Tag Archives: Port Arthur TX

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)

    Fenceline Communities Face an Ongoing Invisible Assault of Toxics Emanating from Refineries

    Repost from NRDC Switchboard – Diane Bailey’s Blog
    [Editor: In the flurry of warranted high emotion over potential catastrophic derailments and explosions, we risk neglecting the far more widespread and lasting disaster of public health and harm to the environment caused by the production, refining and burning of fossil fuels.  This by our friend Diane Bailey should be required reading for everyone, and especially for those of us living in “fenceline” communities.  – RS]

    Fenceline Communities Face an Ongoing Invisible Assault of Toxics Emanating from Refineries

    By Diane Bailey, ‎November ‎18, ‎2014
    Diane Bailey
    Diane Bailey, Senior Scientist, Natural Resources Defense Council

    Drive past the other-worldly refinery landscape in Deer Park, Texas and you have to lunge for the recirc button to avoid the sickeningly-sweet chemical odors. That’s not an option for the more than 200,000 people living along the petrochemical complex of the Houston Ship Channel; they can’t press a recirc button to avoid exposure to those chemical fumes. Such is the problem for hundreds of thousands of Americans living in refinery fenceline communities that are often plagued by foul odors and safety risks.

    Houston_Ship_Channel_Galena.jpg

    Photo: U.S. Army Corps of Engineers

    Of much greater concern though, are the invisible impacts of the toxic chemicals emanating from all the towers, pipes and tanks of refineries. Called “fugitive emissions,” these are chemicals that leak or escape not just during accidents, but also during every day operations. For many facilities, chemicals are leaking in greater quantities than from exhaust pipes where they are tracked and reported. Here is a summary of what these chemical pollutants are, health impacts that refinery fenceline communities face, and what can be done about it.

    The Chemicals That Leak Across Fencelines

    Oil refineries release several hundred hazardous air pollutants. Many of these chemical pose serious health hazards even at very low levels of exposure, and some can build up in the environment contaminating fish, soil and even household dust. These chemicals contribute to a wide range of serious health impacts including asthma and respiratory illnesses, developmental impacts like IQ loss, cancer, heart disease, reproductive system impacts including birth defects, damage to a range of organs including the kidneys and liver, and even premature death. Check out a list of fourteen notorious chemicals emanating from refineries below.

    The thing about these chemicals leaking out of refineries – you never know if you’re exposed to them, when and how much. Back in 1999, a few visits to Port Arthur, Texas, home of three large refineries, made me wonder about this; each time I left with a sticky residue on the car, a splitting headache and blurred vision. People reported their kids having rashes all the time. This made a little more sense after rooting through a room at the local branch of the Texas environmental agency (TCEQ) filled with cardboard boxes of records for each of the plants documenting refinery upsets, unplanned releases and accidents, seemingly on a weekly basis.  The plants were spewing chemical fumes “by accident” all the time.

    Whiting Indiana beach near refinery.jpg

    Photo: Whihala Beach – Whiting, Indiana, by David Wilson under Creative Commons licensing.

    Despite the stacks of paperwork though, it was still a mystery who was exposed to what and how much.  One thing was for sure though, a quick look through census data showed that the neighborhoods closest to the refineries and chemical plants were 99 percent non-white and the percent of non-whites in communities much farther away was dramatically lower. Where did the plant managers and other execs live?  This situation is sadly not unique to Port Arthur. It plays out in refinery towns across the U.S. creating hotspots of disproportionate pollution and “cancer alleys” in low income communities of color.

    Health Impacts Documented in Refinery Fenceline Communities

    Community health surveys have long indicated significantly increased illness and health impacts among residents living near refineries and petrochemical complexes. The surveys are validated by the dozens of rigorous peer reviewed studies that have documented community health impacts of pollution from petroleum refineries, finding increased rates of cancer, preterm births, asthma related hospitalizations, and increased mortality in communities around refineries.

    • Cancer: Many studies have found elevated rates of leukemia and lymphomas in residents living close to petrochemical plants.  One major recent study in the industrial heartland of Alberta, Canada, where many refinery/oil upgrading operations are located, found greatly elevated pollutant levels and notably higher rates of leukemia and non-Hodgkin lymphoma compared to neighboring counties.  Scores of other studies have found higher rates of cancer among residents who live closer to refineries (brain, lung, liver, bone, bladder, stomach, kidney and urinary, and other types of cancer).
    • Asthma: Several studies show increased asthma prevalence, emergency room visits for asthma, respiratory symptoms as well as significantly lower lung function among children and residents living close to refineries.
    • Birth Defects: In 2006, the Texas Department of State Health Services found that Corpus Christi, home of “Refinery Row,” had a birth defect rate that was 84 percent higher than the rest of Texas. A follow-up study found that mothers living near refineries and chemical plants had babies with high rates of life-threatening birth defects.
    • Premature Deaths: A recent major study of air pollution related mortalities in the U.S. found that out of over 5,000 cities evaluated, Donaldsonville, Louisiana has the highest mortality rate from air pollution. Nine refineries in the area contribute to the roughly 81 deaths from cardiovascular disease and lung cancer per 100,000 people.

    Wilmington Refinery.jpg

    Photo: Wilmington Refinery, Universal Images Group via Getty Images

    What Can We Do About it?

    This spring, U.S. Environmental Protection Agency is slated to finalize a new refinery rule that could be a major step in reducing pollution and monitoring for leaks. Please support this rule by telling Congress to protect our environmental policies instead of interfering with them.

    However, despite the critical need for this rule, the phase in will take many years even if it does get finalized according to a court-ordered schedule. In the meantime we are calling on local authorities to act swiftly to reign in refinery pollution beginning with a 20 by 2020 pledge in the Bay Area. The good news is that the Bay Area Air District voted on October 15th to adopt a policy to prevent increases in refinery emissions that an influx of dirtier, extreme crude oil could cause; and to plan for a 20 percent emission reduction from all refineries by 2020.

    The Bay Area refinery clean up policy goes back to the air district board for further consideration on December 17th, in time to provide a happier holiday for fenceline communities… that is, if the Grinch-like oil industry, claiming that it can’t afford to clean up, doesn’t stop it. The air district needs to hear your support to keep the refinery clean up policy on track.  The massive flaring events last week at the Tesoro refinery turned the sky in Martinez orange, reminding everyone for miles how badly we need refinery clean-up policies.

    tesoro flares.jpg

    Photo: Martinez Environmental Group

    Refinery fenceline communities continue to suffer the ill effects of pollution every day despite ample technology to clean up the mess and a wealthy industry that can surely afford the upgrades.  And we are all fenceline communities when it comes to climate change. Given the stark warning issued earlier this month from the world’s leading scientists in the IPCC report on climate change, noting that we will face “severe, pervasive and irreversible impacts” if we do not act now, it is high time to reign in the super-polluting refining industry.

    14 Notorious Refinery Pollutants

    1. Benzene is a known carcinogen (cancer causing agent), associated with childhood leukemia in particular. High exposures can impact the central nervous system leading to drowsiness, dizziness, irregular heartbeat, nausea, headaches, and depression; reproductive impacts, such as smaller ovaries; and potentially developmental effects such as low birth weight, delayed bone formation, and bone marrow damage.
    2. Toluene is especially harmful to people with asthma. It poses reproductive hazards and can cause headaches, impaired reasoning, memory loss, nausea, impaired speech, hearing, and vision, and over the long term, damage to the liver and kidneys.
    3. Ethylbenzene is a carcinogen. Chronic, low-level exposure can result in kidney damage and hearing loss.
    4. Xylenes can cause difficulty breathing, damage to the lungs, impaired memory, and possible damage to the liver and kidneys. Long term exposure is associated with multiple impacts to the nervous system, blood cell abnormalities, abnormal heartbeat, liver damage, genetic mutations, reproductive system effects, and death due to respiratory failure.
    5. Polycyclic aromatic hydrocarbons (PAHs) are a group of over 100 different tar-like chemicals, some of which are mutagens, carcinogens, and developmental toxicants.  PAHs can cross the placenta and harm an unborn fetus, contributing to fetal mortality, increased cancer risk and birth defects. PAHs are also associated with asthma-related symptoms and developmental and cognitive impairment, including lower IQ.
    6. Hydrogen Cyanide exposure at high levels swiftly harms the brain and heart, beginning with rapid breathing, followed by convulsions, and loss of consciousness, and can even cause coma and death. More commonly, low level exposure is associated with breathing difficulties, chest pain, vomiting, blood changes, headaches, and enlargement of the thyroid gland.
    7. 1,3-butadiene causes inflammation of nasal tissues, changes to lung, heart, and reproductive tissues, neurological effects and blood changes; it is a carcinogen associated with cancers of the blood and lymphatic system, and it may also cause birth defects.
    8. Formaldehyde is a carcinogen that can cause asthma or asthma-like symptoms, neurological effects, increased risk of allergies, eczema and changes in lung function.
    9. Arsenic is a carcinogen that poses reproductive and other hazards. In children, in particular, arsenic can cause skin lesions, neurodevelopmental effects like lower IQ, lung disease, and reproductive effects including lower birth weight, spontaneous abortion, and neonatal death.
    10. Chromium (VI) or hexavalent chromium is a carcinogen, primarily affecting the lungs, but also the stomach and intestinal tract. Additional effects include: increased risk of respiratory illness such as pneumonia and bronchitis, gastrointestinal effects including lesions of the stomach and small intestine, hematological effects like anemia, and reproductive effects to males, including lower sperm count and histopathological changes, and complications during pregnancy and childbirth.
    11. Lead is a well-known toxic heavy metal that is particularly hazardous to children, severely impacting development and cognitive functioning, resulting in lower IQ scores, attention deficit problems and other behavioral impacts. Lead exposure is also associated with other neurological, hematological, and immune effects; cancer; cardiovascular and renal effects in adults; and reproductive effects, such as lower sperm counts and spontaneous abortions. There is no safe level of exposure to lead.
    12. Mercuryis a highly neurotoxic contaminant that can bio-accumulate in food such as fish. Health effects of mercury include neurological, developmental, and behavioral problems, such as lower IQ, attention deficit hyperactivity disorder (ADHD), and impaired memory and motor skills. Exposure is also associated with cardiovascular effects including increased risks of heart attacks, increased blood pressure, and thickening of arteries.
    13. Nickel is associated with chronic dermatitis, respiratory impacts and potentially also reproductive impacts. Various nickel compounds are carcinogenic and can also have cardiovascular effects in particulate form.
    14. Hydrogen fluoride or Hydrofluoric acid (HF) is a fatal poison that is highly corrosive and can burn skin or lungs on contact, though symptoms of exposure can be delayed for days. Chronic exposure can lead to lung disease and damaged vision. Other health impacts include nausea, vomiting, gastric pain, low blood pressure, irregular heartbeat, seizures, fluid build-up in the lungs, lung collapse and ultimately death, particularly in situations of accidental release.

      Recent history: the rise of Bakken crude by rail

      Repost from Bloomberg
      [Editor: Significant quote: “‘The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline….The next challenge is exports.'”  – RS]

      Bakken Rail Bet on a Feeling Pays Off for Global’s Slifka

      By Lynn Doan Aug 1, 2014

      When Eric Slifka landed in North Dakota’s Bakken shale field three years ago, he says he was overcome by “this feeling of a lot of growth. You could feel the pressure.”

      The fervor was so strong that Slifka, chief executive officer of Global Partners LP (GLP) in Waltham, Massachusetts, decided in that single trip to carry Bakken crude on railcars that his company had been using to haul ethanol to New York. His first full trains started a wave of deliveries that rescued East Coast refiners from the brink of closing amid the rising cost of oil imported from Africa and the North Sea.

      Shipments of U.S. oil by rail have since doubled to more than 1 million barrels a day, sparking a national debate over safety, and volumes may mount if the government allows more exports of crude, easing a four-decade ban. Global and other midstream carriers are preparing themselves for a chance to serve that market.

      “The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline,” Bradley Olsen, managing director at energy investment bank Tudor, Pickering, Holt & Co., said by phone from Houston. “The next challenge is exports.”

      Shale Boom
      Global Partners, a tax-exempt master limited partnership with a $1.19 billion market value, was worth half that when Slifka flew into the Bakken in 2011 to meet a local entrepreneur who owned a rail facility along the Canadian Pacific (CP) line. North Dakota’s oil production had surged by a record 42 percent to 310,000 barrels a day. It would go on to surpass 1 million this April, helping turn the U.S. into the world’s largest oil producer.

      The flood of domestic crude has put pressure on the federal government to lift a ban on U.S. exports imposed by Congress in 1975 in response to the Arab oil crisis. Crude-by-rail companies will have to compete with pipelines to bring supplies to the coast if the prohibition is lifted, Olsen said.

      “Once you’re trying to export, you’re just trying to reach the water, and you don’t care about going to a specific refinery,” he said. “So you’re just as likely to ship it on a pipeline to get it to a dock.”

      New Rules
      The boom has also ignited regulatory battles from coast to coast. The derailment and explosion of an oil train in Lac-Megantic, Quebec, in July 2013 that killed 47 people thrust rail operations into the limelight.

      In New York, Global is facing a ban on expanding its Albany operations to include tar sands. In Oregon, state regulators said in March that Global unloaded more oil than permitted at its Clatskanie terminal that sends Bakken crude along the Columbia River by barge.

      Global said the Oregon complex is “in full compliance” with regulations in a March 5 e-mail. It sent a letter to Albany County on March 14 describing the county prohibition as “arbitrary and capricious.”

      The U.S. Department of Transportation laid out a plan last week to phase out a generation of tank cars for crude shipments and impose speed limits, braking requirements and route stipulations.

      While the industry is working with regulators to determine the safest way to ship oil, Slifka, now 49, said at an energy conference in Washington July 14 that “rail may actually be the safest mode of transportation for crude.”

      Refinery Squeeze
      On his first visit three years ago, so many companies were racing into the region to squeeze out oil from the Bakken that Slifka couldn’t find a hotel room. He said he stayed in Estevan, Saskatchewan, and drove 30 miles across the Canada-U.S. border to meet Don Bottrell, who owned a women’s clothing business, oil and gas wells and a trans-loading site in the area.

      The biggest wave of refinery closings had meanwhile struck the East Coast as the price of North Sea Brent crude, the international benchmark, climbed. Sunoco Inc. was threatening to shut its Philadelphia refinery if it didn’t find a buyer, and it idled the Marcus Hook plant in Pennsylvania. ConocoPhillips halted output from its Trainer complex, and Hovensa LLC closed a plant in the U.S. Virgin Islands that supplied the region.

      The North Sea grade cost as much as $8.52 a barrel more than West Texas Intermediate today, the highest premium since June 24. WTI was at $97.21 at about 11:16 a.m. in London and has traded below the international benchmark since the end of 2010.

      Crude Champagne
      “East Coast plants had the highest costs because they ran the champagne of oils, very light, very low-sulfur crudes predominantly from West Africa,” Kevin Waguespack, senior vice president of energy consulting firm Baker & O’Brien Inc., said by telephone from Houston July 28. “The Bakken reset their feedstock costs by several dollars a barrel. They’ve gone from losing to winning.”

      EOG Resources Inc. (EOG), at the time the second-largest oil producer in the formation, moved its first trainload on BNSF Railway Co.’s tracks to Stroud, Oklahoma, on Dec. 31, 2009.

      The first dedicated train of Bakken crude arrived at Global’s fuel terminal in Albany, which had handled ethanol and refined fuels such as gasoline, on Oct. 25, 2011.

      Others followed. Enbridge Inc. (ENB)’s 80,000-barrel-a-day Eddystone rail complex outside Philadelphia received its first train in May. The Carlyle Group (CG) and Sunoco formed a joint venture to keep the Philadelphia refinery open and are adding a rail track that will take as many as 14 unit trains of Bakken oil a week. Delta Air Lines Inc. (DAL) bought Conoco’s Trainer plant and on July 21 signed a contract for 65,000 barrels a day, more than a third of the plant’s capacity, that will initially arrive by rail.

      Global Expansion
      Global bought a majority interest in two Bakken terminals after that first delivery to the East Coast, expanded its complex in Albany so it could send barges of oil down the coast, and secured a five-year contract to supply Phillips 66 (PSX)’s 238,000-barrel-a-day Bayway refinery in New Jersey in 2013.

      The company bought the complex in Clatskanie, near Portland, the same year. On July 8 Global said it was building its first Gulf Coast oil-by-rail terminal in Port Arthur, Texas, as a destination for heavy crude from western Canada.

      “If you look back historically on where oil is coming from and how it was transported, it has completely changed,” Slifka told an oil industry conference in Washington July 14. “You might as well take a pipeline map and turn it upside down.”

      With the Port Arthur terminal, Global is positioned for the flood of petroleum that may soon be leaving the nation’s shores should federal policy makers relax the decades-old export ban. In June, the Commerce Department granted Enterprise Products Partners LP (EPD) and Pioneer Natural Resources Co. (PXD) permission to export ultra-light oil known as condensate.

      “Nobody can be sure where the market is going or what we will be carrying, but we are sure that we have positioned ourselves to carry whatever it demands,” Slifka said at the meeting in Washington.

      Reporter on this story: Lynn Doan in San Francisco.  Editors responsible for this story: Dan Stets and David Marino at Bloomdale, and Alaric Nightingale, Rachel Graham.