Repost from Reuters [Editor: Significant quote: “The price of credits has fuel makers like PBF Energy Inc and Valero looking to increase exports, which are not subject to the regulations, as a way to escape the costs.” (emph. added) – RS]
Refiners on track to spend record on U.S. clean fuel standards
By Jarrett Renshaw, Aug 10, 2016 4:26pm EDT
Major refiners like Valero Energy Corp are on track to pay record amounts this year for credits to comply with U.S. renewable fuel rules, corporate filings show, a trend that hurts profits and has some looking to export more to avoid the cost.
Refiners and fuel importers are required to meet a U.S. biofuel quota of roughly 10 percent through blending products like ethanol into gasoline and diesel. If they fall short, they can buy credits generated by companies in compliance. But the cost of the credits, known as Renewable Identification Numbers (RINs), has jumped.
The rising costs have hurt a sector already struggling with huge global fuel stockpiles. The S&P 1500 index of refining and marketing companies has fallen 18 percent so far in 2016, compared with a 6.5 percent gain for the broader market.
In the first half of 2016, a collection of 10 refinery owners including Marathon Petroleum Corp, spent at least $1.1 billion buying RINs, a Reuters review of their filings showed. This puts them on track to surpass the annual record of $1.3 billion the same group spent in 2013.
Refinery executives sharply criticized the regulations during recent earnings calls, saying the burden helped bring about the weakest profits in five years.
“RINs continue to be an egregious tax on our business and have become our single largest operating expense, exceeding labor, maintenance and energy costs,” CVR Refining Chief Executive Jack Lipinski said last month.
Marathon Chief Executive Gary Heminger said on a call last month that demand for RINs are going to outpace supply and the company wanted to see renewable fuel standards eased.
Refiners without blending or retail outlets, such as Delta Air Lines and CVR, have to buy a greater percentage of RINs because they don’t create their own. Delta is part of a refiner group challenging fuel standards through the courts.
Supporters of the existing policy, including the influential corn lobby, said the regulations have produced the desired effect: more renewable fuels in the nation’s gasoline and diesel. They noted refiners can avoid the cost of RINs by investing in blending operations.
“Companies that refuse to blend more renewable fuel will end up paying a premium to other market participants, including speculators, but this is a choice,” said Emily Skor, CEO of Growth Energy, which represents ethanol producers.
ESCAPE THROUGH EXPORTS
Renewable fuel credits averaged about 78 cents apiece in the second quarter, about 25 percent above the same period a year ago, according to Oil Price Information Service data analyzed by Reuters.
Prices for the credits have rallied on more ambitious targets from U.S. regulators on the volumes of ethanol required to be blended with gasoline, traders and industry sources said.
The price of credits has fuel makers like PBF Energy Inc and Valero looking to increase exports, which are not subject to the regulations, as a way to escape the costs.
PBF Chief Executive Thomas Nimbley said on an earnings call last month that it was “very important” that they expand their refined product export operations, citing RINs as a driver.
Refiners are also lobbying to shift the responsibility of compliance from their industry to blenders and distributors who mix gasoline with ethanol for delivery to filling stations.
Upgrades to Unsafe Tank Cars Could Take 15 Years, Board Says
By Matthew Brown, Associated Press, July 13, 2016, 2:30 A.M. E.D.T.
BILLINGS, Mont. — Accident-prone tank cars used to haul crude oil and ethanol by rail could remain in service for another 15 years under federal rules that allow companies to phase in upgrades to the aging fleet, according to the U.S. National Transportation Safety Board.
Transportation officials and railroad representatives have touted the rules as a key piece of their efforts to stave off future disasters, following a string of fiery derailments and major spills that raised concerns about the crude-by-rail industry.
Yet without mandatory, periodic benchmarks for meeting the requirements, the decision to upgrade to safer tank car designs “is left entirely to tank car fleet owners, and may be driven by market factor influences, not safety improvements,” NTSB Chairman Christopher Hart said in a letter Tuesday to the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.
Tom Simpson with the Railway Supply Institute, which represents tank car manufacturers and owners, said the industry is committed to putting stronger cars in place. Members of the group will meet deadlines for replacing or upgrading the cars, he said, noting that demand for rail cars has eased after crude-by-rail shipments decreased over the past two years in response to lower oil prices.
“The need to modify or install new cars isn’t as urgent as when the rule was issued,” Simpson said.
In recent years, accidents involving the older cars have occurred in Oregon, Montana, North Dakota, Illinois, West Virginia and Canada.
The most notable was in Lac-Megantic, Quebec, where 47 people were killed when a runaway oil train derailed in 2013. During the most recent accident last month in Oregon, 42,000 gallons of crude oil spilled, sparking a massive fire that burned for 14 hours near the small town of Mosier in the Columbia River Gorge.
Cars built before the rule was enacted do not have to be fully replaced until 2029, although most would have to come off the tracks sooner.
Just over 10,300 stronger tank cars mandated by the new rules are available for service, according to figures obtained by The Associated Press from the Association of American Railroads.
That’s equivalent to roughly 20 percent of the 51,500 tank cars used to haul crude and ethanol during the first quarter of 2016.
Transportation Department Press Secretary Clark Pettig said in response to the NTSB’s criticism that the schedule to retrofit older cars was locked in by Congress in a transportation bill approved last year. The Congressional deadline represents “the absolute last moment” to meet the new standards, Pettig said.
“We agree with NTSB that industry should work to beat those deadlines,” he said.
A Wednesday meeting was planned in Washington, D.C., where government and industry officials were set to update the safety board on progress addressing the issue.
Safety board member Robert Sumwalt told the Associated Press that federal regulators need to set milestones to hold the industry accountable.
“There’s been 28 accidents over the past 10 years. That’s almost three accidents a year,” Sumwalt said. “Unfortunately, history shows we probably will have more accidents involving flammable liquids.”
A bill from U.S. Sen. Ron Wyden of Oregon and other Democratic lawmakers would offer tax credits for companies that upgrade their cars during the next several years.
“Communities near train tracks, like Mosier, Oregon, must be confident that companies are using the safest tank cars possible,” Wyden said.
The railroad association said only 700 of the least resilient model of the older-style tank cars remain in service. Most of the cars in current use have at least some improvements, such as shields at either end of the car to help prevent punctures during derailments.
Transportation officials cautioned, however, that thousands of idled “legacy cars” could quickly come back online if oil prices rise and shipment volumes rebound.
Most tank cars are owned or leased by companies that ship fuel by rail, not the railroads themselves.
“Every tank car carrying crude or ethanol needs to be upgraded or replaced,” said railroad association spokesman Ed Greenberg.
How Industrial Hygienists Assist in Rail Emergencies
Speaking at an AIHce 2016 session, several experts said industrial hygienists are well suited to anticipate, recognize, and respond to the hazards and to control the risks using science-based methods.
By Jerry Laws, Jul 01, 2016
Industrial hygienists are well prepared to perform an important role during the response to a railroad hazardous materials emergency, several experienced experts said during an AIHce 2016 session about rail crude oil spills on May 24. Risk assessment, data analysis, and plan preparation (such as the health and safety plan, respiratory protection plan, and air monitoring plan) are important early in the response to such emergency incidents, and CIHs are equipped to do all of these, they stressed.
“With our knowledge, skills, and abilities, the training and education that industrial hygienists get, we’re well prepared” to interpret data on the scope and nature of a hazmat spill following a derailment, said Billy Bullock, CIH, CSP, FAIHA, director of industrial hygiene with CSX Transportation. He mentioned several new roles the industrial hygienist can manage in such a situation: health and safety plan preparation, town hall meetings to inform the public, preparing news releases for area news media, interpreting data from air monitoring, working with the local health department, and serving as the liaison with area hospitals, which can improve their treatment of patients affected by the spill if they understand where exposures really are happening and where a gas plume from the spilled crude is moving, he said.
Bullock said the industrial hygienist’s role is primarily in evaluating chemical exposures:
assessing the risk for inhalation hazards
supporting operational decisions
gathering valid scientific information
managing data and ensuring data quality reporting and recordkeeping
“All of these things we do as part of our day job transfer to an emergency situation very, very well,” he said, explaining that it’s very important to gain the trust of local responders and officials, including fire department leaders, hazardous materials response teams, the health department, and city officials.
Another speaker, Laura Weems, CIH, CSP, CHMM, with the U.S. Army Corps of Engineers in Little Rock, Ark., agreed, saying industrial hygienists are well suited to anticipate, recognize, and respond to hazards and to control risks using science-based methods.
Cleanup Workers Face Inhalation, Fire, and Heat Stress Hazards
Scott Skelton, MS, CIH, senior industrial hygienist for CTEH, the Center for Toxicology and Environmental Health, LLC, and other speakers explained that the hazard assessment following a hazmat derailment begins by identifying the type of crude oil that has spilled. It’s critical to know its flammability and the status of the oil’s containment, he said, and if there is an active fire, officials in command of the response will have to decide whether cleanup personnel are wearing flame-resistant clothing or chemical-protective apparel and will default to protecting against the greater hazard, he explained.
Benzene exposure—a dermal and inhalation hazard—is a concern in the early hours of a crude oil spill following the derailment, Skelton said. He discussed a 2015 test spill into a tank measuring 100 feet by 65 feet, where the benzene was completely lost and other lighter compounds also were lost 24 hours after the spill occurred. But that type of large surface area for a crude oil spill is not typical at actual derailments, he said. Still, he said the inhalation risk for cleanup workers is of most concern during the initial 24 hours of a spill.
“It’s my opinion that heat stress is the most dangerous aspect,” Skelton said. “With these [cleanup] guys, heat stress risk is extraordinary.” The American Petroleum Institute (API)’s report on PPE use by workers involved in the cleanup of the Deepwater Horizon oil spill confirmed this, he added.
Patrick Brady, CIH, CSP, general director of hazardous materials safety for BNSF Railway Company, pointed out that crude oil spills from derailments are rare: 99.998 percent of the 1.7 million hazardous materials shipments moved by the railroad during 2015 were completed without an accidental release, he said.
Brady said the railroad pre-positions 253 first responders along with needed cleanup equipment at 60 locations along its rail network. “The best case planning for us is we don’t rely on any local resources to be there at all,” he said, so BNSF hires hazmat contractors for crude oil derailment response and brings in consultants from CTEH to interpret monitoring data. (Responding to a question from someone in the session’s audience, he touted the AskRail™ app, a tool that gives emergency responders information about the hazardous materials inside a railcar or the contents being transported on an entire train. http://www.askrail.us/)
Dyron Hamlin, MS, PE, a chemical engineer with GHD, said hydrogen sulfide is the primary acute hazard faced by responders after a spill occurs. While an H2S concentration below 50 ppm is irritating, 50-100 ppm causes loss of the individual’s sense of smell, and 100 ppm is immediately dangerous to life and health. If the crude oil in a railcar has 1 percent sulfur in the liquid, GHD personnel typically measure 300 ppm of H2S in the headspace inside the railcar, Hamlin said.
Echoing Skelton’s comments, Hamlin said API found that 50 percent of the mass of typical crude oils is lost in the first 48 hours following a spill; following the Deepwater Horizon spill, the volatile organic compounds measured in the air during the response were lower than expected because of water dissolution in the Gulf of Mexico, he said.
He cautioned the audience members to keep in mind that all hazardous material railcars’ contents are mixtures, which complicates the task of calculating boiling points and other factors important to responders and cleanup workers.
DOT Helps Out PHMSA Offers Rail Incident Training Resource
The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration recently released a web-accessible Transportation Rail Incident Preparedness and Response training resource, saying it gives emergency responders critical information and best practices related to rail incidents involving Hazard Class 3 Flammable Liquids, such as crude oil and ethanol. It is off-the-shelf training that is available online and can be used anywhere throughout the country.
“TRIPR is the result of a concerted effort between federal agencies and rail safety stakeholders to improve emergency response organizations’ ability to prepare for and respond to rail incidents involving a release of flammable liquids like crude oil or ethanol,” said PHMSA Administrator Marie Therese Dominguez. “We are committed to safety and providing responders with flexible, cost-effective training and resources that help them respond to hazmat incidents safely.” The resource was developed in conjunction with other public safety agencies, such as the Federal Emergency Management Agency, the U.S. Coast Guard, and EPA, in order to prepare first responders to safely manage incidents involving flammable liquids.
“Some of the most important actions we have taken during the last two years to increase the safety of transporting crude oil by rail have been providing more resources, better information, and quality training for first responders. This web-based training is another tool to help first responders in communities large and small, urban and rural, quickly and effectively respond if a derailment happens,” said FRA Administrator Sarah E. Feinberg.
The TRIPR curriculum focuses on key hazmat response functions and incorporates three animated training scenarios and introductory videos to help instructors facilitate tabletop discussions. PHMSA announced that it plans to host a series of open houses nationwide to promote the curriculum. Visit http://dothazmat.vividlms.com/tools.asp to download the TRIPR materials.
About the Author: Jerry Laws is Editor of Occupational Health & Safety magazine, which is owned by 1105 Media Inc.