KIMA News Yakima, by LISA BAUMANN | Associated Press, Wednesday, December 23, 2020
BELLINGHAM, Wash. (AP) — Federal and local authorities were investigating a fiery oil car train derailment north of Seattle near where two people were arrested last month and accused of attempting a terrorist attack on train tracks to disrupt plans for a natural gas pipeline.
Seven train cars carrying crude oil derailed and five caught fire Tuesday, sending a large plume of black smoke into the sky close to the Canadian border. There were no injuries in the derailment about 100 miles (161 kilometers) north of Seattle
Officials were asked about recent attempts to sabotage oil trains, but they said the investigation was just beginning.
“We’ve not been able to get close enough to the site to make an evaluation,” Whatcom County Sheriff Bill Elfo said late Tuesday.
Officials with the National Transportation Safety Board along with the FBI and other federal, state and local agencies were on the scene.
During a news conference Wednesday, officials spoke about their disaster planning they had done to prepare for incidents similar to what occurred with the train derailment. They also spoke about how the impact of the derailment to the surrounding environment could have been worse.
“As far as crude oil derailments and fires, this could not have occurred in a better location with regard to minimizing environmental impact,” said David Byers, who manages disaster response for the Washington Department of Ecology.
Last month federal authorities in Seattle charged two people with a terrorist attack on train tracks, saying they placed “shunts” on Burlington Northern Santa Fe tracks. “Shunts” consist of a wire strung across the tracks, mimicking the electrical signal of a train. The devices can cause trains to automatically brake and can disable railroad crossing guards.
Authorities said the pair were opposed to the construction of a natural gas pipeline across British Columbia when they interfered with the operation of a railroad in Washington state.
The FBI’s Joint Terrorism Task Force has said there have been dozens of such cases involving BNSF tracks since January, with a message claiming responsibility posted on an anarchist website early this year.
In one, shunts were placed in three locations in northwest Washington on Oct. 11, prompting emergency brakes to engage on a train that was hauling hazardous materials and flammable gas. The braking caused a bar connecting the train’s cars to fail; the cars became separated and could have derailed, authorities said.
Home to five oil refineries, Washington state sees millions of gallons of crude oil move by rail through the state each week, coming from North Dakota and Alberta.
The seven cars derailed at about 11:46 a.m. Tuesday. Two people were on board the 108-car train headed from North Dakota to the Ferndale Refinery, owned by Phillips 66.
Critics of oil transport by rail car said Tuesday’s incident was another example of the dangerousness of the practice. They cited the 2013 fiery derailment of a train carrying crude in Lac Megantic, Quebec, which killed 47 people.
Washington state passed a law that imposed safety restrictions on oil shipments by rail, but it was blocked earlier this year by the federal government.
The U.S. Department of Transportation in May determined federal law preempts the Washington law adopted last year, which mandated crude from the oil fields of the Northern Plains have more of its volatile gases removed prior to being loaded onto rail cars.
Matt Krogh, director of U.S. Oil & Gas Campaigns for the environmental group Stand.earth, said it is difficult for state and local officials to place restrictions on shipments of oil by train.
“Our hands are tied in many ways because of federal pre-emption,” Krogh said.
BELLINGHAM, Wash. (AP) — Seven train cars carrying crude oil derailed Tuesday and five caught fire, sending a large black plume of smoke into the sky north of Seattle close to the Canadian border, authorities said.
The derailment in the downtown Custer area closed nearby streets and spurred evacuation orders during a large fire response, Whatcom County officials said on Twitter. Interstate 5 was temporarily closed in the area in both directions.
Later Tuesday, the Whatcom County Sheriff’s Office tweeted that the fires were under control and the evacuation order had been lifted but roadblocks would remain in place. Fires at the site remained active, the Sheriff’s Office added, and residents were asked to stay inside once they returned home.
“Everyone’s in danger at a scene like this, but fortunately there were no injuries,” Sheriff Bill Elfo said at a news conference.
Jenny Reich, who owns Whimsy Art Glass, was preparing to open her shop and told The Seattle Times that while she is accustomed to train noises, “all of a sudden it was a really big noise, and everything was shaking.”
Black smoke obscured her view, emergency personnel arrived, and Reich said she was advised to evacuate her business. She grabbed her wallet, keys and dog and left.
Home to five oil refineries, Washington state sees millions of gallons of crude oil move by rail through the state each week, coming from North Dakota and Alberta, Canada, according to the state Department of Ecology.
The seven cars derailed at about 11:46 a.m. Tuesday, BNSF Railway spokesperson Courtney Wallace said at the news conference. She said two people were on board the 108-car train headed from North Dakota to the Ferndale Refinery, owned by Phillips 66.
“BNSF is working with local authorities to assess and mitigate the situation,” the railway said on Twitter. “The cause of the incident is under investigation.”
The state Department of Ecology said a command center had been set up at the scene with the railway and federal Environmental Protection Agency officials.
Matt Krogh, director of U.S. Oil & Gas Campaigns for the environmental group Stand.earth, is based in Bellingham near the derailment and told The Associated Press he could see the smoke. He said the incident was another example of how transporting crude oil by train – especially in large numbers of tankers — is “very, very dangerous.”
He cited the 2013 fiery derailment of a train carrying crude in Lac Megantic, Quebec, which killed 47 people, and a 2016 derailment in Mosier, Oregon, along the Columbia River that caused people to evacuate.
Krogh said crude oil is volatile and there are often track maintenance concerns. Among other things, Krogh and his group would like to see a reduction in the number of tank cars allowed per shipment.
“I think we got lucky today,” he said, referring to the derailment in Custer.
Democratic U.S. Rep. Rick Larsen, D-Wash., said in a statement Tuesday he was concerned about the derailment. Larsen is a senior member of the House Transportation and Infrastructure Committee.
“I worked closely with the Obama administration to create strong rules to make the transport of oil by rail safer,” Larsen said. “Clearly there may be more work to do.”
Custer, a small town of several hundred people, is about 100 miles (161 kilometers) north of Seattle.
A train derailed and caught fire in the Custer area Tuesday morning and residents and visitors within a half-mile were being evacuated, according to Whatcom County Public Works, the Whatcom County Sheriff’s Office and Washington State Patrol.
The northbound train carrying crude oil derailed around 11:40 a.m. on Tuesday, Dec. 22, in the Custer area, according to Courtney Wallace, a Burlington Northern Santa Fe spokesperson, and the Whatcom County Sheriff’s Office. It is a BNSF train and track, Wallace said.
The train derailed near the 7500 block of Portal Way, according to the sheriff’s office on Twitter. The sheriff’s office evacuated people within a half-mile of the derailment. Shortly before 5 p.m. Tuesday, the sheriff’s office said on Twitter that the evacuation order was lifted for local residents of Custer. Once residents return home, they are asked to shelter in place and stay inside, the sheriff’s office said. Residents must show proof of residency in order to return home, the sheriff’s office said.
Roadblocks in the area will remain in place.
Seven railway cars derailed from the train and a fire started in two of the seven derailed cars, the sheriff’s office said. The fire was under control as of 3 p.m., but a few were still active as of 5 p.m., the sheriff’s office said.
There have been no reported injuries at this time, Whatcom County Sheriff’s Office Division of Emergency Management Deputy Director John Gargett told The Bellingham Herald about 2 p.m. Tuesday.
Gargett said it’s unclear at this time whether there was damage to nearby structures or buildings. While he didn’t know the exact number of people who were evacuated, he said evacuations were ordered within a half-mile around the center of Custer.
He said the train was carrying Bakken crude oil, so evacuations were ordered out of an abundance of caution. People are asked to avoid the incident site, as it’s not safe to approach, the sheriff’s office said.
BNSF has set up a claims hotline for people who have been impacted by the evacuation at 1-866-243-4784.
We are working to evacuate a 1/2 mile radius from the site of the derailment. Train cars are on fire. I-5 is closed in both directions from Grandview to Birch Bay Lynden Rd. Train cars are on fire.
AGAIN, PLEASE AVOID THE AREA. pic.twitter.com/OuqC5NAuoE
Wallace, with BNSF, said the first priority is safety issues and BNSF is working with local authorities to assess and mitigate the situation.
She said the cause of the derailment is under investigation.
“Our thoughts are with those who have been affected by this incident,” BNSF said on Twitter.
Washington State Patrol Trooper Heather Axtman said there were still a few small pools of oil on fire as of 2:45 p.m. on Tuesday. Axtman said fire officials determined the fires would burn themselves out in a little while. Axtman said at this time it’s believed there was no damage to nearby structures from the derailment.
Now, after all of that, the Bakken oil field appears moving toward terminal decline, with the public poised to cover the bill to clean up the mess caused by its ill-fated boom. Historical Bakken oil production. Energy Information Administration
This oil was technically recoverable due to the recent success with horizontal drilling and hydraulic fracturing (fracking) of oil and gas-rich shale, which allowed hydrocarbons trapped in the rock to be pumped out of reservoirs previously unreachable by conventional oil drilling technology.
The industry celebrated the discovery of oil in the middle of North America but realized it also posed a problem. A major oil boom requires infrastructure — such as housing for workers, facilities to process the oil and natural gas, and pipelines to carry the products to market — and the Bakken simply didn’t have such infrastructure. North Dakota is a long way from most U.S. refineries and deepwater ports. Its shale definitely held oil and gas, but the area was not prepared to deal with these hydrocarbons once they came out of the ground.
Most of the supporting infrastructure was never built — or was built haphazardly — resulting in risks to the public that include industry spills, air and water pollution, and dangerous trains carrying volatile oil out of the Bakken and through their communities. With industry insiders recently commenting that the Bakken region is likely past peak oil production, that infrastructure probably never will be built.
Meanwhile, the petro-friendly government of North Dakota has failed to regulate the industry when money was plentiful during the boom, leaving the state with a financial and environmental mess and no way to fund its cleanup during the bust.
Haste Makes Waste: Booms Move Faster Than Regulations
After the USGS announced the discovery of oil in the Bakken, the oil and gas industry moved fast, with both the industry and state and federal regulators ignoring whether what amounted to essentially new methods of extracting and transporting large amounts of oil called for new rules and protections.
The Bakken’s big increase in oil production quickly exceeded its existing pipeline capacity, leading producers to turn to trucks to move their oil out of the fields. But as the Globe and Mail reported in 2013, this stop-gap solution wasn’t working well: “The trucking frenzy was chewing up roads, driving accident rates to record highs and infuriating local residents.”
The industry could have restricted production until new pipelines and processing equipment were built but instead moved to rail as the next transportation option. High oil prices motivated drillers to get the oil out of the ground and to customers as fast as possible. Moving oil by rail was essentially unregulated and would not require the permits, large investment, or lead times required for pipelines, leading to the Bakken oil-by-rail boom.
Moving large amounts of this light volatile oil on trains had never been done before — but there was no new regulatory oversight of the process. Without proper oversight, the industry loaded the Bakken’s volatile oil into rail tank cars originally designed to carry products like corn oil. That’s despite the National Transportation Safety Board warning that these tank cars were not safe to move flammable liquids like Bakken crude oil.
Fracking for oil also resulted in large volumes of natural gas coming out of the same wells as the oil, further contributing to the financial troubles of shale producers. However, with no infrastructure in place to process or carry away that gas, the industry chose to either leave it mixed in with the oil loaded onto trains (making it more volatile and dangerous) or simply burn (flare) or release (vent) the potent greenhouse gas into the atmosphere.
More than a decade after the Bakken boom started, North Dakota was flaring 23 percent of the gas produced via fracking — making a mockery of the state’s flaring regulations. In July, The New York Times detailed the environmental devastation caused by flaring in the oil fields of Iraq, where they flare about half of the gas as opposed to the quarter of the gas that North Dakota has flared.
Also in July, researchers at the University of California, Los Angeles and University of Southern California published research that found pregnant women exposed to high levels of flaring at oil and gas production sites in Texas have 50 percent higher odds of premature birth when compared to mothers with no exposure to flaring.
Another major blindspot for the industry and regulators has been the radioactive waste produced during fracking. When the industry did finally acknowledge this issue in North Dakota, its first move was to try to relax regulations to make it easier to dump radioactive waste in landfills — a practice that is contaminating communities across the country.
In 2016, a study from Duke University found “thousands of oil and gas industry wastewater spills in North Dakota have caused ‘widespread’ contamination from radioactive materials…”
The fracking boom in North Dakota has resulted in widespread environmental damage and is worsening the climate crisis, given its high flaring levels, methane emissions, and, of course, production of oil and gas. As major Bakken producers go bankrupt and continue to lose money while the oil field goes bust, who will pay to clean up the mess?
Like most oil-producing states, North Dakota had the opportunity to require oil and gas producers to put up money in the form of bonding which would be designated to properly clean up and cap oil and gas wells once they were finished producing. Unfortunately, the state didn’t put that precaution in place, and now bankrupt companies are starting to walk away from their wells.
“It’s starting to become out of control, and we want to rein this in,” Bruce Hicks, Assistant Director of the North Dakota Oil and Gas Division, said last year about companies abandoning oil and gas wells.
The state recently decided to use $66 million in federal funds designated for coronavirus relief to begin cleaning up wells the oil industry has abandoned — costs that the industry should be covering, according to the law, but that are now shifted to the public.
The Bakken boom made a lot of money for a select few oil and gas executives and Wall Street financiers. But as the boom fades, taxpayers and nearby residents have to deal with the financial and environmental damage the industry will leave behind.
Bakken’s Best Days Are a Thing of the Past
As DeSmog reporting has revealed, shale producers have not been profitable for the past decade, even though they have drilled and fracked most of the best available shale oil deposits. While the prolific Permian region in Texas and New Mexico still has some of the best “tier one” core acreage for oil production left, that isn’t the case in the Bakken.
In June, oil and gas industry analysts at Wood MacKenzie highlighted this discrepancy in remaining core acreage between the Permian and the Bakken. According to Wood MacKenzie, the top quarter of remaining oil well inventory in the Permian would result in over 8,000 new wells. For the Bakken, however, the analysts put that number at 333 wells.
This difference is why John Hess, CEO of major Bakken producer Hess Corporation, predicted in January that Bakken production would soon peak.
North Dakota #oil#production fell in May by the largest amount ever, 350 thousand bo/d, to ~850 thousand bo/d.
Over 40% of the 16,000 horizontal #wells were completely shut-in for the month (the average utilization was 52%). The latest data is already available in our services. pic.twitter.com/e3BnH7Pd5J
The drop in oil demand due to the pandemic has hit the industry as a whole, but the Bakken was already in decline, with the best producing wells a thing of the past well before the novel coronavirus reached U.S. shores.
In September 2019, The Wall Street Journal reported on the dismal outlook for Hess Corporation’s oil wells, noting last year: “This year’s wells generated an average of about 82,000 barrels of oil in their first five months, 12 percent below wells that began producing in 2018 and 16 percent below 2017 wells.”
Legal Reviews of Pipelines Potentially Causing Shutdowns
Even when the industry did try to construct oilfield infrastructure in the Bakken, its rush to build and manage pipelines hasn’t always worked out well. Legal challenges to two major Bakken pipelines, one old, one new, may shut down both of them soon.
The controversial Dakota Access pipeline (DAPL) is facing a potential shutdown after a judge ruled that the Army Corps of Engineers did not properly address oil spill risks and now must complete a full environmental review, which could result in a long-term shutdown of the pipeline while the Corps completes the study. Energy Transfer, DAPL‘s owner, appealed that ruling, and a subsequent court decision has allowed the pipeline to remain in operation while the legal battle over the environmental impact study continues.
At the same time, the Tesoro High Plains pipeline — in operation since 1953 — is facing a shutdown because it failed to renew an agreement with Mandan, Hidatsa, and Arikara Nation landowners on the Fort Berthold Indian Reservation, meaning the pipeline’s owner, Marathon, now is trespassing on that land.
These pipelines together ship more than one-third of the oil out of the Bakken, and if they are shut down, Bakken oil producers likely would turn to rail again to move their oil. However, rail is significantly more expensive than pipelines and not economically viable at current low oil prices.
However, at current production levels, existing pipelines (other than the two in question) and current long-term rail contracts can likely handle most of the Bakken’s oil production, especially as the region becomes less attractive to investors.
Stunning. DAPL customers told the Court that it would be the end of the world if the pipeline is shut down. The message to investors? No big deal. https://t.co/D5KUsKZep3
Energy consulting group ESAI Energy recently released a new report on U.S. pipelines, with analyst Elisabeth Murphy concluding, “An uncertain outcome for Dakota Access will have knock-on effects for the Bakken, such as capital being diverted to other basins that have better access to markets.”
The ESAI analysis also concludes that the Bakken will decline by approximately 270,000 barrels per day on an annual basis in 2020 and by a further 65,000 barrels per day in 2021.
With declining total production and new wells producing less than the past, Bakken producers are facing rising debts without the means to pay them back.
End of the Unconventional Bakken Boom
Oil produced by fracking is called “unconventional oil” due to the new technologies used to extract it from shale. However, it is unconventional in other ways as well. One, it has never been profitable. Another is a change in the boom-and-bust cycle, which has been a part of the oil industry since its inception in the U.S. in the 1850s.
Traditionally the boom-and-bust cycle for conventional oil production was tied to the price of oil. Low prices caused busts. This was true of the shale oil industry in 2014 when oil prices crashed. However, the industry returned to record production after that.
But it’s different this time. Unlike conventional oil fields, shale field production declines much more quickly. While shale producers could retreat to the top-producing acreage during the 2014 bust, most of that acreage is now gone.
The shale industry is faced with trying to come back from a historic downturn in which even the companies that don’t go bankrupt are saddled with crippling debts. That’s because for most of the past decade, shale companies borrowed more money than they made producing fracked oil and gas, to the tune of hundreds of billions of dollars.
All of the evidence strongly suggest that the Bakken is an oil field on the decline. Its best acreage has been depleted and the economics of the remaining acreage don’t pan out these days.
Seeking Alpha was purely commenting on the economics of oil production in the Bakken. However, the same could be said about the water, air, and land in the Bakken. Shale companies polluted the environment and are now walking away from the damage — leaving the cleanup bill to the public. It is a tried-and-true approach for industries in resource extraction. Privatize the profits and socialize the losses.
Hess Corporation CEO John Hess knows more about the economics of the Bakken than most people. In February Reuters reported, “Hess plans to use cash flow from the Bakken to invest in longer-term offshore investments.” A major Bakken producer is apparently no longer viewing the region as a good long-term investment.
From here, the outlook only gets worse for the Bakken.