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LOCAL OP-ED – Jerome Page: The triumph of human ingenuity

Repost from The Benicia Herald

Jerome Page: The triumph of human ingenuity

August 8, 2014 by Jerome Page

TIME TO TAKE A CLOSE LOOK AT OUR STARTLING SUCCESS in solving our energy problems with oil — good old American Bakken crude along with a hefty swash of that Canadian tar sands crude. Canada being a very friendly neighbor, this seems a great deal on both sides of the border. And thanks to a fine railroad system, it’s just a simple straight shot from North Dakota and Alberta right up to our door here in Benicia, California! Providence be blessed!

And yet there are, as always, folks who not only want to examine that gift horse’s teeth but can be just plain ungracious — if not downright surly and disagreeable — about it. What could possibly be wrong with cheaper oil in copious quantities, without ever having to deal with folks who don’t even speak English?

But enough. I’ll step out of the Joe Schmoe character and comment just a bit on that question of what can, in fact, possibly be wrong.

From an Earth Island Journal clipping (June 29, 2014), a piece by Adam Federman, we read: “Since the Lac-Mégantic disaster (with its 47 dead) there has been a string of oil train collisions and derailments. Late on the night of November 7, a train carrying at least 2.7 million gallons of Bakken crude derailed near Aliceville, Alabama, resulting in dramatic explosions similar to those seen in Lac-Mégantic. Because the train exploded a few miles outside of Aliceville, no one was injured or killed. On December 30, a train carrying crude collided with another train outside of Casselton, North Dakota, releasing more than 400,000 gallons of oil into the surrounding land. At least half the town’s 2,400 residents were evacuated, though no one was injured. And on April 30, an oil train operated by CSX derailed in the city of Lynchburg, Virginia, sending flames and oil into the James River and forcing the evacuation of more than 300 residents. Last year more oil spilled in rail accidents — 1.15 million gallons — than the previous 35 years combined.” (Italics mine)

Then the following:

“Extra-flammable Bakken crude riskier to ship by rail than other oil, U.S. safety watchdog warns,” by Jeff Lewis, Jan. 2, 2014:

“CALGARY — U.S. authorities said Thursday crude oil shipped by rail from the Bakken shale in North Dakota across the United States and Canada ‘may be more flammable’ than other types of oil, as the latest in a string of explosive accidents focuses attention on the booming oil-by-rail trade.”

How about we ditch that “may be”! For example, another read on Casselton:

“‘There was a huge fireball’: Train carrying crude oil explodes after derailing in North Dakota,” by Dave Kolpack, Associated Press, Dec. 30, 2013:

“A train carrying crude oil from North Dakota’s oil patch derailed Monday near the small town of Casselton, setting off a series of fiery explosions. No injuries were initially reported, but officials were warning residents to stay indoors as the situation unfolded. Cass County Sheriff’s Sgt. Tara Morris says as many as 300 residents of Casselton may be evacuated.

“Morris estimates about 10 cars from a mile-long train caught fire and will have to burn out. She said it could take up to 12 hours before authorities can get close.

Next, “How crude-by-rail accidents may impact the U.S. oil market,” Reuters, Jan. 23, 2014:

“A spate of high-profile crude-by-rail accidents is making oil analysts consider how tighter rail safety standards could impact U.S. oil markets, by potentially crimping a mode of transport that has grown exponentially amid the shale drilling boom.

“Any regulation or industry-driven move to hastily sideline a fleet of some 75,000 older tank cars commonly used for shipping crude could roil U.S. oil logistics, boost costs for refiners, and even hit output from North Dakota’s giant Bakken field, oil analysts said.

“The scenario that many view as more likely — where older rail cars could be gradually retrofitted or retired — would be less disruptive but still raise transportation costs.” (And, of course, forestall greater dangers, but what the hell, what’s life without a little spice!)

“Tank cars known as DOT-111s are used to transport most of the 10 percent of U.S. oil production, or around 800,000 barrels per day, that is shipped by railroad. The cargoes have surged over the past half decade, offering drillers in fast-growing shale plays like the Bakken a quick and flexible way to send barrels to consumer markets without relying on limited regional pipelines.

“DOT-111 rail cars built before 2011, which have been involved in several accidents, are under scrutiny for safety issues that make them more likely to puncture in a derailment.

“Over the weekend, a train carrying North Dakota crude derailed in Philadelphia, although there was no fire or injuries.

“‘I view this as a potentially hugely significant rail risk,’ said Credit Suisse’s Jan Stuart, referring to how new crude-by-rail safety measures could impact Bakken-region oil logistics or production.” (That risk of course is financial, and when you’re talking financial risk, man you have an audience; human risk, risk to life and limb — not so much!)

“So far, the Department of Transportation has set a schedule for next year to draft new regulations, including updated tank car specifications, but it is facing pressure to move faster.

“‘Regulators have endorsed the new safety standards for newly built cars, but so far have not required any retrofitting,’ said Sandy Fielden of the RBN Energy consultancy in Austin. ‘If the existing fleet of older cars were to need retrofitting, it would be very disruptive.’”

And why in hell would we be wanting to do anything “disruptive” when the money is rolling in so beautifully! Is it that hard for people to focus on the crucial bottom line?!

“In the fast-growing Bakken, where pipeline capacity has not kept up with oil production, more than 70 percent of output that is approaching 1 million barrels per day now moves by rail, according to the North Dakota Pipeline Authority.

“Over half of the U.S. crude moved by rail hails from the Bakken, where the trend has allowed drillers to quickly send their barrels to refineries in the biggest fuel markets along U.S. coasts where they fetch higher prices, boosting profits.

“‘The most likely scenario is for regulators to gradually phase in safety improvements,’ said energy analyst Michael Wittner of Societe Generale. ‘That could increase transportation costs, but if there were a decision to replace older tank cars on short deadline, crude would be piling up in North Dakota.’” (Let’s not be disrupting the flow of oil — and cash.)

“Retrofitting the entire fleet of older DOT-111s would be costly and take up to ten years, the Rail Supply Institute, which represents tank car owners, said last year, in part because manufacturers are already struggling with a backlog of tank car orders. Newer DOT-111s feature safety improvements, but comprise only around 14,000 cars so far, according to the AAR.

“Sidelining older DOT-111s could depress Bakken oil prices at the wellhead as producers compete for insufficient pipeline capacity, eventually hurting production, Fielden said. Any fall in deliveries by rail could force some coastal U.S. refineries to go back to buying more expensive crude imports.

“If all older tankers were retrofitted, it could add between 20 and 40 cents per barrel to crude-by-rail costs, assuming a cost of $30,000 to $60,000 per car, according to a report this month from Turner, Mason & Company consultants.

“Should producers have to rely just on pipelines, Bakken deliveries would plummet to less than 600,000 bpd at the most, less than 60 percent of daily output, according to the state pipeline authority.

“Because of its rapid output growth and isolated location from fuel markets, only a small portion of Bakken crude is processed in facilities known as fractionation plants, which strip out volatile gases like propane and butane, known as light ends. The plants can require large up-front investment, and years to build.” (Whoa there, time and money again? Forget it!)

“‘Regulatory costs are going to go up, it’s just a question of how high and how fast,’ said Robert McNally, president at U.S. energy consultant Rapidan Group. ‘I expect officials will try to find a sweet spot where timely and adequate regulations … do not cripple Bakken economics.’” (Ah yes, a sweet spot that doesn’t interfere with profit!)

Just maybe in all of that there are some lessons for those of us living in Benicia, California about the priorities that should be guiding our decisions when it comes to bringing in Bakken and Canadian tar sands crude. Our neighbors to the east on that train route are obviously deeply concerned; why not Benicia?

Should an accident or major spill occur on that clearly precarious route down the Feather River Canyon, the damage to river, reservoir and water supply would be incalculable. And what of Sacramento and Davis and their obvious great vulnerability — have we no responsibility to our neighbors along that long trail from Alberta or North Dakota to Valero?

And, finally, of course, there is that bloody problem of the environmental costs of jacking up our use of not just more oil — bad enough in itself — but the most dangerously polluting stuff we can find. A bizarre example of man’s capacity to blot out the future in the pursuit of — just what?!

Jerome Page is a Benicia resident.
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    Oil industry recommends: use “highest-danger” labeling on bakken oil tank cars

    Repost from Reuters
    [Editor: The oil industry recommends highest-danger labeling on Bakken crude oil tank cars despite its misleading claim that Bakken is no different from other light sweet crudes.  This stance puts pressure on the rail industry to come up with stronger tank cars sooner.  Um… follow the money?  – RS]

    Oil group wants highest-danger label for Bakken rail shipments

    New York, Aug 5, 2014

    Aug 5 (Reuters) – A U.S. oil industry group is recommending that all crude shipped by rail from North Dakota’s Bakken fields be labeled as the most-dangerous type of oil cargo, a designation that could hasten the use of new or upgraded tank cars.

    On Monday, the North Dakota Petroleum Council (NDPC) released the final results of a wide-scale study on the quality characteristics of Bakken crude, which has been involved in several fiery oil-train derailments over the past year.

    The study confirmed preliminary findings released in May suggesting that Bakken was little different from other forms of light, sweet U.S. crude and posed no greater threat versus other fuels when transported by rail.

    The NDPC also issued a series of recommendations following the study, however, including one urging oil-by-rail shippers to classify all Bakken crude oil as “Packing Group I” hazardous materials.

    That is the highest-risk level of a three-tiered danger assessment, and the NDPC said it was recommended “even though the majority of samples tested for the study would fall within specifications for PG (Packing Group) II.”

    Current methods for testing boiling point, the key criteria for differentiating PG I and II classifications, can be inconsistent, the NDPC said. Because it typically contains a high proportion of very light hydrocarbons and petroleum gases, Bakken crude tends to boil at lower temperatures.

    “The margin of error for the test methodology can result in different labs testing the same sample with values meeting both PGs. PG I has the more stringent standards and is therefore recommended to avoid further confusion,” said the NDPC report, which was prepared by industry consultants Turner, Mason & Co.

    Historically the Packing Group label has made no material difference in how oil is handled on trains; its only purpose was to inform emergency responders about the cargo. The DOT-111 tank car, the model used almost exclusively to ship oil by rail, is able to transport any Packing Group. Many oil companies have been using PG I routinely simply to ensure they were compliant.

    But under new regulations proposed last month by the U.S. Department of Transportation, the Packing Group determination could become a pivotal factor in determining how quickly shippers use new or upgraded tank cars that will gradually replace older-model DOT-111s long seen as flawed.

    The NDPC represents major producers in the Bakken including Marathon Oil Corp, ConocoPhillips, Continental Resources and Hess.

    Authorities had already begun to crack down on misclassified oil shipments after the Lac Megantic tragedy in Canada last year, when a runaway oil-train with cargo from the Bakken energy patch derailed and killed 47 people in the center of a Quebec town.

    In February, the DOT’s Pipeline and Hazardous Materials Safety Administration (PHMSA) fined three companies for using incorrect Packing Group labels for their Bakken cargoes. Two of them had mislabeled shipments as PG II, when in fact they should have been labeled PG I. A third company had used a PG III label rather than PG II.

    The DOT rules last month said older model DOT-111 cars would not be allowed to carry Packing Group I crudes within two years, while less dangerous crudes that fall into PGs II and III could still be shipped in the older cars for three and five years.

    The rules are open to public comment and may not be finalized for several months.

    [Editor: To send a comment, see Two-month comment period starts for new federal oil train rules. -RS]

    In its own study released last month, the PHMSA said most crude from the Bakken tested as PG I or II material – “with a predominance to PG I”. It also said the oil was “more volatile than most other types of crude,” a finding disputed by both the American Petroleum Institute and NDPC.

    (Reporting by Jonathan Leff; Editing by Tom Brown)
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