All posts by Roger Straw

Editor, owner, publisher of The Benicia Independent

Exxon Mobil completes $2B tar sands expansion

Repost from Albany Business Review, Latham NY

Exxon Mobil completes $2B tar sands expansion

By Nicholas Sakelaris, Dallas Business Journal, May 11, 2015, 7:55pm EDT

Exxon Mobil Corp. (NYSE: XOM) announced that the $2 billion Cold Lake Nabiye expansion has started production in Alberta, Canada.

The expansion adds about 20,000 barrels per day to what’s already the largest oil sands operation in Canada. That number could double to 40,000 barrels soon, according to Exxon, bringing the total capacity to nearly 200,000 barrels per day.

Exxon added new steam generation, bitumen processing, field production pads and a 170-megawatt electrical cogeneration plant.

The project was executed by ExxonMobil Development Co. on behalf of Imperial Oil Limited, an affiliate that’s majority owned by Exxon.

Latest ‘bomb train’ incident predictable

Repost from The Hawkeye, Burlington, Iowa

Latest ‘bomb train’ incident predictable

By Kathleen Sloan, May 11, 2015

BNSF Railway carried the Hess Corp.-owned rail car, which carried highly volatile Bakken crude oil from North Dakota and appears to have followed the law.

President Barack Obama weighed and rejected using executive authority to curb the transport of this explosive crude oil, rich in butane and propane, because he decided North Dakota state law should be the controlling authority. But the law North Dakota passed in December and went into effect just last month, only requires less than 13.7 pounds-per-square-inch vapor pressure inside the tanker, despite explosions at lower pressures.

That’s almost 40 percent more than the average vapor pressure among the 63 tanker cars that exploded July 6, 2013, at Lac-Megantic, Quebec. That disaster killed 47 people, some of whom could not be found because they were vaporized, and is driving recent federal and state rail car regulations.

According to an Albany, N.Y., Times Union investigation, the average vapor pressure among 72 tanker cars in the Lac-Megantic train was 10 psi.

Hess Corp. tested the crude just before loading at 10.8 psi, according to Associated Press reporters Matthew Brown and Blake Nicholson, in their follow-up story about the derailment at Heimdal, N.D.

While federal regulations only require flash point and boiling point to be measured, North Dakota now requires vapor pressure be measured. But measuring and labeling the danger does not make transporting it safe.

The U.S. Department of Transportation’s two divisions, the Federal Railroad Administration and the Pipeline and Hazardous Materials Safety Administration, are the regulating authorities overseeing railway transport of crude oil. Generally, the FRA is responsible for train car and rail safety, while the PHMSA inspects the proper testing of the oil. That determines the oil’s proper classification and its proper “packaging” in pressurized cars and their labeling.

Other PHMSA duties include checking shipping documents to see if the shipper has self-certified the procedures properly as well as employee safety and handling training.

The U.S. DOT initiated “Operation Safe Delivery” in August 2013, in reaction to the Lac-Megantic incident, although the Bakken oil boom dates to 2008.

A federal rule-making process also began in August 2013. Those rules went into effect last week.

PHMSA, as part of Operation Safe Delivery, took several samples of Bakken crude oil from rail-loading facilities, storage tanks and pipelines used to load rail cars. Several also were collected from cargo tanks.

The first set of samples were taken August through November 2013 and the second set February through May 2014.

The first set showed psi vapor pressure among a dozen samples ranging from 7.7 psi to 11.75 psi.

A second set of 88 samples showed vapor pressure ranging from 10.1 psi to 15.1, with the average at about 12 psi.

Only six of the 88 samples were at or exceeded North Dakota’s 13.7 psi. This means shippers are not required to treat most of the crude generated from the Bakken oil formation before loading it onto cars.

The “Operation Safe Delivery Update,” available on the PHMSA website, also gives test results for propane, sulphur, hydrogen sulfide, methane and butane content.

The conclusions in the Operations Safe Delivery Update, which was not dated, are:

“Bakken crude’s high volatility level — a relative measure of a specific material’s tendency to vaporize — is indicated by tests concluding that it is a ‘light’ crude oil with a high gas content, a low flash point, a low boiling point and high vapor pressure …

“Given Bakken crude oil’s volatility, there is an increased risk of a significant incident involving this material due to the significant volume that is transported, the routes and the extremely long distances it is moving by rail… These trains often travel over a thousand miles from the Bakken region to refinery locations along the coasts…”

And although the report states, “PHMSA and FRA plan to continue … to work with the regulated community to ensure the safe transportation of crude oil across the nation,” the new rules that went into effect last week did nothing about regulating vapor pressure.

Instead, the rules phase out weaker and older pressurized tanker cars, the DOT-111, by 2020, and phase in CPC-1232 cars.

So far, at least four derailments of CPC-1232 cars carrying Bakken oil have exploded:

    • March 5 in Galena, Ill.;
    • Feb. 1 in Mount Carbon, W.Va.;
    • Feb. 15 near Timmons, Ontario; and
    • Last year in Lynchburg, Va.

Experts in various news articles and public comment submitted during the federal rule-making stated the way to make transport safe is to refine the crude before shipping. That would involve building refineries near the extraction point, which experts pointed out would be expensive.

In a Sept. 26, 2014, story, Railway Age contributing editor David Thomas applauded North Dakota for “using state jurisdiction over natural resources to fill the vacuum created by the federal government’s abdication of its constitutional responsibility for rail safety and hazardous materials.”

But Thomas admitted the state law on crude treatment would reduce the danger only slightly.

“Simply put, North Dakotan crude will have to be lightly pressure-cooked to boil off a fraction of the volatile ‘light ends’ before shipment,” Thomas said. “This conditioning lowers the ignition temperature of crude oil — but not by much. It leaves in solution most of the culprit gases, including butane and propane. Even the industry itself says conditioning would not make Bakken crude meaningfully safer for transportation, though it would make the state’s crude more consistent from one well to another.”

“The only solution for safety is stabilization, which evaporates and re-liquifies nearly all of the petroleum gases for separate delivery to refiners,” Thomas said.

He points out owners and shippers in the Eagle Fork formation in Texas, voluntarily stabilize their crude before shipping. It’s more volatile than Bakken crude.

“So far, stabilized Eagle Fork crude has been transported by tank car as far away as Quebec City, without the fireballs that have plagued the shipment of unstabilized Bakken crude,” Thomas said. “The Texan gases are liquefied and piped underground to the state’s Gulf Coast petrochemical complex for processing and sale.”

Keeping the volatile gases in solution during shipping, while dangerous, is profitable.

Thomas said North Dakota has no nearby petrochemical plants, which “explains the oil industry’s collective decision not to extract the otherwise commercially valuable gases from North Dakota crude oil. Instead, most of the explosive gases remain dissolved in the unstabilized Bakken oil for extraction after delivery to distant refineries.”

The PHMSA, however, requires butane and propane be removed from the crude before it is injected into pipelines, Thomas said.

Comments to the federal rule-making pointed out Bakken oil is made more dangerous still by corrosive chemicals used in the fracking process. The crude is further treated with chemicals to make the molasses-like consistency easier to pump.

Severe corrosion to the inner surface of the tanker cars, manway covers, valves and fittings have been recorded in various incidents, commentators said.

The lack of federal regulations is not the only problem. Enforcement is minimal because there are only 56 inspectors, according to PHMSA spokesman Gordon Delcambre.

Ten of those have been assigned to the North Dakota Bakken oil formation region, he said.

In the PHMSA 2013 annual enforcement report, 151 cases were prosecuted and 312 civil penalty tickets were issued, resulting in $1.87 million in fines. The largest fine was $120,200.

The report did not mention what the hazardous material was in 173 of the 463 enforcement actions.

Only one enforcement action appeared to result from an inspection of “fuel oil” transport, which resulted in a $975 fine for incorrect “packaging” and failure to prove, through documents, employees had been given the required safety and hazardous material handling training.

According to BNSF Railway’s report to the state Homeland Security and Emergency Management, required by a U.S. DOT emergency order since May 2014, a range of zero-to-six trains carrying at least 1 million gallons (30,000 gallons per car or about 35 cars or more) pass through Burlington each week.

Vandalism on inactive rail line used to justify oil train secrecy

Repost from The Bellingham Herald

Vandalism on inactive rail line used to justify oil train secrecy

By Curtis Tate, McClatchy Washington Bureau, May 10, 2015
A train carrying tanker cars filled with crude oil passes through St. Paul, Minnesota, on February 27, 2013. JIM GEHRZ — Minneapolis Star-Tribune/MCT

Part of the federal government’s justification for keeping details about oil trains secret is literally hiding in the weeds on the South Dakota prairie.

Itself hidden on page 255 of the U.S. Department of Transportation’s 395-page final rule on trains carrying large volumes of flammable liquids, the example is sure to raise additional questions about the government’s decision to shield routing and volume details on oil trains from public view.

Such details have been publicly available for the past year, at least about weekly shipments of 1 million gallons or more of Bakken crude oil. But rail and oil companies have been adamant that the government drop the disclosure requirement it imposed last May, citing concerns about security and business confidentiality.

In its rule, the department cited an investigation by the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives into an act of vandalism reported last December in Vivian, S.D.

According to investigators, a two-foot section of rail on the state-owned Dakota Southern Railway was blown out with tannerite, an explosive used in target practice that can be purchased at sporting goods stores.

In its rule, the department notes that “widespread access to security sensitive information could be used for criminal purposes when it comes to crude oil by rail transportation.”

But not only is the track through Vivian not used for oil trains, it hasn’t been used by any train for years.

Publicly searchable photos show that the rail line is clearly out of service, its rusting rails barely visible, if at all, under prairie grass. Several road crossings along the route have been paved over, including the one where U.S. Highway 83 crosses the track in Vivian.

Officials didn’t even notice the missing piece of rail for weeks.

South Dakota bought the nearly 300-mile rail line connecting Mitchell and Rapid City from the bankrupt Milwaukee Road in the early 1980s to preserve train service for grain-producing communities.

While part of the eastern end of the line has come back to life in recent years, thanks to federal and state investment, the western half, including the track that runs through Vivian, has mostly been out of service.

McClatchy received partial or full reports on Bakken oil trains from 24 states last year through their open records laws. South Dakota was one of those states, and the Dakota Southern Railway was not labeled as an oil train route.

Alberta election could send tremors through Montana economy

Repost from The Missoulian
[Editor:  Pay attention to Alberta!  Changes there will send ripples all along the rails in the U.S., from the Upper Midwest to the East Coast, West Coast and Gulf Coast.  Congratulations to Rachel Notley and the New Democratic Party!  – RS]

Alberta election could send tremors through Montana economy

By Rob Chaney, May 09, 2015 5:30 pm
Rachel Notley
Alberta New Democratic Party leader Rachel Notley speaks on stage Tuesday night in Edmonton after being elected Alberta’s new premier. The NDP won a majority in the provincial Legislative Assembly by toppling the Progressive Conservative colossus that has dominated the province for more than four decades. Photo: NATHAN DENETTE, Canadian Press

Montana’s political seismograph didn’t rattle much last Tuesday when its neighbor to the north underwent a governmental earthquake.

But that could change in the coming weeks, as the citizens of Alberta absorb the magnitude of their replacement of Canada’s longest-standing political party rulers with a left-wing opposition pledged to look hard at its energy economy.

“The Progressive Conservative Party has been in power two years longer than I’ve been alive,” said University of Montana biology professor Mark Hebblewhite, a 42-year-old Alberta native. “I think this is a real response to the ongoing mismanagement of Alberta’s bounty. One thing that hit the nail on the head was how the province went from being overrun with money to crashing in another bust. People get really tired of it.”

The New Democratic Party took 53 seats in the Alberta Parliament in Tuesday’s election. Another traditional minority group, the Wildrose Party, surprisingly found itself in second place with 21 seats. The Progressive Conservatives held onto just 10 seats.

NDP party leader Rachel Notley was credited for a remarkable political ground game that unseated Progressive Conservative Party leader Jim Prentice – a man widely considered a future leader of all Canada. Prentice resigned from his post on election night and said he was at least temporarily leaving politics.

Alberta’s entire United States border runs along Montana, from the western edge of Waterton-Glacier International Peace Park to the 110th Meridian north of Havre. The province and state share the spine of the Rocky Mountains and the beginnings of the great mid-continental prairies.

They also share a relatively recent surge in energy development. Over the past decade while Montana has exploited its Bakken oil and gas fields along the border with North Dakota, Alberta has been opening massive production in tar sands petroleum near Fort McMurray.

Oil from the tar sands has become both a political and social controversy.

New Democratic Party officials have questioned the need for the Keystone XL pipeline that would run south from Alberta, through a corner of Montana and down to refineries in Oklahoma and Texas. The Obama administration has stalled permitting of the international border crossing, while Montana’s bipartisan congressional delegation has supported it.

“If the Keystone XL doesn’t happen, the amount of rail traffic leaving Alberta would be impacted significantly from that decision,” said Bentek Energy senior analyst Jenna Delaney. “Currently, taking the Keystone XL out would increase petroleum unit trains by five a day out of Alberta. And Transport Canada officials say residents in Canada are very concerned with rail traveling through their communities.”

Moving petroleum by rail has become an issue in both Canada and the United States, signposted most recently by last week’s explosion of a group of oil tank cars near Heimdal, North Dakota.

Caryn Miske of the Flathead Basin Commission said the prospect of moving more oil trains along the southern border of Glacier National Park is under close scrutiny.

“We’re already seeing impacts from the amount of oil that’s moving around,” Miske said. “The number of trains and cars carrying oil has increased, and that’s really concerning, considering how many near-misses we’ve had.”

Burlington Northern Santa Fe has a freight line that runs out of Alberta into Montana at Sweet Grass, although there’s not much cross-border oil traffic there yet.

***

Delaney said another factor of the government change could be the NDP’s campaign pledge to revamp the province’s tax structure on energy development.

“They’re looking at increasing income taxes and royalty rates to corporations, which the oil companies aren’t happy about,” Delaney said. “The last time I was in Calgary, the atmosphere was already a little bleak. If taxes are raised on corporations, I don’t know how they might respond. Companies with offices in other places might shift people away from Calgary.”

Much of the province’s energy economy has extremely expensive initial start-up costs. Energy analysts have already been forecasting a drop in Albertan oil production as new projects slip below their break-even points with falling oil prices.

Delaney said that could have an impact on Montana’s economy, as the demand for megaloads of oil field equipment transported across the state stalls.

Longtime conservation activist Stephen Legault said the provincial government’s failure to manage its oil wealth led to great voter frustration.

“We’re drilling 20,000 wells a year in Alberta, and we’re $7 billion in the hole economically,” Legault said. “That’s largely because when oil goes below $75 a barrel, provincial coffers take a massive hit.”

The result has been a government unable to fix damage from the floods that ravaged Calgary in 2013, or even to send land management officials to cross-border conferences in Montana.

While the new government has majority control of Alberta’s Parliament, its influence over the provincial agencies could be a murkier matter. Those departments have had decades of one-party control appointing their directors and staffs.

“If I was south of the border looking north, I wouldn’t expect to see anything dramatic right away,” Legault said. “We’ve had five changes of government since 1905. The bureaucracy is so deeply entrenched after 45 years of one-party rule, it’s going to take years for a new government to put in place the people it wants to create change.”