Tag Archives: Kinder Morgan Richmond

Appeals Court Doesn’t Stop Crude Oil Rail Shipments Through Richmond CA

Repost from CBS San Francisco (5KPIX, 740AM, 106.9FM)

Appeals Court Doesn’t Stop Crude Oil Rail Shipments Through Richmond

July 19, 2016 9:22 PM
Protesters against fracked oil trains held a demonstration outside the Kinder-Morgan rail yard in Richmond on September 4, 2014. (CBS)
Protesters against fracked oil trains held a demonstration outside the Kinder-Morgan rail yard in Richmond on September 4, 2014. (CBS)

SAN FRANCISCO (CBS SF) — A state appeals court upheld dismissal of a lawsuit in which environmentalists sought to challenge crude oil rail shipments through Richmond.

A trial judge’s dismissal of the lawsuit was upheld in court Tuesday in San Francisco. The court said Communities for a Better Environment, known as CBE, and other groups missed a state law’s six-month deadline for challenging a lack of environmental review for the shipments.

A three-judge panel said the California Environmental Quality Act didn’t allow an exception to the deadline even though the groups said they couldn’t have discovered the project sooner.

“Ultimately, CBE’s arguments about the proper balance between the interests of public participation and of timely litigation are better directed to the Legislature, not this court,” Court of Appeal Justice Jim Humes wrote for the court.

The panel unanimously upheld a similar ruling in which San Francisco Superior Court Judge Peter Busch dismissed the lawsuit in 2014.

The crude oil is carried by the Texas-based Kinder Morgan energy company in railroad tanker cars from North Dakota’s Bakken shale formation to Kinder Morgan’s Richmond terminal, where it is transferred to tanker trucks.

The shale oil is extracted through hydraulic fracturing, or fracking, and horizontal drilling.

The environmental groups contend that shale crude oil, which is lighter than other types of crude oil, is dangerous because it is more explosive in the event of a derailment. They also say fumes emitted during the oil transfers harm human health.

The groups sued the Bay Area Air Quality Management District in March 2014 after discovering that the agency had quietly issued a permit for the project in July 2013 without requiring an environmental impact report.

The permit allowed Kinder Morgan to change its previous ethanol facility to the crude oil facility.

In addition to CBE, the plaintiffs were the Natural Resources Defense Council, Asian Pacific Environmental Network and Sierra Club. They were represented by the Earthjustice law firm.

They argued that a report should have been required under the CEQA law, while the air district and Kinder Morgan contended no report was needed because granting the permit was a ministerial rather than discretionary decision.

But the issue of whether there should have been an environmental report was never reached in court because Busch ruled, and the appeals court agreed, that the lawsuit was filed too late.

The appeals court said, “We acknowledge that if there were any situation in which it would be warranted to delay the triggering of a limitations period in the manner CBE urges, it would be one in which no public notice of the project was given and the project’s commencement was not readily apparent to the public.”

But the panel said that case law set by the California Supreme Court and other courts established that the Legislature made a “clear determination” that CEQA challenges must be filed within the deadline.

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    Rally to Stop Oil Trains in Richmond, California, Saturday, July 11

    Repost from Stop Oil Trains Week of Action July 6-11

    Rally to Stop Oil Trains in Richmond, California, Saturday, July 11, 2015 – 11am in Atchison Village Park

    Richmond_action_flyer

    In Richmond, the fight against crude by rail is the latest example of the fossil fuel industry’s blatant disregard for the climate and the health and safety of communities of color. We know we don’t need this toxic and explosive extreme oil – already, our communities are building solutions for climate resilience and social justice. Together, we demand an end to extreme fossil fuels as we usher in a just transition to a clean, equitable, and thriving economy for all.

    This summer, the fight against oil trains is heating up across the Bay Area, California, and North America. Richmond is on the front lines of two major oil train fights: first, environmental justice leaders have been fighting to shut down the illegal Kinder Morgan oil trains terminal, which was permitted behind the backs of the community. In addition, the proposed Phillips 66 oil trains terminal in San Luis Obispo County would bring an additional 2.5 million gallons of toxic, explosive tar sands oil daily through the city. Already, the climate justice movement in Richmond and beyond have been stepping up to fight both projects. Now is the time to turn up the heat.

    This July marks both the height of the Summer of Our Power and the second annual Stop Oil Trains Week of Action that commemorates the second anniversary of the tragic Lac-Mégantic, Quebec, oil train catastrophe that killed 47 people.

    That’s why On Saturday, July 11th, a coalition of environmental justice, labor, climate, and community groups will mobilize thousands of people to stop oil trains in Richmond, as part of the Summer of Our Power and the national Stop Oil Trains Week of Action.

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      Pittsburg CA: WesPac oil storage project no longer includes Bakken crude trains

      Repost from the San Jose Mercury News
      [Editor: For original project documents and the recent announcement, see the City of Pittsburg’s WesPac Pittsburg Energy Infrastructure Project.  – RS]

      Pittsburg: WesPac oil storage project no longer includes Bakken crude trains

      By Sam Richards, 04/01/2015 11:40:04 AM PDT

      PITTSBURG — Amid the growing national debate over the safety of transporting crude oil by trains, an energy firm has dropped the rail component from a controversial proposal to transform an old PG&E tank farm into a regional oil storage facility here.

      WesPac Midstream LLC’s proposed Pittsburg Terminal Project, which had been attacked by local activists as posing a serious safety threat, is back on the table after a year of dormancy.

      But the elimination of the crude-by-rail element doesn’t mean critics are satisfied that a revived oil storage and shipping operation would be safe for the community. The dormant tanks are less than a half-mile from hundreds of houses and apartments on West 10th Street and in the downtown area between Eighth Street and the waterfront.

      “There are still environmental issues … having the stored oil in those tanks so close to homes, ground pollution issues, vapors from the big tanks,” said Frank Gordon of Pittsburg, a vocal opponent of the project in the past.

      The City Council on Monday is expected to approve another review of the proposed oil storage facility’s environmental impact reports — this time excluding the prospect of rail deliveries.

      The WesPac plan, as presented in October 2013, included facilities just north of Parkside Avenue — south of the tank farm — to handle as many as five 104-car oil trainloads a week.

      Art Diefenbach, WesPac’s Pittsburg project manager then and now, said this week that the “regulatory environment” surrounding rail shipments of crude oil — in particular, the more volatile Bakken crude from an area covering parts of North Dakota, Montana and Saskatchewan in Canada — isn’t stable enough to plan a major project around.

      “We just can’t proceed with that uncertainty floating out there,” said Diefenbach, also noting that falling crude prices help make shipping oil by rail a less attractive alternative, at least in the short term.

      He said protests against the crude oil trains — in Pittsburg, the East Bay and the nation — were a factor in the plan change, too. Such decisions, he said, “are always a combination of factors.”

      Oil trains, he said, are out of the picture for the foreseeable future.

      Several communities in the East Bay have expressed alarm in recent months about the transport of crude by rail through the region in the wake of several high-profile derailments and accidents in North America in recent years, including one in Quebec in 2013 that killed 47 people and destroyed part of a town. At a meeting in Crockett last week, residents raised concerns about plans to ship oil by rail through Contra Costa County and other parts of the Bay Area to a refinery in Central California.

      Without trains, all oil arriving at the WesPac facility would be via either ship or a pipeline from the southern reaches of the Central Valley.

      Pittsburg Mayor Pete Longmire said removing the trains from the WesPac equation should result in a safer project for the community. “And it’s probably less controversial than before,” he said.

      Although the council will decide Monday night on only an amendment to one of the project’s environmental studies, Longmire expects a large crowd to turn out to discuss what many still likely see as a polluting facility that could present a health danger to the hundreds of people who live near the old tanks.

      WesPac Energy, as the company was called then, first applied in March 2011 for needed permits to renovate and restart the former PG&E oil storage and transfer facilities off West 10th Street on the city’s northwestern edge. The $200 million project calls for an average of 242,000 barrels of crude or partially refined crude oil to be unloaded daily from ships on the nearby Sacramento River, and from pipelines, and stored in 16 tanks on 125 acres.

      The oil would then be moved to Contra Costa County refineries, and the Valero refinery in Benicia, via pipeline for processing.

      The Pittsburg Defense Council, a group of opponents to the WesPac project in general, had decried the prospect of Bakken crude oil coming into town for unloading. Some already has rolled through Pittsburg on BNSF rails, destined for a Kinder-Morgan facility in Richmond.

      Diefenbach said that, assuming various approvals come at a typical pace, construction could begin in early 2016, and likely would take from 18 to 24 months.

      Longmire said he doesn’t have strong feelings about WesPac either way at this point but insists that the project — with its jobs and its boost to the local economy — must be safe. Gordon said he is still leaning against it. They agree, though, the formal permitting process must be allowed to play out.

      Said Gordon, “We’ll have to see what they do with the new” environmental impact report.

      If you go…

      The Pittsburg City Council meets at 7 p.m. Monday at City Hall council chamber, 65 Civic Ave. in Pittsburg. The public is welcome.

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        California Crude Trains: How Much Oil Is Actually Coming In and Where Is It Coming From?

        Repost from North American Shale Blog
        [Editor: Notwithstanding the disparaging remarks about crude-by-rail opponents and politics in California, this is an interesting report by a pro-industry analyst.  – RS]

        California Crude Trains: How Much Oil Is Actually Coming In and Where Is It Coming From?

        California has become ground zero for legal opposition to crude-by-rail projects. Opponents decry derailments, toxic vapors, and other ills.[i]  Yet despite the dire images painted by crude-by-rail’s opponents, the reality on the ground in California has been quite mundane thus far. The high-water mark to date for California railborne crude supplies was approximately 39 thousand barrels of oil per day (kbd) in December 2013 (Exhibit 1).

        To put this number in perspective, California refineries typically process an average of around 1.7 million barrels per day of crude – meaning that at the crude-by-rail peak, only about one barrel in 50 of the state’s crude supply came in by rail.[ii]  Presently, the number is closer to one barrel in 100 – certainly not the overwhelming flood of trains opponents fear. And to that point, even supplying one-quarter of California’s total crude oil needs would only require about six to seven crude oil unit trains per day. To put this in context, the Colton Crossing east of Los Angeles by itself can see more than 100 freight trains per day.[iii]

        Exhibit 1: California Crude by Rail Sources

        exhibit 1
        Source: California Energy Commission, Alberta Office of Statistics and Information

        Where California’s Railborne Oil Imports Come From

        For much of the past six years, light, low-sulfur Bakken crude and heavier, higher-sulfur Western Canadian Select (“WCS”) dominated rail imports into California. Canadian supplies show a clear correlation with how cheap WCS is relative to Maya, a heavy crude oil from Mexico that is shipped by tanker and offers a proxy for what heavy, sour, waterborne crude oil imports into California will cost. The spread between WCS and Maya prices matters because it only makes sense for refiners to purchase WCS barrels if they are sufficiently discounted that the buyer still comes out ahead after adjusting for rail transport costs, which can amount to approximately $20/barrel for manifest trains and $15/barrel for oil moved on unit trains.[iv]

        For reference, “manifest trains” are mixed cargo trains where a 100-car freight train might include 20 or 30 tanker cars carrying oil. Unit trains, on the other hand, carry only one type of freight, meaning that all 100 to 120 cars carry crude oil. This maximizes economies of scale and significantly reduces transportation costs. Shipments of Canadian crude oil into California traditionally rode on manifest trains, but in November 2014, Union Pacific brought its first unit train of crude oil from Western Canada into California, to a terminal near Bakersfield.[v] The route is currently dormant as WCS crude’s discount to Maya was less than $10 per barrel in January 2015, according to official price data, making it uneconomical to import the Canadian oil by rail.[vi] Unit trains’ lower costs relative to the previously used manifest trains will likely have oil trains rolling from Alberta to California once again if the WCS discount widens to around $15 per barrel.

        California has also seen increased supplies of light, low-sulfur crude oil from New Mexico in recent months. The most likely explanation for this is that continued strong oil production in Texas, New Mexico, and the Midcontinent are inundating the Gulf Coast with light, sweet barrels. Indeed, this author’s models using official Energy Information Administration data strongly suggest that Gulf Coast refineries have hit a physical “wall” where they are not able to sustainably use more than 65 percent domestic crude oil to supply their plants, because facilities designed for heavier, higher-sulfur oils cannot run at maximal efficiency with light, low-sulfur crude feedstocks.[vii] This crowded market reduces the potential realized value of crude to certain Permian Basin producers and makes California attractive as a clearing destination because crude can be railed from the Permian Basin to California for as little as $7-8/bbl, according to Tesoro.[viii]

        What the Future May Hold

        The bottom line is that California’s existing crude-by-rail terminal capacity is massively underutilized at present. The state’s two largest facilities alone – Kinder Morgan’s terminal at Richmond and new terminal near Bakersfield – can offload more than 140 kbd at full capacity. In comparison, crude-by-rail import volumes were less than 20 kbd in December 2014, the last month for which data are available (Exhibit 2). 

        Exhibit 2: California Crude by Rail Capacity vs. Actual Import Volumes

        exhibit 2
        Source: California Energy Commission, Company Reports

        Current terminal capacity is sufficient for approximately two unit trains per day of crude – 140 to 150 kbd – to enter the state. California’s fickle politics make forecasting crude-by-rail volumes a tough exercise. That said, this author believes that if oil prices recover to at least $75/bbl, California’s railborne crude imports will likely exceed 200 kbd by early 2016. Under those conditions, existing terminals would increase their capacity utilization and larger price differentials would attract additional Canadian heavy crude, as well as Bakken and other light, sweet grades from the Rocky Mountain states and the Permian.


        [i] “GROUPS SUE TO STOP DAILY 100-CAR TRAIN DELIVERIES OF TOXIC CRUDE OIL TO BAKERSFIELD TERMINAL,” Earthjustice, January 29, 2015, http://earthjustice.org/news/press/2015/groups-sue-to-stop-daily-100-car-train-deliveries-of-toxic-crude-oil-to-bakersfield-terminal; See also Alexander Obrecht, “Environmental Groups Ramp Up the Crude-by-Rail Fight in the Courtroom,” BakerHostetler North America Shale Blog, October 6, 2014, http://www.northamericashaleblog.com/2014/10/06/environmental-groups-ramp-up-the-crude-by-rail-fight-in-the-courtroom/
        [ii] “FACTBOX – California crude sources and oil-by-rail projects,” Reuters, July 21, 2014, http://af.reuters.com/article/energyOilNews/idAFL2N0PM26S20140721
        [iii] “Colton Flyover Supports L.A.-Area Business,” Union Pacific Railroad, September 5, 2013, http://www.uprr.com/newsinfo/community_ties/2013/september/0905_colton.shtml
        [iv]Yadullah Hussein, “Oil-by-rail economics suffers amid narrowing spreads,” Financial Post, February 9, 2015, http://business.financialpost.com/2015/02/09/oil-by-rail-economics-suffers-amid-narrowing-spreads/?__lsa=c711-5acd
        [v] Bruce Kelly, “UP begins Canada-to-California CBR service,” Railway Age, November 25, 2014, http://www.railwayage.com/index.php/tag/CBR/feed.html
        [vi] “Heavy Crude Oil Reference Prices, Monthly,” Alberta Office of Statistics and Information, https://osi.alberta.ca/osi-content/Pages/OfficialStatistic.aspx?ipid=941 (last accessed March 18, 2015)
        [vii] Detailed explanation of models available; please contact author at gcollins @ bakerlaw.com.
        [viii] Company investor presentation, September 2014, “Rail Costs to Clear Bakken,” slide 11, http://phx.corporate-ir.net/phoenix.zhtml?c=79122&p=irol-presentations
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