Tag Archives: Clean-up costs

Dangerous energy gamble: Pipelines vs. rail

Repost from the Washington Examiner
[Editor: One significant quote among many: “In the last five years, 423 oil trains have crashed in the U.S. Since 2010, those crashes have cost about $45 million in damages. In just the first six months of 2015, 31 oil train crashes cost almost $30 million in damages…. It’s 5.5 times more likely that oil will be spilled during rail transport than from a pipeline, according to a study by the Fraser Institute, an independent Canadian think tank. The risk of deaths, injuries and spills are higher with rail and trucks since vehicles can hit other vehicles, they travel through population centers and the drivers can err. None of those factors exist for pipelines.” – RS]

Dangerous energy gamble: Pipelines vs. rail

By Kyle Feldscher, 11/2/15 12:01 AM
Fire burns at the scene of a train derailment, near Mount Carbon, W.Va., on Feb. 16. Fires burned for nearly nine hours after the train carrying more than 100 tankers of crude oil derailed in a snowstorm. (AP Photo/WCHS-TV)

Energy companies increasingly have turned to rail to ship crude oil during the fracking boom, but with train crashes becoming more frequent, they are pushing for construction of more pipelines beyond the Keystone XL.

However, that effort is being stymied by the collapse of oil prices and concerns about pipeline safety.

On Wednesday, Shell announced it would stop construction on a site in Alberta, Canada, that potentially holds 418 million barrels of bitumen oil. The company blamed the project’s expense in a time of cheap oil as well as a lack of pipeline infrastructure.

It’s one example of low prices and lack of pipelines prompting companies to reconsider drilling for oil, especially in the Canadian tar sands, where it’s more expensive to drill. Pipeline transportation is typically cheaper than rail, which costs about $30 a barrel more.

Fifty pipelines have been proposed to the Federal Energy Regulatory Commission this year. They would carry the light, sweet crude from shale regions as well as the natural gas that has helped make the U.S. the world’s energy leader. ”

Because of the costs associated with [rail], it’s going to drive up the cost of oil and it’s going to be significantly higher than pipelines on a per barrel basis,” said Dan Kish, senior vice president for policy at the conservative Institute for Energy Research.

Another calculation oil companies must make is the safety of their highly flammable product.

In the last five years, 423 oil trains have crashed in the U.S. Since 2010, those crashes have cost about $45 million in damages. In just the first six months of 2015, 31 oil train crashes cost almost $30 million in damages, mostly due to a major crash in West Virginia.

It’s 5.5 times more likely that oil will be spilled during rail transport than from a pipeline, according to a study by the Fraser Institute, an independent Canadian think tank. The risk of deaths, injuries and spills are higher with rail and trucks since vehicles can hit other vehicles, they travel through population centers and the drivers can err. None of those factors exist for pipelines.

The August study also found oil and natural gas production is rising faster than existing American and Canadian pipelines can handle. Those pipelines would be even busier if production increased in the Canadian tar sands.

Keystone XL, proposed by TransCanada in 2007, would be able to transport 830,000 barrels per day from the tar sands to the Gulf Coast to be refined. Due to the viscous nature of bitumen oil, it’s much easier to transport it by pipeline than by rail, experts say.

When a train carrying oil derails, it’s often catastrophic.

In West Virginia, oil burned for days after 26 oil tanker cars derailed in February. Nineteen of those cars caught on fire and oil spilled into a nearby river. The damages from that crash totaled more than $23 million.

A train derailment in a Quebec community that killed 46 people in July 2013 prompted calls for better rail safety and led some to question whether to transport highly flammable oil at all.

The State Department estimates rail transportation of oil is responsible for 712 injuries and 94 deaths per year, while oil pipelines are responsible for three injuries and two deaths per year.

“For our society, we have to evaluate the value we place on human life and we should make that a priority,” said Diana Furtchgott-Roth, a conservative economist who is the director of the Manhattan Institute’s e21 program.

“The families of those 46 people killed in Lac-Megantic would have been happy to have less oil and having the lives of their family members back.”

Dangerous derailments led the Obama administration to introduce new regulations to make tanker cars safer. The rule, announced in May, requires improvements to braking systems, making tanker cars thicker and more fire resistant and new protocols for transporting flammable liquids.

The number of crashes steadily increased during the last five years, as more trains shipped crude and natural gas, rising from nine crashes in 2010 to 144 crashes in 2014. But as the price of oil plummeted, the amount of crude oil being drilled and shipped leveled off in 2015, according to the Energy Information Administration.

If drilling in the Canadian tar sands in Alberta were to pick up in earnest, State Department officials believe rail transport would lead to 49 more injuries and six more deaths per year. If that oil were to be moved by the Keystone XL pipeline, there would be one additional injury and no fatalities.

Environmentalists, who have been fighting the Keystone XL, point to the State Department’s finding that pipeline spills are often bigger than those from trains and trucks.

They also point to declining oil use and the collapse of prices as great excuses to leave it in the ground.

Zach Drennen, legislative associate at the League of Conservation Voters, said with oil prices as low as they are, it’s economic folly for oil companies to drill in the Canadian tar sands. Without high oil prices, companies can’t afford to build pipelines. They also can’t afford to ship by rail.

That is why green groups think oil companies could be willing to leave the oil in the earth.

“If you look right now, a lot of oil companies are just deciding that’s not where they want to put their money at,” Drennen said.

To Kish, environmentalists’ goal is to make it too expensive to drill.

“They’re going to try and fight against every damn pipeline they can,” he said, “because if they can choke off production and delay construction of pipelines, it causes disruptions.”

But Ken Green, senior director of natural resource studies at the Fraser Institute, said environmentalists’ dream of keeping oil in the ground isn’t feasible.

“The oil in the ground has a market value and everyone knows what the market value is,” he said. “It’s not hard to calculate that market value … My assumption is sooner or later, that value will be sought.”

Please share!

BENICIA HERALD LETTER: The high-risk cost of crude by rail

Repost from the Benicia Herald
[Editor:  An excellent perspective on the economic risks that local communities take on when they permit crude by rail.  No link is provided for this letter because the Benicia Herald does not publish Letters in its online edition.  (Yes, I still remember how to type! ) – RS]

The high-risk cost of crude by rail

By Kat Black, August 26, 2015

For the past few years, I have been listening to the Valero Benicia Refinery representatives and supporters of the refinery’s proposed Crude-by-Rail Project make statements supporting the project because of the large tax revenue Valero provides for the city of Benicia.  But when did tax revenue override health and safety?  Valero’s most recent propaganda cites the loss of over $300,000 per year because of the delay in the project, and further cites that as loss of pay for police and paramedics.   Notwithstanding that that particular claim is completely unsubstantiated, the people and business owners of the city of Benicia are entitled to due process under the California Environmental Quality Act (CEQA), regardless of the time it takes.  This is the law.  To say Benicia is losing money because of CEQA is a simple propaganda ploy, an effort to make people believe they are less safe because the project has not yet been approved.  Why else would they quote police and paramedics?  Why didn’t they quote the library or other services?

There has been a lot of press on crude train derailments and explosions over the past few years.  We need to consider what the cost would be if this project is approved and a subsequent explosion were to happen, as has already happened in the U.S. and Canada.  If you are a property or a business owner, your property value would very likely decrease.  There is a local precedent for this: In August, 2012, there was a large explosion and fire at the Chevron refinery in Richmond.  In 2013, the County Assessor increased property values for all cities in Contra Costa County except Richmond, where property values were lowered.  The Assessor specifically cited the Chevron explosion as the precise reason for the devaluation.  The City of Richmond was subsequently hit with a $2.5 million deficit for the loss of property tax revenue.

Do you want to risk the devaluation of your property or the property tax revenue for the City?  The risks are just too high.  Stop Valero’s dangerous Crude-by-Rail Project!

Katherine Black
Benicia Resident

Please share!

Santa Barbara oil spill might have been far larger than projected

Repost from Associated Press
[Editor:  See also local coverage in the Benicia Herald.  – RS]

Oil spill might be larger than projected

By Michael R. Blood, Aug. 5, 2015 4:04 PM EDT
In this May 21 file photo, David Ledig, a national monument manager from the Bureau of Land Management, walks past rocks covered in oil at Refugio State Beach, north of Goleta. New documents released Wednesday show that the Plains All American Pipeline spill, originally estimated to be around 101,000 gallons, might have been much larger than projected. JAE C. HONG , THE ASSOCIATED PRESS

LOS ANGELES (AP) — More than two months after oil from a ruptured pipeline fouled California beaches, documents released Wednesday disclosed that the spill might have been far larger than earlier projected.

Plains All American Pipeline had estimated that the May 19 break along a corroded section of pipe near Santa Barbara released up to 101,000 gallons of crude. The resulting mess forced a popular state park to shut down for two months, and goo from the spill washed up on beaches as far as 100 miles away.

In documents made public Wednesday, the Texas-based company said alternate calculations found the spill might have been up to 143,000 gallons, or about 40 percent larger.

The company is continuing its analysis, and the figures are preliminary. Plains All American has hired an outside consultant as part of the effort to reconcile the differences, the documents said.

At this point, the company considers the methodology used in its initial estimate to be “the most straight forward and accurate calculation.” However, it emphasized the estimate could change as the investigation continues.

In a statement, Sen. Edward J. Markey, D-Massachusetts, faulted the federal agency responsible for regulating the nation’s pipelines for the conflicting figures.

“The revelation that the Santa Barbara pipeline spill was much larger than originally thought underscores the importance of our pipeline safety agency providing complete information to Congress and the American people. Unfortunately, the Pipeline and Hazardous Materials Safety Administration’s operational culture has been to withhold information from the American people and Congress,” he said.

The company has been criticized for taking about 90 minutes to alert federal responders after confirming the spill, even though federal regulations require the company to notify the National Response Center, a clearinghouse for reports of hazardous-material releases, “at the earliest practicable moment.” State law requires immediate notification of a release or a threatened release.

The cleanup is nearly complete, although the cause of the break is under investigation. The state attorney general and local prosecutors are considering possible charges, and the documents said the U.S. Justice Department is also investigating.

The company said it’s covering legal costs for several employees who could be questioned by the Justice Department.

No timeline has been set to restart the pipeline.

CEO Greg Armstrong told Wall Street analysts in a phone call that the company faced as much as $257 million in potential costs from the break, which includes estimates for cleanup operations, possible legal claims and fines.

At the end of June, the company said cleanup costs had hit $92 million.

Wildlife officials reported that nearly 200 birds and more than 100 marine mammals were found dead in the spill area. Investigators have not yet determined what, if any, role the spill played in those deaths.

Please share!