County supervisors declare end to moot oil project approved in 2014
BY JOHN COX, Jan 22, 2019
A pair of controversial oil projects killed years ago by poor market conditions was finally declared dead last week by the Kern County Board of Supervisors.
The projects, valued at $170 million, were supposed to transform the former Big West refinery on Rosedale Highway, in one case by turning it into a rail terminal that was supposed to take in two mile-long trains, or 150,000 barrels, per day of crude from across the continent. The related project would have upgraded the 67,000-barrel-per-day refinery, which has not operated since 2012.
After the board voted unanimously to approve the project Sept. 9, 2014, the plan came under legal attack by environmental groups that considered it polluting and dangerous. Prior to the vote there was a series of rail accidents in which trains carrying oil from North Dakota derailed and exploded, in one case killing nearly four dozen people in Canada. The Bakersfield project wasn’t limited to receiving only oil from North Dakota, which was considered uniquely volatile.
The environmentalists ultimately prevailed in court and, as part of a settlement released Sept. 19, a judge ordered the board to rescind its approval of the projects. Supervisors did so Tuesday by signing off on a consent-agenda list that included the oil projects.
Refining industry observers have said the projects likely would not have proceeded anyway. When oil prices plummeted in 2014, there was no longer enough operating margin — and apparently still isn’t — to cover the cost of transporting huge amounts of oil across the country. Separately, the company that proposed the project, Houston-based Alon USA, now part of Delek US Holdings Inc., headquartered in Tennessee, opted not to move forward with a broader overhaul of the refinery.
Environmental groups said the projects’ official end ensures local residents won’t be harmed by refining emissions or oil-train explosions.
“Families throughout Kern County can breathe easier knowing that this ill-conceived, extremely dangerous project has been stopped,” Angela Johnson Meszaros, an attorney with the environmental group Earthjustice, said in a news release.
Environmentalists sue to stop crude-by-rail terminal in California
By Rory Carroll, Jan 29, 2015
Environmental groups on Thursday sued a California regulator that permitted trains carrying crude oil to begin making deliveries at a terminal in Bakersfield, arguing the permit was issued in secret and the volatile crude could cause explosions.
The plaintiffs asked the California Superior Court to stop operations at the newly opened Bakersfield Crude Terminal in Taft until a full environmental review is conducted. The terminal, located in Kern County, began receiving crude in November from North Dakota and Canada and is owned by Plains All American Pipeline LP.
In their complaint, the groups point to emails obtained through a public records request that they say show the San Joaquin Air Pollution Control District helping the company avoid environmental and public reviews of the project.
The terminal can currently receive one 100-car unit train a day carrying crude from the Bakken shale formation as well as heavier tar sands crude from Canada. The terminal will ultimately expand to receive two unit trains per day, carrying as much as 61 million barrels of crude a year, making it one of the state’s largest crude-by-rail terminals, the groups said.
Crude oil shipments by rail in California have jumped in recent years as producers seek to move cheap, landlocked crudes from North Dakota and Canada to refineries along the West Coast.
The increase has raised environmental and safety concerns due to a series of fiery derailments, most notably the Lac-Mégantic rail disaster in Quebec in July 2013, which killed 47 people.
“The Bakersfield Crude Terminal evaded both state and federal environmental review and was permitted largely in secret. Given the potentially catastrophic damage from derailments of these tank cars full of volatile crude, these permits must be cancelled,” said Vera Pardee, senior attorney for the Center for Biological Diversity, one of the five environmental groups who are plaintiffs in the case.
Annette Ballatore-Williamson, an attorney for the air district, said the lawsuit misrepresents the nature of the permit, which only covered the construction of a couple storage tanks that emit about a half a pound of air pollution per day.
The facility and the rail terminal underwent significant environmental review and analysis by Kern County several years ago, she said.
“The problem from (the plaintiff’s) perspective is the statute of limitations on their claim against Kern County expired quite some time ago so now they are just looking for a target,” she said.
(Reporting by Rory Carroll; Editing by Andrew Hay and Lisa Shumaker)
Benicia sees cash in crude oil; neighbors see catastrophe
By Jaxon Van Derbeken, October 23, 2014
A plan to bring tank-car trains filled with crude oil from Canada and North Dakota to a Benicia refinery is pitting the Solano County town against Northern California neighbors who say they will be burdened with the risk of environmental catastrophe.
Benicia officials must decide whether to approve a draft environmental impact report on a $70million terminal at Valero Corp.’s refinery near Interstate 680, where two 50-car oil trains a day would deliver crude.
Supporters and the company say California consumers stand to benefit: With no major oil pipelines running to the West Coast and marine transport both costly and potentially hazardous, they say, rail is the best way to keep local gasoline prices low.
“Right now, that refinery relies on more expensive crude from Alaska,” said Bill Day, spokesman for Valero. “Rail is the quickest, most efficient and safest way of delivery.”
Benicia’s environmental study weighing the risks of the project, however, has done nothing to assuage critics who say the city is downplaying the dangers of delivering oil by rail.
Crude from North Dakota shale is extra-volatile, they say, and the city’s environmental report assessed only the chances of a spill along the 69 miles of track from the Sacramento suburbs to Benicia — not the chance of a catastrophic explosion, or the possibility of an accident of any kind along the more than 1,000 additional miles the trains would have to travel to reach the shores of the Carquinez Strait.
“This project is not in our region — it is outside of our region — but the impacts on the 2.3million people who live here we view as very significant, very troublesome, very disturbing,” said Don Saylor, chairman of the Yolo County Board of Supervisors and vice chairman of the Sacramento Area Council of Governments, which represents 22 cities and six counties through which the oil trains could travel.
‘A street fight’
Benicia itself is divided by the proposed project. Some locals worry about the environmental risks and traffic problems, while others tout the benefits of low-cost crude to Valero — a company that accounts for a quarter of the city’s tax revenue.
“This is going to be a street fight,” said oil-train opponent Ed Ruszel, whose family woodworking business fronts the railroad tracks next to the refinery. “They have to come across my driveway every day — we’re at ground zero.”
The issue is so contentious that the city attorney recently told Mayor Elizabeth Patterson to stop sending out e-mail alerts about city meetings regarding the oil-train project. According to Patterson, the city attorney warned that her activism could open Benicia’s final decision to legal challenge.
Patterson said she has not taken a stand on the Valero terminal, but that “we need to make sure that just because one industry wants to do something, we don’t ignore the adverse impact to the other businesses and the community.”
She called City Attorney Heather Mc Laughlin’s warning “a blatant effort to muzzle me.” Mc Laughlin did not respond to a request for comment.
For Ruszel and other critics of the project, the danger is real. They cite several recent oil-by-rail explosions, including the derailment of a 72-car train that killed 47 people and wiped out much of the town of Lac-Mégantic in Quebec in July 2013.
The Valero-bound trains would pass through Sacramento, Davis and Fairfield, among other cities, en route to Benicia. Those cities have voiced concerns about the terminal, where trains would deliver a total of 2.9million gallons a day of shale oil and tar sands.
“We have lots of support here from our own local people,” said project critic Marilyn Bardet of Benicia, “but the real difference is that there are so many agencies and people from up rail looking at this problem. We feel exonerated — everybody has chimed in and agreed with us.”
Not everyone along the rail line is against the idea, however. State Sen. Ted Gaines, a Republican who represents Rocklin (Placer County) and is running for state insurance commissioner, called the project “beneficial environmentally and economically.”
It “can be done safely given the prevention, preparedness and response measures in place by both Valero and Union Pacific Railroad,” Gaines said.
The Benicia battle will probably be a preview of numerous local fights over oil trains in California. Oil-by-rail shipments jumped from 1million barrels in 2012 to 6.3million barrels in 2013, according to government estimates. By 2016, the state could be awash with 150million rail-shipped barrels of crude a year.
What Benicia does could influence how future oil-train plans play out. Several cities have called on Benicia to require that all train tanker cars have reinforced walls and be better controlled by new, electronically activated braking systems, and that officials restrict what kind of oil can be shipped to Valero.
Such efforts, however, could run afoul of federal law that preempts states and local governments from setting standards on rail lines. Valero has already warned city officials that it may “invoke the full scope of federal preemption,” a thinly veiled threat to sue if Benicia imposes too many restrictions.
Much of the crude that would arrive via train at Valero is expected to come from the Bakken shale formation in North Dakota. Federal transportation officials recently deemed Bakken crude to be an “imminent hazard” because it is far more easily ignitable than more stable grades of crude previously shipped by rail.
In issuing an alert in May, federal transportation officials warned that oil trains with more than 20 cars are at the highest risk because they are heavier than typical cargo and thus more difficult to control. The federal government is considering requiring additional reinforcement of tanker cars and more robust braking systems.
The federal alert about the danger of crude by rail comes as accidents have skyrocketed, with nine major explosions nationwide since the start of 2013. Last year alone, trains spilled more than 1million gallons of crude in the United States — 72 percent more than the entire amount spilled in the previous four decades combined, California officials say.
The consultants who wrote Benicia’s draft environmental impact study concluded that because the type of crude that would be brought to Valero is a trade secret, they could not factor it into their risk assessment. They calculated that a major spill on the 69 miles of track between Roseville (Placer County) and Benicia could be expected roughly once every 111 years.
Among those who think Benicia needs to take a harder look is state Attorney General Kamala Harris, whose office wrote a letter challenging the environmental impact report this month.
Harris’ office says the report’s authors assumed that the safest rail cars available would be used, disregarded spills of fewer than 100 gallons in determining the likelihood of accidents and, in looking only as far as Roseville, ignored 125 miles of routes north and east of the Sierra foothills town.
Some possible routes go through treacherous mountain passes that historically have seen more accidents, say oil-train skeptics. While not specifically mentioning a legal challenge, Harris’ office called Benicia’s study deficient and said it ignored the “serious, potentially catastrophic, impacts” of an accident.
Not her call
Valero says Harris can voice all the objections she wants, but that she doesn’t get a say on whether the terminal will be built.
“This is really the city of Benicia’s decision,” said Day, the company spokesman. The attorney general and others, he said, are “free to file comments” on the environmental report.
He added that “all the crude oil that Valero ships will be in the newest rail cars, which meet or exceed rail safety specifications.”
“Rail companies have products moving on the rails every day that are flammable,” Day said. “The overwhelming majority of everything transported gets there safely, on time, with no incidents.”
Benicia’s City Council now has to decide whether to order to certify the draft study, order it revised or reject it entirely. When that decision comes, Benicia will be getting a lot of out-of-town attention.
“We have near-unanimity in our region to address the safety issues of the crude-oil shipments by rail,” said Saylor, the Yolo County supervisor. “For us, it has been strictly about public safety. It’s a high-risk operation — we have no choice but to take on this issue.”
Repost from Reuters [Editor: Significant quote: “…proposals have faced lengthy delays for comprehensive environmental reviews, public input, and revisions. Valero Energy Corp, the largest U.S. refiner, postponed its plans to send crude by rail to its San Francisco-area refinery because of such delays, and withdrew permit applications for a similar project at its Los Angeles plant….’I think Bakersfield is probably the best place to build a rail facility in California, because it’s not sitting in San Francisco or LA, and it has access to pipes going north and south. It just seems like it’s going to be a struggle to develop rail in other locations,’ Plains’ Chief Operating Officer Harry Pefanis told analysts in May.” – RS]
Oil-by-rail project for shut California refinery near approval
Kristen Hays, August 15 2014
(Reuters) – The first new crude-by-rail project at a California refinery is likely to win approval next month after more than a year of scrutiny, the head of the Kern County planning division told Reuters, and it could help reopen the shuttered plant.
The facility at independent refiner Alon USA Energy Inc’s Bakersfield plant would increase crude offloading capacity to 140,000 barrels per day from its current 13,000 bpd and open up significant access to cheaper inland U.S. and Canadian crudes.
Alon’s Bakersfield plant is in Kern County, home to about 65 percent of all California oil production, where crude has been produced for more than a century.
Alon shut the 70,000 bpd Bakersfield refinery in late 2012 because its reliance on more expensive imports and lack of access to other crudes without significant rail rendered the plant unprofitable.
Other California refiners also struggle with profitability because of reliance on expensive imported crude and costly fuel manufacturing regulations in the biggest gasoline market in the country.
“We’re supportive of what Alon is doing with this refinery,” said Lorelei Oviatt, director of the county’s planning and community development department. “This refinery is not operating at full capacity. We would like to see this refinery operating at full capacity.”
Alon didn’t respond to requests for comment.
The Alon project is among several proposed at California refineries, some of which face growing opposition in light of a spate of crude train crashes in the past year as the U.S. oil boom sent amounts of crude moving by train soaring.
The worst by far was in Quebec in July last year when a runaway crude train exploded in the town of Lac-Megantic, killing 47 people.
Several California refiners, largely isolated by the Rocky Mountains from the growing cheap bounty from oilfields in Texas, North Dakota and Canada, want to tap those sources via rail because no major pipelines carry crude from those areas into the Golden State, nor are any planned.
More than half of the 1.7 million barrels of crude processed by California refiners each day is imported.
But proposals have faced lengthy delays for comprehensive environmental reviews, public input, and revisions.
Valero Energy Corp, the largest U.S. refiner, postponed its plans to send crude by rail to its San Francisco-area refinery because of such delays, and withdrew permit applications for a similar project at its Los Angeles plant.
Kinder Morgan Energy Partners operates the state’s most substantial oil-by-rail facility at a terminal in Richmond, which handles up to 72,000 bpd. Local planners last year approved, without an environmental review, a revised ethanol offloading permit to allow the terminal to handle crude. But opponents are suing to temporarily shut it down and force that kind of review.
Tesoro Corp faces similar growing opposition for a 360,000-bpd railport project in southwest Washington state that could ship crude to California refineries by tanker.
That could let California refiners – which includes Tesoro’s Los Angeles-area plant – replace more than 40 percent of more expensive imported oil with North American crudes if all of it were shipped to the state.
Alon is considering possibly leaving the Bakersfield refinery shut and running the facility as a rail and logistics terminal.
If the refinery remains shut, the rail operation would be similar to a separate 70,000-bpd oil-by-rail facility Plains All American plans to open in October and eventually expand to 140,000 bpd. That project was approved two years ago before it was acquired by Plains.
Alon bought the Bakersfield plant out of bankruptcy in 2010 from Flying J Inc, which had shut it in early 2009 shortly after seeking bankruptcy protection. Alon restarted the hydrocracker in the summer of 2011, but operational problems led to more shutdowns and startups.
David Hackett, president of Stillwater Associates, a refining consultancy in Irvine, California, said the refinery’s spotty operational history may better support a future as a rail hub.
“They haven’t run it as a refinery in a long time. I don’t think they’ll restart Bakersfield, and I don’t understand why they didn’t pull this off two years ago,” he said.
ESTABLISHED OIL HUB
Bakersfield sits in the center of the state’s oil production where the oil industry is long established. Plains executives have said its crude-friendly climate and existing infrastructure make the area more attractive for such projects.
“I think Bakersfield is probably the best place to build a rail facility in California, because it’s not sitting in San Francisco or LA, and it has access to pipes going north and south. It just seems like it’s going to be a struggle to develop rail in other locations,” Plains’ Chief Operating Officer Harry Pefanis told analysts in May.
Alon had hoped to have its Bakersfield rail project up and running by the end of 2013, but it, like others in the state, underwent a lengthy environmental review and public comment.
Oviatt said the Kern County planning department had considered all issues during that review, including safety and spill preparedness.
Now the project is slated to go before the county’s board of supervisors for a vote at a Sept. 9 public hearing. Oviatt, who is not one of the five members of the board, said she expected a final decision at that time.
The planning department has signed off on it, and Oviatt said the board tended to be supportive of business.
“I can’t say how the board would vote, but I do believe that given their business-friendly attitude, they’re going to take all of this into serious consideration.”
(Reporting by Kristen Hays in Houston; Editing by Terry Wade, Lisa Shumaker, Jessica Resnick-Ault and Phil Berlowitz)