Category Archives: Pipeline transport

THE TRIBUNE, SAN LUIS OBISPO: Decision on Nipomo refinery’s oil-by-rail plan put off again

Repost from The Tribune, San Luis Obispo CA
[Editor:  Additional coverage: The Lompoc Record, “SLO County Planning Commission delays decision on oil trains, again”.  – RS]

Decision on Nipomo refinery’s oil-by-rail plan put off again

By Cynthia Lambert, September 22, 2016 6:55 PM
Phillips 66 hopes to extend a rail line to its Nipomo Mesa refinery, which would allow deliveries from three oil trains a week..
Phillips 66 hopes to extend a rail line to its Nipomo Mesa refinery, which would allow deliveries from three oil trains a week. Joe Johnston

After several more hours of public comment on a controversial oil-by-rail plan Thursday, San Luis Obispo County planning commissioners started to debate various conditions to approve the project, but they did not reach a decision.

Instead, the proposal by Phillips 66, which has been the subject of numerous Planning Commission meetings this year, will again be continued. It is scheduled to return Oct. 5.

In May, a move to deny the project failed on a 3-2 vote, with Commissioners Jim Harrison, Jim Irving and Don Campbell voting “no.” The commission directed planning staff to return with conditions for approving the proposal to allow the oil company to build a 1.3-mile spur that would connect to the main rail line so the Nipomo Mesa refinery can get crude oil by rail.

The proposal calls for deliveries from three trains per week. Each train would have three locomotives and 80 rail cars to haul about 2.2 million gallons of crude oil.

It’s expected that any decision by the commission will be appealed to the county Board of Supervisors.

“I’m concerned that if we were to deny the project today without establishing conditions of approval for a smaller project with fewer trains and specific hours of operation, that this would leave a wide-open project for the Board of Supervisors to consider next year,” Irving said.

In the afternoon, the commission started working its way through a 33-page document of 97 conditions for the project, asking questions and making minor changes and additions.

I’M INTERESTED IN SAFETY, IN RENEWABLE CLEAN ENERGY AND IN BEING A GOOD STEWARD OF OUR ENVIRONMENT. THIS PROJECT COMPROMISES ALL THREE OF THOSE INTERESTS.
Lisa Ritterbuck of Avila Beach

Commissioner Eric Meyer suggested the commission take a straw vote to see which way commissioners were leaning on the project.

Commissioner Ken Topping agreed, saying, “I think the public deserves to know where we stand individually.”

But Harrison pointed out that they had already taken one vote on the project in May.

Irving said his mind is not made up on the project, and he said he wants to look at it point by point and then make a decision.

“I know it drags it out more,” he said. “I know we are on our seventh hearing, but that’s the way I would like to proceed.”

The commission did not reach a consensus to take a straw vote.

Earlier this year, the Planning Commission held five days of hearings on the rail spur project that drew thousands of people from around the state, many opposing the project.

Phillips 66 has said oil production in California is dropping, and they need to bring crude oil by rail from other areas.

The refinery now receives crude oil by pipeline and by truck. The county found out about the trucking during the April 15 hearing on the project.

Planning staff has recommended a condition that would not allow any further trucking of crude oil on or off the refinery property with the approval of the rail spur project. Phillips 66 suggests that “trucking of coke (petroleum carbon) and sulfur from the refinery and delivery of feedstock, including crude oil, to the refinery shall be limited to an annual average maximum of 49 trucks per day.”

But the Planning Commission did not reach that condition — No. 33 out of the 97.

ONE WAY OR ANOTHER, THIS OIL IS GOING TO GET TO THE REFINERY. BUT IS HUNDREDS OF TRUCKS DRIVING DOWN THE HIGHWAY ANY SAFER THAN JUST A FEW TRAINS AND A SMALL RAIL TERMINAL?
Devin Miller of Arroyo Grande

Earlier in the day, public comment was opened to allow people to speak on the new conditions of approval.

About 90 people spoke, with all but four opposed to the project. Most of the speakers live in the county, including more than two dozen Nipomo residents who suggested additional conditions to deal with air pollution, light and odor problems.

Paul Stolpman suggested that Phillips 66 shouldn’t be allowed to operate the three locomotive engines on days when county air officials predict the area will violate air quality standards.

Lisa Ritterbuck, who lives on an organic farm near Avila Beach, said, “I’m interested in safety, in renewable clean energy and in being a good steward of our environment. This project compromises all three of those interests.”

The few supporters who spoke Thursday said there’s a need for the product the refinery is processing.

“One way or another, this oil is going to get to the refinery,” said Devin Miller of Arroyo Grande. “But is hundreds of trucks driving down the highway any safer than just a few trains and a small rail terminal?”

He added that the families of Phillips 66 employees also live in the community.

“Why would they endanger those people?” he asked.

Mike Brown, government affairs director for the Coalition of Labor Agriculture & Business of San Luis Obispo County, also reiterated his support.

“What you’re being asked to do is deny the project on all these potential uptrack incidents that have a very small overall statistical chance,” Brown said. “… You can’t make these decisions based on emotion.”

By the end of the hearing, the Planning Commission had reached condition No. 17 before adjourning at 5 p.m. Public comment will not be reopened at the October hearing.

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Fewer Bakken oil trains when major new pipeline is operational

Repost from the Chronicle Times, Cherokee, IA
[Editor: Significant quote: “Currently, almost 100% of the 944,000 barrels of crude oil produced daily from western North Dakota oil fields moves out over the U.S. railroad system.”  – RS]

Energy Transfer sells share of Bakken Pipeline

By Loren G. Flaugh, Wednesday, August 31, 2016
Rail shipments to lessen when pipeline operational

(Photo)According to an Energy Transfer Partners, L.P. (ETP) website, ETP and Sunoco Logistics Partners, L.P. announced they had signed an agreement to sell 36.75% of the Bakken Pipeline Project to MarEn Bakken Company, LLC. Marathon Petroleum Corporation and Canada based Enbridge Energy Partners, L.P. jointly own MarEn Bakken.

Marathon Petroleum and Enbridge paid $2 billion in cash for the minority share of the Dakota Access Pipeline (DAPL) and its sister pipeline, the Energy Transfer Crude Oil Pipeline (ETCOP).

The DAPL consists of approximately 1,172 miles of 30-inch diameter pipeline from western North Dakota’s Bakken oil production region to the petroleum storage hub at Patoka, Illinois. The ETCOP is roughly 700 miles of existing, 30-inch diameter pipeline already converted from carrying natural gas to carrying the light sweet Bakken Crude oil. That converted pipeline starts at Patoka and terminates at Nederland, Texas near Houston.

Energy Transfer said the sale to Marathon Petroleum and Enbidge is to close in the 3rd quarter of 2016 and it’s subject to certain closing conditions. ETP will receive $1.2 billion and Sunoco will receive $800 million in cash when closing is finalized.

Energy Transfer said they plan to use the proceeds from the cash sale to pay down debt and to help fund their current growth projects.

Energy Transfer/Sunoco will own 38.25% of the DAPL. MarEn will own 36.75% and Phillips 66 will continue to own the remaining 25%. Energy Transfer will continue to oversee the ongoing construction of the approximately $3.8 billion pipeline project. Once the pipeline becomes operational later this year, Sunoco will be responsible for day-to-day operations of the pipeline.

Energy Transfer will quickly initiate another open season process and solicit additional shippers on its common-carrier crude oil pipeline to increase the daily flow rate from the current design capacity of 450,000 barrels per day to just under 600,000 barrels per day. The tariffs that ETP will assess petroleum companies that ship oil on the pipeline will pay off construction costs and provide revenue for day-to-day operations

A large subsidiary of Marathon Petroleum has already committed to participate in this upcoming open season and will make a long-term commitment to ship a large volume of Bakken crude oil to the Patoka petroleum hub. Enbridge owns crude oil storage tanks at Patoka and existing pipelines that go in to and out of this vital petroleum transshipment hub.

When ETP proposed the DAPL back on June 25, 2014, the pipeline was designed for transporting 320,000 barrels of light sweet Bakken crude oil per day. Energy Transfer said that they would solicit additional shipper interest to increase the daily flow rate. Additionally, Energy Transfer said they were in discussions with Sunoco to seek their participation in a potentially significant equity partnership.

Then on September 22, 2014, Energy Transfer announced that they intended to initiate an Expansion Open Season to acquire additional crude oil transportation services on the DAPL. This Expansion Open Season was successful when additional shippers signed long-term commitments increasing the daily throughput to 450,000 barrels per day.

With the pending ETP open season in the coming weeks, this anticipated flow-rate increase of upwards of 570,000 barrels per day will result in the DAPL moving a substantial volume of the daily crude oil produced from western North Dakota’s Bakken/Three Forks petroleum production areas.

According to the North Dakota Bakken Daily Oil Production News website, the daily production level of Bakken crude oil stood at 994,727 barrels per day as of May 31, 2016. This is a small increase from the previous month. However, both production figures are down significantly from June 30, 2015 when the Bakken oil field was producing at the rate of 1,153,000 barrels per day. The Bakken oil fields had been yielding almost 1,200,000 barrels per day in 2014 when prices for crude oil were much higher than today.

The U. S. Energy Information Administration (EIA) recorded a price for crude oil at $105 per barrel in June of 2013. It was in July of 2014 when oil prices dropped below $100 per barrel. One year ago, in June of 2015, the EIA reported a price per barrel of around $60. Earlier this year, in February, the price per barrel plunged to just above $26 per barrel. Today’s price per barrel is around $40 and still expected to fall more.

The daily production rates for crude oil in the Bakken oil fields are rising and falling right along with the fluctuating prices for crude oil and will continue to due to the current over-supply of crude oil in the world oil markets.

Currently, almost 100% of the 944,000 barrels of crude oil produced daily from western North Dakota oil fields moves out over the U.S. railroad system. That is because there are no significant crude oil pipeline systems originating from the Bakken region currently available for moving this huge volume of light sweet crude oil into the broader U.S. pipeline distribution system.

Once the 600,000 barrel per day DAPL begins commercial operations later this year, it will be the first major pipeline to move Bakken crude oil. However, that still leaves about 400,000 barrels per day for railroad shipment. A 100-car Bakken crude oil unit train can carry about 3,000,000 gallons of oil.

According to North Dakota statistics, Burlington Northern & Santa Fe Railroad (BNSF) hauls out about 75% of the crude oil that leaves the Bakken region. Union Pacific and CSX Corporation are other rail carriers that move Bakken crude oil. Some Bakken crude oil goes north into Canada and is moved east or west to crude oil refineries located as far east as Nova Scotia.

The most recent crude oil unit train derailment happened on June 3, 2016 when a 96-car Union Pacific unit train carrying Bakken crude oil derailed while moving through the Columbia River Gorge near Mosier, Oregon. Fourteen of the tanker cars derailed, ruptured and caught fire. Approximately 42,000 gallons of crude oil spilled. A federal investigation revealed that broken bolts joining two rails caused the accident.

The Iowa Homeland Security and Emergency Management Department tracks how much Bakken crude oil moves through Iowa. According to figures from early 2015, BNSF moves Bakken crude oil through Iowa on one heavily used route through Lyon, Sioux and Plymouth Counties and into eastern Nebraska. Another heavily used BNSF route crosses southern Iowa. When daily North Dakota crude oil production rates peaked in 2014 and 2015, roughly 12 to 18 crude oil unit trains per week used the two BNSF routes.

The Association of American Railroads did a study of U. S. Rail Crude Oil Traffic in November of 2015. Their summary noted; U.S. crude oil production has risen sharply in recent years, with much of the increased output moving by rail. In 2008, U.S. Class I railroads originated 9,500 carloads of crude oil. In 2014, they originated 493,146 carloads, an increase of nearly 5,100 percent. Rail crude oil volumes in 2015 will be lower than in 2014. Additional pipelines will probably be built in the years ahead, but the competitive advantages railroads offer–including flexibility to serve disparate markets–could keep them in the crude oil transportation market long into the future.

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KQED: Oil train traffic is down by more than half — for market reasons

Repost from KQED Marketplace

Oil train traffic is down — for market reasons

By Jed Kim, August 24, 2016 | 11:12 AM
At its peak, in October 2014, trains leaving the Bakken region of North Dakota moved more than 29 million barrels. – FREDERIC J. BROWN/AFP/Getty Images

Oil and its downstream products enable most transportation methods, from the gas in automobile tanks to the rubber in shoes. For oil itself, however, there are only a few methods of movement, and each is controversial. In the U.S., one method that saw a recent boom is now on the decline.

Shale oil pumped in recent years from the Bakken region in North Dakota ramped up production and availability faster than pipelines could be built. Trains filled in the gap in the meantime. At its peak, in October 2014, trains moved more than 29 million barrels.

The most recent data from the Energy Information Administration shows that the amount of oil shipped by rail has fallen dramatically since.

“Within the U.S., we’re moving about 12 million barrels in May, and that compares with last May – the intermovements within the U.S. was 26 million barrels,” said Arup Mallik, an industry economist at the Energy Information Administration.

Several factors have contributed to the more-than-half decline in shipments. One is that the price of U.S. oil has risen to more closely match global prices. That has reduced the amount of oil being purchased and shipped to refineries.

Low global oil prices, meanwhile, have stifled production, thus reducing the amount of oil needing to be moved.

While those factors have led to a temporary reduction in the need for crude-by-rail shipping, the completion of additional pipeline infrastructure around the country has made more of a permanent change.

“New pipelines are still getting built, further pushing down the need for crude-by-rail,” said Adam Bedard, CEO of ARB Midstream, a company that invests in pipelines and rail facilities.

Bedard said the biggest impact to crude-by-rail shipments may come later this year, if construction is completed on the Dakota Access Pipeline, which would move oil east into Chicago.

“Those barrels will have to come from somewhere, and it is our view that a lot of those barrels will come from crude by rail,” Bedard said. “The Dakota Access Pipeline can move up to 450,000 barrels a day.”

In May, the total amount of oil moved by trains in the entire U.S. was 470,000 barrels a day.

The future of that pipeline is being decided. Protests have temporarily halted construction of the Dakota Access Pipeline, partly because of concerns for the safety of drinking water.

Safety issues plague perception of crude-by-rail as well. In the past four years, there have been a dozen significant derailments of trains carrying crude oil in the U.S., spilling more than 1.5 million gallons, according to the Federal Railroad Administration.

Brett VandenHeuvel, executive director of Columbia Riverkeeper, said his organization is fighting to reduce or eliminate the traffic traveling through the Pacific Northwest. An oil train derailed in Mosier, Oregon, in June, spilling an undetermined amount of crude.

“We think oil trains are dangerous,” said VandenHeuvel. “We’ve seen explosions very close to our homes here on the Columbia River and have watched explosions and derailments all over the nation, and we think it’s not a safe way to transport oil.”

The overall decline of oil train traffic in the U.S. doesn’t extend to his region, as the network of pipelines on the West Coast is largely isolated from the rest of the country. Trains are necessary. Canada, as well, is expected to see an increase in crude-by-rail because it lacks comparable pipeline infrastructure.

VandenHeuvel said his organization will work to keep more terminals from being constructed that would bring in more rail traffic. He said he’s concerned more will come if oil prices rise again.

“You know, that number could ramp back up as production increases,” VandenHeuvel said.

Jed Kim
Jed Kim is a reporter for the Marketplace Sustainability Desk. He focuses on issues of climate change, conservation, energy and environmental justice.  Prior to joining Marketplace in April 2016, Jed was an environment reporter at KPCC public radio…
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