Tag Archives: Anacortes WA

Dakota Access pipeline to upend oil delivery in U.S. – Losers to include struggling oil-by-rail industry

Repost from Reuters

Big Dakota pipeline to upend oil delivery in U.S.

By Catherine Ngai and Liz Hampton | NEW YORK/HOUSTON, Aug 12, 2016 12:46pm EDT
Dead sunflowers stand in a field near dormant oil drilling rigs which have been stacked in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen
Dead sunflowers stand in a field near dormant oil drilling rigs which have been stacked in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

It may seem odd that the opening of one pipeline crossing through four U.S. Midwest states could upend the movement of oil throughout the country, but the Dakota Access line may do just that.

At the moment, crude oil moving out of North Dakota’s prolific Bakken shale to “refinery row” in the U.S. Gulf must travel a circuitous route through the Rocky Mountains or the Midwest and into Oklahoma, before heading south to the Gulf of Mexico.

The 450,000 barrel-per-day Dakota Access line, when it opens in the fourth quarter, will change that by providing U.S. Gulf refiners another option for crude supply.

Gulf Coast refiners and North Dakota oil producers will reap the benefits. Losers will include the struggling oil-by-rail industry which now brings crude to the coasts.

The pipeline also will create headaches for East and West Coast refiners, which serve the most heavily populated parts of the United States and consume a combined 4.1 million barrels of crude daily. They will have to rely more on foreign imports.

The pipeline, currently under construction, will connect western North Dakota to the Energy Transfer Crude Oil Pipeline Project (ETCOP) in Patoka, Illinois. From there, it will connect to the Nederland and Port Arthur, Texas, area, where refiners including Valero Energy, Total and Motiva Enterprises operate some of the largest U.S. refining facilities.

“That’s a better and cheaper path than going out West and down through the Rockies,” said Bernadette Johnson, managing partner at Ponderosa Advisors LLC, an energy advisory based in Denver.

CHEAPER THAN RAIL

Moving crude by pipeline is generally cheaper than using railcars. The flagging U.S. crude-by-rail industry already is moving only half as much oil as it did two years ago: volumes peaked at 944,000 bpd in October 2014, but were around just 400,000 bpd in May, according to the U.S. Energy Department.

Rail transport has become less economical for East and West Coast refiners when compared with importing Brent crude, the foreign benchmark, because declining supply out of North Dakota made that grade of oil less affordable.

“If you look at the Brent to Bakken arb, it’s tight,” said Afolabi Ogunnaike, a senior refining analyst at Wood Mackenzie in Houston. “If you look at the spot rate, it’s uneconomical to move crude by rail right now.”

Ponderosa Advisors estimated that the start-up of the pipeline could reroute an additional 150,000 to 200,000 bpd currently carried by rail to the U.S. East Coast and Gulf Coast.

Crude imports into the East Coast are now on the rise, averaging 788,000 bpd this year, with nearly 960,000 bpd in July, the highest level in three years, according to Thomson Reuters data.

On the West Coast, refiners like Shell, Tesoro and BP may have to commit to some railed volumes for longer because of shipping constraints, although it will largely depend on rail economics. They also face declining output from California and Alaska.

Tesoro’s top executive Gregory Goff told analysts and investors last week he expects rail costs to drop as much as 40 percent from the current $9-to-$10 barrel cost to compete with pipelines, in order to move Bakken to its Anacortes, Washington, refinery.

CHANGING TIDES

Rail companies have been trying to adapt. CSX Corp, which runs a network of lines in the eastern part of the country, said it was evaluating potential impacts of the pipeline. BNSF Railway declined to discuss future freight movements, but said that at its peak, it transported as many as 12 trains daily filled with crude, primarily from the Bakken. Today, it is moving less than half of that.

In a recent earnings call, midstream player Crestwood Equity Partners said it was working to capitalize on the pipeline and not be dependent on loading crude barrels onto trains. That includes building an interconnection to its 160,000 barrel-per-day COLT crude rail facility in North Dakota.

As refiners bring in more barrels from overseas, Brent’s premium over U.S. crude will eventually widen. On Thursday, December Brent futures settled at a 97-cent premium to U.S. crude, one of its widest premiums this year.

Separately, Bakken crude, a light barrel, could rise further due to the additional competition, especially as production is still falling. Bakken differentials hit a six-month low earlier this week of $2.65 a barrel below WTI, according to Reuters data, but rose to a $1.80 a barrel discount by Thursday.

(Reporting by Catherine Ngai in New York and Liz Hampton in Houston; Editing by David Gregorio)
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Montana county has had 5 derailments in two years

Repost from The Dickinson Press

Montana county has had 5 derailments in two years

By Amy Dalrymple on Jul 20, 2015 at 11:22 p.m.
An investigator takes photos at the site of a crude oil train derailment on Saturday, July 18 east of Culbertson, Mont. Twenty-two oil tankers derailed, leaking an estimated 35,000 gallons of oil. (FNS Photo by Amy Dalrymple)

CULBERTSON, Mont. — Five train derailments have occurred in less than two years in the northeastern Montana County where crews continue cleaning up after last week’s oil train derailment.

In addition to the two train derailments that occurred last week within a 20-mile stretch of Roosevelt County, two railcars also derailed at Culbertson in February, according to the Federal Railroad Administration database, which is updated through April.

The cause of that incident, which did not cause injuries or release of hazardous material, was attributed to human error, according to information submitted to the FRA.

The area also had two train derailments in 2014, including the derailment of two Amtrak cars in April of that year in the neighboring community of Bainville.

Two people were hurt in the derailment, which caused more than $100,000 in damage to Amtrak equipment and nearly $500,000 in damage to the track, the FRA database shows.

The cause that derailment is listed as “track roadbed settled or soft,” according to information submitted to the FRA.

The other 2014 incident, which involved one railcar that derailed in December at Culbertson, was attributed to a broken wheel, the FRA database shows.

The entire state of Montana had 19 train derailments in 2014, the FRA information shows.

Last Tuesday, nine railcars derailed near Blair, Mont., damaging about 1 mile of track. The cause remains under investigation.

BNSF Railway inspects the track in that area at least four times per week, spokesman Matt Jones said.

The FRA and the Pipeline and Hazardous Materials Safety Administration continued collecting evidence Monday to investigate the cause of Thursday’s derailment involving 22 oil tankers. Four of the derailed tank cars leaked oil, the FRA said, and spilled an estimated 35,000 gallons of oil.

The train was not speeding at the time it derailed, an FRA spokesman said. It was traveling 44 miles per hour in a 45-mph zone, the spokesman said.

BNSF environmental specialists continue to clean up at the site. Oil will be removed from the remaining tank cars in the next several days, and the cars will be removed after that, Jones said.

Crews are excavating contaminated soil, said Daniel Kenney, enforcement specialist with the Montana Department of Environmental Quality, which is monitoring the cleanup. The spill was not reported to have contaminated any water sources and has not threatened human health, Kenney said.

The North Dakota Department of Mineral Resources confirmed Monday that Statoil, the company that owns the oil that was on the train, is in compliance with the state’s oil conditioning order.

The order, which took effect in April, aims to reduce the volatility of Bakken crude oil.

Statoil was meeting the order by operating its equipment at specific temperatures and pressures, said Department of Mineral Resources spokeswoman Alison Ritter. Companies also can comply by submitting vapor pressure tests to the state.

The train with was loaded by Savage Services in Trenton, N.D., and headed to Anacortes, Wash., the FRA said.

Jeff Hymas, a spokesman for Savage Services, said Monday the railcar inspection protocols at the Trenton terminal are consistent with FRA and BNSF requirements.

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Growing oil train traffic is shrouded in secrecy

Repost from The Center for Investigative Reporting and KUOW.org
[Editor:  This is an important report.  State regulators can’t get accurate oil train data from the federally regulated railroads, so Washington officials are turning to the refineries: “Washington state lawmakers passed a law recently that requires oil refineries, which are state regulated, to give weekly notice of the train schedule to first responders.”  (See previous report.)  The story of Dean Smith’s Train Watch is inspiring – we should set up annual counts in all of our frontline refinery communities.  – RS]

Growing oil train traffic is shrouded in secrecy

By Ashley Ahearn / June 13, 2015
Dean Smith was frustrated with the lack of public information about oil train traffic so he organized 30 volunteers to count the trains coming through his community north of Seattle. Credit: Ashley Ahearn/EarthFix/KUOW

EVERETT, Wash. – Dean Smith, 72, sits in his car by the train tracks here north of Seattle.

It’s a dark, rainy Tuesday night, and Smith waits for an oil train to come through town. These trains are distinctive: A mile long, they haul 100 or so black, pill-shaped cars that each carry 30,000 gallons of crude oil.

Smith has been counting the trains for about a year, noting each one on a website he built. The former National Security Agency employee does it because the railroads share little information about oil train traffic with Washington state. They don’t have to because they’re federally regulated.

What is known: The railroads are moving 40 times more oil now than in 2008 due to an oil boom in the Bakken formation of North Dakota. Bakken crude oil contains high concentrations of volatile gas, with a flashpoint as low as 74 degrees Fahrenheit.

Derailments and explosions have occurred around North America since the oil boom began, including a 2013 catastrophe that killed 47 people in rural Quebec.

This has prompted emergency responders to call for more information from railroad companies about oil train traffic patterns and volumes. The railroads mostly have refused; they say that releasing that information could put them at a competitive disadvantage.

Which is why Smith decided to find out for himself. “It’s pretty hard to hide an oil train,” he said with a chuckle.

Last year, Smith launched the first Snohomish County Train Watch. He organized 30 volunteers to take shifts counting trains around the clock for a week.

In their first week of watching oil trains, the group collected more information about oil train traffic than the railroads had given Washington in the three years the trains have come here.

State officials say Smith’s data is helpful but insufficient. They say they shouldn’t have to rely on citizen volunteers to get critical information in case of disaster.

Dave Byers, the head of spill response for the state’s Department of Ecology, said his team needs the information to plan area-specific response plans to protect the public and keep oil from getting into the environment.

“It gives us an idea of what the risk is, the routes that are taken,” Byers said. “The frequency and volume of oil really gives us an idea of what level of preparedness we need to be ready for in Washington state.”

Oil train traffic shows no signs of slowing, which adds to the state’s sense of urgency. The oil industry wants to build five new terminals in Washington to move crude oil off trains and onto ships.

Meanwhile, Congress is considering legislation to lift a federal ban on exporting crude oil that’s been in place since 1975 – allowing American crude to be shipped around the world.

Close call in Seattle

Anyone who has attended a Mariners baseball game in downtown Seattle likely has seen or heard oil trains passing the ballpark. The trains continue north through the city to refineries on Puget Sound.

Seattle had a close call last year when an oil train derailed near downtown.

Byers and his team weren’t notified for one and a half hours and initially were not told there was oil in the derailed train cars.

No oil was spilled, but Byers is critical of how BNSF Railway, the company that moves most of the oil out of the Bakken oil fields, handled the situation.

BNSF did not tell the state there was highly flammable Bakken crude oil in the derailed train cars – that information came five hours later from the oil refinery waiting for the train. Additionally, Byers said that when his team arrived on the scene, no BNSF representative was present, but welders were working on the derailed cars. The welders said they did not know what was inside.

We became concerned because people were wandering off the street and taking selfies of themselves next to the rail cars,” Byers said. “There was no preparing for the potential that one of those cars could actually start leaking.”

BNSF spokeswoman Courtney Wallace said in an emailed statement that BNSF Railway had its hazardous materials team quickly in place to evaluate the situation. “This derailment did not cause a release at any point, nor was there a threat of a release,” she said.

The state and BNSF Railway have sparred over the railroad company’s reports of hazardous materials spills. Earlier this year, state regulators released an investigation and recommended that BNSF be fined up to $700,000 for not quickly reporting these spills. The company has disputed the state’s findings. A final decision is expected next year.

Concern in Anacortes

Workers prepare oil trains for unloading at the Tesoro refinery north of Seattle. The train that derailed in Seattle on July 24, 2014, was bound for the refinery.

This spring, several hundred people packed into the Anacortes City Hall for information from oil companies and BNSF Railway about the oil trains moving through their community. Just that morning, a BNSF oil train had derailed and caught fire in North Dakota.

In northern Puget Sound, Anacortes is home to two refineries that receive oil by rail from North Dakota. Its residents, like others in small communities along the tracks in Washington state, have voiced concern about oil trains. Congestion woes are among their complaints; unlike Seattle, where the trains mostly pass through tunnels and over bridges, trains here disrupt traffic.

Audience members were allowed to submit written questions only. Oil refineries’ representatives told them about safety precautions at their facilities to prevent and respond to spills. They also talked about their commitment to getting newer oil train cars.

Courtney Wallace is a spokeswoman for BNSF Railway. The company believes that every derailment or accident is avoidable. On the day this photo was taken, a train had derailed and caught fire in North Dakota. It was carrying the same type of crude oil that is currently moving through Washington state.

Wallace, the BNSF spokeswoman, gave a presentation about the company’s commitment to safety. She said BNSF believes that every accident is preventable.

When pressed by a reporter about how much information BNSF shares with local emergency responders, Wallace said BNSF has “always provided information to first responders, emergency managers about what historically has moved through their towns.”

She cautioned that sharing regular updates or notifications of oil train movements could put the public at risk.

“We’re always cognizant of what information is shared, because we don’t want to see an incident that involves terrorism or anyone else who might have that kind of frame of mind,” Wallace said.

Fight for information

A federal emergency order demands that railroads share limited information with states – but state officials want more.

Washington state lawmakers passed a law recently that requires oil refineries, which are state regulated, to give weekly notice of the train schedule to first responders. 

Washington state Rep. Jessyn Farrell is a Democrat who has fought for legislation that would force oil refineries to share information about how much oil is arriving by rail.

State Rep. Jessyn Farrell, a Seattle Democrat who sponsored the bill, said BNSF and the oil industry opposed the legislation from the beginning.

“We’re going to get the information,” she said. “I don’t really care who gives it to us as long as it’s good information and it stands in court, because we need that information now.”

BNSF Railway spent more than $300,000 on lobbyists and political contributions in Washington state in 2014.

“I think they’re absolutely on the wrong side of this,” Farrell said. “In the public mind, and morally, they are absolutely wrong.”

BNSF’s Wallace said the company still is reviewing the law to see how federal regulatory authority will interact with state authority.

Back in Everett, Dean Smith said he isn’t waiting for politicians or lawyers to duke this one out.

Instead, he’ll wait for trains, he said, and he’ll continue gathering information about them.

Four hours into a recent train-watching shift, Smith perked up.

“There’s something coming,” he said. He opened the door of his Chevy Volt and stepped into the rain. An orange BNSF engine emerged from the tunnel. Behind it were oil cars – about 100 of them, black as night.

The streetlight reflected off Smith’s glasses and shadows gathered in the furrow of his brow as he stood by the tracks, shoulders hunched.

“Sometimes I wonder, why fight it? Why not just move? That’d be the easiest thing to do,” he said. “But I think we have to fight. And I would like to see citizens groups acting like this all over the country. That’s the form of checks and balances we can create. All it takes is a few people.”

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