Tag Archives: American Fuel and Petrochemical Manufacturers (AFPM)

Refiners’ Association sues railroad over fee on oil loaded in older tank cars

Repost from McClatchy DC
[Editor:  Incredible: The complaint says, “Despite BNSF’s distaste for the DOT-111 cars, (emphasis added) they are authorized bulk packaging for crude oil service.”  “Distaste?”  Really!  Oh, and … the BNSF surcharge would suggest that $1000/car will help exactly whom if/when the next explosion occurs?  Surely not those whose bodies and livelihoods are incinerated.  See this story also at Bloomberg Business News and Courthouse News Service.  – RS]

Refiners sue BNSF over fee on oil loaded in older tank cars

By Curtis Tate, McClatchy Washington Bureau, March 16, 2015

A trade group representing oil refiners has sued the nation’s largest hauler of crude oil in trains over a surcharge for oil loaded into older tank cars that have punctured and ruptured in numerous derailments.

The American Fuel & Petrochemical Manufacturers, a trade association for producers of gasoline, jet fuel, home heating oil and other refined products, sought an injunction last week in U.S. District Court in the Southern District of Texas to block BNSF Railway from imposing a $1,000 surcharge for every DOT-111 model tank car loaded with crude oil.

Tens of thousands of DOT-111 cars have carried a surge in domestic energy production, but their poor safety record in oil and ethanol train derailments has drawn fresh scrutiny from regulators, lawmakers and the National Transportation Safety Board.

BNSF hauls 600,000 barrels a day of crude oil, mostly from North Dakota’s Bakken region, to refineries on the east and west coasts. In October, the railroad announced it would impose a $1,000 surcharge on oil shipped in DOT-111 tank cars, effective Jan. 1.

But the trade group, which represents more than 400 companies, said in its complaint that BNSF asserted “unlawful regulatory authority” when it began imposing the surcharge.

The U.S. Department of Transportation regulates rail transportation, and until regulations require tank cars of a different design for oil shipments, the group’s complaint says that BNSF and other railroads are obligated by law to accept them in whatever cars the government currently allows.

“Despite BNSF’s distaste for the DOT-111 cars,” the complaint says, “they are authorized bulk packaging for crude oil service.”

One DOT-111 tank car holds about 30,000 gallons, or 700 barrels of oil. The complaint says the $1,000 surcharge adds $1.50 per barrel in rail transportation costs.

The trade group’s complaint says that BNSF’s surcharge causes “direct and substantial harm” to its clients and “breaches BNSF’s common carrier duty to ship hazardous materials.” By law, railroads must provide rail transportation on reasonable request.

The Pipeline and Hazardous Materials Safety Administration submitted a new design for tank cars to the White House Office of Management and Budget for review in January.

Four crude oil trains have derailed and caught fire across North America since mid-February. One of them was a BNSF train that derailed earlier this month near Galena, Ill.

In all four derailments, the tank cars were a modestly improved version of the DOT-111.

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    Setting the record straight on the oil industry studies of Bakken crude by rail

    Repost from Reuters

    Industry tests of oil train dangers need scrutiny, U.S. officials say

    By Patrick Rucker  |  WASHINGTON, June 2, 2014

    (Reuters) – Oil industry studies concluding that Bakken crude oil is safe to move by rail under existing standards may underestimate the dangers of the fuel and should not be the last word, U.S. lawmakers and industry officials said on Monday.

    In the past year, several doomed oil trains originated from North Dakota’s Bakken region, including a shipment that jumped the tracks and burst into flames in Lynchburg, Virginia, on April 30. Last July, a fiery derailment destroyed the center of the village of Lac-Megantic, Quebec, killing 47 people.

    Two industry-funded studies conclude Bakken fuel is rightly classed as a flammable liquid that can safely move in standard tank cars. The cargo is nothing akin to flammable gasses like propane that must move in costlier, heavier vessels, the oil industry has said.

    But the industry findings hinge on incomplete and out-of-date methods for determining vapor pressure, an important indicator of volatility, that may miss the true dangers of Bakken fuel, according to several industry officials.

    Lawmakers say they expect regulators to scrutinize the industry’s findings.

    “These studies should be taken with a grain of salt,” said Senator Charles Schumer, Democrat of New York, a state that is a major pass-through point for Bakken fuel.

    One study released May 20 by the North Dakota Petroleum Council (NDPC) collected samples with open bottles rather than a precision instrument, known as a floating piston cylinder, that is being adopted by the industry.

    Gas can escape with bottle sampling and such tests are unreliable, said the Canadian Crude Quality Technical Association, a trade group.

    “We would consider the data suspect,” the group said.

    ASTM, an international standard-setting body, last month deemed the floating piston cylinder the right tool for Bakken fuel samples. Open bottle samples can skew vapor pressure nearly 10 percent lower, according to research from Ametek, which manufactures testing equipment.

    Industry officials say that any underestimation of vapor pressure would be negligible.

    Vapor pressure results did not exceed 15 pounds per square inch (psi) in the NDPC report.

    A separate study by the American Fuel and Petrochemical Manufacturers (AFPM) returned readings below 17 psi.

    The threshold pressure for flammable gas is 43 psi under those same conditions.

    Rich Moskowitz, general counsel for the AFPM, the refining industry trade group, said its report “clearly found that Bakken crude oil is properly transported as a flammable liquid. That’s the bottom line.”

    Industry officials note that the U.S. Department of Transportation has not issued any of its own findings on Bakken fuel despite collecting samples since the summer.

    The issue will likely be raised on Tuesday at a panel of the Senate Commerce Committee which will feature testimony from railroad regulators, among others.

    “It is my hope that any private data collection and studies on this issue will be highly scrutinized,” said Senator Cory Booker, Democrat of New Jersey, who sits on the panel.

    (Reporting by Patrick Rucker; Editing by Grant McCool)
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      Interactive Map and Report: “Runaway Train: The Reckless Expansion of Crude-by-Rail in North America”

      Repost from DESMOGBLOG.COM
      [Editor: The map has some errors, but overall this is a great report and an important contribution in understanding the massive scope of the oil train boom.  – RS]

      Interactive Map and Report on Oil-By-Rail, “Booming Bomb Train Industry”

      2014-05-28  |  Justin Mikulka

      A new report and website released today by Oil Change International provides a comprehensive overview of the current oil-by-rail industry in North America and it isn’t a pretty picture.

      The report and interactive map of the “booming bomb train industry” capture the alarming scope of this very recent development.  As the report points out, 70 times as much oil was moved by rail in 2014 as there was in 2005. That rapid expansion is continuing, placing more North American communities at risk.

      “This analysis shows just how out of control the oil industry is in North America today. Regulators are unable to keep up with the industry’s expansion-at-any-cost mentality, and public safety is playing second fiddle to industry profits,” said Lorne Stockman, Research Director of Oil Change International and author of the report.

      According to the report, Runaway Train: The Reckless Expansion of Crude By Rail in North America, approximately one million barrels of oil per day are moved on 135 trains of 100 cars or more each day in America.  If all of the currently planned development of oil-by-rail facilities occurs, the full capacity to move oil would be five times that amount.

      “This is what the All of the Above Energy Strategy looks like – a runaway train headed straight for North American communities,” Stockman said.

      N.Amer.CrudeByRail(600)

      This massive investment by the oil and rail industries to expand their capacity to move oil by rail is one of the main reasons that improving oil-by-rail safety is unlikely when it comes to the unsafe DOT-111 tank cars.  These cars currently make up approximately 70% of the oil-by-rail tank car fleet and there is currently a two to three year waiting list for companies wanting new tank cars.

      The planned expansion of the oil-by-rail industry is simply impossible without the existing DOT-111 cars.  In 2013 this point was made by an industry analyst:

      “People who want to ship oil can’t get them,” Toby Kolstad, president of the consultant firm Rail Theory Forecasts LLC said. “They’re desperate to get anything to move crude oil.”

      Without the oil-by-rail transportation option, the Bakken Shale oil would have no way to get to market.  Despite the fact that the DOT-111 cars are inadequate and the Bakken crude is more explosive, the industry continues to rapidly expand with no new regulations.

      The planned expansion of the industry and the current known capacity restraints help explain the recent public relations effort by the oil industry to dismiss any safety concerns.

      Last week, the North Dakota Petroleum Council released a new study that said Bakken crude was “comparable in volatility to gas-rich oils from other shale formations in other regions.”

      Which is true.  However, in other regions, like the Eagle Ford formation in Texas, the natural gas liquids are stripped from that oil before being shipped by rail which greatly reduces the danger of explosion.

      Last week, the American Fuel and Petrochemical Manufacturers also weighed in with their opinion.  AFPM President Charles Drevna stated their position to Railway Age:

      “As the standards are today for flammable liquids, Bakken crude fits right in, and the DOT-111 cars should be fine”

      These claims are being made despite testimony by Robert Sumwalt of the National Transportation Safety Board calling the DOT-111’s an “unacceptable public risk” when used to transport Bakken crude.

      Last week, the White House announced that the Pipeline and Hazardous Materials Safety Administration (PHMSA) will be proposing new oil-by-rail regulations in July.  However, this will just be a proposal and the beginning of a likely contentious political battle about these regulations.  No one expects any new regulations before 2015.  Meanwhile, the industry continues its expansion plans.

      In July, at the same time PHMSA is expected to announce its proposed new regulations for the oil-by-rail industry, activists across the country are planning a week of action.  Starting on July 6th, the anniversary of the deadly explosion in Lac-Megantic, Quebec, the “Oil by Rail week of action” will highlight opposition to the shipping of oil by rail through communities and remember the victims of that first Bakken crude oil explosion.

      In Lac-Megantic, there is little good news. The town is facing years of clean-up and reconstruction, and billions of dollars of expenses to deal with that disaster.  Recently, Réjean Roy, whose daughter died in that accident, talked about the reality of Lac-Megantic’s current situation and their need to try to revive the town’s tourism industry.

      “We need it for my town, because my town is dying. If we do nothing to attract tourists here, the town will die.”

      A town will die. But the oil-by-rail industry is booming and regulations are not coming any time soon. It will take a huge public outcry to change that.

      Stockman, author of the Oil Change International report, remains hopeful that the tide could turn.

      “Communities are already waking up to the dangers of oil trains barreling through their backyards, with spills, explosions and derailments happening all too often. This report and online tool will help provide the critical information that’s been sorely missing in order to shine a light on what’s really going on, and to help stop the runaway train of crude-by-rail in its tracks before more damage is done.”

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