Repost from the New York Times
Bakken Crude, Rolling Through Albany
By JAD MOUAWADRail tanker cars roll through Albany on their way to the port.
Credit: Stewart Cairns for The New York Times
ALBANY — On a clear December morning two years ago, a 600-foot oceangoing oil tanker called the Stena Primorsk left the Port of Albany on its maiden voyage down the Hudson River laden with 279,000 barrels of crude oil. It quickly ran aground on a sandbar.
The incident attracted little attention at the time. The ship’s outer hull was breached, but a second hull prevented a spill. Still, the interrupted voyage just 12 miles south of the port signaled a remarkable turnaround for the state’s capital.
With little fanfare, this sleepy port has been quietly transformed into a major hub for oil shipments by trains from North Dakota and a key supplier to refiners on the East Coast.
Hidden in plain sight, Albany’s oil boom has taken local officials and residents by surprise. Many became aware of the dangers of oil trains after a recent series of derailments and explosions, including one that killed 47 people in Quebec last July, which have generated concerns about growing rail traffic into the city. Trains rumble through the heart of Albany every day and often idle along the busy Interstate 787 highway while waiting to get into the port’s rail yards.
“This has caught everyone off guard,” said Roger Downs, a conservation director at the Sierra Club in Albany.
About 75 percent of Bakken oil production travels by rail and as much as 400,000 barrels a day heads to the East Coast, said Trisha Curtis, an analyst at the Energy Policy Research Foundation. Albany gets 20 to 25 percent of the Bakken’s rail exports, according to various analyst estimates.
“Albany has become a big hub,” Ms. Curtis said.
But opposition is starting to form over new plans by one energy company to expand operations here and, possibly, ship crude extracted from the oil sands of Canada into Albany. The company, Global Partners, which pioneered the use of Albany as a crude-oil hub, is also looking at shipping oil from a terminal in New Windsor, just north of West Point.
The rapid growth in the oil-by-rail business is raising alarms. Railroads carried more than 400,000 carloads of crude oil last year, up from 9,500 in 2008, according to the Association of American Railroads. Federal regulators have been under pressure to address the industry’s safety and recently outlined a series of voluntary steps, including slowing oil trains in some major urban areas.
These steps are not enough to protect many communities along the rail lines, Senator Charles E. Schumer, Democrat of New York, said this week. This includes many places in upstate New York, like Buffalo, Rochester, Utica, Syracuse and Albany, that have seen higher rail traffic. He compared the industry’s use of outdated tank cars to “a ticking time bomb” and urged federal regulators to quickly retire these older cars, known as DOT-111s, in favor of models built after 2011 that have better protections.
“The safety regime has to catch up with the reality that there are now hundreds of cars everyone admits could be dangerous if there is a derailment that are hurtling through heavily populated areas of New York State,” he said in a telephone interview Thursday.
Albany’s newfound role did not happen by chance. It has long served as a regional distribution center for heating oil and gasoline to Vermont. It is linked to the Midwest by rail and is close to many of the East Coast’s major refineries. This coincidence of geography and logistics has made it an ideal trans-shipping point for oil produced in the Bakken region, now about 950,000 barrels a day.
“Early on we saw an opportunity to supply East Coast refiners with cost-effective North American crude oil,” said Eric Slifka, the chief executive of Global Partners, which first brought oil by rail to Albany around the end of 2011. The company doubled its oil-handling capacity to 1.8 billion gallons a year, the equivalent of 118,000 barrels a day, in 2012.
Another energy company, Houston-based Buckeye Partners, made a similar calculation and also expanded its capacity for crude oil in Albany in 2012 to one billion gallons a year, up from 400 million gallons. At the time, state regulators at the Department of Environmental Conservation received no public comment.
“The D.E.C. has done all its studies and analyses, but my guess is just that the community doesn’t like the answer,” Mr. Slifka said in an interview. “I think it’s hard to turn back the clock. At the end of the day, the D.E.C. and government agencies have gone into this with their eyes wide open.”
Trains now come into Albany on average twice a day after completing a four-day journey from North Dakota, either through the Canadian Pacific network, via Montreal, or on the CSX rail lines that pass through Buffalo and Syracuse. These mile-long trains, each up to 120 tank cars long, can carry roughly 85,000 barrels of oil.
Once in Albany, the oil goes into giant storage tanks before being loaded onto barges that make daily trips to refineries down the Hudson. Some trains go to Pennsylvania. Every eight days, a bigger tanker, a Bahamas-flagged ship called the Afrodite, which replaced the Stena Primorsk after its accident, picks up oil destined for Irving Oil’s refinery in Saint John, New Brunswick, which produces gasoline for the American market.
“Bakken crude has been a lifeline for the East Coast refineries,” said Lawrence Goldstein, an energy economist.
Richard J. Hendrick, the Port of Albany’s general manager, said the new traffic had been a boon for the port and the longshoremen who work there. Ships still haul scrap metal to Turkey or large electrical components destined for a power plant in Algeria. But the port’s business has been increased by the oil traffic.
“We can do things faster and more safely here,” Mr. Hendrick said.
But hauling oil on rails comes with unanticipated dangers. After an oil train derailed and exploded near Casselton, N.D., late last year, federal regulators warned that Bakken crude oil was extremely volatile. On Tuesday, they ordered shippers to properly test and classify Bakken crude before loading it onto freight trains.
There is not much New York’s officials can do to reduce the flow of oil trains, despite the state’s commitment to low-emission fuels and its opposition to natural gas drilling and hydraulic fracturing. Officials acknowledge that they are powerless since railroad commerce is regulated by the federal government.
Gov. Andrew M. Cuomo nevertheless directed state agencies in late January to review their emergency and spill response plans and report back to him by the end of April. The state’s top environmental and transportation officials met with their federal counterparts last week to discuss the issue.
But there remains considerable uncertainty about how authorities would respond to an accident or a spill in the Hudson River. The Coast Guard conducted a drill in New Windsor last November. The mock event involved the derailment of four train cars and a 50,000-gallon spill in the Hudson from a storage tank.
“We continue to look for ways to improve coordination and response with our federal and local partners and, as directed by Governor Cuomo in his recent executive order, are evaluating the state’s spill prevention, response and inspection program for rail, ship and barge transportation of crude oil and other petroleum products,” said Emily DeSantis, the Department of Environmental Conservation’s spokeswoman.
That is little comfort for a broad coalition of environmental groups, elected city officials and residents, who said state regulators should have better anticipated these risks and are demanding a full review.
Chris Amato, who worked at the D.E.C. from 2007 to 2011 and is now a lawyer at the advocacy group Earthjustice, which is challenging the oil projects, said regulators should have performed a detailed environmental impact study two years ago. “A lot of people are upset that the D.E.C. is still dillydallying,” he said.
Vivian Kornegay, a City Council member, whose district is across from the rail yards and the port, said, “We want a do-over.”
Hundreds of residents attended a public meeting at an elementary school last month, and voiced their concerns over the expansion plans of Global Partners. The meeting focused on a recent application by the company that includes building seven heating units at its rail yard. Some say they believe the company intends to import heavier, dirtier crude from Canada’s oil sands in addition to Bakken crude.
Mr. Slifka, Global’s chief executive, said the heating units were needed to accommodate “any types of U.S. and Canadian crudes that would require heat to be put to them because of the viscosity.”
He added: “Where the crude comes from isn’t necessarily the focus. It’s making sure there is flexibility in the system to take various types of crude.”
Given the new opposition, state officials recently extended the public comment period on Global’s plans until April. They also said they would require the company to be more transparent about its plans, even if it has followed all regulations. The Department of Environmental Conservation is also conducting a review of “all matters pertaining to Global’s operations in New York State,” Ms. DeSantis, the agency’s spokeswoman, said.
“There’s been some clear indications that D.E.C. needs to be a better cop on the beat when it comes to this industry,” said Peter Iwanowicz, the executive director of Environmental Advocates of New York, and a former state official in charge of environmental issues. “But we can’t look back in the windshield. The reality is that Albany is now part of the oil patch.”A version of this article appears in print on February 28, 2014, on page B1 of the New York edition with the headline: Bakken Crude, Rolling Through Albany.