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Crude oil train shipments dwindle in California, for now

Repost from The Sacramento Bee

Crude oil train shipments dwindle in California, for now

By Tony Bizjak, 03/11/2015 9:47 PM
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June.
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June. Jake Miille / Special to The Bee

A year ago, California officials nervously braced for an influx of milelong trains carrying volatile crude oil to refineries in the Valley and on the coast – trains similar to the one that exploded two years ago in Canada, killing 47 people.

The trains never arrived. Although tank cars full of oil now roll daily through cities in the Midwest and East, provoking fears of crashes and fires, the number of oil trains entering California has remained surprisingly low, state safety regulators say, no more than a handful a month. In recent weeks, they appear to have dwindled to almost nothing.

The reasons appear to be mainly economic.

“Crude oil shipments from out of state have virtually stopped,” said Paul King, rail safety chief at the California Public Utilities Commission. “Our information is that no crude oil trains are expected for the rest of this month.”

Most notably, the BNSF Railway recently stopped running a 100-car train of volatile oil from the Bakken region of North Dakota through the Feather River Canyon and midtown Sacramento to the Bay Area. The trains, several a month, carried an estimated 3 million gallons of fuel each.

Bakken oil, a lighter type of crude, similar to gasoline, has gained a fearsome reputation since it entered the national scene a few years ago. A string of Bakken train explosions around the country prompted the federal government to issue a warning last year about the oil’s unusual volatility and launch efforts to write stiffer regulations on rail transport, including a proposal to require sturdier tank cars for oil.

Two more Bakken train derailments and explosive fires recently in West Virginia and Illinois triggered a new round of complaints that the federal government is dragging its heels in finalizing those regulations.

The BNSF train through Sacramento was believed to be the only train in California carrying 100 cars of Bakken oil. PUC rail safety deputy director King said his commission’s rail monitors have been told by owners of a Richmond oil transfer station in the Bay Area that refiners stopped the shipments in November as global oil prices dropped.

California Energy Commission fuels specialist Gordon Schremp said lower prices for other types of oil have made Bakken marginally less marketable in California, although that could easily change in the future.

Other projects, like a Valero Refining Co. plan to run two 50-car oil trains daily through Sacramento beginning this spring to its Benicia plant, have not yet gotten off the ground, in part because of political opposition. Under pressure from state officials, including Attorney General Kamala Harris, Benicia recently announced it is redoing part of its environmental and risk analysis of the Valero rail project. Valero has said it intends to ship lighter fuels, but has declined to say whether those will be Bakken.

State safety officials said the slowdown provides a bit more time to provide hazardous-materials training for more firefighters, as well as to put together a state rail-bridge inspection program and to upgrade disaster and waterway spill preparedness. But state officials said they still feel like they’re playing catch-up as they prepare for existing and future potential rail hazards.

“This apparent reprieve may seem helpful, but we still have substantial amounts of … hazardous materials traveling across California’s rail lines,” said Kelly Huston, deputy director of the state Office of Emergency Services. “It only takes one train to create a major disaster.”

Oil prices have begun rising again, and state officials say they expect Bakken shipments to Richmond and potentially elsewhere to be back on track at some point. “We don’t have any concrete info about when it will resume,” the PUC’s King said. “When prices come up, it is likely to resume, and that could be in months.”

Federal emergency rules require railroads to report to states when they run trains carrying more than 1 million gallons of Bakken crude, and then again when that amount changes by 25 percent or more. BNSF sent the state Office of Emergency Services a brief notice on Wednesday acknowledging it had not shipped more than 1 million gallons of Bakken on any train in the last week. The notice does not say how long ago the shipments stopped or when they may resume.

BNSF officials have contended in letters to the state that shipping information is proprietary and should be kept secret. A BNSF spokeswoman declined this week to discuss shipments with The Sacramento Bee, writing in an email, “Information regarding hazardous material shipments is only provided to emergency responders.”

King of the PUC said his monitors estimate that eight or more non-Bakken crude oil trains had been entering the state monthly from Canadian and Colorado oil fields recently, headed to refineries or transfer stations. The Canadian oil, called tar sands, is not considered as explosive as Bakken, but two tar-sands trains derailed and exploded in recent weeks in Ontario, creating fires that lasted several days.

The national concern about crude oil rail shipments follows a boom in domestic oil production, notably in North Dakota, where hydraulic-fracturing advances have freed up immense deposits of shale oil. Lacking pipeline access, North Dakota companies have turned to trains to ship the oil mainly to East and Gulf Coast refineries and to Washington state. Crude by rail shipments in the United States skyrocketed from 9,500 carloads in 2008 to 436,000 in 2013, according to congressional data.

California continues to produce a sizable amount of its own oil in Kern County and receives marine shipments from Alaska and foreign sources. Still, a recent state energy-needs analysis estimates the state could receive as much as 23 percent of its oil via train or barge from continental sources, including North Dakota, Canada, Texas and other Western states, in the coming years. That estimate is based on plans by refineries in Benicia, San Luis Obispo and Kern County to build rail facilities that can accommodate large crude transports.

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    U.S. oil reserves continue rising, surpass 36 billion barrels for first time since 1975

    Repost from U.S. Energy Information Administration – Today In Energy

    U.S. oil reserves continue rising, surpass 36 billion barrels for first time since 1975

    December 5, 2014

    graph of U.S. crude oil and lease condensate proved reserves, as explained in the article text

    Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves

    U.S. crude oil and lease condensate proved reserves rose for the fifth consecutive year in 2013, increasing by 9% from the 2012 level to 36.5 billion barrels, according to the U.S. Crude Oil and Natural Gas Proved Reserves, 2013 report released yesterday by the U.S. Energy Information Administration (EIA). U.S. crude oil and lease condensate proved reserves surpassed 36 billion barrels for the first time since 1975.

    Proved reserves

    Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

    North Dakota had the largest increase (1.9 billion barrels, 51%) in oil reserves among individual states in 2013, based on development of the Bakken/Three Forks formation in the Williston Basin. With 5.7 billion barrels of proved reserves, North Dakota has more reserves than the federal offshore waters of the Gulf of Mexico. Texas remains by far the leading state in total proved oil reserves—its reserves increased from 11.1 billion barrels in 2012 to 12 billion barrels in 2013 (an 8% increase). The largest decline of 2013 was in Alaska, where proved reserves decreased by 454 million barrels, due mainly to reduced well performance at large existing oil fields.

    map of changes in oil and lease condensate proved reserves by state/area, as explained in the article text

    Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves
    Note: * data withheld to avoid disclosure of individual company data

    Changes in reserves reflect exploration and development activities as well as financial factors. Increases in crude oil and lease condensate reserves in 2013 were mainly attributable to nearly 5 billion barrels of extensions to existing fields. Extensions are the result of additional drilling and exploration in previously discovered reservoirs, and have accounted for the majority of reserves increases over the past three years. Continued development of the Bakken/Three Forks play in North Dakota accounted for a large portion of the reserves additions, and overall, tight oil plays accounted for almost 30% of all U.S. crude oil and lease condensate proved reserves.

    graph of components of crude oil and lease condensate reserve changes, as explained in the article text

    Source: U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves

    EIA’s estimates of proved reserves are based on an annual survey of domestic oil and gas well operators. For more information, read the full U.S. Crude Oil and Natural Gas Proved Reserves, 2013 report.

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      Reuters Exclusive: California getting more Bakken crude by barge than rail

      Repost from Reuters
      [Editor:  At the 9/11/14 Benicia Planning Commission meeting, John Hill, vice president and general manager of the Valero Benicia Refinery, stated that Bakken crude has been refined at Valero.  Commissioner Steve Young asked Hill to confirm his statement, which he did.  Young then asked the means of transport, and Hill replied “by barge.”  Our communities might well ask when, how much, and with what new volatile emissions output, etc….  – RS]

      Exclusive: California getting more Bakken crude by barge than rail

      By Rory Carroll, SAN FRANCISCO, Oct 23, 2014
      A pumpjack brings oil to the surface  in the Monterey Shale, California, April 29, 2013.  REUTERS/Lucy Nicholson
      A pumpjack brings oil to the surface in the Monterey Shale, California, April 29, 2013. REUTERS/Lucy Nicholson

      (Reuters) – Shipments of Bakken crude oil from North Dakota to California by barge have quietly overtaken those by train for the first time, showing how the state’s isolated refiners are using any means necessary to tap into the nation’s shale oil boom.

      While tough permitting rules and growing resistance by environmentalists have slowed efforts to build new rail terminals within California itself, a little-known barge port in Oregon has been steadily ramping up shipments to the state, a flow expected to accelerate next year.

      From January through June, California received 940,500 barrels of the North Dakota crude oil from barges loaded at terminals in the Pacific Northwest, the highest rate ever, Gordon Schrempf, senior fuels analyst for the California Energy Commission, told Reuters.

      Bakken crude transported to California on railcars, which has gained widespread attention after a series of fiery train derailments in North America, accounted for just 702,135 barrels over the same time period, according to published figures.

      “We’re seeing marine transport of Bakken crude outpace rail for the first time,” Schrempf said. In 2013, rail shipments of 1.35 million barrels exceeded barge shipments of 1.33 million barrels. The year before, almost no crude arrived by barge.

      Bakken shipments by barge and rail may only comprise a tiny portion of the crude California imports, at about 5,200 and 4,000 barrels per day respectively, with Alaska supplying over 20 times as much crude.

      But companies, including refiner Tesoro Corp and logistics company NuStar Energy LP, have plans to significantly expand that volume with new terminals along the Pacific Northwest that would unload trains from North Dakota and pump the oil onto tankers.

      They would help make California a major destination for Bakken oil, a trend that has drawn objections from environmental groups who have been seeking to stem the tide, often by blocking local permits to built oil-train offloading terminals.

      “Bringing it in by barge gets you around cumbersome permitting and the growing citizen opposition to crude-by-rail,” said Lorne Stockman, research director of Oil Change International, a research and advocacy organization working on energy, climate and environmental issues.

      To be sure, their objections may differ. The principle concern over transporting Bakken by rail is the risk that a derailment could cause a deadly explosion similar to the one in Lac Megantic, Quebec, last year that killed 47 people.

      There is no suggestion that waterborne oil transportation poses similar explosive risks, although the environmental impact of a barge spill could be much greater.

      “The barges are designed to carry the grade of oil that the Bakken is,” said Ted Mar, prevention branch chief for the state’s Office of Spill Prevention and Response and a former member of the Coast Guard.

      That is small comfort to environmentalists, who oppose all forms of oil production, in particular shale crudes like Bakken, extracted through hydraulic fracking they fear contributes to global warming and poses a potential risk to water supplies.

      “Our end goal is to leave these more dangerous, unconventional fuels in the ground,” said Jess Dervin-Ackerman, conservation manager for the San Francisco Bay Chapter of the Sierra Club.

      SMALLER BUT CLOSER

      With state production declining since the mid-80s, California’s refiners have increasingly relied on deliveries of crude by oceangoing tankers carrying 500,000 barrels or more from places like Alaska, Saudi Arabia, Ecuador and Iraq, which supplied two-thirds of their needs last year.

      The refiners have been scrambling for several years to get better access to cheaper domestic shale oil by any means necessary, replacing costlier imports. But with the big shale fields to the east of the Rocky Mountains and a lack of major pipelines, it has not been easy.

      The articulated tug barges (ATBs) now arriving are tiny by comparison to the tankers, carrying as little as 50,000 barrels.

      Such shipments cost more than bringing Bakken directly to California by rail, but easily plug into existing port and terminal infrastructure – avoiding the need for new permitting that can take years.

      While many are working to build out their own rail facilities, a handful of major rail-to-barge terminals along the Pacific Northwest coast that would ship over 500,000 bpd of Bakken crude have been in the works for several years. But most are incomplete, and several face delays.

      One of the few exceptions is an idled ethanol terminal and processing plant in Clatskanie, Oregon, run by Global Partners LP. The facility, on a small canal that feeds into the Columbia River, began quietly transshipping oil from trains to barges in 2012 and is now receiving so-called “unit trains”, mile-long trains that only carry crude oil.

      “Unit train volume into our Clatskanie terminal is up, and interest in the facility from prospective customers is at an all-time high,” Global Partners Chief Executive Eric Slifka said in August.

      Global Partners did not respond to a request for comment.

      Later that month, the firm received a new air permit from the Oregon Department of Environmental Quality that will allow it to ship as much as 1.84 billion gallons of volatile liquids, or some 120,000 bpd. It did not specify crude or ethanol.

      Much of those shipments moved north to refineries in Washington, including BP’s Cherry Point in Puget Sound, and Phillips 66’s Ferndale facility. But both those plants are expanding their own facilities to bring more Bakken in by rail, likely curbing some demand for barges.

      Top oil barge operator Kirby Corp, which runs vessels out of Clatskanie, is currently building two larger 185,000-barrel barges to deploy on the coast next autumn.

      Environmentalists say they are monitoring the rise in Bakken-by-barge deliveries.

      “This won’t pull our focus away from crude by rail, but rather expand the lens with which we look at dangers of Bakken entering our communities,” said the Sierra Club’s Dervin-Ackerman.

      (Reporting by Rory Carroll, editing by Jonathan Leff and Marguerita Choy)
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        Benicia Herald Op Ed: My Dream for Benicia, by Sue Kibbe

        Repost from The Benicia Herald
        [Editor: Sue Kibbe also submitted her “Dream for Benicia” to the Benicia Planning Commission as a comment for the record on Valero Crude By Rail.  – RS]

        My dream for Benicia

        I HAVE A DREAM THAT ONE DAY BENICIA WILL RISE UP and be known across the nation as the Little City that said “No” to Big Oil, putting human life and environmental stewardship above human greed and the insatiable quest for increased profits. What a proud day it would be if Benicia said the risk to the thousands living up-rail is too high a price to pay.

        Because it is too high a price to pay. The effect on the environment from a spill or explosion would be an unmitigated disaster, a fire that cannot be extinguished, a toxic slick destroying every living thing.

        Crude-by-rail has been called “a disaster in the making” by more than one expert. A railway safety consultant has warned, “We’ve got all kinds of failings on all sides, inadequacies that are coming to light because trains are blowing up all over the place.” The Federal Railroad Administration is able to inspect only two-tenths of 1 percent of railroad operations each year. With 140,000 rail miles across the nation, regular inspection of the tracks is impossible.

        The Department of Transportation has yet to provide regulations for crude-by-rail transport. Expect pushback from the rail industry. Safety measures such as “positive train control” (PTC) were recommended 45 years ago, yet the technology operates on only a tiny slice of America’s rail network. The railroads have preempted local control and can make routing decisions without public disclosure.

        Meanwhile, aging rail trestles and lines such as the one through Feather River Canyon — lines that were never constructed for such heavy traffic — continue to be used with greater frequency. The New York Times reported last month that “400,000 carloads of crude oil traveled by rail last year . . . up from 9,500 in 2008. . . . From 1975 to 2012, federal records show, (railroads) spilled 800,000 gallons of crude oil. Last year alone, they spilled more the 1.15 million gallons.”

        Scott Smith, a scientist whose work has focused on oil spills, has studied samples of the Bakken crude oil from three accident sites. He may be the only expert outside the oil industry to have analyzed this crude. All the samples he studied share the same high levels of volatile organic compounds (VOC) and alkane gases in exceptional combinations. Smith says 30 percent to 40 percent of Bakken crude is made up of toxic and explosive gases. “Any form of static electricity will ignite this stuff and blow it up,” he said.

        The Wall Street Journal, based on its own analysis, reported that Bakken has significantly more combustible gases and a higher vapor pressure than oil from other formations. Basically, its flash point is dangerously low, and a chain reaction from tank car to tank car is inevitable.

        Examining the draft environmental impact report (DEIR)

        Pay attention to the wording in Valero’s proposal: “The Project would not increase the amount of crude oil that can be processed at the refinery . . .” It never says the amount of crude oil that “is being processed” at the refinery. In the DEIR, page 3-2, it says: “The Refinery’s crude oil processing rate is limited to an annual average of 165,000 barrels per day (daily maximum of 180,000 barrels) by its operating permit.” That is a huge increase from the 70,000 barrels per day that it says are processed now. With the 70,000 by rail per day, add 18 vessels shipping 350,000 barrels per vessel — that equals 6,300,000 barrels, a total of 31,850,000 barrels per year — thus an increase in processing, and hence in emissions.

        We have read in a Bay Area newspaper that “Valero was named by the U.S. Environmental Protection Agency this year as one of California’s top distributors of dangerous substances. It was second to the ConocoPhillips refinery in Rodeo as the most profligate disseminator of poisons in the Bay Area, releasing 504,472 pounds of toxic substances into the air, water or ground. It was the 10th biggest source of chemicals and pollutants in the state, according to (a) report released in January.

        “Almost half of the violations cited by the (Bay Area Air Quality Management District) between 2011 and 2012 involved excessive short-term emissions and valve leaks on tanks.”

        According to the DEIR, Section 4.1-23: An unmitigated, significant and unavoidable air quality violation, with a net increase in Nitrogen oxides and ozone precursor emissions would result from transporting crude by rail through the communities up-rail within the Sacramento Basin: in the Yolo-Solano, Sacramento Metropolitan and Placer County Air Quality Management Districts.

        How can we, in good conscience — or even legally — violate the air quality of our neighbors to the north by authorizing these shipments? And not only would we affect their air quality, we also would authorize the transport of a highly toxic, corrosive, flammable material in 36, 500 tank cars, each weighing 143 tons when loaded with crude oil — an annual total of 1,460 locomotives weighing more than 7,150 tons when loaded — through these communities, over rails that were never built for and have never carried such heavy traffic, all for the sole purpose of satisfying human greed?

        Valero’s net income rose 28 percent in the first quarter of 2014; net income to shareholders jumped to $828 million, while revenues rose to $33.6 billion. If you are telling me that Valero needs this project to stay competitive, you haven’t looked at the facts.

        A closer look at ‘job creation,’ one of the claimed benefits to the community from crude-by-rail

        The addition of 20 full-time jobs at the refinery will be the result of switching from crude by vessel to rail delivery. There will be 72 fewer vessel deliveries, in which crude is pumped directly from a ship at the dock into pipes and storage tanks in one operation. Instead, there will be 36,500 tank cars per year to be emptied at the refinery, coupling and uncoupling 100 tank cars per day.

        Let’s be clear, these are HAZMAT jobs. Not only would you be unloading one of the most toxic substances on the planet, breathing in toxic “fugitive emissions” from the tank cars, you also would be in direct contact with the toxic emissions from 730 locomotives per year. The only thing appealing about these new jobs will be the “good pay” (they are never described as “good jobs”), because they are hazardous, arduous, truly nasty jobs.

        Section 4.6.5 Impacts and Mitigation Measures: Greenhouse Gas Emissions

        Another one of the project’s “benefits” much proclaimed by Valero is the reduction of greenhouse gas emissions. Valero states that crude by rail would “improve air quality in the Bay Area.” They are not lying — this is a carefully worded deception. The Bay Area Air Quality Management District is a huge area encompassing every county that touches the Bay, the entirety of every county except for Sonoma and Solano counties. This is the area in which they can legally claim to improve air quality.

        The mitigating factor here is the reduced number of oil tankers traversing the Bay. What they calculated were the emissions from 72 ships that will no longer be sailing across 49.5 miles — from the sea buoy outside the Golden Gate to the Valero dock in Benicia and back out again. (That’s 99 miles total for each of the 72 tankers.) They were allowed to subtract those Bay Area emissions from the direct emissions that will be generated right here from construction of the rail terminal, the unloading of crude oil and the 730 locomotive engines moving through the Industrial Park.

        This, then, gives Valero a “less than significant” increase in emissions (DEIR Table 4.1-5) — but in reality, while reducing emissions out in the Bay they will be increasing them right here where we live and breathe by 18,433 metric tons per year (DEIR Table 4.6-5). This may be legal in terms of the permitting process, and good news for sailboats on the Bay, but for the people of Benicia and especially for any businesses located in the Industrial Park, it is a terrible deal.

        What people need to understand is that this “mitigation” in the “Bay Area” has been used to offset the very real pollution that will happen right here in our city. That pollution is not reduced by one particle, except on paper. To tell us that this is a “benefit” to Benicia is hugely hypocritical and a manipulation of the facts. Do not be deceived. Know that the pollution in this city will increase as a result of crude by rail, and the “mitigation” out in the Bay actually works against us. And if you have a business in the Industrial Park, you will be in the thick of it.

        Further emissions and omissions

        The DEIR, page 4.1-21, states: “. . . locomotives generate more emissions than marine vessels per mile, per 1,000,000 barrels of crude oil delivered each year, of ROG (reactive organic gas), NOx, (nitrogen oxide), CO (carbon monoxide), PM10 and PM25 (particulate matter of differing micron size).” Estimates are vague regarding all this pollution. We are supposed to take comfort, however, in the decrease in marine emissions from fewer oil tankers traveling from Alaska, South America and the Middle East, which according to this document is supposed to offset all but the lethal NOx from the trains. It’s fancy figuring, subtracting what is happening on the ocean blue from the reality of emissions from 1,460 locomotives, each traveling more than 1,500 miles, that would be added to the terrestrial U.S., directly to hundreds of communities, farms and forests along the railways. The impact would, in fact, be “significant and unavoidable.”

        But all this is avoidable — if Benicia declares a moratorium on crude by rail.

        I have a dream today . . . that could all too easily become tomorrow’s nightmare.

        Sue Kibbe is a longtime resident of Benicia’s Highlands district.

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