder Morgan’s switch of its Richmond, California, unloading facility, an analyst said Monday.
“The other big [ethanol] terminals aren’t as close to refiners, and there is a limited amount of ethanol capacity,” Stillwater Associates President David Hackett said on the sidelines of the American Fuel and Petrochemical Manufacturers Annual Meeting in Orlando, Florida.
Kinder Morgan late last year converted the terminal to crude service from ethanol service “after changes in the ethanol market made it attractive for us to look to other commodities,” spokeswoman Melissa Ruiz said Monday in an email.
The Richmond terminal is the only 100-car unit train crude-by-rail facility in California, she said.
“In order to handle crude oil, we had to file a new application with the Bay Area Air Quality Management District (BAAQMA) for permits, which we received last summer,” she said. “We began handling crude this past September, and the facility will serve Bay Area refiners.”
The terminal is located on the Burlington Northern Santa Fe rail yard in Richmond. The railed crude is trucked from the terminal, she said, noting that there are no pipelines or tank connections involved.
Ruiz declined to comment on the terminal’s current throughput or on which types of crude are received by the facility.
The rail terminal conversion comes after the leading US midstream company early last year scrapped its high-profile proposed Texas-to-California Freedom Pipeline on a lack of customer interest. The pipeline would have delivered 277,000 b/d of crude from the Permian Basin in West Texas to northern and southern California refining complexes.
Kinder Morgan said at the time that it would focus on providing crude-by-rail options for West Coast and Texas shippers.
Along the West Coast, refiners and midstream companies are planning to construct crude-by-rail unloading terminals, but are facing permitting delays opposition.
If California “doesn’t get crude by rail, their competitiveness will erode,” Hackett said during the Platts Barrel Talk panel discussion at the conference. “We do see some uptick in rail deliveries, but there is a lot of opposition to crude by rail in California with the environmental community.”
As oil shipments rise on rails, California cities fight to be heard
By Curtis Tate and Tony Bizjak
A tanker truck is filled from railway cars containing crude oil on railroad tracks in McClellan Park in North Highlands on Wednesday, March 19, 2014. North Highlands is a suburb just outside the city limits of Sacramento, CA. Randall Benton / MCT
SACRAMENTO, Calif. — As rail shipments of crude oil have risen in Northern California, so has opposition in many communities along rail lines and near the refineries they supply.
Concerned about the potential safety and environmental hazards of 100-car trains of oil rolling through population centers, leaders from Sacramento to San Jose say they’re banding together to present a unified voice for “up-line” cities: communities that could bear some of the highest risks as California turns toward rail shipments to quench its thirst for fuel.
“What I suspect will come out of this is more of a regional understanding and interest in the topic,” said Mike Webb, director of community development and sustainability in Davis.
The federal government regulates rail shipments, but the rules haven’t caught up to the surge in oil traffic on the nation’s rail network. That’s left local leaders at the forefront of pushing for changes in state and federal laws.
Last week, the city councils of Berkeley and Richmond voted to oppose crude shipments on rail lines through their towns. The resolutions call for state lawmakers and members of Congress to seek tougher regulations.
Several environmental groups filed a lawsuit last week against pipeline operator Kinder Morgan and the Bay Area Air Quality Management District. The groups said the agency quietly issued a permit to Kinder Morgan for a crude-by-rail facility in February without reviewing potential environmental and health impacts.
“We don’t accept that as a forgone conclusion,” said Diane Bailey, a senior scientist with the Natural Resources Defense Council, one of the groups in the lawsuit.
But it may be an uphill fight. State officials anticipate that within two years, California will receive a quarter of its petroleum supply by rail. That could potentially mean several trains of crude oil passing daily through Sacramento, West Sacramento and Davis.
The Sacramento Bee reported last week that crude oil had been transferred from trains to trucks at the former McClellan Air Force Base in Sacramento since last year without the knowledge of local emergency response officials and without a required air quality permit.
Webb said Davis’ goal is to be part of the review process to make sure the city’s concerns are heard.
“Our primary objective and interest is in the health and safety of our community,” he said.
A group of community activists in Benicia and Martinez has been trying to stop two oil refiners, Tesoro and Valero, from expanding their crude oil deliveries by rail. And they’re pressing local, state and federal officials to push for tougher oversight of crude oil shipments by rail following a series of derailments with catastrophic fires and spills.
They’re focused on two types of crude oil that are moving by rail in the absence of new pipelines. First is tar sands, a thick, gritty crude that’s produced in western Canada. Tar sands production generates more carbon dioxide emissions, environmentalists say, and is more difficult to clean up when spilled in water because it’s heavy and sinks.
The second is Bakken crude, extracted through hydraulic fracturing of shale rock. Most of the Bakken formation lies in North Dakota, and most of the oil produced there moves out of the state by rail. The oil has proved more volatile than conventional types.
Since last summer, three major derailments have involved Bakken crude. The first, in Lac-Megantic, Quebec, killed 47 people in an inferno that also leveled the center of the small lakeside town.
Subsequent derailments in Alabama and North Dakota, though not fatal, showed that disaster could strike again.
“People are afraid that anybody along the rail line could become the next Lac-Megantic,” said Andres Soto, a community activist in Benicia.
Part of the frustration at the local level is the lack of information about how much crude oil is being shipped on rail lines. The companies involved in transporting and refining oil are not required to provide much information on the shipments and usually don’t.
“There is so little oversight,” Bailey said. “This is a new area and people are scratching their heads, saying, ‘Wow, this isn’t covered.’”
West Sacramento Fire Chief Rick Martinez, who has experience fighting oil fires, said national attention on the issue may provide a platform for cities to push for better real-time information on what materials are coming through town, so emergency responders know what to expect as they head to a call.
“Is there way through technology to get more information to local agencies?” he asked. “We are trying to take advantage of the interest to pose the questions.”
On March 27, 2014 “Drilling California” author J. David Hughes was joined by business leader and Next Generation co-founder Tom Steyer and Robert Collier, a research fellow with Next Generation, to discuss the prospects of developing California’s Monterey Shale during a panel in Sacramento. A recording of the event can be viewed below.
In her background materials and in the resolution, Vice Mayor Maio made the extraordinary claim that Phillips 66 was seeking a permit to ship extreme crudes by rail from “Donner Pass, through Auburn, Rocklin, and Roseville, proceed along the Sacramento River through Sacramento and Davis to Benicia and along the San Francisco Bay through Martinez, Richmond, Berkeley, Emeryville, and Oakland. From Oakland the trains would use the Coast Line via Hayward, Santa Clara, San José, Salinas and continue along the Pacific Coast into San Luis Obispo County.”
Railroads are notably secretive about routing of hazardous materials, so I asked Maio to clarify exactly how she determined that these crude oil trains would pass through Benicia and across the 85-year-old Benicia rail bridge (built in 1929) to Martinez, along the Carquinez Strait and down through the East Bay.
Vice Mayor Maio asked her “subject matter expert,” Dr. Phyllis Fox, to be in touch, and below is her detailed and I think rather conclusive explanation. It looks like Benicians are facing not only the offloading of 100 train cars of crude each day, but another 100 cars passing through on tracks shared by Amtrak.The following is by Phyllis Fox, Ph.D, PE, BCEE, QEP, Environmental Management, Rockledge, Florida:
I’m the subject matter expert that ferreted out the route of the Santa Maria trains for the CBR Berkeley Resolution.
The DEIR fails to disclose the route the trains will take from their entrance to California to San Jose, a fundamental flaw in the DEIR. However, there are important clues.
First, the DEIR on p. 4.12-7 suggests the Mulford line out of Oakland to Santa Clara would be used. The only way to get to Oakland is through Richmond and Berkeley.
Second, on p. 4.12-22, the DEIR notes “However, north of San Jose through the Bay area there are areas of multiple mainline tracks, and a large number of commuter trains. Therefore, it is unclear how much the crude oil unit train would overlap with the Coast Starlight. Given this uncertainty, the EIR has limited the analysis to the Coast Line.” (e.g., the DEIR only discusses the route from San Jose to Santa Maria, leaving the reader to guess which East Bay cities will be affected.) The implication is that any route with capacity is fair game.
Third, throughout the DEIR, interference between “commuter” trains and the crude unit trains is discussed. See, e.g., Sec. 4.12. The Union Pacific Coast Starlight line is apparently a key option. Figure 4.12-3 shows it passes through Richmond, Berkeley, Oakland, and down the East Bay.
Fourth, finding no clear statement in the DEIR as to the East Bay route, I did an exhaustive survey of railroad maps. This work indicates that rail lines go either: (1) down the Central Valley, roughly parallel to I-5, or through Benicia, Richmond, Berkeley, Oakland, and down the East Bay. There is no connection between these two routes except for the Altamont Corridor Express or ACE commuter line from Stockton, over the Altamont Pass into Livermore, Pleasanton, and Fremont. See: http://en.wikipedia.org/wiki/Altamont_Corridor_Express. The ACE line would be an unlikely choice given the challenges posed by the Altamont Pass in handling unit trains with 80+ cars weighing up to 18,000 tons that are a mile long. The line has significant operating limitations including limited capacity, single track for much of the route, slow average operating speeds, and service limitations. Further, the line alarmingly, passes through the Niles Canyon, which also contains the Hetch Hetchy Aqueduct, carrying the water supply for San Francisco. The DEIR is silent on the ACE line. Thus, the only route that appears viable, coming from northern California, is through Sacramento (Roseville), the refinery towns and into Berkeley, Oakland etc. The most likely route is from the northern part of CA, as both Bakken crude and tar sands crude come from the far north and will most likely be sent first west into WA or OR into northern California or through Reno.
There are no other connecting rail lines between the Central Valley route and the East Bay. Thus, by process of elimination, I (and others who did similar analyses) concluded the most likely route is through the East Bay.
Regardless, the DEIR does not restrict the route. Thus, any route can be used, so the East Bay cannot be eliminated.