Tag Archives: Shell Oil

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.”

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    Obama Administration Approves Shell’s Arctic Drilling Plans

    Press Release from Sierra Club

    Obama Administration Approves Shell’s Arctic Drilling Plans

    Monday, May 11, 2015
    Contact:  Virginia Cramer, 804-519-8449, virginia.cramer@sierraclub.org

    WASHINGTON, DC– The Obama administration granted approval today for Shell Oil to move ahead with plans to drill in the Arctic’s Chukchi Sea.  The decision comes against a backdrop of growing opposition in Seattle and across the country to Arctic drilling, and just as the U.S. assumes leadership of the Arctic Council.

    In response Michael Brune, Executive Director of the Sierra Club issued the following statement.

    “We are deeply disappointed that just days after the United States took over chairmanship of the Arctic Council, an international body dedicated to protecting the Arctic environment, the Obama Administration decided to allow Shell to move forward with its dirty and dangerous plan to drill in our Arctic waters. This is exactly the wrong message to send to the world.

    “Shell’s poor track record in the Arctic does not inspire confidence in its ability to drill safely in the unique and harsh environment of  America’s Arctic Ocean. In fact, an analysis by the Obama administration itself  predicts a 75% chance of a major oil spill if Shell is allowed to drill in America’s Arctic Ocean.

    “Both science and common sense is crystal clear in telling us that undeveloped dirty fuels, especially those in the Arctic, must remain in the ground if we are to avoid the worst consequences of climate disruption. Downplaying the threats drilling poses to our climate, communities, and environment — as Shell continues to do — does not in reality make the threats any less serious. The Obama administration must say no to drilling in America’s Arctic Ocean, cancel these leases, and remove future leasing from the five-year offshore drilling plan.”

    ###

    Campaign Name:
    Our Wild America

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      Environmentalists play ‘Whac-A-Mole’ to stall crude-by-rail projects

      Repost from Environment & Energy Publishing (EEnews.net)

      Environmentalists play ‘Whac-A-Mole’ to stall crude-by-rail projects

      By Ellen M. Gilmer and Blake Sobczak, March 20, 2015
      (Second of two stories. Read the first one here.) [Subscription required]

      When an oil company’s expansion plans for Pacific Northwest crude by rail suffered a major setback last month, environmentalists spread the news just as quickly as they could Google “Skagit County Hearing Examiner.”

      The little-known local office about an hour north of Seattle holds the keys to land use in the area, and environmental attorneys saw it as the best shot to stall a rail extension considered critical for the delivery of crude oil to a nearby Shell Oil Co. refinery, but potentially disastrous for nearby estuaries and communities.

      The effort was successful: After environmental groups appealed a county-level permit for the rail project, Skagit County Hearing Examiner Wick Dufford sent the proposal back to the drawing board, ordering local officials to conduct an in-depth environmental impact statement to consider the broad effects of increased crude-by-rail throughout the county.

      “The environmental review done in this case assumes that the whole big ball of federal, state and local regulations will somehow make the trains safe. And that if an accident happens, the response efforts described on paper will result in effective clean up, so that no significant adverse effects are experienced,” Dufford wrote. “There is no proven basis for such conclusions.”

      The decision was an incremental but significant victory for environmental groups, sending a signal to industry that its increasing reliance on railed-in crude could face formidable hurdles.

      Skagit County is just one piece of a larger plan to expand crude-by-rail across the country to better connect refineries and ports with prolific oil plays like North Dakota’s Bakken Shale. The use of rail to deliver crude oil has skyrocketed in recent years, rising from 9,500 tank cars of crude in 2008 to nearly 500,000 carloads in 2014, according to industry data. Projects in Washington and other refinery hubs aim to expand facilities and extend rail spurs to handle even more crude deliveries.

      Shell spokesman Curtis Smith said the company is “confident that we can satisfy any remaining issues associated with the project” to add rail capacity to its Puget Sound Refinery in Skagit County.

      “This project is critical to the refinery, the hundreds of employees and contractors who depend on Shell, and the regional economy,” he said. “We do not feel it should be held to a different standard than the crude-by-rail projects of the neighboring refineries that have been approved.”

      Smith added that “we all share the top priority of safety.”

      But the new reality of crude-by-rail traffic has environmentalists on edge. Oil train derailments in Illinois, West Virginia, North Dakota and other places have led to fires, spills and, in one case, lost lives. A 2013 crude-by-rail explosion in Lac-Mégantic, Quebec, killed 47 people, prompting regulators in the United States and Canada to review the inherently piecemeal rules governing crude-by-rail transportation.

      The federal government has authority over certain details, such as standards for tank cars used to haul crude. But most expansion plans and related environmental concerns are left to local agencies situated along oil routes. The result is a hodgepodge of permitting decisions by local authorities following varying state laws, while a team of environmental lawyers challenges expansion projects one by one.

      “It’s a little bit like Whac-A-Mole because there isn’t a big permitting scheme,” said Earthjustice attorney Kristen Boyles, who represented six environmental groups in the Skagit County appeal. “It makes it difficult and makes it frustrating for the public.”

      State laws in play

      So far, the Whac-A-Mole approach is working well for environmentalists.

      After three oil refineries in Washington went unopposed in building facilities to receive rail shipments of crude oil, Boyles said environmentalists and community advocates began tracking local land-use agencies more closely.

      Earthjustice and the Quinault Indian Nation successfully challenged two proposed crude projects in Grays Harbor County, southwest of Seattle, leading a review board to vacate permits and require additional environmental and public health studies. A third Grays Harbor project is also preparing a comprehensive environmental review.

      The next project on environmentalists’ radar is in Vancouver, Wash., just across the Columbia River from Portland, Ore., where Savage Cos. and Tesoro Refining and Marketing Co. have proposed building a new terminal to transfer railed-in crude oil to marine tankers bound for West Coast refineries. The Sierra Club, ForestEthics and several other groups earlier this month moved to intervene in the state agency review process for the project, citing major threats to the Columbia River and public health.

      The key to all of these challenges is Washington’s State Environmental Policy Act (SEPA). Similar to the National Environmental Policy Act, SEPA requires government agencies to conduct a broad environmental impact statement for any major actions that may significantly affect the environment.

      For projects in Skagit County, Grays Harbor and now Vancouver, state and local officials considering challenges look to SEPA to determine how rigorous environmental review must be, based on whether projects are expected to have major impacts. To Dufford, the Skagit examiner, the answer is plain.

      “Unquestionably, the potential magnitude and duration of environmental and human harm from oil train operations in Northwest Washington could be very great,” he wrote.

      Down the coast in California, environmentalists have an even stronger tool: the California Environmental Quality Act. Considered the gold standard in state-level environmental protection laws, CEQA has already proved useful in halting a crude-by-rail expansion project in Sacramento.

      In Kern County, a team of environmental attorneys is also relying on CEQA to appeal construction permits for the Bakersfield Crude Terminal, a project that would ultimately receive 200 tank cars of crude oil per day. The local air quality board labeled the construction permits as “ministerial,” bypassing CEQA review, which is required only for projects considered discretionary. A hearing is set for next month in Kern County Superior Court.

      Earthjustice attorney Elizabeth Forsyth, who is representing environmental groups in the Bakersfield case, said the state environmental law has been powerful in slowing down the rapid rise of crude-by-rail operations.

      “In California, we have CEQA, which is a strong tool,” she said. “You can’t hide from the law. You can’t site your project out in some town that you think won’t oppose you.”

      Unified strategy?

      Still, the one-at-a-time approach to opposing crude-by-rail growth is undoubtedly slow-going, and progress comes bit by bit.

      Boyles noted that Earthjustice attorneys from Washington to New York frequently strategize to “unify” the issues and make broader advances. On tank cars, for example, environmental groups have come together to press the Department of Transportation to bolster safety rules.

      “That at least is some place where you could get improvements that could affect every one of these proposals,” she said.

      But for expansion projects, the effort must still be localized.

      “You have this giant sudden growth of these sort of projects, and that’s the best we can do at this point to review each of them and comment,” said Forsyth, the California lawyer, who said the end goal is to empower local agencies to control whether proposals move forward and to mitigate the impacts when they do.

      Though labor-intense, advocates say the approach has paid dividends. Projects that would have otherwise flown under the radar are now under rigorous review, and industry players no longer have the option of expanding facilities quietly and without public comment.

      “If you hadn’t had these citizens challenging these projects,” Boyles said, “they’d be built already; they’d be operating already.”

      The delays have set back refiners seeking to use rail to tap price-advantaged domestic crude — particularly in California.

      “The West Coast is a very challenging environment,” noted Lane Riggs, executive vice president of refining operations at Valero Energy Corp., which has faced staunch environmentalist opposition at a proposed oil-by-rail terminal in Benicia.

      Riggs said in a January conference call that “we’re still pretty optimistic we’ll get the permit” for the 70,000-barrels-per-day unloading terminal at its refinery there, although he added that “timing at this point is a little bit difficult.”

      Facing pressure from concerned locals and the Natural Resources Defense Council, Benicia officials last month opted to require updates to the rail project’s draft environmental impact review, further delaying a project that was originally scheduled to come online in 2013.

      A Phillips 66 crude-by-rail proposal in San Luis Obispo County, Calif., has encountered similar pushback. If approved, the project would add five 80-car oil trains per week to the region’s track network. The potential for more crude-by-rail shipments has drawn opposition from several local city councils and regional politicians, despite Phillips 66’s pledge to use only newer-model tank cars (EnergyWire, Jan. 27).

      Some town leaders have also separately taken action against railroads bringing oil traffic through their neighborhoods, although federally pre-emptive laws leave cities vulnerable to legal challenges (EnergyWire, March 19).

      ‘Business as usual’

      Local, often environmentalist-driven opposition is seen as “business as usual” within the refining industry, according to Charles Drevna, president of the American Fuel and Petrochemical Manufacturers.

      “This is just another extension of the environmental playbook to try to obfuscate and delay,” said Drevna, whose trade group represents the largest U.S. refiners. “We’ve been dealing with that for years, and we’re going to continue to be dealing with it.”

      While Drevna said he doesn’t see lawsuits “holding up any of the plans” for refiners to improve access to North American oil production, environmentalists chalk up each slowdown to a victory.

      In New York, a plan to expand a key crude-by-rail conduit to East Coast refiners has been held in limbo for over a year at the Port of Albany, owing to an environmentalist lawsuit and closer public scrutiny.

      The proposal by fuel logistics firm Global Partners LP would have added a boiler room to an existing facility to process heavier crude from Canada. But advocacy groups including Riverkeeper have challenged the company’s operating air permit, calling for more review by New York’s Department of Environmental Conservation (EnergyWire, Jan. 13, 2014).

      “All of the actions we’ve taken with Earthjustice and others have really ground to a halt DEC’s repeated approvals of these minor modifications,” said Kate Hudson, watershed program director for Riverkeeper. “We have not seen tar sands. … The river has been spared that threat for a year-plus, at this point.

      “We certainly have no regrets,” she said.

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        Washington county puts the brakes on a new oil-train facility

        Repost from High Country News

        A Washington county puts the brakes on a new oil-train facility

        In the wake of recent oil-train derailments, Skagit County wants Shell to do a full environmental review.

        Jeremy Miller, March 12, 2015

        BACKSTORY
        Railroad cars full of flammable crude oil are rattling through the West, hauling more than six out of every 10 barrels produced in the Bakken to refineries, according to a 2014 report. Washington state has already seen a major uptick in oil-train traffic and at least one derailment. Shell Oil wants to build a new facility north of Seattle that would take in six 100-car locomotives per week (“Flash point,” HCN, 11/24/14).

        FOLLOWUP
        Last month, following West Virginia’s massive oil train derailment and explosion and reports of a Bakken train leaking oil in Washington, Skagit County blocked Shell’s proposed facility until the company completes a full environmental review. The U.S. Department of Transportation predicts an average of 10 oil train derailments per year over the next two decades. But the recent drop in oil prices means fewer trains are rolling out of the Bakken; perhaps — at least for now — there’s less chance of another disaster.

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