Repost from The Times Union, Albany NY [Excellent month-by-month review of CBR developments in New York’s capital region, and an excellent group of 14 photos. – RS]
Albany’s Top 10 stories: Region a hub in oil train surge
Converging lines drove growth in shipment
By Brian Nearing, December 29, 2014
More oil trains kept a-rollin’ last year in Capital Region from the booming Bakken fields of North Dakota, where massive hydrofracking has helped drop national gasoline prices below $3 a gallon.
It was only two days into 2014 in the aftermath of a massive oil train derailment and fire in North Dakota when federal regulators warned that Bakken crude was more likely to catch fire than regular crude. And at year’s end, critics were warning that federal plans to phase out less-sturdy versions of the most common rail tankers during the next two years were too slow.
In between, massive trains pulling dozens of all-black tanker cars — carrying millions of gallons of crude and ominously called bomb trains by opponents — kept coming.
Because of its geographic location, with rail lines converging from all four directions and its access to the Hudson River, Albany has become a major oil shipping hub, which drew little public attention when the oil boom began taking shape some five years ago.
Some oil is unloaded at the port for shipment down the Hudson in barges or tankers, while other oil continues by rail either south along the Hudson River to coastal refineries in New Jersey and Pennsylvania or north along Lake Champlain to Canada.
And there are many more trains than just a couple years ago. For the first 10 months of 2014, more than 672,000 oil-filled tanker cars moved by rail in the U.S., an increase of more than 13 percent from the previous period of 2013, according to federal statistics. That was more than twice as many as the 300,000 rail oil tankers that moved for the same period in 2011.
But for part of the oil train story in Albany, 2014 will end the way it began, with the state Department of Environmental Conservation still weighing plans by an oil terminal operator at the port, Global Partners, to build a facility that heats crude oil to make it easier to pump in cold weather.
Bakken crude doesn’t have to be heated in the cold, leading many to conclude Global wants to begin accepting trains carrying Canadian tar sands oil, a thicker crude that must be heated to be pumped in the cold. Global has never said either way. DEC extended the comment period on the project eight times amid growing community opposition.
Global and another terminal operator, Houston-based Buckeye Partners, have DEC permission to ship 2.8 billion gallons of oil a year that is arriving by rail. By the end of January, Gov. Andrew Cuomo had ordered a state review of safety and spill control plans while also pressing the Obama administration to act faster to toughen rules on the burgeoning energy network.
The governor did not wait for the report to act. By February, he was touting the first rail-safety inspections at the Port of Albany and elsewhere by state and federal regulators. By year’s end, eight such inspection “blitzes” had been done involving nearly 7,400 rail cars, including more than 5,300 oil tankers, and nearly 2,700 miles of track. A total of 840 defects have been uncovered.
In March, Albany County Executive Daniel P. McCoy slapped a county moratorium on Global’s crude heating project. By July, as many as 42 oil trains each week — each holding more than 100 million gallons of Bakken crude — were coming into Albany from North Dakota, according to figures released by the state Division of Homeland Security and Emergency Services.
This summer, two major rail companies — CSX and Canadian Pacific — revealed information about their shipments under an emergency federal order intended to help inform local emergency workers of potential risks. CSX transports oil through 17 counties on a line that runs upstate from Lake Erie and eastward roughly along the Thruway corridor, while CP runs oil through five counties in the Capital Region and the North Country on the way from Canada.
The region can expect to see trains for a long time. By October, a Canadian Pacific official predicted increased transport of tar sands crude oil from Alberta in coming years would account for about 60 percent of the railroad’s oil revenue. That same month, the DEC rejected oil train opponents’ claims that the state had the power to immediately ban the most common type of tanker cars — called DOT-111s — from entering the port loaded with flammable oil.
Also in October, Global quietly withdrew plans before the DEC for a new oil terminal facility on the Hudson River in New Windsor, Orange County, so that oil could be moved from massive crude oil tanker trains onto vessels to continue downriver to coastal refineries. The company also announced it had voluntarily stopped using the oldest, least sturdy models of DOT-111s.
By December, officials in North Dakota announced new safety rules on Bakken crude oil shipments aimed at reducing its potential explosiveness, but the limits would not affect about 80 percent of oil arriving daily in Albany, leading oil train opponents to criticize the rules as almost meaningless.
And it looks like the surge of oil trains will continue to grow. According to the U.S. Energy Information Administration, two refineries in Linden, N.J., and Philadelphia are adding crude-by-rail terminals to handle up to 8.8 million gallons a day of incoming shipments.
For oil trains from North Dakota and Canada to reach these refineries, the trip would have to pass through Albany.
Many railroad companies want more time to retrofit cars in the U.S. and Canada, but some are forging ahead.
By Joe Eaton for National Geographic, October 31, 2014
Three days after an oil train derailed and exploded in 2013 in Lac-Mégantic, Quebec, killing 47 people, Greg Saxton wandered through the disaster site inspecting tank cars.
For Saxton, the damage was personal. Some of the tank cars were built by Greenbrier, an Oregon-based manufacturer where he’s chief engineer. Almost every car that derailed was punctured, some in multiple places. Crude oil flowed from the gashes, fueling the flames, covering the ground, and running off into nearby waterways.
Each day, as Saxton returned to the disaster zone, he passed a Roman Catholic church. “We never came and went when there wasn’t a funeral going on,” he said.
“If you don’t set an aggressive time line, you won’t see improvements as quickly as the current safety demands require,” Jack Isselmann, a Greenbrier spokesman, said. “We’ve been frankly just perplexed and confused by the resistance.”
Industry Pushes for More Time
The tank cars that derailed at Lac-Mégantic were built before October 2011, when the American Railway Association mandated safety enhancements to the oil and ethanol tankers known in the industry as DOT-111 cars. The cars lacked puncture-resistant steel jackets, thermal insulation, and heavy steel shields, all of which could have lessened the destruction, experts say.
In July, the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) proposed rules that, if finalized, would require higher safety standards for new oil cars. The rules also require owners to retrofit older cars or remove them from the rails by October 2017.
Canadian regulators in July mandated that DOT-111 tank cars built before 2014 be retrofitted or phased out by May 2017. Transport Canada, which regulates rail safety, has also proposed aggressive safety standards for new tank cars and will seek industry comment this fall before finalizing its rules.
Saxton and others at Greenbrier support the proposed regulations, which could be tremendously lucrative to the company. However, others in the rail supply industry say the proposed retrofit time line cannot be met.
The Railway Supply Institute—a trade organization that represents the rail industry—has asked DOT to allow legacy cars in the oil and ethanol fleet to remain on the rails until 2020.
Thomas Simpson, the institute’s president, said a survey of rail maintenance and repair shops found that only 15,000 of the roughly 50,000 non-jacketed legacy tank cars in the crude oil and ethanol fleet can be modified by the proposed 2017 deadline.
For many cars, the retrofit process would include adding thermal protection systems, thick steel plates at the ends, and outer steel jackets, as well as reconfiguring the bottom outlet valve to ensure it does not break off and release oil during a derailment.
That’s too much work to complete before the deadline, and the regulations have not yet been finalized, Simpson said.
The proposed deadline, he said, will “idle cars waiting for shop capacity and adversely affect the movement of crude and ethanol.”
In comments to U.S. regulators and the press, API tied the safety upgrades to approval of the proposed Keystone XL pipeline, which would transport Alberta’s tar sands oil through the Midwest to Texas refineries.
Both API and the Rail Supply Institute have also warned regulators that a short time line for retrofitting oil cars could cause a spike in truck shipments of oil and ethanol.
But Anthony Swift, an attorney with the Natural Resources Defense Council, an environmental group opposed to Keystone XL, called these arguments misleading. Swift said Keystone XL would have little impact on retrofitting tank cars, because most train traffic from the Bakken oil fields in North Dakota moves to East Coast and West Coast refineries. He said that traffic would not be affected by the pipeline.
Swift said the costs to the oil industry are worthwhile if lives are saved. “The argument that we need to wait until the oil industry does not need tank cars until we can make them safe is ridiculous on its face,” he said.
Greenbrier Gears Up to Meet Demand
In February, Greenbrier introduced a beefed-up tanker with a 9/16-inch steel shell (1/8-inch thicker than many DOT-111 cars), 11-gauge steel jacket, removable bottom valve, and rollover protection for fittings along the top of the cars.
Greenbrier calls the tanker the “car of the future,” saying it’s eight times safer than the DOT-111. Isselmann said Greenbrier has received more than 3,000 orders for the new car and plans to double its manufacturing capacity by the end of the year.
In June, Greenbrier and Kansas rail-service company Watco joined forces to form GBW Railcar Services, creating the largest independent railcar repair-shop network in North America. Isselmann said the company plans to hire 400 workers and start second shifts at its factories to meet demand for retrofitting DOT-111 tank cars.
In comments to U.S. regulators, GBW said it currently has the capacity to retrofit more than 10 percent of the fleet of DOT-111 tank cars.
Isselmann said that number will grow as other companies take advantage of the market once regulators release final rules. For that reason, he said the industry’s current capacity to meet regulations is less important than its ability to ramp up quickly to capture the increased business that new safety standards could bring.
“This notion that the status quo is going to remain—it’s diversionary at best,” Isselmann said.
Some in the industry are responding to public concern before rules are finalized. In April, Irving Oil—the owner of Canada’s largest refinery, in Saint John, New Brunswick, where the Lac-Mégantic train was headed before the disaster—completed a voluntary conversion of its crude oil railcar fleet.
Also in April, Global Partners, one of the largest U.S. distributors of gasoline and other fuels, began requiring all crude oil unit trains making deliveries at its East and West Coast terminals to meet October 2011 safety standards for tank car design.
“As an industry, we have both an opportunity and a responsibility to maximize public confidence in the safety of the system that carries these products across the country,” Eric Slifka, Global Partners’ CEO, said in a press release.
A Push to Harmonize Regulations
As the U.S. and Canada consider train safety regulations, oil and rail companies are pushing to ensure that the same tank cars can be used to haul flammable liquids in both countries.
Regulators say they are working together to make that happen. Lauren Armstrong, a spokeswoman at Transport Canada, said the department is holding technical discussions on new tank car standards with the U.S. Department of Transportation and the Federal Railroad Administration.
However, coordinating tank car regulations between the two countries would have to overcome current gaps, industry representatives say.
In April, Transport Canada banned the use of the oldest and least crash-resistant DOT-111 tank cars, which lacked bottom reinforcement. The U.S. so far has not banned the cars from carrying oil and ethanol.
Canada also set a 2017 deadline for retrofitting the cars. In the U.S., regulators are expected to release final rules by early 2015. The process, however, could continue much longer.
The strongest standards will carry the day, said Thomas Simpson, the president of the Railway Supply Institute. Given the large amount of oil that moves between the two countries, Simpson said it makes no business sense for companies to keep two different sets of cars to meet the two sets of rules.
Communities Concerned About Safety
But as final rules are being hammered out in the U.S., some train safety advocates and community groups worry they are being left out of the process.