Category Archives: Kinder Morgan

Ethanol, Kinder Morgan, Oil Industry

Market analyst: Kinder Morgan switched from ethanol to crude “late last year”

Repost from PLATTS McGraw Hill Financial

More ethanol-to-crude rail facility conversions unlikely in California: analyst

Orlando, Florida (Platts)–24Mar2014

More conversions of California ethanol rail unloading terminals to crude service are unlikely, following Kinder Morgan’s switch of its Richmond, California, unloading facility, an analyst said Monday.

“The other big [ethanol] terminals aren’t as close to refiners, and there is a limited amount of ethanol capacity,” Stillwater Associates President David Hackett said on the sidelines of the American Fuel and Petrochemical Manufacturers Annual Meeting in Orlando, Florida.

Kinder Morgan late last year converted the terminal to crude service from ethanol service “after changes in the ethanol market made it attractive for us to look to other commodities,” spokeswoman Melissa Ruiz said Monday in an email.

The Richmond terminal is the only 100-car unit train crude-by-rail facility in California, she said.

“In order to handle crude oil, we had to file a new application with the Bay Area Air Quality Management District (BAAQMA) for permits, which we received last summer,” she said. “We began handling crude this past September, and the facility will serve Bay Area refiners.”

The terminal is located on the Burlington Northern Santa Fe rail yard in Richmond. The railed crude is trucked from the terminal, she said, noting that there are no pipelines or tank connections involved.

Ruiz declined to comment on the terminal’s current throughput or on which types of crude are received by the facility.

The rail terminal conversion comes after the leading US midstream company early last year scrapped its high-profile proposed Texas-to-California Freedom Pipeline on a lack of customer interest. The pipeline would have delivered 277,000 b/d of crude from the Permian Basin in West Texas to northern and southern California refining complexes.

Kinder Morgan said at the time that it would focus on providing crude-by-rail options for West Coast and Texas shippers.

Along the West Coast, refiners and midstream companies are planning to construct crude-by-rail unloading terminals, but are facing permitting delays opposition.

If California “doesn’t get crude by rail, their competitiveness will erode,” Hackett said during the Platts Barrel Talk panel discussion at the conference. “We do see some uptick in rail deliveries, but there is a lot of opposition to crude by rail in California with the environmental community.”

–Bridget Hunsucker, Edited by Katharine Fraser

Bakken Shale, Bay Area Refineries, Berkeley, DOT-111, Federal Regulation (U.S.), Kinder Morgan, Lac-Mégantic, Oil Industry, Rail industry, Rail routing, Rail tanker cars, Richmond, Tar sands crude

California cities’ crude-by-rail opposition makes national news

Repost from The Miami Herald

As oil shipments rise on rails, California cities fight to be heard

By Curtis Tate and Tony Bizjak
McClatchy  Newspapers                           
A tanker truck is filled from railway cars containing crude oil on railroad tracks in McClellan Park in North Highlands on Wednesday, March 19, 2014. North Highlands is a suburb just outside the city limits of Sacramento, CA.
A tanker truck is filled from railway cars containing crude oil on railroad tracks in McClellan Park in North Highlands on Wednesday, March 19, 2014. North Highlands is a suburb just outside the city limits of Sacramento, CA.        Randall Benton    /     MCT 

SACRAMENTO, Calif. — As rail shipments of crude oil have risen in Northern California, so has opposition in many communities along rail lines and near the refineries they supply.

Concerned about the potential safety and environmental hazards of 100-car trains of oil rolling through population centers, leaders from Sacramento to San Jose say they’re banding together to present a unified voice for “up-line” cities: communities that could bear some of the highest risks as California turns toward rail shipments to quench its thirst for fuel.

“What I suspect will come out of this is more of a regional understanding and interest in the topic,” said Mike Webb, director of community development and sustainability in Davis.

The federal government regulates rail shipments, but the rules haven’t caught up to the surge in oil traffic on the nation’s rail network. That’s left local leaders at the forefront of pushing for changes in state and federal laws.

Last week, the city councils of Berkeley and Richmond voted to oppose crude shipments on rail lines through their towns. The resolutions call for state lawmakers and members of Congress to seek tougher regulations.

Several environmental groups filed a lawsuit last week against pipeline operator Kinder Morgan and the Bay Area Air Quality Management District. The groups said the agency quietly issued a permit to Kinder Morgan for a crude-by-rail facility in February without reviewing potential environmental and health impacts.

“We don’t accept that as a forgone conclusion,” said Diane Bailey, a senior scientist with the Natural Resources Defense Council, one of the groups in the lawsuit.

But it may be an uphill fight. State officials anticipate that within two years, California will receive a quarter of its petroleum supply by rail. That could potentially mean several trains of crude oil passing daily through Sacramento, West Sacramento and Davis.

The Sacramento Bee reported last week that crude oil had been transferred from trains to trucks at the former McClellan Air Force Base in Sacramento since last year without the knowledge of local emergency response officials and without a required air quality permit.

Webb said Davis’ goal is to be part of the review process to make sure the city’s concerns are heard.

“Our primary objective and interest is in the health and safety of our community,” he said.

A group of community activists in Benicia and Martinez has been trying to stop two oil refiners, Tesoro and Valero, from expanding their crude oil deliveries by rail. And they’re pressing local, state and federal officials to push for tougher oversight of crude oil shipments by rail following a series of derailments with catastrophic fires and spills.

They’re focused on two types of crude oil that are moving by rail in the absence of new pipelines. First is tar sands, a thick, gritty crude that’s produced in western Canada. Tar sands production generates more carbon dioxide emissions, environmentalists say, and is more difficult to clean up when spilled in water because it’s heavy and sinks.

The second is Bakken crude, extracted through hydraulic fracturing of shale rock. Most of the Bakken formation lies in North Dakota, and most of the oil produced there moves out of the state by rail. The oil has proved more volatile than conventional types.

Since last summer, three major derailments have involved Bakken crude. The first, in Lac-Megantic, Quebec, killed 47 people in an inferno that also leveled the center of the small lakeside town.

Subsequent derailments in Alabama and North Dakota, though not fatal, showed that disaster could strike again.

“People are afraid that anybody along the rail line could become the next Lac-Megantic,” said Andres Soto, a community activist in Benicia.

Part of the frustration at the local level is the lack of information about how much crude oil is being shipped on rail lines. The companies involved in transporting and refining oil are not required to provide much information on the shipments and usually don’t.

“There is so little oversight,” Bailey said. “This is a new area and people are scratching their heads, saying, ‘Wow, this isn’t covered.’”

West Sacramento Fire Chief Rick Martinez, who has experience fighting oil fires, said national attention on the issue may provide a platform for cities to push for better real-time information on what materials are coming through town, so emergency responders know what to expect as they head to a call.

“Is there way through technology to get more information to local agencies?” he asked. “We are trying to take advantage of the interest to pose the questions.”

Bakken Shale, Bay Area Refineries, Berkeley, DOT-111, Environmental Impacts, Kinder Morgan, Local Regulation, Oil Industry, Rail accidents, Rail industry, Richmond, Santa Maria Refinery, Tar sands crude

East Bay Express: Richmond and Berkeley oppose oil by rail

1 Comment

Repost from East Bay Express

Richmond and Berkeley Oppose Fracked Oil and Tar Sands Rail Shipments

Jean Tepperman —  Wed, Mar 26, 2014

The city councils of both Berkeley and Richmond unanimously passed resolutions last night calling for tighter regulation of the shipping of crude oil by rail through the East Bay. The Berkeley resolution went further, committing Berkeley to oppose all shipment of crude oil by rail through the city until tighter regulations are in place.

Information has recently come to light about crude-by-rail activity in both cities. In September, with no public announcement, the Kinder Morgan rail yard in Richmond quietly switched from handling ethanol to crude oil. And a new proposal calls for shipping crude oil to the Phillips 66 refinery in Santa Maria on train tracks that run through the East Bay.

Fracked oil from Bakken shale is highly explosive.
USGS – Fracked oil from Bakken shale is highly explosive.

At the Richmond City Council meeting, oil-industry expert Antonia Juhasz presented evidence from both the BNSF railroad and Kinder Morgan websites showing that the crude oil coming into the Richmond rail yard is fracked from the Bakken shale fields in North Dakota. This Bakken crude has been responsible for several recent disastrous explosions when trains carrying it have derailed, with the worst accident in Lac Megantic, Quebec, where 47 people were killed and the downtown destroyed.

Juhasz added that there were more derailments and accidents involving crude by rail in 2013 than in the previous thirty years combined. More crude is being shipped by rail because of the huge increase in production of crude from North Dakota Bakken shale and Canadian tar sands, both far inland, and the need to get the fossil fuel to the coasts to refine and export.

Juhasz also reported that the National Transportation Safety Board (NTSB) has said that emergency response planning along the rail routes is “practically nonexistent” and that current regulations are “no longer sufficient” — and that it’s not safe to carry crude oil in the type of car currently being used. Because of all this, the NTSB has recommended that trains carrying crude oil be rerouted “away from populated and other sensitive areas.”

Several Richmond council members and community speakers expressed surprise that the switch to crude oil happened with no public notice. Andres Soto of Communities for a Better Environment said the “real culprit” was the staff of the Bay Area Air Quality Management District, which approved Kinder Morgan’s application to make this change without notifying the public or even the air district board members.

City councilmembers wrestled with the fact that the city has no jurisdiction over railroads — only the federal government can regulate them. But Juhasz and McLaughlin said a resolution by the city was important as part of a demand from many cities and organizations for more regulation of crude by rail.

The resolution called on federal legislators to move quickly to regulate the transportation of the new types of crude oil from Bakken shale and Canadian tar sands. Many speakers argued in favor of a moratorium on shipping crude by rail until adequate regulations were in place.

Meanwhile in Berkeley, another oil-industry expert, environmental engineer Phyllis Fox, described the plan to ship crude oil through the East Bay to Santa Maria — probably through Richmond, Berkeley, and Oakland — since these tracks are built to carry heavy trains. She projected a map showing that rail lines in California parallel rivers and go through the most populated areas, so accidents would be “disastrous.”

Information released about the plan doesn’t reveal the source of the crude oil, but Fox said the two main kinds of crude oil being shipped by rail are from Bakken shale — oil that is highly volatile and prone to explosion — and Canadian tar sands — very heavy oil that is especially toxic and difficult to clean up. “One catastrophic event,” Fox said, “could cause irreversible harm.”

Other sources have pointed out that the Phillips 66 refinery in San Luis Obispo County is geared to refining heavy crude oil, so it’s most likely that the crude headed to that plant would come from the Canadian tar sands.

Many speakers in the public comment period supported the resolution, including residents of Crockett/Rodeo and Martinez, who are waging similar battles in their communities. Speakers pointed out a wide range of problems with shipping crude by rail in addition to the immediate danger. In a pre-meeting rally in support of the resolution, Mayor Tom Bates said the issues “go beyond the danger to our community to our whole carbon future. If we don’t get off fossil fuel we’re all doomed.”

The resolution commits Berkeley to file comments opposing crude-by-rail projects in any draft permit-approval process, starting with the Santa Maria project; to file comments opposing new projects in the Phillips 66 refinery in Rodeo and the Valero refinery in Benicia; and to support the federal Department of Transportation in creating strict regulation of rail shipments of crude oil. In presenting the resolution, Maio also said Berkeley should form a coalition with other cities fighting crude-by-rail projects.

Bay Area Refineries, California Energy Commission, City of Benicia, Kinder Morgan, Local Regulation, Oil Industry, Rail industry, Vallejo Times-Herald

Local officials may check Solano “Industrial Safety Ordinance”

Repost from Vallejo Times-Herald
[VERY interesting in this story: “Local officials say they may need to revisit the county’s Industrial Safety Ordinance to see whether modifications should be made to ensure safety in dealing with Bakken crude, which is more volatile and susceptible to explosion than heavier crude blends.”  – Editor]

Huge increase in crude oil by rail to Bay Area concerns local leaders

By Robert Rogers/MediaNews Group
Posted:   03/18/2014 01:08:00 AM PDT 

RICHMOND — Bakken crude oil from North Dakota is part of the mix of increased crude-by-rail shipments into Contra Costa County, raising concerns from local leaders about whether current regulations are sufficient to minimize risks of transporting the volatile fossil fuel.

“There’s a lot more to be learned, but Bakken (crude) is coming in now,” said Contra Costa County Hazardous Materials Division Director Randy Sawyer. “How much, I don’t know.”

Kinder Morgan Inc., at 1140 Canal Blvd. in Richmond, secured a permit last month to transfer crude from rail cars to trucks, said county Supervisor John Gioia, of Richmond, and is the only facility in the Bay Area that receives crude shipped on Burlington Northern Santa Fe trains, according to the California Energy Commission.

Domestic oil harvesting has increased in recent years, most notably in North Dakota, where drillers use hydraulic fracturing, or “fracking,” to fracture rock and extract oil. As the haul has increased, more oil is coming by rail to California refineries for processing.

Northern California volume of crude by rail increased 57 percent during 2013, from 74,332 barrels in January to 116,657 barrels in December, according to California Energy Commission statistics. But the bulk of the increase statewide went to Southern California refineries, as total state volume spiked from 155,841 barrels in January to 1,180,662 barrels in December. Only about one tenth of all crude-by-rail imports came to Northern California.

About 85 percent of the crude by rail delivered to Northern California in 2013 came from North Dakota, followed by 12.5 percent from Colorado, according to the commission. Four of the five Northern California oil refineries listed by the commission are in Contra Costa County, with the other in Benicia.

The city of Benicia is considering local resident concerns about Valero’s proposals to ship crude by rail.

Local officials say they may need to revisit the county’s Industrial Safety Ordinance to see whether modifications should be made to ensure safety in dealing with Bakken crude, which is more volatile and susceptible to explosion than heavier crude blends.

What local agencies can do to regulate the rail cargo, which is typically covered by federal interstate commerce laws, is limited.

The changes come as popular resistance to increased refining of continental oil has been building.

In the past month, critics hosted town hall-style meetings in Richmond, Martinez and Pittsburg decrying planned increases in crude-by-rail shipments into the Bay Area. Activists drew attention to rising accident numbers, with particular emphasis on a train explosion in July in Lac-Mégantic, Quebec, where 47 people were killed. Other derailments and explosions have occurred in the past year in Alabama and North Dakota.