Category Archives: Oil refineries

Baltimore council members propose ban on new crude oil facilities

From an email by Jennifer Kunze, Maryland Program Organizer, 
Clean Water Action
[See also the Baltimore Sun story, below]

Thu, Oct 19, 2017

Hi everyone,

Just wanted to share the exciting news that the Baltimore zoning code change to prohibit new or expanded crude oil terminals has been officially introduced!  You can download the bill here, and here is some coverage of it in the Baltimore Sun and our local NPR station.  Taylor and I would be happy to answer any questions about it!

Have a great day,

Jennifer Kunze
Maryland Program Organizer
Clean Water Action
WebsiteFacebookTwitter


Repost from The Baltimore Sun

Baltimore council members propose ban on new crude oil facilities

By Ian Duncan, October 16, 2017

Two members of the Baltimore City Council want to ban new crude oil terminals from the city as part of an effort to limit the number of oil trains traveling through the area.

Council members Mary Pat Clarke and Ed Reisinger introduced a proposed change to the city’s zoning laws Monday that would add the oil terminals to a list of banned facilities, ranking them alongside nuclear power plants and incinerators.

“Crude oil shipments are potential hazards to residents and entire neighborhoods,” Reisinger said in a statement.

The council members said they were turning to the zoning code because federal law stops city authorities from directly regulating rail. They hope limiting the terminal capacity will mean there will be less interest in sending oil trains to Baltimore.

Two existing facilities in Baltimore would be allowed to stay but could not expand in any way under the proposal.

For years environmental activists have been sounding the alarm about crude oil that is transported by rail, which can lead to deadly explosions in the case of an accident. In 2013, 47 people died when a train carrying crude oil exploded in Canada.

Precise details of the shipments are scarce, but with the price of oil low, the practice is widely believed to currently be at a low ebb. Rob Doolittle, a spokesman for CSX Transportation, said no oil trains have operated in Baltimore or anywhere else on the company’s network for months. Doolittle also said the company has never run dedicated oil trains through the city, but had moved small amounts of crude on mixed trains.

Clarke said the dip in the market meant it was the right time for the council to take up the proposed restrictions.

“It doesn’t put jobs in jeopardy,” she said. “We don’t know when the marketplace may change. If it does we want to have already capped out the capacity of Baltimore facilities.”

The operator of one of the existing terminals declined to comment; the other did not respond to questions.

Environmental groups say there’s reason to think that if the price of oil picks up again, companies would seek to expand the number of terminals in Baltimore. That’s what happened during the last boom several years ago, but the plans were blocked.

Jennifer Kunze, an organizer with Clean Water Action, said it makes sense to put limits in place now.

“This is really a preventative measure,” she said.

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    Exxon, other refineries affected as Louisiana waters rise

    Repost from Bloomberg News
    [Editor: You can count on the oil industry to prevaricate. The Baton Rouge Advocate reports that ExxonMobil released a statement disputing this Bloomberg report. “‘Contrary to some reports, the ExxonMobil Baton Rouge Complex is operating. It is our practice not to comment on specific unit operations at our facilities,’ the company said.”  – RS]

    Exxon Said to Slow Louisiana Refinery as People Escape Flood

    By Barbara J Powell & Brian K Sullivan, August 17, 2016 6:13 AM PDT, Updated 4:14 PM PDT

    • Fourth-largest U.S. refinery affected as waters rise
    • Louisiana is home to about 18% of U.S. refining capacity

    Exxon Mobil Corp. curbed operations at the fourth-largest U.S. refinery as record flooding in Louisiana shut roadways, sent tens of thousands fleeing from their homes and threatened the state’s oil infrastructure.

    The Baton Rouge refinery along the Mississippi shut four production units and idled others when the flooding threatened an offsite liquefied petroleum gas storage facility and pumping station, a person familiar with operations said early Wednesday. The refinery can process 502,500 barrels of crude a day into gasoline, diesel and other fuels.

    At least 11 people have died, 30,000 people rescued and 40,000 homes have been damaged as almost 2 feet (61 centimeters) of rain fell in parts of southern Louisiana, the Associated Press reported Wednesday. Flood warnings extended across much of the southern portions of the state with many bayous and rivers still at dangerous levels. Louisiana is home to about 18 percent of U.S. refining capacity, according to Energy Information Administration data.

    Pipelines, Terminals

    Most in danger from direct disruption from flooding is the support infrastructure consisting of pipelines, terminals, salt caverns and above-ground pumping stations, said Andy Lipow, president of Lipow Oil Associates in Houston.

    “Those that supply support services to refineries could be in danger of shutting down, and that could impact refineries’ operations,” Lipow said.

    Todd Spitler, an Exxon spokesman, said the refinery is operating. The company doesn’t comment on specific unit operations and has continued to meet contractual commitments, he said

    Through Tuesday, Baton Rouge had received 22.11 inches of rain since the start of August, more than 19 inches above normal, according to the National Weather Service. New Orleans got 7.46 inches, or 4.35 above normal; Lake Charles had 11.22 inches, or 8.69 above normal; and Lafayette logged 23.19, or 20.81 higher than the 30-year average.

    Governor John Bel Edwards declared an emergency on Friday. Residents in 20 parishes are eligible for federal assistance and in two days 39,000 people have registered, the Governor’s Office of Homeland Security and Emergency Preparedness said.

    Motiva Convent

    Motiva Enterprises LLC said in an online message to employees Wednesday afternoon that it will staff its Convent refinery, about 38 miles southeast of Baton Rouge, with only essential personnel through at least Sunday. The company had previously said the restriction would last until Wednesday.

    Angela Goodwin, a Motiva spokeswoman, didn’t immediately respond to a request for comment. She said Tuesday that operations at Motiva’s Convent and its Norco refinery, about 38 miles to the south, are stable.

    Gulf Coast fuel prices climbed early Wednesday on the prospect of refinery outages. Ultra-low sulfur diesel strengthened 1 cent to 2.75 cents below New York Mercantile Exchange futures, the narrowest discount since November 2014, according to data compiled by Bloomberg. Conventional gasoline gained 1.88 cents to trade near parity with futures for the first time in four days.

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      Dakota Access pipeline to upend oil delivery in U.S. – Losers to include struggling oil-by-rail industry

      Repost from Reuters

      Big Dakota pipeline to upend oil delivery in U.S.

      By Catherine Ngai and Liz Hampton | NEW YORK/HOUSTON, Aug 12, 2016 12:46pm EDT
      Dead sunflowers stand in a field near dormant oil drilling rigs which have been stacked in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen
      Dead sunflowers stand in a field near dormant oil drilling rigs which have been stacked in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

      It may seem odd that the opening of one pipeline crossing through four U.S. Midwest states could upend the movement of oil throughout the country, but the Dakota Access line may do just that.

      At the moment, crude oil moving out of North Dakota’s prolific Bakken shale to “refinery row” in the U.S. Gulf must travel a circuitous route through the Rocky Mountains or the Midwest and into Oklahoma, before heading south to the Gulf of Mexico.

      The 450,000 barrel-per-day Dakota Access line, when it opens in the fourth quarter, will change that by providing U.S. Gulf refiners another option for crude supply.

      Gulf Coast refiners and North Dakota oil producers will reap the benefits. Losers will include the struggling oil-by-rail industry which now brings crude to the coasts.

      The pipeline also will create headaches for East and West Coast refiners, which serve the most heavily populated parts of the United States and consume a combined 4.1 million barrels of crude daily. They will have to rely more on foreign imports.

      The pipeline, currently under construction, will connect western North Dakota to the Energy Transfer Crude Oil Pipeline Project (ETCOP) in Patoka, Illinois. From there, it will connect to the Nederland and Port Arthur, Texas, area, where refiners including Valero Energy, Total and Motiva Enterprises operate some of the largest U.S. refining facilities.

      “That’s a better and cheaper path than going out West and down through the Rockies,” said Bernadette Johnson, managing partner at Ponderosa Advisors LLC, an energy advisory based in Denver.

      CHEAPER THAN RAIL

      Moving crude by pipeline is generally cheaper than using railcars. The flagging U.S. crude-by-rail industry already is moving only half as much oil as it did two years ago: volumes peaked at 944,000 bpd in October 2014, but were around just 400,000 bpd in May, according to the U.S. Energy Department.

      Rail transport has become less economical for East and West Coast refiners when compared with importing Brent crude, the foreign benchmark, because declining supply out of North Dakota made that grade of oil less affordable.

      “If you look at the Brent to Bakken arb, it’s tight,” said Afolabi Ogunnaike, a senior refining analyst at Wood Mackenzie in Houston. “If you look at the spot rate, it’s uneconomical to move crude by rail right now.”

      Ponderosa Advisors estimated that the start-up of the pipeline could reroute an additional 150,000 to 200,000 bpd currently carried by rail to the U.S. East Coast and Gulf Coast.

      Crude imports into the East Coast are now on the rise, averaging 788,000 bpd this year, with nearly 960,000 bpd in July, the highest level in three years, according to Thomson Reuters data.

      On the West Coast, refiners like Shell, Tesoro and BP may have to commit to some railed volumes for longer because of shipping constraints, although it will largely depend on rail economics. They also face declining output from California and Alaska.

      Tesoro’s top executive Gregory Goff told analysts and investors last week he expects rail costs to drop as much as 40 percent from the current $9-to-$10 barrel cost to compete with pipelines, in order to move Bakken to its Anacortes, Washington, refinery.

      CHANGING TIDES

      Rail companies have been trying to adapt. CSX Corp, which runs a network of lines in the eastern part of the country, said it was evaluating potential impacts of the pipeline. BNSF Railway declined to discuss future freight movements, but said that at its peak, it transported as many as 12 trains daily filled with crude, primarily from the Bakken. Today, it is moving less than half of that.

      In a recent earnings call, midstream player Crestwood Equity Partners said it was working to capitalize on the pipeline and not be dependent on loading crude barrels onto trains. That includes building an interconnection to its 160,000 barrel-per-day COLT crude rail facility in North Dakota.

      As refiners bring in more barrels from overseas, Brent’s premium over U.S. crude will eventually widen. On Thursday, December Brent futures settled at a 97-cent premium to U.S. crude, one of its widest premiums this year.

      Separately, Bakken crude, a light barrel, could rise further due to the additional competition, especially as production is still falling. Bakken differentials hit a six-month low earlier this week of $2.65 a barrel below WTI, according to Reuters data, but rose to a $1.80 a barrel discount by Thursday.

      (Reporting by Catherine Ngai in New York and Liz Hampton in Houston; Editing by David Gregorio)
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