Category Archives: Crude By Rail

SF Chronicle: California refiners double volume of oil imported by rail

Repost from the San Francisco Chronicle

California refiners double volume of oil imported by rail

Lynn Doan  |  May 3, 2014

California, country’s biggest gasoline market, more than doubled the volume of oil it received by train in the first quarter as deliveries from Canada surged.

The third-largest oil-refining state unloaded 1.41 million barrels in the first quarter, up from 693,457 a year ago, data on the state Energy Commission’s website showed last week. Canadian deliveries made up half the total and were eight times the number of shipments a year earlier. Supplies from New Mexico jumped 71 percent to 173,081 barrels. Those from North Dakota slid 34 percent to 277,046.

Projects in works

West Coast refiners including Tesoro Corp. and Valero Energy Corp. are developing projects to bring in more oil by rail from reserves across the middle of the U.S. and Canada to displace more expensive supplies. Crude production in the federal petroleum district that includes California and Alaska, has dropped every year since 2002, while drillers are extracting record volumes from shale in states including North Dakota and Texas.

The surging flows of domestic oil to California “reflect a continuing improvement in crude-by-rail receiving facilities here,” said David Hackett, president of Stillwater Associates, an energy consultant.

Rail shipments still account for a small fraction of California’s oil demand. In February, the state imported more than 20 million barrels of crude from abroad, according to the U.S. Energy Information Administration.

Crude from North Dakota and Canada trades at a discount to Alaska North Slope oil, which rose 36 cents to $107.78 a barrel in early trading on Friday. Western Canada Select, a heavy, sour blend, gained 36 cents to $82.88. North Dakota’s Bakken crude also gained 36 cents to $95.28.

It costs $9 to $10.50 a barrel to send North Dakota’s Bakken oil by rail to California, according to Tesoro, the West Coast’s largest refiner.

Series of accidents

Trains are bringing more oil to California even as projects face more regulatory scrutiny after a series of accidents involving rail cars carrying fuel. The most recent was on Wednesday, when a CSX Corp. crude train derailed in Lynchburg, Va., igniting a fire that led to an evacuation. A derailment in Quebec in July killed 47 people.

The U.S. Transportation Department is studying changes to shipping oil by rail, and in February railroads agreed to slow such trains in urban areas. Canada ordered a phase-out of older tank cars last month.

Officials in Benicia said Thursday that they’re delaying until June an environmental report on a rail-offloading complex that Valero has proposed at its refinery in the North Bay city. The San Antonio company originally planned to finish the project by the end of last year.

Tesoro is six to eight weeks behind schedule in receiving regulatory permits for a rail-to-marine crude trans-loading terminal in Washington state, the company, also based in San Antonio, said Thursday. It now expects to receive the permits late this year or in early 2015, with construction taking about 12 months, Scott Spendlove, the chief financial officer, said on a conference call with analysts.

Alaskan oil output has declined every year since 2002 as the yield from existing wells shrinks.

Lynn Doan is a Bloomberg writer.
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Lynchburg derailment and explosion – TV news coverage

Repost from WDBJ 7 CBS Lynchburg, VA
[Editor: This 2 ½ minute video has local commentary and images after the explosion.  Apologies for the ad.  – RS]

UPDATE: Train carrying crude oil derails in Lynchburg

There are no reports of injuries at this time
WDBJ7 Bedford-Lynchburg Newsroom Bureau Chief Tim Saunders
WDBJ7 Anchor/Reporter Nadia Singh Nadia Singh

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LYNCHBURG, Va. – Approximately 50,000 gallons of crude oil are gone from three tankers as a result of the train derailment in Lynchburg Wednesday, which sent flames and thick black smoke into the air.

The CSX train was carrying between 12 and 14 CSX tanker cars when it derailed around 1:45 p.m. at the intersection of Ninth and Jefferson Streets, near Amazement Square. Three tanker cars are in the James River.

Lynchburg officials told WDBJ7 that one tanker is empty, one is full and one is a third of the way full.

Crews are working to determine what caused the derailment and working to start the clean up process.

It’s too soon to tell if there will be any negative environmental impacts.

For now, crews are working and environmental experts are urging the public to be vigilant and cautious.

CSX representatives, local officials and the National Transportation Safety Board are working to clear out the wreckage.

It’s not clear how much oil burned off or how much of it spilled into the river.

People in the area between Washington and Fifth Streets were evacuated. There are no reports of injuries. It’s not clear yet what caused the derailment.

The derailment happened when part of the CSX train ran off the tracks and caused a pile-up. The train was carrying crude oil that was housed in large tanks. When the train wrecked, the tanks broke open and the oil caught on fire. The train originated in Chicago.

People who were near the scene when the crash happened said they heard a loud explosion. The derailment happened a few feet away from the Depot Grille restaurant. Workers saw the train as it came off the tracks.

“We just saw it going sideways on two wheels,” witness Travis Uhle said. “One went down, and then the train just kept coming with a dog-pile on top of that.”

Some people are being allowed back into the area to get their cars, but most of the area below Main Street remains blocked off. At one point a 20-block area was blocked off.

According to a Lynchburg city official who was at the command post, crude oil leaked into the James River. Intake stations downstream were notified. Booms in the river are trying to catch the crude oil. The city official says that three or four train cars are in the James River.

Jeff Hurst of the Virginia Department of Environmental Quality says it is not clear how much crude oil leaked into the James River. Before the DEQ can begin cleanup at the site of the derailment, they need to wait for fire crews to fully extinguish small fires around the riverbank that could re-ignite oil on top of the river.

In the meantime, a contractor is placing booms downstream to try and contain as much oil as they can. Hurst says the DEQ hopes to begin cleanup work at the site of the derailment Wednesday night. The City of Lynchburg said there is no impact to the city’s drinking water supply.

People who work at the Griffin Pipe Products on Seventh Street were unable to evacuate because the train derailment blocked the only way in and out of the property. CSX officials are working to remove the wreckage so those workers can get out.

City of Lynchburg leaders say CSX is confident it will have the tankers moved and the site cleaned up by the end of the day Thursday.

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Latest derailment, explosion: Lynchburg, Virginia

Repost from Reuters

CSX train carrying oil derails in Virginia, bursts into flames

 By Selam Gebrekidan | NEW YORK Wed Apr 30, 2014
Flames and a large plume of black smoke are shown after a train derailment in this handout photo provided by the City of Lynchburg, Virginia April 30, 2014. REUTERS/City of Lynchburg, Virginia/Handout via ReutersFlames and a large plume of black smoke are shown after a train derailment in this handout photo provided by the City of Lynchburg, Virginia April 30, 2014.

Credit: Reuters/City of Lynchburg, Virginia/Handout via Reuters

(Reuters) – A CSX Corp train carrying crude oil derailed and burst into flames in downtown Lynchburg, Virginia on Wednesday, spilling oil into the James River and forcing hundreds to evacuate.

In its second oil-train accident this year, CSX said 15 cars on a train traveling from Chicago to Virginia derailed at 2:30 p.m. EDT. Photos and video showed high flames and a large plume of black smoke. Officials said there were no injuries, but 300-350 people were evacuated in a half-mile radius.

City officials instructed motorists and pedestrians to stay away from downtown, while firefighters battled the blaze. Three railcars were still on fire as of 4 p.m., CSX said.

The fiery derailment a short distance from office buildings in the city of 77,000 was sure to bring more calls from environmentalists and activists for stricter regulations of the burgeoning business of shipping crude oil by rail.

JoAnn Martin, the city’s director of communications, said three or four tank cars were leaking, and burning oil was spilling into the river, which runs to Chesapeake Bay. She said firefighters were trying to contain the spill and would probably let the fire burn itself out.

Attorney John Francisco at the firm of Edmunds & Williams, told local TV station WSET 13 he heard a loud noise that sounded like a tornado and then watched as several cars derailed. He said flames streaked as high as the 19th floor of his office building in Lynchburg, the commercial hub of central Virginia.

“The smoke and fire were on a long stretch of the train tracks. The smaller fires died down pretty quickly. You could feel the heat from the fire,” Randy Taylor, who was working downtown when the train derailed, told the station.

The U.S. Department of Transportation said it was sending Federal Railroad Administration inspectors to the scene.

There was no immediate information about the origin of the cargo or the train’s final destination. One of the only oil facilities to the east of Lynchburg is a converted refinery in Yorktown, now a storage depot run by Plains All American. The company did not immediately reply to queries.

It was not clear what had caused the accident or triggered the fire. CSX said it was “responding fully” to the derailment with emergency personnel, safety and environmental experts.

Central Lynchburg General Hospital had not had any injured people brought in from the train derailment, spokeswoman Diane Riley said.

NEW RULES

Several trains carrying crude have derailed over the past year. Last July, a runaway train in Lac-Megantic, Quebec, derailed and exploded, killing 47 people. Another CSX train carrying crude oil derailed in Philadelphia in January, nearly toppling over a bridge.

With more trains hauling crude and flammable liquids across North America, U.S. regulators are expected soon to propose new rules for more robust tank cars to replace older models; Canadian authorities did so last week.

“With this event, regulators could try to expedite the process, and they’ll likely err on the side of the more costly safety requirements in order to reduce the risk of these accidents in the future,” said Michael Cohen, vice president for research at Barclays in New York.

Tougher rules could drive up costs for firms that lease tank cars and ship oil from the remote Bakken shale of North Dakota, which relies heavily on trains. It could also boost business for companies that manufacture new cars, such as Greenbrier Companies and Trinity Industries.

Oil trains rolling across the country, often a mile long, have sparked concern in local communities, particularly in New York and the Pacific Northwest. Derailments have occurred in places as far removed as Alberta and Quebec in Canada, and North Dakota and Alabama in the United States.

In Virginia, environmental groups including the Sierra Club and the Chesapeake Bay Foundation have opposed expansion of crude-by-rail shipments through the region to the Yorktown terminal, which can handle 140,000 barrels per day. CSX’s route through populated areas like Lynchburg and the proximity to the James River have been mentioned as special concerns.

“Whenever oil is handled around water, a percentage of it gets into the water. This derailment is of major concern to us,” said William Baker, President Chesapeake Bay Foundation. City officials said there was no impact on drinking water.

CSX has been positioning itself to deliver more crude to East Coast refineries and terminals. In January, Chief Executive Officer Michael Ward told analysts the company planned to boost crude-by-rail shipments by 50 percent this year.

At the time, Ward said that Jacksonville, Florida-based railroad was working with U.S. regulators to address safety concerns in light of recent derailments and fires.

(Reporting by Selam Gebrekidan, Joshua Schneyer, Anna Driver, Patrick Rucker, Josephine Mason, Ian Simpson; Editing by David Gregorio)

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