Category Archives: Oil Industry

Railroads agree to slow down crude oil trains in major cities

Repost from ABC News
IMPORTANT TO NOTE: “The agreement does not … address an estimated 78,000 flawed tank cars that carry crude and ethanol and are known to split open during derailments. The U.S. Department of Transportation said it would address the tank car issue separately.”

Oil Train Wrecks Spur Railroad Safety Measures

BILLINGS, Mont. February 21, 2014 (AP)
By MATTHEW BROWN and JOAN LOWY Associated Press

Railroads that haul volatile crude shipments have reached an agreement with U.S. transportation officials to adopt wide-ranging, voluntary safety measures after a string of explosive and deadly accidents.

The deal signed Friday calls for oil trains to be slowed from a maximum of 50 to 40 miles per hour through major cities, more frequent track inspections and better emergency response planning along routes that carry trains hauling up to 3 million gallons of crude each.

The new safety steps would begin going into effect in late March and be fully in place by July 1.

After a boom in domestic drilling in recent years, oil trains now travel thousands of miles from oil producing areas, including the Northern Plains, to coastal refineries and shipping terminals along the Mississippi River and other major waterways.

The agreement does not resolve concerns over another hazardous fuel, ethanol, involved in a spate of rail accidents in recent years. It also does not address an estimated 78,000 flawed tank cars that carry crude and ethanol and are known to split open during derailments.

The U.S. Department of Transportation said it would address the tank car issue separately.

By taking voluntary steps, the railroads will be able to act more quickly than if they waited for new safety rules to be drafted and approved by the government, said Robert Chipkevich, a former director of rail accident investigations at the National Transportation Safety Board.

But regulators will have little leverage to enforce the industry’s commitments, he added.

“It’s a positive step,” Chipkevich said. “But certainly there’s nothing to say they would have to continue following those practices. The only way you can enforce something like that would be for regulators to publish regulations and do periodic oversight.”

Federal officials said they would continue to pursue longer-term safety measures and use regular inspections to check for compliance with the industry agreement. With no formal rules in place inspectors could not issue fines or take other punitive measures.

“We expect for this to be a document that is fully adhered to, and are prepared to inspect accordingly and call out the industry as necessary,” Federal Railroad Administrator Joseph Szabo said in a Friday interview with The Associated Press.

The Association of American Railroads represents the major railroads in the U.S., Canada and Mexico. President Edward Hamberger said he expects all of them to sign the agreement.

At least 10 times since 2008, freight trains hauling oil across North America have derailed and spilled significant quantities of crude, with most of the accidents touching off fires or catastrophic explosions.

The deadliest wreck killed 47 people in the town of Lac-Megantic, Quebec. Others have occurred in rural areas of North Dakota, Alabama, Oklahoma and New Brunswick. The derailments released almost 3 million gallons of oil, nearly twice as much as the largest pipeline spill in the U.S. since at least 1986.

“Safety is our top priority, and we have a shared responsibility to make sure crude oil is transported safely,” U.S. Transportation Secretary Anthony Foxx said.

Members of Congress who had pressed for tighter safety rules — including Senators Heidi Heitkamp and John Hoeven of North Dakota and Mark Udall of Colorado — welcomed the industry agreement.

Hazardous materials response plan for Glacier National Park

Repost from Flathead Beacon, Kalispell, Montana

As More Oil Rides the Rails, BNSF Prepares For the Worst

Glacier National Park chief says there could be ‘severe consequences’ if an oil train were to derail along the Middle Fork

Glacier National Park superintendent Jeff Mow speaks to a group during a Whitefish Chamber of Commerce lunch on Feb. 6. – Greg Lindstrom | Flathead Beacon
By Justin Franz, 02-16-14
WEST GLACIER – Less than a mile from Glacier National Park Superintendent Jeff Mow’s office is one of America’s fastest growing pipelines for Bakken crude oil: BNSF Railway.
Oil trains have become a common sight in West Glacier and the Flathead Valley, due in large part to the oil boom in North Dakota and Eastern Montana. Recently, BNSF CEO Matt Rose said his 32,000-mile railroad was projected to haul 1 million barrels of oil every day by the end of 2014. According to BNSF, the railroad operates one crude oil train every day through the Flathead Valley to refineries in Washington and Oregon. However, a recent rash of accidents has brought scrutiny to the practice.
Now, the railroad company is preparing a detailed hazardous materials response plan if an oil train were to derail near Glacier National Park. According to spokesperson Matt Jones, the plan will be available to local first responders in the coming weeks.
The increase of oil on the rails worries Mow, who perhaps has more experience than anyone else in the National Park Service with regard to oil spills. Mow was a park ranger and later superintendent at Kenai Fjords National Park that is located less than 100 miles from where the Exxon Valdez ran aground in the Prince William Sound off the coast of Alaska on March 24, 1989. The wreck spilled 257,000 barrels of oil, the equivalent of 125 Olympic-sized swimming pools, and killed thousands of animals, including 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles and 22 killer whales. Mow helped investigate the spill for the Park Service and Department of Justice.

Twenty-one years later, Mow was a Department of the Interior incident commander when the Deepwater Horizon oil drilling well sank in the Gulf of Mexico, causing the largest offshore oil spill in U.S. history. Those two incidents shape Mow’s worldview when it comes to the increase of oil on the tracks near Glacier.

“There would be severe consequences of a derailment near the park, whether it sparks a fire or spills oil,” Mow said. “We need to be prepared for it.”
Moving oil by rail received increased scrutiny after a series of explosive derailments last year. On July 6, an unmanned oil train derailed and exploded in Lac Mégantic, Que., killing 47 people and leveling more than 30 buildings. On Dec. 30, a BNSF oil train ran into a derailed grain train and exploded in Casselton, N.D. No one was injured in the blast, but the town was evacuated because of toxic fumes. Other oil trains have derailed in Alabama, Alberta and New Brunswick.
Mow is concerned about both public safety in the park and the environmental impact of a spill or explosion. Recently, the superintendent met with BNSF officials to voice his concerns.
“We’re not experts in operating railroads, but we want to ask questions and make sure (BNSF) is doing everything they can to lessen the risk,” Mow said.
A lesson from the Exxon Valdez spill that could be applied to today’s situation is the importance of knowing what environmental resources are at a location before an accident happens. Mow said before the spill, the National Park Service had little information about the Kenai Fjords coastline in winter because no one was there to gather information that time of year. Immediately following the spill, the Park Service dispatched rangers and scientist to assess the area before the oil floated ashore. He said that information is valuable when trying to make informed decisions about protecting environmental resources.
One impact of the Exxon Valdez spill was the establishment of community groups who regularly meet to discuss the issues of transporting oil. Mow said something similar is already set up in Northwest Montana, the Great Northern Environmental Stewardship Area. The railroad and the U.S. Fish and Wildlife Service created the GNESA in 1991 to prepare a Habitat Conservation Plan to protect grizzly bears that were attracted to the tracks by grain spilled from passing trains. The GNESA corridor includes the 58 miles of track between East Glacier Park and West Glacier.
The rail line along Glacier’s southern boundary is now the subject of BNSF’s Geographical Response Plan. The document, which will be released to first responders and other stakeholders in the next few weeks, will include a detailed response plan in case an oil train derailed anywhere between East Glacier Park and Stryker. Jones said it would include highly detailed maps of the entire route and strategies on how to deploy containment booms in the Middle Fork of the Flathead River or any other nearby body of water. BNSF has a similar response plan for the Kootenai River Valley between Wolf Creek, on the west side of Flathead Tunnel, and Bonners Ferry, Idaho.
The National Parks Conservation Association’s Michael Jamison said the railroad and the communities it runs through are “at the beginning what promises to be a robust conversation” about the movement of oil by rail. He said the railroad needs to do everything it can to prevent accidents, including improving its track infrastructure and upgrading to modern tank cars.
BNSF recently announced that the railroad would spend $5 billion on improvements in 2014, including $900 million to expand track capacity in the Northern Plains where crude oil shipments are surging. The spending plan is roughly $1 billion higher than 2013.
Mow and Jamison both said BNSF has a positive relationship with the park, which will be important in the months and years ahead.
“We need to have a conversation about how we make it safer and how we plan for the day something bad does happen,” Jamison said. “The good thing is there isn’t a bad guy in this, there’s no pro-accident lobby.”

“Bomb Trains” facebook page

For Facebook users:

2014 — The Year In Bomb Train Derailments

February 16, 2014
This a running list of bomb train derailments in North America in 2014.

By “bomb train,” I mean those trains hauling one or more cars of crude oil, fuel oil, ethanol, methanol, propane, butane, liquified natural gas (methane), ammonium nitrate or high-nitrogen fertilizer, phosphoric acid or some other highly volatile or especially toxic or corrosive cargo. (The list does not include coal train derailments, which, of course, are a whole nuther problem.)  I’ve also indicated whether a detonation resulted.

So far in North America in 2014, we have seen an average of one bomb train derailment every 5 days ….

  • 1/07 – Plaster Rock, NB (6 days from Jan. 1), detonation
  • 1/20 – Philadelphia, PA (13 days later)
  • 1/26 – Edmundston, NB (6 days later)
  • 1/28 – Molino, FL (2 days later)
  • 1/31 – New Augusta, MS (3 days later)
  • 2/06 – Sedalia, CO (6 days later)
  • 2/11 – South Shore, KY and Jacksonville, FL (5 days later)
  • 2/13 – Vandergrift, PA (2 days later)
  • 2/16 – 3 days and counting ….

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Crude Oil: Follow the Money

Repost from The New York Times Business/Energy

Conflict in Oil Industry, Awash in Crude


caption="Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States." data-mediaviewer-credit="Andrew Burton/Getty Images" />Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States. Andrew Burton/Getty Images
caption=”Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States.” data-mediaviewer-credit=”Andrew Burton/Getty Images” />Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States. Andrew Burton/Getty Images

HOUSTON — T. Boone Pickens has personified the nation’s oil industry for more than a generation. So when he made an offhand comment at a conference here a few weeks ago expressing reservations about lifting the nation’s ban on exports of crude oil, he startled some of his old allies in the business.


Scott Sheffield, chief executive of Pioneer Natural Resources and one of the top oil executives in the state, picked up the phone to have a chat. “We had lunch and he made sense,” said Mr. Pickens, who has since revised his position.


Chalk one up for the oil producers, who have begun lobbying the Obama administration, Congress and the public to let them export the bounty of crude oil flowing out of new shale fields across the country.


Opposing them are their erstwhile cousins, the independent refiners, who insist that they need abundant, economical domestic supplies of oil so they can compete with foreign refiners.


It is a rare clash in a deeply guarded industry that involves arguments over national security, pricing at the pump and, after all is said and done, who will get a bigger share of earnings from the current drilling rush.


“What we have here is a food fight for the profits that will come either from exports of crude oil or exports of refined products,” said Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis, who testified before Congress recently in favor of lifting the ban. “It’s like an argument inside a family business but one that could result in huge market distortions that can either hurt the consumer or our national security.”


Producers like Mr. Sheffield warn that a mounting glut of certain grades of oil in some regions of the country will eventually force a halt to unprofitable drilling if exports are not allowed.


“Nobody wants the collapse of the oil industry,” Mr. Sheffield said in an interview. “You would be importing crude oil from the Middle East all over again.”


On the other side of the debate are some of the nation’s biggest refiners, who argue against unlimited exports of crude oil even as they export increasing amounts of refined products like diesel and gasoline. To their way of thinking, the oil producers are merely trying to increase their profits at the expense of American consumers.


“They are seeking the highest price available,” Bill Day, a vice president at the Valero Energy Corporation, a large independent refiner, said of the producers. “If anything, unlimited exports would raise the price of American crude to the international level, which is why the producers want this step to begin with.”


The debate began in earnest two months ago when Energy Secretary Ernest Moniz suggested at a New York energy conference that it might be time for the country to reconsider the export ban that was instituted in the 1970s, when OPEC oil embargoes threatened the American economy. Congress at the time made oil exports illegal except for some shipments to Canada. The ban on exports of Alaskan North Slope crude was lifted in 1996.


The topic has renewed interest thanks to the oil industry’s reversal of fortunes in recent years. Only seven years ago the country’s domestic oil production appeared to be in a downward spiral. But with the advent of new extraction techniques, entire new fields were opened, replacing oil imports from unfriendly or unruly places like Venezuela and Nigeria.


Suddenly parts of the Midwest and Gulf of Mexico regions are overflowing with superior grades of crude, leading to a slump in prices and a gap of as much as $10 between American oil benchmark prices and the dominant world Brent price.


Even under current restrictions, crude exports are growing quickly. Shipments to Canada have already roughly tripled since 2012 to around 200,000 barrels a day. Some analysts say they think that figure will double by the end of the year.


While the entire oil industry has profited from all the domestic production, which has increased by about 60 percent to eight million barrels a day since 2005, refiners have particularly benefited. American refiners became darlings of Wall Street by buying cheaper domestic crude and now export 3.4 million barrels a day of gasoline, diesel and other refined products, mostly to Latin America and Europe.


Not surprisingly, both the producers and the refiners say they are on the side of consumers and national security, and each side has academic and consultancy reports to back up its position.


The producers argue that if they could freely export, they would increase world oil supplies, forcing down the international Brent benchmark crude price, which in turn would reduce the price of gasoline at the pump. “The American consumer is held captive by the restrained market,” said Jack Ekstrom, a vice president at the Whiting Petroleum Corporation, a major producer in the North Dakota Bakken shale field. “When you have additional supplies coming on to market, the price naturally comes down.”


Executives at the refineries, which struggled for decades, counter that adding another million barrels of United States oil of daily supply to a global market of 90 million barrels a day will make little difference. Instead, they say, domestic crude prices will climb higher and with them gasoline prices.


“The export ban works,” Graeme Burnett, chairman of Monroe Energy, which operates Delta Air Lines’ refinery in Trainer, Pa., told a Senate Energy Committee hearing last month. “We still have a long way to go to protect against oil market volatility and achieve true energy independence.”


Refinery executives concede that they cannot argue against free trade when they are exporting products themselves. Michael C. Jennings, chief executive of the HollyFrontier Corporation, said in an interview that he could support ending the oil export ban as long as other regulations that he said penalize the refiners, including federal mandates for the refining of expensive biofuels, were also reformed.


Such sweeping energy reforms are not likely to be enacted by Congress soon. But in their talks with Commerce Department officials and members of Congress, refiners and producers appear to be closing in on some short-term compromises.


Some executives have suggested that Commerce Department officials could approve swaps of lighter American crudes to Mexico for their heavier sour crudes without violating current oil export regulations. That would give the producers another market and give refiners more oil to process.


There appears to be growing support for recharacterizing condensates, the hydrocarbon liquids used for petrochemical production, from crude to natural gas liquids, so they might be exported under current regulations. That would ease gluts in Rocky Mountain and South Texas fields where drilling has already slowed.


And perhaps more oil could be sent to countries with free trade agreements with the United States.


Such compromises, some executives say, could look something like the arrangements for export of liquefied natural gas from the United States. While gas producers supported exports and some chemical companies opposed them, the Obama administration responded by approving export terminals slowly to gauge the impact on domestic energy prices in the future.


“The middle ground could probably be accomplished without any additional legislation,” said Stephen H. Brown, a vice president for federal government affairs at the Tesoro Corporation, a major Texas refiner, “and I think that is what this administration is probably hoping for.”


Such actions by the Commerce Department, Mr. Sheffield said, could be a “relief valve that would push off the problem for another two years.”


But after that, he and other executives said, the country will probably again face a glut of high-quality crudes if current production trends continue.


A version of this article appears in print on February 13, 2014, on page B1 of the New York edition with the headline: Conflict in Oil Industry