Valero Oil-by-Rail Plan Has ‘Unavoidable’ Air Impacts, City Says
By Lynn Doan Jun 17, 2014
Valero Energy Corp. (VLO)’s plan to unload as many as 70,000 barrels of oil a day from trains at its Benicia refinery will increase emissions across California in a “significant and unavoidable” way, a city report shows.
Valero has applied to build a rail-offloading rack at the plant northeast of San Francisco that would take oil from as many as 100 tanker cars a day. The San Antonio-based company delayed the project’s completion by a year to early 2015 as it awaits approval from the city.
“Project-related trains would generate locomotive emissions in the Bay Area Basin, the Sacramento Basin, and other locations in North America,” the city of Benicia said in an environmental assessment posted on its website today. “The city has no jurisdiction to impose any emission controls on the tanker car locomotives; therefore, there is no feasible mitigation available to reduce this significant impact to a less-than-significant level.”
Valero is proposing the rail spur as record volumes of oil are extracted from North American shale formations that the U.S. West Coast has little pipeline access to. California’s refiners are already bringing in the biggest-ever volumes of oil by rail as they seek to displace shrinking supplies of crude within the state and from Alaska.
A series of explosions and derailments of trains carrying crude, including one in Quebec that killed 47 people in July, touched off a flood of letters to the city of Benicia about Valero’s project and compelled the planning commission to put off a decision until an environmental study could be done.
Regulators in both the U.S. and Canada are imposing new rules designed to improve the safety of trains carrying oil and a group of California agencies released a report June 10 recommending ways in which the state should respond.
Earlier this month, the city council in Vancouver, Washington, voted to oppose a proposal by Tesoro Corp. (TSO) and Savage Cos. to build a 360,000-barrel-a-day, rail-to-marine complex at the Port of Vancouver.
Valero’s Benicia project would probably result in a spill of more than 100 gallons once every 111 years, according to an analysis conducted as part of the city’s environmental report. The report was prepared by researchers at the University of Illinois’s Rail Transportation and Engineering Center in Urbana, Illinois.
California’s refiners received 557,315 barrels of oil by rail in April, the most ever for that month, state Energy Commission data show. Crude from Canada made up 45 percent of the state’s total rail receipts. Oil from North Dakota accounted for 22 percent.
Valero has described refining in the western U.S as “a challenged market” with margins close to break-even when all of the region’s plants are running normally. Profits from the 132,000-barrel-a-day Benicia refinery are particularly under pressure, Joe Gorder, the company’s president and chief executive officer, said in a presentation May 21.
The plant “produces a significant yield of gasoline, which, of course, we’ve seen the margins compressed on and demand not be the greatest on,” Gorder said at the UBS Global Oil and Gas Conference in Austin, Texas. Sourcing alternative crudes on the West Coast “would increase the economics out there for us substantially,” he said.
Spot California-grade diesel has traded about 3.5 cents a gallon above gasoline in Los Angeles this year and averaged an 8.75-cent premium in 2013, data compiled by Bloomberg show.
Repost from The Sacramento Bee [Editor: A MUST READ – excellent background piece. Note multiple references to uprail communities’ concerns about Valero’s Crude By Rail proposal. – RS]
Crude oil rail transports to run through Sacramento region
By Tony Bizjak, June 7, 2014
Sacramento’s history as a rail town is long and rich. A potential new chapter, however, is creating concern: The city may soon become a crude-oil crossroads.
As part of a national shift in shipping practices, several oil companies are laying plans to haul hundreds of train cars a day of flammable crude through the region on the way to coastal and Valley refineries, passing through neighborhoods and downtowns, and crossing the region’s two major rivers. Saying they’ve been told little about the transport projects, area leaders are scrambling to gather information so they can advocate for local safety interests as several of the rail shipment proposals move forward.
“This is a real issue,” Sacramento Rep. Doris Matsui said this week after holding a recent conference call with fire officials. “Sacramento’s downtown and many neighborhoods sit next to the tracks. The feedback I received on that call is that our locals are not receiving the information they need to be ready for an incident.”
Several of the planned crude-oil trains will share tracks with Capitol Corridor passenger trains. Notably, Capitol Corridor chief David Kutrosky said last week he was not aware of the plans until informed by The Sacramento Bee.
Some of the trains are expected to carry Bakken crude, a North Dakota oil mined with fracking technology. Federal hazardous materials officials recently issued a warning that Bakken crude may be more flammable than traditional oil, citing derailments that resulted in fires, including a catastrophic explosion last year that killed 47 people in Lac-Megantic, Quebec, and leveled half of that city’s downtown.
Subsequent derailments in North Dakota and Virginia, though not fatal, caused fires and evacuations and showed disaster could strike again.
Kirk Trost, an attorney and executive with the Sacramento Area Council of Governments, a coalition of six counties and 22 Sacramento-area cities, said he will ask the SACOG board this month to issue a regional statement of concern about the potential rail projects. Trost and other local officials say they want to push oil and railroad companies to be more open about their plans and to work more closely with local leaders on safety issues.
“We’re not trying to stop the movement of crude through the region,” he said. “But if it comes, we want the safety interests of the region to be addressed.”
Those concerns are being echoed across the country as cities, many with downtown rail lines, react to the oil industry’s rapid evolution toward using trains to haul crude oil. The rail shipments spring from increased pumping of inexpensive crude in North Dakota and from tar sands in Canada, which have limited access to oil pipelines.
Federal officials are exploring the ramifications of having so much oil moving by train. The National Transportation Safety Board held April hearings highlighting the inadequacies of the nation’s current fleet of crude oil tank cars. The U.S. Department of Transportation says it plans to propose tougher standards for safer tank cars. Critics like Andres Soto of the activist Communities for a Better Environment group – who calls current crude tankers “rolling beer cans” – say the government isn’t doing enough.
California, with its coastal refineries and huge gasoline consumption, saw its rail shipments jump from 1 million barrels in 2012 to more than 6 million in 2013, according to the state Energy Commission. Those numbers still represent a small portion of crude oil shipments, but energy officials say they expect them to grow.
In response, the Governor’s Office has proposed more funding to deal with rail oil spills, and Assemblyman Roger Dickinson, D-Sacramento, is pushing legislation to require rail carriers to communicate information about the movement and characteristics of crude oil and other hazardous materials, and maintain a 24-hour, seven-day communications center.
Union Pacific railroad officials insist they’re taking action. They say the company has agreed to reduce crude oil train speeds in large cities such as Sacramento, and have spent millions of dollars on safety efforts, including expanded inspections and technology use, such as lasers and ultrasound, and real-time train tracking via track-side sensors.
“We take this very seriously,” UP spokesman Aaron Hunt said. Representatives of Union Pacific and BNSF, another major freight carrier in California, say they conduct ongoing training with local first responders on dealing with hazardous materials.
The railroads, however, are fighting to keep some train movement data from becoming public.
The Federal Department of Transportation issued an emergency order last month requiring railroads currently running trains with large amounts of Bakken oil to notify state emergency responders about train movements. That deadline is this weekend.
Railroads have said they want states to sign a nondisclosure agreement to keep the information confidential, shared only with emergency personnel. California state officials say they will not sign that agreement, but said Friday they do not know what level of information they may receive from the railroads, and are not sure how much information they would make public.
“We want to keep as much information as public as possible. Anything of concern to the public we want to be available to the public,” said Brad Alexander of the Governor’s Office of Emergency Services. “Since we haven’t received information yet, we don’t know if there is certain national infrastructure risks to (some of the information) being public.”
BNSF officials said on Friday they will submit information to the state. Union Pacific said it does not currently ship Bakken in the state.
Some information about potential future crude-oil rail movements is becoming public. Valero Refining Co. of Benicia in the East Bay plans to run 100 train cars a day carrying crude oil through Sacramento on the Union Pacific rail line starting early next year, according to Benicia city documents. Company officials have been silent on how much of it will be Bakken, simply saying it will be North American crude. Two 50-car crude oil trains will be assembled daily in the Roseville railyard, then run through Sacramento, West Sacramento and Davis to the refinery.
Valero spokesman Chris Howe said his company is focused on safety, and that derailments causing crude oil spills are rare. “We think some of the concerns voiced about transport of particular crudes by rail are a little exaggerated,” Howe said. “There is nothing inherently more dangerous about one crude than another. They are all flammable, and need to be handled carefully.”
He pointed out that the rail transport of less expensive oil from North America will save money and reduce the chance of ocean spills by allowing Valero to cut back dramatically on imports from Africa, the Middle East and South America.
Farther south in California, the Phillips 66 oil company plans to run up to 80 train cars of crude oil daily to its Santa Maria refinery, mainly through Sacramento and the Bay Area. Phillips spokesman Dennis Nuss said rail shipments will keep its refinery competitive as California oil sources diminish. He said the crude will come from a variety of locales, but is not expected to be Bakken. He estimated the trains likely will start running in 2016.
Roseville to Benicia
Two facilities in Kern County – one run by Alon USA, the other by Plains All American Pipeline LP – also plan rail upgrades to allow deliveries of more than 100 tank crude cars a day. Alon did not respond to Bee requests for information, but, according to Kern County environmental documents, trains to the Alon facility will share tracks with the San Joaquin passenger rail service, which runs from Sacramento to Bakersfield. Plains All American Pipeline spokesman Brad Leone confirmed that his company is building a station to handle 104 crude cars daily, with plans to start shipping later this year, but said he did not know what rail lines would be used.
Sacramento already is home to one crude-by-rail transfer station. Sacramento-based InterState Oil has been transferring crude-oil shipments from train cars to trucks headed to Bay Area refineries at the former McClellan Air Force Base in north Sacramento since last September. The company started crude transfers before getting the necessary air-quality permit, local air quality officials said, and Sacramento-area fire officials said they were not initially told about the crude transfer operations.
Local leaders in Sacramento, West Sacramento and Davis say their front-burner concern is Valero’s plan to run two crude oil trains a day through the area. The city of Benicia, the permitting authority for Valero’s plan to build a rail spur to handle more trains, is scheduled to release a draft environmental impact report on the project Tuesday. Trost of SACOG and Davis official Mike Webb said Sacramento area representatives will dig through that report to see how definitively it addresses potential impacts, including derailment and spill risks, on the “up-rail” cities and counties between Benicia and Roseville.
The Sacramento group already has compiled a list of steps it wants taken, and says it hopes to use the moment to make the case that railroads and oil companies must work more closely with cities as the stakes rise.
Trost said the local group will call for a detailed advanced notification system about what shipments are coming to town. Those notifications will help fire agencies who must respond if a leak or fire occurs. Local officials say they also will ask Union Pacific to keep crude-oil tank cars moving through town without stopping and parking them here. The region’s leaders also want financial support to train firefighters and other emergency responders on how to deal with crude oil spills, and possibly funds to buy more advanced firefighting equipment. Sacramento leaders say they will press the railroad to employ the best inspection protocols on the rail line.
So far, the Davis City Council is the only entity in Sacramento that has formally spoken out about the shipments. It recently passed a resolution saying the city “opposes using existing Union Pacific rail lines to transport hazardous crude oil through the city and adjacent habitat areas.”
Davis officials point out that the existing Union Pacific line comes through downtown on a curve that must be taken at reduced speeds. Mike Webb, Davis director of community development and sustainability, said the city of Davis wants to push UP to employ computerized control of train speeds through town, rather than rely on a conductor to reduce speeds manually.
“The city is not opposed to using domestic oil, and the job creation that goes with that,” he said. “We want to be reasonable. Our primary concern is to ensure the highest degree of safety for our community. If trains carrying Bakken crude oil are coming through our community, we want it to be done in the safest way possible.”
Read more here: http://www.modbee.com/2014/06/07/3378435/crude-oil-rail-transports-to-run.html#storylink=cpy
Workshop on How to Respond to the Draft EIR
Wednesday, June 18 from 7:00-9:00 p.m.
Fellowship Hall at Davis Community Church (421 D Street)
Instruction, brainstorming, and organizing our efforts
The Draft EIR for the Valero rail terminal Project in Benicia (70,000 barrels of crude oil /day or one unit train of 100 cars over 1 mile) will be released for a 45-day public comment period on June 10, with a possible extension to 60 or 90 days for review.
Our city will comment and has invited surrounding jurisdictions to join them. Other organizations and concerned individuals are also invited to make written comments during the comment period. To inform yourself about the project and begin thinking how you might respond, some recommended resources are:
Key areas for uprail responders will most likely include public safety, the hazards of spills in terms of the environment, the insistence on the Right-to-know laws, health risks, liability issues, and the true cost of oil in terms of climate change. Benicia has to respond to all comments in their final EIR, so the more specific, thoughtful and numerous our comments, the better. Different people can address different aspects.
Another opportunity for citizen response: The Phillips 66 Santa Maria refinery in San Luis Obispo County request for a rail spur for 5 oil trains of 88 cars per week expects to release their Draft EIR possibly in July.