Tag Archives: Texas

Bakken Shale, Crude By Rail, Marine transport, Pipeline transport

REUTERS FACTBOX – California crude sources and oil-by-rail projects

Repost from Reuters

FACTBOX-California crude sources and oil-by-rail projects

Mon Jul 21, 2014

HOUSTON, July 21 (Reuters) – California refiners remain far behind peers elsewhere in the country in replacing expensive imports with cheaper North American crudes from a new production boom.

No major crude pipelines cross the Rocky Mountains, leaving the isolated region dependent on rail to tap the burgeoning bounty in Texas, North Dakota and other growing oilfields.

More than half of the 1.7 million barrels of crude processed by California refineries each day is imported, largely from Saudi Arabia, Ecuador, Iraq and Colombia. The rest comes from California and Alaska, where output is declining.

Several refiners and logistics or pipeline companies are trying to tap U.S. and Canadian crude via rail, but California’s tough regulatory environment and growing opposition in light of fiery crude train crashes elsewhere could halt current projects and stop new ones from starting up.

Tesoro Corp and Savage Companies are proposing a 360,000 barrels per day railport at the Port of Vancouver in Washington that, if approved, could potentially replace more than 40 percent of California’s imported crude. Once railed to Vancouver, crude would be loaded onto barges or ships bound for West Coast refineries.

Here is a rundown of California’s crude slate and existing and pending oil-by-rail projects:

CALIFORNIA CRUDE
California’s 1.7 million barrels per day (bpd) of crude processed in 2013 came from these three main sources:
* Imports: 875,564 bpd, 51 percent of the total
* California, 631,441 bpd, 37 percent
* Alaska, 201,720 bpd, 12 percent
The non-California supply arrives via ships or barges except negligible oil-by-rail shipments, which reached 15,715 bpd in the first quarter of 2014.
That is less than 2 percent of the overall 873,967 bpd that originated on top U.S. railroads throughout the United States in the same period.
By comparison, in 2003 a little more than one-third of the 1.8 million bpd of crude processed in California came from imports:
* Imports, 636,923 bpd, 34 percent
* California, 792,920 bpd, 42.5 percent
* Alaska, 438,805 bpd, 23.5 percent
Source: California Energy Commission
CaliforniaCBR

(Reporting By Kristen Hays, editing by Peter Henderson)

Crude By Rail, Light sweet crude, Oil Industry

Big oil producers in Texas shifting to crude-by-rail

Repost from Midland Reporter-Telegram
[Editor: Significant quote: ““The Permian Basin may be a lot larger than the Bakken and Eagle Ford combined….”  Note: I have added a map of the Permian Basin below this article.  – RS]

Basin operators increase interest in shipping oil by rail

By Mella McEwen. July 31, 2014

Oil Trains

Billions of dollars have been pouring into the Permian Basin in recent years as pipelines rush to help producers move their crude and natural gas to market.

Despite the investment in new pipelines and gathering lines and expansion of existing lines, takeaway capacity remains tight and producers are increasingly turning to the railroads for relief.

Using trains to move crude to market is nothing new, points out Bruce Carswell, West Texas operations manager for Iowa Pacific Holdings. “There has been, over time, crude oil moving by rail out of the Permian Basin almost since the beginning” of oil production, he said.

The increase in pipeline construction has not kept pace with the increase in production from drilling activity, he said, and the railroads his company operators are seeing increased shipments across the board.

Judging by the ringing of his phone, Christopher Keene, president and chief executive officer of Rangeland Energy, says demand for moving Permian Basin crude by rail is growing. His Sugar Land-based company is in the process of constructing the Rangeland Integrated Oil System in the Delaware Basin. A rail terminal is under construction near Loving, New Mexico that will open in October with truck-to-rail transload operations. Initial capacity will be 10,000 barrels a day, eventually growing to high-speed unit train loading capacity of over 100,000 barrels a day. It will be served by the BNSF Railway.

Rangeland is also planning its RIO Pipeline, which will connect the new RIO Hub in Loving to the RIO State Line Terminal and then Midland, which will provide connections to various terminals and interstate pipelines to Cushing and the Gulf Coast.

Carswell’s company operates two railroads, the Texas-New Mexico from Monahans to Hobbs and Lovington and the West-Texas Lubbock, which runs from Lubbock to Seagraves and a line that runs from Levelland to Whiteface.

While new pipelines will come online later this year and into next year, Carswell said, “But my observation is they’re drilling a lot more wells, too.”

Producers, observed Khory Ramage, president of Ironhorse Energy Partners, didn’t expect as big an increase in production as has been seen.

“It just accelerated,” said Ramage, whose company is building a rail terminal at Artesia. The company, which he founded with brother Kyle, already has laid 7,000 feet of track and connected to the BNSF main line. The first phase of the development calls for 18,000 feet of track to accommodate rail cars unloading proppants. By the time development of the unit train terminal is done, there will be nine-and-a-half miles of track with a loop track to hold 200 loaded railcars at once.

“The Permian Basin may be a lot larger than the Bakken and Eagle Ford combined,” he said. “Bringing production into and out of the market is vital.” He reported that his company is talking to two different entities about moving their production.

Keene said his company “just landed the 800 pound gorilla out there in the Permian Basin,” a name he was not yet ready to announce.

The rising use of rail to move crude production has caught the public’s attention recently in the aftermath of the derailment in Canada that killed over 40 people as well as derailments that have resulted in spills. New safety regulations are being proposed by the federal government, something Carswell said the industry welcomes because it has been waiting for the federal government to approve new standards for awhile.

“There’s been a fair amount of effort to improve the safety aspect of moving any flammable liquid,” he said.

Keene said he is glad there is a conversation about safety and said he sees three areas where change is occurring or needed: Safer rail cars need to be designed, the railways themselves need to be maintained and speed in certain areas should be addressed.

“I’m a firm believer rail is here to stay,” Keene said, “if it’s done the right way, in a safe and environmentally friendly manner. I think the industry is going to continue getting better.”

For his part, Ramage sees a need for both rail and pipelines, saying there will always be options for rail. He saw the impact on rail demand with the rise in production from the Bakken in North Dakota and Wyoming. That prompted him and his brother to form Ironhorse.

Keene said the Delaware Basin is different in that the crude seems to want to move by pipeline, but when it can’t, for whatever reason, producers are turning to railroads.

Another benefit of railroads, Carswell said, is they offer producers flexibility as to where to send their commodities, especially given the price differentials. “This week, shipments may go to the Gulf Coast but next month they may go to the West Coast or the East Coast.”

“What’s predominantly driving this is the price differentials” between West Texas Intermediate-Midland, West Texas Intermediate Cushing and even Louisiana Light Sweet, Keene said, a gap that has reached as much as $20. “That’s huge,” he said.

Another driver, he said, is pipeline constraints, and even though significant new and expanded capacity is expected in the coming year, he said price differentials are still playing a role.

Ramage said flexibility is important, especially as traditional pipeline destinations like Cushing, Oklahoma and the Gulf Coast are becoming inundated with light sweet crude. In the 1990s, he noted, refineries were retrofitted to process heavier, more sulfur-laden crudes that were being imported, making them slower to respond to the rise of light sweet crudes from unconventional shale plays.

That quality, Keene said, is the third driver in rail demand. “A lot of the new crude is outside pipeline specifications” of 42 API Gravity, though some pipelines have inched that up to 44 API Gravity. Much of the crudes now coming from shale plays are 45 to 55 API Gravity, he said and can even be considered condensate or natural gasoline.

Producers then have three options, Keene said: Rail the crude to a splitter, where the condensate is split into different components like distillates and naphtha, send it by rail to Canada for use as diluents or send it by rail to coastal terminals where, hopefully, the government will classify it as stabilized condensates that can be exported overseas.

Allowing exports could be key to the industry’s future, Ramage said.

“The only concern is if the government doesn’t consider the importance of lifting the export ban,” he said. “We may see prices decrease and the energy revolution we’re experiencing slow down.

Map of the Permian Basin:

 

 

Air Quality, Clean Air Act, Federal Regulation (U.S.), Fence line monitoring, Greenhouse gas emissions

California Groups Tell EPA: Set Stronger New Standards for Oil Refinery Air Pollution

Repost from EarthJustice

California Groups Tell EPA: Set Stronger New Standards for Oil Refinery Air Pollution

Focus on need for the EPA to do more to protect communities’ health

July 16, 2014 
Conoco Phillips Refinery in Wilmington, CA
Los Angeles, CA — California environmental and community groups—including families living near oil refineries—today provided powerful testimony about why the U.S. Environmental Protection Agency must strengthen protections from hazardous air pollution.The statements were made during a day-long public hearing in Wilmington, Calif., which the EPA held as part of its 60-day public comment period on proposed standards that would strengthen emissions and monitoring requirements for the country’s nearly 150 oil refineries.In advance of the hearing, Jane Williams, director of California Communities Against Toxics, said:

“The EPA’s proposal is an improvement over the status quo. However, it does not go far enough to reduce the harmful, toxic air that our children are exposed to. More must be done to reduce hazardous pollution spewed by the nation’s oil refineries to prevent cancer, breathing problems and other illnesses in our children.”

Although the proposed standards—to be finalized in April 2015—reduce hazardous air pollution by 5,600 tons each year and reduce cancer risk for millions of Americans, community leaders who have been working for decades for stronger protection say the standards fall short of the Clean Air Act mandate that all sources must follow at least, the average, emission control achieved by the cleanest refineries.

The proposed standards that were published in the federal register last month resulted from a consent decree resolving a lawsuit filed by Earthjustice and the Environmental Integrity Project on behalf of environmental groups in California, Louisiana, and Texas that argued that EPA missed its deadline under the Clean Air Act to review and update toxic air standards for oil refineries by more than a decade.

The proposed standards, include a fence line monitoring requirement for the first time, which would require refineries to measure the toxic air contaminant benzene at the property line as it goes into the local community’s air. In addition, if benzene exceeds the new action level EPA proposes to establish, the federal agency would require a plan for corrective action.

In addition, the proposed standards would require tighter controls on emissions from storage tanks and other parts of refineries that are major contributors to toxic air pollution (such as delayed coker units) along with controls and monitoring requirements on flaring or the burning of waste gas, which is, too often, used routinely and which creates harmful new pollution.

The proposed standards also finally remove unlawful loopholes that previously allowed refineries to escape scot-free when they violated the air standards.

For EPA’s new standards to provide much-needed protection for communities on the ground, environmental groups are calling for stronger fence line monitoring requirements that would mandate the use of the best current technology to give neighborhoods a real-time, continuous measure of pollution, not just a snapshot or long-term average that masks peak exposure levels.  The standards also must require accessible public reporting and enforceable corrective action so refineries will quickly fix violations. In addition, groups want to see a hard limit on flaring to ban its routine and unnecessary use and to assure refineries minimize flaring in all other circumstances, as well as tighter controls on emissions from other parts of refineries.

Cynthia Babich, of Del Amo Action Committee said she is most focused on the real world health impacts of refineries’ pollution when considering this proposal. “The EPA must do a health evaluation using the most current scientific methods, instead of ignoring dangerous health risks our communities face,” said Babich.

“People who live near refineries are often surrounded by multiple sources of contaminants from other polluters besides refineries, like chemical plants. And in view of this and the greater risk to our most vulnerable children, EPA should find the current, high level of health risk to be unacceptable and set stronger emission limits,” she said.

Jesse Marquez, of Coalition For A Safe Environment, said his organization supports EPA’s proposal to make flares more efficient when they are used, and also calls on the EPA to limit flared emissions by setting a hard cap on flaring that will ban its everyday use.

“The oil industry claims emissions have been decreasing for decades but we found that flared emissions at the four refineries in the Wilmington area increased every year between 2000 and 2011,” Marquez said. “We must have stricter standards to end all unnecessary flaring and improve our air quality.”

Although the oil industry is objecting to the new proposed standards, community groups’ testimony illustrated today how important it is for EPA to reduce toxic air pollution and decrease the unacceptable extra health threats millions of Americans currently face just because they live near refineries. EPA predicts its current proposal will take about 5,600 tons each year of hazardous chemicals, associated with leukemia and other devastating forms of cancer, out of the air.

Lisa Garcia, Earthjustice’s Vice President of health, said: “It is imperative that we fight industry’s unfounded attempts to weaken EPA’s attempt to strengthen health protection, and, instead, do all we can to protect everyone—especially fence line communities and those that are overburdened—from the unacceptable harm caused by oil refineries’ pollution. We must stand behind EPA’s efforts to set strong new hazardous air pollution standards, just as the Clean Air Act requires it to do.”

Eric Schaeffer, executive director of the Environmental Integrity Project said: “EPA’s analysis shows that the proposed emission controls are worthwhile and will have negligible impact on the bottom-line of these companies, many of which report multi-billion dollar profits every year. The communities affected by refinery pollution cannot continue to pay for this pollution in the form of medical bills and missed school and work days, which add up to tens of millions of dollars every year.”

Bakken Crude, Crude By Rail, Derailment, Explosion, Volatile gases

BizJournal: Why does North Dakota oil explode so much?

Repost from The Minneapolis / St. Paul Business Journal 

Why does North Dakota oil explode so much?

By Mark Reilly, Managing Editor- Minneapolis / St. Paul Business Journal – July 8, 2014

Oil-industry shortcuts made in the early days of the North Dakota oil boom have left the state awash with crude oil that’s so unstable many pipeline companies won’t ship it. Cue the exploding trains.

The Wall Street Journal reports that only one company in North Dakota has installed stabilizer equipment to remove explosive gases from the crude oil before transport. Federal regulations don’t call for such measures, but pipeline companies do, and that’s one reason why North Dakota oil is so often shipped by rail — and why oil trains have exploded so ferociously when they derail.

RELATED: Oil train tally: More than 40 per week into Minnesota

Now, faced with the prospect of an explosion in a populated area, regulators are reconsidering those rules. Industry groups have played down the danger, saying that train cars can handle the issue.

The Journal contrasts North Dakota with Texas, another region that’s seeing a boom in fracking-produced oil that’s possibly even more combustible. But in Texas, companies spent hundreds of millions of dollars to add stabilizing equipment and now ship it via pipeline with no trouble.