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.
Inslee statement on Trump administration’s decision to roll back crucial oil train safety regulation
September 25, 2018
“Today, the Trump administration repealed a crucial oil train safety regulation which will increase the risk posed by oil train derailments. We know all too well the horrific damage and potential loss of life that could result from the greater numbers of trains carrying crude oil through Washington and along the Columbia River. Today’s news signifies a reckless disregard for the life and property of all who live or work along the rail tracks that transport volatile Bakken crude oil.
“The Obama administration proposed thoughtful electronic braking system requirements that would help keep trains from speeding off the tracks. It is incomprehensible why this administration would pursue a biased cost-benefit analysis to make a case that this safety measure is too expensive and then dismiss such a common sense measure from further consideration. I fear the day we witness a destructive or deadly derailment that could have been prevented with readily available technology.
“This is yet one more example where this administration has abandoned its responsibility to protect our communities and left it to states to handle. We will continue to do all we can to ensure our communities are prepared and ready to respond, if necessary, and I will continue to lean on our federal partners to do the right thing and put the safety of our communities over the profits of the oil industry.”
Inslee has been advocating for stronger oil train safety measures for years. He issued a directive in 2014 directing various state agencies to conduct risk analyses and develop response plans in coordination with state and provincial partners, and has worked with legislators to implement additional inspection, safety and notification requirements. Inslee met with federal officials in June 2014 following a derailment in Mosier, Oregon, and sent a letter to the U.S. Department of Transportation and wrote an op-ed in 2016 pleading with federal officials to pursue numerous actions, including phasing out outdated tank cars, requiring lower speeds in populated areas and implementing electronic braking requirements.
Washington Agency Votes to Reject Vancouver Energy’s Massive Oil-by-Rail Terminal
By Justin Mikulka • Wednesday, November 29, 2017 – 10:29
In another major blow to the West Coast oil-by-rail industry, a Washington state agency voted unanimously to recommend Governor Jay Inslee reject the Vancouver Energy oil terminal. Proposed for construction in Vancouver, Washington, along the Columbia River, it would be the largest oil-by-rail facility in the country.
Washington State’s Energy Facility Site Evaluation Council (EFSEC) has been reviewing the project since 2013 — reportedly the longest review period ever for the council. However, its November 28 meeting and vote on the final recommendation for the Tesoro Savage–backed project only took 10 minutes.
“Given the reality of climate change, there is simply no reason to build new fossil fuel infrastructure, especially for the export of extreme oil,” said Matt Krogh of activist group Stand, one of many groups opposing the Vancouver Energy project. “The entire reason behind this proposal was to move crude oil from the middle of North America to overseas markets. Simply put, this oil is not for us — and the proposal would leave every single community along the rail lines with all of the risk and none of the reward.”
Proposed by Tesoro Savage Petroleum Terminal LLC (also known as Vancouver Energy), the facility is designed to handle 360,000 barrels of oil per day. Expectations are that the facility would receive both the highly volatile light Bakken oil as well as Canadian tar sands oil, with much of it traveling through the Columbia River Gorge. In 2016 an oil train derailed and caught fire in Mosier, Oregon, with some of the oil ending up in the Columbia River, which has already been suffering major declines of its once-historic salmon populations.
Despite lower oil prices, U.S. imports of Canadian tar sands oil reached record levels in 2017 and are currently at 3.3 million barrels per day. More of that oil has been moving by rail recently, and as overall tar sands production continues to rise, industry observers predict large potential increases in shipping more of it by rail over the next several years.
Rich Kruger, CEO of tar sands producer Imperial (the Canadian affiliate of ExxonMobil), recently commented on how rail was becoming more attractive as a way to get oil to America.
“Rail is increasingly competitive,” Kruger told Bloomberg. “There are times when we look at the pipeline alternative, [but] the variable cost aspect of rail is a more attractive means for us to get to the mid-Western or Gulf coast markets.”
West Coast Oil-by-Rail Plans
Should Washington Governor Inslee, who has 60 days to make a final decision, follow the recommendation to reject the Vancouver Energy oil terminal, it would throw a major wrench in oil industry plans for Canadian tar sands and Bakken oil in the West. As DeSmog reported in June, oil-by-rail remains part of the industry’s long-term plans to get oil to West Coast refineries.
Earlier this year the Washington Supreme Court voted unanimously to deny an oil-by-rail project in Grays Harbor because that project lacked a comprehensive environmental review that considered the Ocean Resources Management Act.
Growing awareness of the risks of oil train terminals has led many communities where they are proposed to back away from such projects.
Local Election Was Proxy Vote on Vancouver Oil Terminal
Because Vancouver Energy’s proposed oil-by-rail facility is sited in the Port of Vancouver, a recent electoral race for one of the port commission’s three seats became a proxy fight over the oil terminal.
The race was between Don Orange, owner of a local auto repair shop and opponent of the oil-by-rail project, and Kris Greene, an insurance agent who was backed by large amounts of money from oil and rail corporations. Oregon Public Broadcasting reported Greene raised “nearly $600,000, with 87 percent coming from Vancouver Energy and backers of the project” and also received support from a PAC, funded in part by rail company BNSF and Tesoro, which spent $160,000.
However, Orange also raised close to $400,000, with considerable support coming from the Washington Conservation Voters Action Fund.
Orange thought there was little question why so much money was pouring into a local election for a seat on a commission that pays around $10,000 a year.
“This is a choice of what our economy should look like,” said Orange. “It is a choice of having a vibrant small business economy or becoming a big oil town.”
The election’s results showed how the majority of the community felt about the oil-by-rail project: despite being outspent by Greene, Orange won over 64 percent of the vote.
Current port commissioner Eric LaBrant was shocked by the results, saying, “I’ve never seen anything like this in local politics … This election shows where the community wants to go and what kind of business the community wants to have there at the port.”
Still, the final decision on the oil terminal lies with the governor, and even then, the door remains open for either side to take legal action.
Grant Cooke: CBR permit denied and new Green Inudstrial Revolution developments impact Benicia
By Grant Cooke, September 22, 2016
History, or at least precedence, was made Tuesday evening when the Benicia City Council denied Valero a land use permit to bring in volatile Bakken and Tar Sands crude oil from North Dakota and Canada by train.
In what appeared to observers to be a stunning change of heart, the council unanimously agreed with the Planning Commission’s earlier recommendation to reject Valero’s project permit.
With other Northern California cities —and San Luis Obispo—watching carefully, the council’s action set a precedent and reaffirmed a city’s right to regulate local land use and protect the health and safety of its citizens.
The decision may have marked the first significant rejection by a California small town of a fossil fuel company’s proposed major business expansion, and probably notes the diminishing power of the industry in local and state politics.
Interestingly enough, the most prominent rejection by a small town of an oil company’s intended expansion occurred in Denton, Texas. Denton, a quiet and prosperous suburb of Dallas, in the middle of America’s oil patch, banned fracking (a method of shale gas extraction that uses large amounts of water pumped at high pressure into channels drilled into rock to release gas) within the city limits in 2014.
Benicia council’s decision has signaled the city’s first steps away from its past dependence on the fossil fuel industry and its Company Town identity, and marks a tentative step toward a new reality. While local, the decision was significant and reflects the growing momentum of the megatrend known as the Green Industrial Revolution, which is replacing carbon dependent economies with those powered by renewable energy.
Despite the decision, and for years to come Benicia’s tax revenue will still be highly dependent on fossil fuel, and so the developments of the Green Industrial Revolution with its twin drivers of carbon emission reduction and non-carbon energy expansion will have enormous consequences. As the Green Industrial Revolution expands, it will lead to the decline of the fossil fuel industries and correspondingly to the reduction of Benicia’s tax base and carbon-dependent economy.
Here are some other recent events furthering this expansion, and while not local, all have a bearing on Benicia’s future.
The first event happened at the recent G20 meeting in Hangzhou, China. The G20 meeting, which occurs annually, brought together the world’s 20 major economies to discuss international problems and potential policies and solutions. Leaders from the U.S., the European Union, China, Japan and Russia among others, came together for the two-day summit. Next year’s meeting is in Germany.
Woodrow Clark, my writing/business partner, is a member of the B20, a G20 subgroup that focuses on international business and economic issues. As a member of the group that delivered a policy report at the Hangzhou meeting, Woody had a front row view of the historic G20 meeting. Among the policy discussions that the meeting generated, there were some remarkable initiatives. One was that Russia agreed to join the US and China, along with the EU in addressing climate change. I imagine that India will also commit to GHG reductions next year at the G20 meeting in Germany.
This is an expansion of the initial US/China agreement from December’s UN Climate Conference in Paris. It increases the pressure on the fossil fuel industry, which is already beset by plunging oil prices, corrupt and chaotic politics, and furthers the rapid development of non-carbon renewable energy. Its impact on Benicia is indirect, unlike a report from Japan’s Eneco Holdings, LTD, which was part of the G20 Executive Talk Series. (Here’s the link to the vertical edition http://g20executivetalkseries.com )
A second development was also part of the G20 meeting and featured the showcasing of a remarkable chemical breakthrough by Eneco Holdings, LTD, from Japan. The company has the potential to be one of Asia’s largest energy companies with their development of a nano-emulsion technology. It appears that the company has succeeded in making a “complete fusion” between water and oil through the ultra-miniaturization of components at the molecular level. In simple terms, they have succeeded, where all others have failed, in mixing water and oil into a combustible fuel. The result is a mixture that is 70 percent water and stable enough to be a used in internal combustion engines. Further, it is safe and environmentally friendly, emitting about half the carbon, nitrous oxide, and sulfur dioxide released in traditional internal combustion gasoline and diesel combustions. Additionally, when produced in large quantities it will be significantly cheaper than conventional gasoline and diesel.
Originally produced for the Japanese market, Eneco’s Plasma Fusion fuel is being tested and used in China and other parts of Asia. With clean emissions levels, it is ideal for the heavily polluted Asian megacities, and should rapidly grow into a viable alternative to conventional gasoline and diesel. Just imagine how healthy West Oakland’s port area would be without its diesel contaminates? Regardless, this emulsion fuel will be a transitional fuel to hydrogen powered vehicles.
The third development that will have a significant impact on the fossil fuel industries is the continual plunge in the price of solar panels. Last week at a meeting, a solar developer told me that panel prices are now the lowest they have ever been in California, plus they are functioning at their highest levels of efficiency.
Driven by the economic principle of Zero Cost Margins—once the equipment is paid for, the rest of the energy is free—solar and renewable energy are expanding at the rate of Moore’s Law, or doubling about every 18 months. Developing and developed nations are rapidly adopting renewable energy, mostly wind and solar, as a replacement for fossil fuels. In about 20 areas in the world, particularly in Asia, solar and renewable energy are less expensive than fossil fuel. Even Saudi Arabia and United Arab Emirates are developing large solar power generation sites.
Because of Russian aggression and threats of shutting off the natural gas supply, Europe has accelerated its transition from fossil fuel and atomic energy to wind and solar. Germany is a major user of solar energy despite the northern climate, and the United Kingdom is building the world’s biggest offshore wind farm called Hornsea off the Yorkshire coast. Hornsea will be the world’s first offshore wind farm to exceed 1 GW in capacity and will produce enough energy to power well over 1 million homes.
Closer to home, the United States’ Pacific coastline has enough wind and tidal resources to power most of the nation’s needs, and by adding solar to the mix, the U.S. could easily generate enough electricity for centuries to come. Roughly speaking, wind power costs about 2 to 4 cents per kilowatt hour and solar about 5 to 6 cents. PG&E charges around 22 to 24 cents per kilowatt hour, so it’s just a matter of time before on-site or distributive energy overtakes traditional energy delivery.
Further, the carbon industries and the large central utilities have flawed business models that are dependent on ever increasing growth and they cannot adapt to the lower prices available from renewable energy, or the increasing efficiency of vehicles and buildings. This is why Clark and I have written extensively on energy cost deflation and the shrinkage and decline of the carbon industries and the large central utilities.
Finally, we come to Sept. 8’s monumental signing by Gov. Jerry Brown of Senate Bill 32, the legislation that has catapulted California into a leadership role of the international efforts to slow global warming. SB 32 will force the state’s trillion-dollar economy, one of the biggest in the world, into a much smaller carbon footprint. In fact, the legislation requires the state to slash greenhouse gas emissions to 40 percent below 1990 levels by 2030, a much more ambitious target than the previous goal of hitting 1990 levels by 2020. Cutting emissions will affect nearly all aspects of our lives, accelerating the growth of renewable energy, prodding people into buying electric autos, and pushing developers into building denser communities connected to mass transit. (Details: http://www.latimes.com/politics/la-pol-ca-jerry-brown-signs-climate-laws-20160908-snap-story.html ).
One other key element to California’s pursuit of clean air and reduced greenhouse gases is the state’s cap-and-trade program. The program requires the state’s heavy polluters to buy carbon offsets, or credits, to release emissions into the atmosphere, creating an additional operating cost for the oil and utility industries.
SB 32 and the expansion of cap-and-trade will have dramatic impacts on the state’s fossil fuel industries. Likely many of us are driving our last conventional gasoline powered vehicle, with the next one probably powered by electricity or hydrogen. It’s not hard to predict that since the Bay Area’s refineries are the heaviest of the area’s polluters, that the combination of reduced revenue from shrinking demand and increased costs of production and operation will eventually lead to refinery closings.
The fossil fuel industries won’t give up easily, there’s trillions of dollars at stake. Many of the industries leaders and the more prescient investment bankers know that the fossil fuel era has peaked and started to decline, which is why Russia overran the Crimea and is poised to take over Ukraine. Which is why the U.S. and Canada are being besieged by the fossil fuel interests to ignore or eliminate environmental and safety protections that hamper production.
Which is why Valero pushed so hard to transport volatile Bakken crude by rail cars through the densely populated Sacramento corridor and cram the trains into Benicia and a refinery that is not designed or equipped to deal with them. The industries, the refineries and all connected to the fossil fuel era, know that the incredibly lucrative period when oil was king and black gold flowed from the sand is coming to an end.
Bringing this back to Benicia, we see a city that is dependent on Valero for tax revenue and its governing process glimpsing a new reality. Small cities like Benicia that have been so dependent on the fossil fuel industries for so much and for so long, struggle to change. Other cities like those in the deindustrialized Midwest that have suffered sudden collapses of their major companies and tax bases have had to reinvent their economic drivers or just blow away. But it’s hard for a city like Benicia with its apparent prosperity and ease of living to understand that its fossil fuel base is in decline and that the future is elsewhere.
Grant Cooke is a longtime Benicia resident and CEO of Sustainable Energy Associates. He is also an author and has written several books on the Green Industrial Revolution. His newest is “Smart Green Cities” by Routledge.