Category Archives: Oil prices

Crude trains: risky bridge conditions

Repost from The Sacramento Bee
[Editor: This is an excellent analysis of refinery benefits and risks, including commentary on the aging bridges used by oil tanker trains.  – RS]

Crude oil trains revive Philadelphia refineries but deliver new risks

By Curtis Tate
McClatchy Washington Bureau
Monday, Apr. 7, 2014

Chunks of concrete are falling off Philadelphia’s 25th Street Viaduct, which stretches for several city blocks in South Philadelphia. Two or three loaded crude oil trains pass over the 86-year-old structure every day, bound for Philadelphia Energy Solutions, a sprawling refinery complex that’s now the largest single consumer of Bakken crude oil from North Dakota.

PHILADELPHIA — Just a few years ago, the region’s refineries were on life support, hurt by high prices of oil imported from foreign countries. Now, they’re humming again with the daily deliveries of domestic crude in mile-long trains.

As one of the country’s largest destinations for crude oil from North Dakota’s Bakken region, Philadelphia illustrates both the benefits, and risks, of a massive volume of oil moving by rail.

“It’s a good marriage,” said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers, an industry group. “Ultimately, it will be good for the consumer.”

Bakken_and_bridges_McClatchy2014-04-07_325But even as the oil and the trains that bring it may have saved refineries and jobs, they’re testing the limits of the city’s infrastructure and emergency response capabilities.

In January, seven loaded tank cars derailed on the 128-year-old Schuylkill Arsenal Railroad Bridge over the Schuylkill River. Though no crude was spilled, one car dangled precariously over the river and Interstate 76. Investigators blamed it on faulty track maintenance.

“We always hear that things will never happen,” testified former Rep. Curt Weldon, R-Pa., a former firefighter and mayor of nearby Marcus Hook, Pa., at a hearing last month, “but things always happen.”

The city grew up around its rail network, so the only way to the refineries for trains is through town. Some rumble over a steel viaduct through the campuses of Drexel University and the University of Pennsylvania. Others snake through a tunnel under the iconic Philadelphia Museum of Art and the steps made famous by Rocky Balboa.

One of the main routes to the sprawling refinery complex in South Philadelphia crosses a crumbling viaduct for several blocks through a residential neighborhood. Railroad officials say the 86-year-old viaduct is structurally sound, but residents are concerned about the chunks of concrete that regularly fall into the street.

“It may be perfectly safe, but the impression it gives just by looking at it is something else,” said Roy Blanchard, a longtime South Philadelphia resident knowledgeable about the railroads.

Robert Sullivan, a spokesman for CSX, which owns the structure and operates trains over it, said the viaduct was designed to accommodate heavy commodities, such as iron ore and coal, and the railroad is planning to improve it. It already has hired a contractor to begin removing loose sections of concrete.

While other major endpoints for oil trains, including Albany, N.Y., and towns in the San Francisco Bay Area and the Pacific Northwest, have attempted to slow or stop the shipments because of environmental and safety concerns, Philadelphia largely has welcomed the boom.

State and local officials hailed the opening in October of a rail yard that now unloads two 120-car trains carrying 80,000 barrels of oil every day to feed the largest refinery complex on the East Coast. A partnership between Sunoco and the Carlyle Group, a private equity firm, created Philadelphia Energy Solutions, which employs 1,000 workers.

Without Bakken oil to replace expensive imports, the refinery would have closed.

Republican Pennsylvania Gov. Tom Corbett, flanked by Philadelphia Mayor Michael Nutter and Rep. Robert Brady, both Democrats, called the revived operation “a symbol of the connection that exists between Pennsylvania’s expanding energy industry and the potential we have to achieve energy independence in North America.”

But it’s also created new challenges for emergency response agencies.

A series of fiery derailments involving Bakken crude oil since last summer has raised questions about whether government and industry fully accounted for the risks before railroads began hauling it. The worst killed 47 people in Lac-Megantic, Quebec. Others in Alabama and North Dakota, while not fatal, drove home the need for new precautions.

“This crude is not the crude of old,” said Robert Full, chief deputy director of the Pennsylvania Emergency Management Agency.

Full was testifying before a state House of Representatives oversight hearing last month in nearby Eddystone, Pa., the site of a rail-to-barge facility set to open this month. It will unload two trainloads of crude oil a day by the end of the year.

Bob Andrews, a Texas entrepreneur and fire protection engineer, testified that Pennsylvania should consider developing a specific crude-by-rail response plan to protect communities and the investment they have in keeping the oil moving.

“The Philadelphia area is a good place to start,” he said.

Clifford Gilliam, a spokesman for the Philadelphia Fire Department, said the oil shipments don’t change emergency response procedures, but the department is preparing for the possibility of an event larger in size and scope than what it’s planned for in the past.

He said the department has a good working relationship with the railroads and refineries and “has the training and capability to handle hazmat incidents and, if warranted, join forces with other agencies.”

The rail operations, and risks, cross into Delaware and New Jersey. Norfolk Southern delivers a train every other day to a Sunoco terminal across the Delaware River in Westville, N.J., with plans to double the shipments later this year.

Getting the cars into the Westville facility requires repeat backup moves that block two four-lane highways on a track only feet from several homes.

The drawbridge the trains cross was completed in 1896. An $18.5 million grant from the U.S. Department of Transportation helped pay for repairs to the aging span in 2011, before the oil trains began rolling across it.

At Eddystone, south of Philadelphia International Airport, workers are putting the finishing touches on new tracks that will transfer 160,000 barrels of oil daily from trains to barges by the end of the year. The companies involved in the operations say they’ve accounted for the risks.

CSX reached an agreement with the Pennsylvania Emergency Management Agency last month to give first responders access to the railroad’s shipment tracking system. Norfolk Southern, which plans to supply the Eddystone facility, intends to offer safety training.

Jack Galloway, president of Canopy Prospecting, one of the companies developing the Eddystone facility, assured lawmakers last month that it would be “top of the line,” equipped with containment units under the trains and floating barriers around the barges.

“We don’t think there’s any possibility of this oil getting away,” he said.

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    Five myths about crude oil by rail

    Repost from TRAINS The Magazine of Railroading

    A lot of what you’ve been hearing is not true. It’s time to set the record straight

    COASTAL REFINERIES ARE FLOCKING TO OIL BY RAIL LIKE DROWNING MEN TO LIFE PRESERVERS.

    Fred W. Frailey, Trains Magazine, Feb2014, Vol. 74 Issue 2, p17

    Three years have passed since the village was rocked by the scandal, namely the remarriage, after half a century of divorce, of Mr. Big Rail and Ms. Crude Oil. People are still aghast. Who would have imagined these two would find each other attractive again? Yet a lot of loose tongues are still spreading gossip, and frankly, much of it is simply not true. To promote harmony in the village, your scribe this month wishes to set the record straight. Here are five commonly articulated myths that have no basis in fact.

    1. It’s just a fling and won’t last. The way oil is priced worldwide virtually guarantees this marriage will endure. The world oil price (Brent) in recent years has usually been $10 to $25 a barrel higher than the West Texas Intermediate (WTI) price for oil from the U.S. interior, and oil from new discoveries in North Dakota and Canada is further discounted from the WTI price. Follow me so far? Refineries on the west and east coasts are not reached by pipelines from the country’s oil-producing midsection, and had to pay the Brent price (or something close to it) to buy oil from overseas or Alaska’s North Slope. It was difficult for these refiners to compete and stay in business.

    Now these coastal refineries are flocking to oil by rail like drowning men to life preservers. If they can get oil $10 to $25 a barrel cheaper, they’re way ahead even after paying the railroads. Therefore, the east and west coasts, I maintain, will be the ultimate destination for much, if not most, of the oil coming from the Bakken shale formation in North Dakota and Saskatchewan. And the only way to get it there is by rail.

    2. The Keystone XL pipeline will disrupt the marriage. Not at all. TransCanada’s XL, according to the environmental impact statement, is supposed to bring up to 730,000 barrels a day of stuff from Canada (more about “stuff” in a minute) to refineries on the U.S. Gulf Coast, and pick up another 100,000 barrels of North Dakota oil as it passes through that state. But there are problems with the XL. First, it may never be approved by the U.S. government. Second, Gulf Coast refineries are being flooded by light sweet crude oil of the sort North Dakota produces. I concede that pipelines can get North Dakota crude to the Gulf cheaper than railroads, but question whether there will be much appetite for it. Third, the “stuff” from Canada is not well-suited to pipelines.

    3. Railroads cannot compete with pipelines head to head. In theory, that’s largely true. Between Point A and Point B, if there are no complicating hang-ups, pipe will underprice rail. Now, let’s talk about “stuff:’ The oil being extracted in northern Alberta, above Edmonton, is so heavy that you cannot do conventional drilling. Either you mine it and extract the oil from the sand, or you heat it underground and boil it out, so to speak. What you get is an oil called bitumen. Gulf Coast refiners are largely geared for this heavy oil – it’s a natural destination for this oil – but there’s a catch: Bitumen will not flow through a pipeline. Pipelines shippers have to buy condensate. transport it to northern Alberta, and then dilute the bitumen with it so that they end up pumping 72 percent bitumen and 28 percent condensate, or “stuff:’ So what goes through the pipe is 28 percent waste. At the other end, refiners have to remove the diluent. It’s a costly process. At least a couple of oil industry experts who have studied the economics of all this say bitumen can be shipped a lot cheaper by unit train, particularly if you use insulated tank cars with coils for steam injection to permit raw bitumen to be loaded and unloaded. Facilities that will do just that are being built or planned at both ends. The same experts say that even if you dilute the bitumen with 18 percent condensate to make it flow in and out of ordinary tank cars, unit trains are still the low-cost winner, although not by much.

    4. Crude oil doesn’t explode. That was the prevailing wisdom before a runaway, unmanned crude oil train piled up in Lac-Megantic, Quebec, in July, killing dozens. And in November an Alabama & Gulf Coast crude oil train derailed over a wooden trestle near Aliceville, Ala., and press reports state that three cars of crude exploded (while other derailed cars did not). Today, I suppose the popular belief is that crude oil is explosive. The truth is that both myths are untrue (or true, take your pick). The lighter the crude oil, the more likely it will be to contain explosive elements such as butane and benzene that may separate from the heavy components during transport. If released and ignited, an explosion may result, according to published safety data sheets. Both the Lac-Megantic and Aliceville accidents involved light sweet crude that originated in North Dakota. As for tar-like bitumen, you could probably hit it with a flamethrower with no explosive effects.

    5. The backlog of tank car orders is creating a bubble that will burst. That bit of village gossip had validity because after all, booms are followed by busts, and freight car manufacturers aren’t exempt. But after the Association of American Railroads in November got behind the idea of retrofitting (or reassigning or scrapping) 78,000 of the 92,001]. cars hauling flammable liquids such as ethanol and crude oil, it pretty much insured that the car builders will be turning out tank cars at their peak 24,000-a4 year rate for some time to come. That bust appears to be a long way off. ~

    Fred W. Frailey is a TRAINS special correspondent and blogs on www.TrainsMag.com.

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