Tag Archives: Statoil

Investment Analyst: Oil Train Derailments Pose Huge Risks

Repost from Energy & Capital

Oil Train Derailments Pose Huge Risks

New Regulations Haven’t Done Enough

By Keith Kohl, August 7, 2015

About 40 miles west of Williston, North Dakota — the epicenter of the Bakken oil formation — sits a tiny rural town that was recently rocked by a strange occurrence.

Culbertson, Montana, a town of less than 1,000 people just north of the Missouri River, saw a massive train derailment in July.

A 106-car BNSF Railway train was carrying oil from the Bakken to a BP refinery in Washington State, but when it reached Culbertson, 22 of the cars derailed and five began leaking crude.

When the cars derailed, a nearby power line was knocked over — a sure sign of imminent catastrophe.

Of course, train derailments and explosions are not strange occurrences these days. Such derailments have become an all-too-common consequence of North America’s shale oil boom.

In 2013, as I have discussed many times, a train derailed and exploded in the center of a small town in Canada, destroying several buildings and killing 47 people.

There was also a crash and explosion earlier this year in West Virginia that threatened residents and nearby water resources.

But this derailment in Montana was different…

You see, despite the five breached tankers, the more than 1,000 barrels of oil that leaked, and the downed power lines, there was no explosion.

CulbertsonCrash

There was no fire to speak of, either — just leaked oil and the torn metal of the train cars scattered near the tracks.

Many began to question exactly how an explosion was avoided and if such conditions could be replicated on all future oil rail shipments.

Unfortunately, as of yet, there are no definitive answers…

Air + Gas + Sparks = Explosion

A local sheriff’s deputy said of the spill: “You could smell it from over a mile away.”

As a precaution, some residents were evacuated, but BNSF crews quickly contained the leaked oil, and the debris and the tracks were soon restored to order.

Some have said that the reason the oil didn’t ignite was because the vapor pressure of the oil was in compliance with new regulations…

After a report released last year by the Pipeline and Hazardous Materials Safety Administration said that crude oil from the Bakken is more dangerous because of its higher-than-normal gas content, regulators in North Dakota required that any oil shipped from the Bakken be heated to 110 degrees to lower the gas content in the oil to below 13.7 psi.

According to Statoil, the owner of the crude in the train, the oil was below the 13.7-psi mark, and many commentators leaped to the conclusion that this prevented fires and explosions.

Of course, this is a bit disingenuous because, as I discussed in a column a few months ago, an oil train in compliance with the same standards crashed outside of Heimdal, North Dakota and burst into flames, forcing the evacuation of the small town.

heimdaltrain

Even though the oil was treated, it still caught fire, so it would seem that the lack of explosion or fire in the Culbertson crash had everything to do with luck and very little to do with science or regulation.

I’ll reiterate: It was very lucky indeed.

Usually a fire starts in a train derailment because the sparks caused by the friction of a train wreck meet the leaking oil and oxygen present in the air and combust.

Once oil and air meet fire, as you know, explosions happen — typically large ones.

Since the incident caused a power line to go down, it’s practically miraculous that there were no explosions or fires.

Still, can we really rely on luck to prevent the dangerous explosions caused by most derailments?

Pipelines are Coming

Despite all of the industry standards and new rules announced by the Department of Transportation, there’s still no definitive solution to stopping these crude oil derailments other than to cull the amount of oil shipped by rail.

Even with oil production in a tenuous position because of low prices, large amounts of crude are still shipped via rail.

And if rail shipments of oil were forcibly halted, the effects could be devastating on the companies drilling in the Bakken that need secure revenue streams now more than ever.

Instead, the solution to cutting traffic has to benefit producers and be market-based. The only way to do this is by pipeline.

As the amount oil traffic — and accidents — on rails has increased, so too has the call for construction of more pipelines.

Within a few years, the pipeline capacity in the U.S. is set to double, and when it does, there will hopefully be a reduction in railroad traffic and accidents.

Until next time,

Keith Kohl
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    Officials: Oil train didn’t speed before Montana derailment

    Repost from Yahoo News (AP)

    Officials: Oil train didn’t speed before Montana derailment

    By Matthew Brown, July 20, 2015

    BILLINGS, Mont. (AP) — A train that derailed and spilled 35,000 gallons of oil in northeastern Montana was traveling within authorized speed limits, federal officials said Monday as they continued to probe the accident’s cause.

    The Burlington Northern Santa Fe Railway train loaded with crude from North Dakota was traveling 44 mph before Thursday’s wreck, U.S. Federal Railroad Administration spokesman Matthew Lehner said.

    Officials have said the maximum authorized speed in the area is 45 mph.

    Twenty-two cars on the BNSF train derailed near the small town of Culbertson. Lehner said the tank cars were a model known as the “1232,”which is built under a 2011 industry standard intended to be more crash-resistant than earlier designs.

    But several recent oil train crashes, including some that caught fire, also involved 1232s, and federal officials said in May that the older cars must be phased out. The oil industry has challenged the timeline for the phase-out in federal court.

    The stretch of track where last week’s derailment occurred is inspected at least four times a week, said Matt Jones, a spokesman for the Fort Worth, Texas-based company. Jones did not immediately respond to a request for details on the latest inspection.

    The accident triggered a temporary evacuation of nearby homes and a camp for oil-field workers.

    No one was hurt, and no fire or explosion occurred. But oil leaked from four of the cars. Officials said the spill was quickly contained, and there was no immediate evidence that any crude reached a waterway.

    Federal Railroad Administration spokesman Michael Cole said Monday the train was bound for the Cherry Point refinery, operated by oil company BP near Ferndale, Washington. The agency had said previously that the shipment was headed to a refinery in Anacortes, Washington.

    The spill marked the latest in a series of wrecks across the U.S. and Canada that have highlighted the safety risks of moving crude by rail.

    In recent years, trains hauling crude from the Bakken region of North Dakota and Montana have been involved in fiery derailments in six states. In 2013, a runaway train hauling crude from the Bakken derailed and exploded in Lac-Megantic, Quebec, incinerating much of its downtown and killing 47 people.

    North Dakota regulators in April began requiring oil producers to treat their crude before it can be loaded onto rail cars, to reduce the concentration of volatile gases that can trigger an explosion. Statoil, which was shipping the oil involved in last week’s crash, was in compliance with the new regulations, company spokesman Peter Symons said.

    Cleanup work along the BNSF line near Culbertson continued Monday, said Daniel Kenney, an enforcement specialist with the Montana Department of Environmental Quality.

    BNSF has been asked to sample underground water supplies in the vicinity of the crash as a precaution, Kenney said. For most spills, the state expects cleanup work to be completed and a final report submitted to regulators within 90 says, Kenney said. He added that might not be the case with Thursday’s derailment given the large volume of oil spilled.

    Speed restrictions put in place following the derailment were lifted Monday on nearby U.S. Highway 2, the region’s main artery.

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      Montana county has had 5 derailments in two years

      Repost from The Dickinson Press

      Montana county has had 5 derailments in two years

      By Amy Dalrymple on Jul 20, 2015 at 11:22 p.m.
      An investigator takes photos at the site of a crude oil train derailment on Saturday, July 18 east of Culbertson, Mont. Twenty-two oil tankers derailed, leaking an estimated 35,000 gallons of oil. (FNS Photo by Amy Dalrymple)

      CULBERTSON, Mont. — Five train derailments have occurred in less than two years in the northeastern Montana County where crews continue cleaning up after last week’s oil train derailment.

      In addition to the two train derailments that occurred last week within a 20-mile stretch of Roosevelt County, two railcars also derailed at Culbertson in February, according to the Federal Railroad Administration database, which is updated through April.

      The cause of that incident, which did not cause injuries or release of hazardous material, was attributed to human error, according to information submitted to the FRA.

      The area also had two train derailments in 2014, including the derailment of two Amtrak cars in April of that year in the neighboring community of Bainville.

      Two people were hurt in the derailment, which caused more than $100,000 in damage to Amtrak equipment and nearly $500,000 in damage to the track, the FRA database shows.

      The cause that derailment is listed as “track roadbed settled or soft,” according to information submitted to the FRA.

      The other 2014 incident, which involved one railcar that derailed in December at Culbertson, was attributed to a broken wheel, the FRA database shows.

      The entire state of Montana had 19 train derailments in 2014, the FRA information shows.

      Last Tuesday, nine railcars derailed near Blair, Mont., damaging about 1 mile of track. The cause remains under investigation.

      BNSF Railway inspects the track in that area at least four times per week, spokesman Matt Jones said.

      The FRA and the Pipeline and Hazardous Materials Safety Administration continued collecting evidence Monday to investigate the cause of Thursday’s derailment involving 22 oil tankers. Four of the derailed tank cars leaked oil, the FRA said, and spilled an estimated 35,000 gallons of oil.

      The train was not speeding at the time it derailed, an FRA spokesman said. It was traveling 44 miles per hour in a 45-mph zone, the spokesman said.

      BNSF environmental specialists continue to clean up at the site. Oil will be removed from the remaining tank cars in the next several days, and the cars will be removed after that, Jones said.

      Crews are excavating contaminated soil, said Daniel Kenney, enforcement specialist with the Montana Department of Environmental Quality, which is monitoring the cleanup. The spill was not reported to have contaminated any water sources and has not threatened human health, Kenney said.

      The North Dakota Department of Mineral Resources confirmed Monday that Statoil, the company that owns the oil that was on the train, is in compliance with the state’s oil conditioning order.

      The order, which took effect in April, aims to reduce the volatility of Bakken crude oil.

      Statoil was meeting the order by operating its equipment at specific temperatures and pressures, said Department of Mineral Resources spokeswoman Alison Ritter. Companies also can comply by submitting vapor pressure tests to the state.

      The train with was loaded by Savage Services in Trenton, N.D., and headed to Anacortes, Wash., the FRA said.

      Jeff Hymas, a spokesman for Savage Services, said Monday the railcar inspection protocols at the Trenton terminal are consistent with FRA and BNSF requirements.

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        Why U.S. oil companies clash with EU peers on global warming

        Repost from The San Francisco Chronicle

        Why U.S. oil companies clash with EU peers on global warming

        By David R. Baker, Sunday, June 7, 2015 11:37 am
        John Watson, CEO of the Chevron Corporation, speaks during an energy summit in Washington, D.C., in 2011. Photo: Saul Loeb, AFP/Getty Images
        John Watson, CEO of the Chevron Corporation, speaks during an energy summit in Washington, D.C., in 2011. Photo: Saul Loeb, AFP/Getty Images

        The fight against climate change has opened a trans-Atlantic rift in an industry often seen as a monolith — Big Oil.

        Unwilling to sit on the sidelines of climate negotiations, Europe’s largest oil companies last month issued a joint statement calling for a worldwide price on the greenhouse gas emissions that come from burning their products. Such a price, they said, would help the global economy transition to cleaner sources of energy.

        The CEOs of BP, Eni, Royal Dutch Shell, Statoil and Total all signed the statement.

        None of their American counterparts did.

        Chevron Corp. CEO John Watson argued that his European colleagues are pushing a policy that consumers would never embrace. Focus instead on developing nuclear plants and natural gas reserves to fight global warming, he said.

        “It’s not a policy that is going to be effective, because customers want affordable energy,” Watson said last week, at an OPEC seminar in Vienna. “They want low energy prices, not high energy prices.”

        The split, analysts say, reflects the stark divide between climate politics in Europe and the United States.

        Europe already has a cap-and-trade system for setting a price on greenhouse gas emissions. Public debate over global warming revolves around how best to fight it, not whether it exists.

        In the United States, many conservatives still insist that warming is either a natural phenomenon or an outright hoax perpetrated by scientists, environmentalists and their political allies. Pricing carbon is a nonstarter for most Republicans in Washington, who are trying to block President Obama’s climate regulations. An effort to create a nationwide cap-and-trade system died in 2010, in part due to opposition from oil- and coal-producing states.

        “The domestic politics for the U.S. companies is different from what it is for the Europeans,” said Raymond Kopp, a senior fellow with the Resources for the Future think tank. “Right now, this is a difficult conversation for them to have domestically.”

        And that’s assuming they want to have it all.

        Exxon CEO Rex Tillerson has expressed support for a tax on greenhouse gas emissions but hasn’t pushed for it. The company formerly supported groups that questioned the scientific consensus on warming. Billionaires Charles and David Koch, whose wealth comes largely from oil and gas, have poured money into the campaigns of political candidates who oppose action on climate change. The Koch brothers have announced plans to spend $889 million during the 2016 election cycle.

        California policies

        And while Chevron’s home base lies in the only U.S. state with a full-scale cap-and-trade program — California — the company has often criticized the state’s climate-change policies, warning they could push energy prices higher.

        Last month’s statement from the European oil CEOs, in contrast, brands climate change “a critical challenge for our world” that must be tackled immediately. The executives urge governments that haven’t already done so to start putting a price on carbon.

        The statement, issued as an open letter to two top international climate negotiators, is notably silent on whether the companies prefer a tax on greenhouse gas emissions or a cap-and-trade system. Such systems — including California’s, which began in 2012 — force businesses to buy credits for each ton of carbon dioxide they emit.

        The CEOs make clear, however, that they eventually want a worldwide price.

        “Pricing carbon obviously adds a cost to our production and our products,” they write. “But carbon pricing policy frameworks will contribute to provide our businesses and their many stakeholders with a clear roadmap for future investment, a level playing field for all energy sources across geographies and a clear role in securing a more sustainable future.”

        Natural gas strategy

        The CEOs also hint at how their companies could thrive in such a future, by producing more natural gas and investing in renewable technology. Indeed, the companies already have extensive natural gas holdings, analysts noted.

        “If you’re on the board of directors of an oil company, you have to be asking yourself, ‘What’s our future in a low-carbon world?’ And with this letter, I think you see these companies trying to figure it out,” said Ralph Cavanagh, energy program co-director for the Natural Resources Defense Council environmental group.

        Chevron and Exxon have also invested heavily in natural gas, which when burned in power plants produces roughly half the greenhouse gas emissions of coal. Regulations limiting emissions, including the Obama administration’s effort to cut emissions from power plants, could help them.

        “I can’t imagine that Exxon or Chevron, which are companies that would benefit from a shift to natural gas, would be privately opposed to the Clean Power Plan,” said Amy Myers Jaffe, director of the energy and sustainability program at UC Davis.

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