Contra Costa residents pushing for more information on crude by rail
By Karina Ioffee, Bay Area News Group, 03/27/2015 05:22:01 PM PDT
CROCKETT — With plans in the works to transport crude oil by rail through Contra Costa County cities to a Central California refinery, local residents say they want assurances that state and federal agencies are doing everything they can to keep them safe.
Less than 1 percent of crude that California refineries received in 2014 came by rail, but the negative perception of transporting oil by train has grown sharply because of highly publicized accidents. A derailment in Quebec in 2013 killed 47 people and destroyed parts of a town; another in West Virginia contaminated local water sources and forced the evacuation of hundreds of residents.
Tanker cars sit on railroad tracks near the Shell Refinery in Martinez on May 6, 2013. (Kristopher Skinner/Bay Area News Group)
If the Phillips 66 plans are approved, an estimated five trains a week, each hauling 80 tank cars, could travel through Contra Costa cities, then Berkeley, Oakland and San Jose along the Amtrak Capitol Corridor, before arriving at the refinery in Santa Maria.
At a community meeting here Thursday, residents peppered a representative from the California Energy Commission about what kind of emergency plans were in place should a train derail and explode, what timelines the federal government had for new and improved tanker cars, and whether railroad companies have enough insurance in case of a catastrophic event.
Many came away unsatisfied with what they heard, saying they were terrified by the prospect of rail cars filled with Bakken crude from North Dakota, which is lighter and more combustible than most types of petroleum.
“The oil companies are getting all the benefits and the communities who live near them are taking all the risk,” said Nancy Rieser, who lives in Crockett and is a member of Crockett-Rodeo United to Defend the Environment, a community organization.
Her group is pushing the railroad industry to release its risk-assessment information, required for insurance purposes, to better understand what kind of plans companies have in an event of an emergency and whether their insurance policies would cover a large incident. Railroad companies have so far declined to release the information.
“You need to have hospitals at the ready, you need to have first responders, so if you keep it a secret, it’s as if the plan didn’t exist,” Rieser said. “You can’t be coy with the communities.”
Regulations about rail safety are written and enforced by the Federal Railroad Administration, and the California Public Utilities Commission focuses on enforcement in the state, employing inspectors to make sure railroads comply with the law. There is also an alphabet soup of state agencies such as the Office of Emergency Services (OES), the Office of State Fire Marshal (OSFM), California Environmental Protection Agency (CalEPA) and the Office of Spill Prevention and Response (OSPR).
But to what extent the agencies are working together to prepare for crude-by-rail transports and how they’re sharing information remains unclear. Last year, an Interagency Rail Safety Working Group, put together by Gov. Jerry Brown, produced a report recommending that additional inspectors be hired to evaluate tracks, rail cars and bridges; more training for local emergency responders; and real-time shipment information to local firefighters when a train is passing through a community. According to the report, incidents statewide involving oil by rail increased from three in 2011 to 25 in 2013.
Many at Thursday’s meeting said the only way to prevent future accidents was to ban the transport of crude by rail completely, until all rail cars and tracks had been inspected.
“These trains are really scary because we live so close to them and we feel the effects deeply through emissions and air pollution,” said Aimee Durfee, a Martinez resident. Statewide, Californians use more than 40 million gallons of gasoline each day, according to the California Energy Commission.
Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University, said railroad companies are already shifting to new cars — outfitted with heat shields, thicker tank material and pressure-relief devices — although the process is gradual because of the sheer volume of the fleet, estimated at more than 25,000. New rulings specifying tanker car standards and timelines about phasing in updated technology are also expected this May.
“No human activity is completely risk-free,” Weinstein said, adding that the spill rate for trains transporting crude was roughly four times higher than accidents involving pipelines.
“Communities are resistant to crude by rail and they are against pipelines, but they also want to go to the pump and be able to fill up their car.”
Repost from North American Shale Blog [Editor: Notwithstanding the disparaging remarks about crude-by-rail opponents and politics in California, this is an interesting report by a pro-industry analyst. – RS]
California Crude Trains: How Much Oil Is Actually Coming In and Where Is It Coming From?
By Gabriel CollinsCalifornia has become ground zero for legal opposition to crude-by-rail projects. Opponents decry derailments, toxic vapors, and other ills.[i] Yet despite the dire images painted by crude-by-rail’s opponents, the reality on the ground in California has been quite mundane thus far. The high-water mark to date for California railborne crude supplies was approximately 39 thousand barrels of oil per day (kbd) in December 2013 (Exhibit 1).
To put this number in perspective, California refineries typically process an average of around 1.7 million barrels per day of crude – meaning that at the crude-by-rail peak, only about one barrel in 50 of the state’s crude supply came in by rail.[ii] Presently, the number is closer to one barrel in 100 – certainly not the overwhelming flood of trains opponents fear. And to that point, even supplying one-quarter of California’s total crude oil needs would only require about six to seven crude oil unit trains per day. To put this in context, the Colton Crossing east of Los Angeles by itself can see more than 100 freight trains per day.[iii]
Exhibit 1: California Crude by Rail Sources
Source: California Energy Commission, Alberta Office of Statistics and Information
Where California’s Railborne Oil Imports Come From
For much of the past six years, light, low-sulfur Bakken crude and heavier, higher-sulfur Western Canadian Select (“WCS”) dominated rail imports into California. Canadian supplies show a clear correlation with how cheap WCS is relative to Maya, a heavy crude oil from Mexico that is shipped by tanker and offers a proxy for what heavy, sour, waterborne crude oil imports into California will cost. The spread between WCS and Maya prices matters because it only makes sense for refiners to purchase WCS barrels if they are sufficiently discounted that the buyer still comes out ahead after adjusting for rail transport costs, which can amount to approximately $20/barrel for manifest trains and $15/barrel for oil moved on unit trains.[iv]
For reference, “manifest trains” are mixed cargo trains where a 100-car freight train might include 20 or 30 tanker cars carrying oil. Unit trains, on the other hand, carry only one type of freight, meaning that all 100 to 120 cars carry crude oil. This maximizes economies of scale and significantly reduces transportation costs. Shipments of Canadian crude oil into California traditionally rode on manifest trains, but in November 2014, Union Pacific brought its first unit train of crude oil from Western Canada into California, to a terminal near Bakersfield.[v] The route is currently dormant as WCS crude’s discount to Maya was less than $10 per barrel in January 2015, according to official price data, making it uneconomical to import the Canadian oil by rail.[vi] Unit trains’ lower costs relative to the previously used manifest trains will likely have oil trains rolling from Alberta to California once again if the WCS discount widens to around $15 per barrel.
California has also seen increased supplies of light, low-sulfur crude oil from New Mexico in recent months. The most likely explanation for this is that continued strong oil production in Texas, New Mexico, and the Midcontinent are inundating the Gulf Coast with light, sweet barrels. Indeed, this author’s models using official Energy Information Administration data strongly suggest that Gulf Coast refineries have hit a physical “wall” where they are not able to sustainably use more than 65 percent domestic crude oil to supply their plants, because facilities designed for heavier, higher-sulfur oils cannot run at maximal efficiency with light, low-sulfur crude feedstocks.[vii] This crowded market reduces the potential realized value of crude to certain Permian Basin producers and makes California attractive as a clearing destination because crude can be railed from the Permian Basin to California for as little as $7-8/bbl, according to Tesoro.[viii]
What the Future May Hold
The bottom line is that California’s existing crude-by-rail terminal capacity is massively underutilized at present. The state’s two largest facilities alone – Kinder Morgan’s terminal at Richmond and new terminal near Bakersfield – can offload more than 140 kbd at full capacity. In comparison, crude-by-rail import volumes were less than 20 kbd in December 2014, the last month for which data are available (Exhibit 2).
Exhibit 2: California Crude by Rail Capacity vs. Actual Import Volumes
Source: California Energy Commission, Company Reports
Current terminal capacity is sufficient for approximately two unit trains per day of crude – 140 to 150 kbd – to enter the state. California’s fickle politics make forecasting crude-by-rail volumes a tough exercise. That said, this author believes that if oil prices recover to at least $75/bbl, California’s railborne crude imports will likely exceed 200 kbd by early 2016. Under those conditions, existing terminals would increase their capacity utilization and larger price differentials would attract additional Canadian heavy crude, as well as Bakken and other light, sweet grades from the Rocky Mountain states and the Permian.
Alberta’s Greatly Anticipated Tar Sands Tailings Ponds Framework Falls Short
By Jennifer Skene, March 13, 2015
A new Tailings Management Framework released by the Government Alberta unfortunately enables industry to sidestep taking meaningful action on one of the most pressing environmental issues of tar sands development. For years, Alberta’s political leaders have promised to finally address the harmful legacy of the toxic tar sands tailings problem. But this latest framework is not likely to compel industry action to clean up the tailings in a meaningful way, especially given its lack of meaningful enforcement mechanisms. This, in fact, makes the new framework a step in the wrong direction since the previous regulation, Directive 074, had concrete means of enforcement. Furthermore, Alberta’s history of unfulfilled promises to protect Canadian citizens and wildlife from the devastating effects of tailings ponds casts doubt on the framework’s true efficacy. This framework, without evidence of successful, speedy reclamation efforts, should not serve as a shroud obscuring the Canadian government’s inaction on tar sands and tailings ponds. It is further demonstration to U.S. officials that Alberta isn’t ready for serious action. The failure of the Alberta government to finally release a comprehensive, framework that stops the growth of tailings adds to the urgency to calls for a halt to an expansion of the tar sands industry.
The Problem of Tailings Ponds
Tailings ponds are a blight upon Alberta’s landscape that endanger both wildlife and Canadians. These ponds, which consist of the bitumen, napthenic acids, heavy metals, and other toxic substances left over from tar sands mining, kill and deform wildlife and poison downstream communities. There are currently 976 billion liters of tailings in the mineable region in Alberta–the equivalent of 390,000 Olympic-sized swimming pools–and this number is steadily growing. The dangers of the tailings ponds have been well illustrated. In addition to the recent tailings pond spills in Alberta and British Columbia, there is significant evidence that the ponds are leaking into groundwater, which could be placing wildlife and communities at risk (see video below).
This new tailings framework released by the provincial government is the latest effort to address the unrelenting growth of these tailings ponds and to hold tar sands companies accountable for taking steps to reclaim tailings. However, Alberta’s history and the framework itself provide plenty of reason to doubt that it will be effective.
Alberta’s History of Unfulfilled Promises
Canadian leaders have been heralding the creation of an effective tailings policy for years, but tailings volumes continue to grow. While Alberta has touted its environmental leadership, it has largely failed to protect its environment and citizens from the effects of tar sands tailings ponds. In 2010 Premier Ed Stelmach called for the elimination of tailings ponds, stating that the province would have to “get more aggressive” with mining companies to ensure that they reclaimed their waste. In April 2013, even as Alberta was failing to enforce existing tailings laws, Premier Allison Redford promised, “tailings ponds [will] disappear from Alberta’s landscape in the very near future.” This new framework’s timeline would not eliminate tailings in the “very near future,” nor would it constitute “get[ting] more aggressive” with the tar sands industry. In fact, if anything, it is a capitulation to the industry after they failed to carry out their obligations under Directive 074.
Tailings emptying into a pond in Alberta Photo by Rocky Kistner, NRDC
The previous tailings framework, Directive 074, was a failure, largely because it was not enforced. Directive 074, passed in 2009 by Alberta’s now-defunct Energy Resources Conservation Board (ERCB), required tar sands companies to reclaim a certain amount of tailings every year, beginning in 2010. By July 2012, companies were obligated to reduce 50% of its tailings every year thereafter, and tailings ponds had to be ready for reclamation within five years of the mine’s closure. The tar sands companies universally failed to meet the Directive’s requirements, and in 2013 the executive manager of the ERCB declared that Directive 074 was “overly optimistic” and that the ERCB would not take any actions to enforce it.
What’s In the New Framework
The new tailings framework – generally weaker than the previous Directive 74 – should not be construed as a solution to address the growing problem of tailings nor its enormous legacy on the northern Alberta landscape. Under the new framework, the Tailings Management Framework for the Mineable Athabasca Oil Sands:
Companies are still able to generate large volumes of toxic tailings over the lifetime of a mine.
Companies are given a lengthy window of time while they ramp up mining operations before they are required to start limiting tailings production.
Because the Government of Alberta has not clarified what is means to “clean up” tailings, there may be a loophole for companies to dump the legacy tailings into end pit lakes.
Companies have a significant amount of time to fully clean up tailings even after a mine closes.
There are no provisions in the framework for enforcement.
The framework sets up tailings reclamation as a trapezoid (see figure below). Tar sands companies will be allowed to accumulate tailings to the extent that they would be able to be within range of an “End of Mine Life Target.” This target will vary based on the project. Companies are given a discretionary 3-10-year period during which they can accumulate tailings. After that time, they will be expected to maintain a constant tailings volume until the end of the mine’s life. Within ten years after the mine’s closure, the company will have to reclaim the entirety of the tailings.
One of the most immediate issues with the new framework is the discretionary period companies are given to accumulate tailings prior to having to engage in any reclamation efforts. It is unclear why the companies are being provided with this window, which will only lead to further accumulation. Furthermore, while the framework would reduce the total quantity of tailings on the landscape, the company is allowed to keep its tailings volume constant until the end of the mine’s life. Many mines last up to 50 years, meaning that full reclamation efforts, other than maintenance of a set amount of tailings, may not even begin for several decades and may not be completed until years after the mine closes. If the company goes out of business in that time, there may be no recourse to clean up the remaining tailings. Reclamation would also be further delayed because the framework provides projects with a ten-year window following the end of the mine’s life until the entirety of the tailings needs to be reclaimed.
Additionally, the framework allows companies a certain percentage deviation from their fixed accumulated tailings volume, referred to as a “Profile Deviation Trigger,” but this number is not specified. It will be up to the Alberta Energy Regulator (AER) to decide upon this percentage, along with each project’s tailings limits and end of life mine targets. However, the AER’s decisionmaking process is unclear, and it is uncertain whether stakeholders would be allowed to voice their concerns before the AER, leaving the basis for these quantities unknown.
Perhaps most significantly, given Alberta’s history with Directive 074, there is little provision in the framework for enforcement. If tar sands companies fail to abide by these more relaxed regulations, it is uncertain how they would be held accountable. The framework states that there will be a “compliance levy” if they deviate from their maximum permitted tailings, but the exact penalty and how it would be carried out, and whether it would be high enough to incentivize reclamation, are uncertain. Additionally, there is no mention of penalties related to tailings pond leakages into groundwater, leaving this crucial issue unregulated.
The framework also leaves vague what constitutes reclamation, stating only that “the land must be reclaimed to a resilient and functional boreal forest ecosystem.” This means the public is not given any guarantee as to whether toxic tailings will ever be cleaned up. The more established definition of reclamation is that it means returning the land to the thriving, vegetated region it was prior to the mine’s construction. Alberta regulators, however, have recently approved the use of end pit lakes as a mechanism for “reclamation.” These end pit lakes store tailings waste at the bottom, which is then capped or covered by fresh water. End pit lakes are largely terra incognita or, rather, lacus incognita.Their safety and effectiveness are unproven; it is uncertain how long, if ever, it will take for the freshwater layer to be free of toxins, or whether the tailings will seep into the surrounding land and water. Thus, even if the framework were effective and enforced, it may still be possible for companies to avoid more proven methods of reclamation.
Implications for the Future of Tailings
While Alberta regulators could certainly point to how the current framework improves upon Directive 074 in that it regulates both past and future tailings, the larger issues identified above loom large. Alberta’s historic lack of enforcement and the ambiguities in the law will give the tar sands industry an easy means of sidestepping any meaningful action on this major issue in the foreseeable future, making it difficult to imagine any scenario in which this framework achieves any substantial regulation of tailings ponds.
On March 12, 2015, Marilyn Bardet represented Benicians For a Safe and Healthy Community (BSHC) at the Benicia Planning Commission meeting, reading a lengthy list of questions concerning the City’s process as it determined to recirculate Valero’s Crude By Rail proposal.
Today, the City of Benicia sent the following announcement by email, responding to the BSHC letter:
On March 12, 2015, Benicians For a Safe and Healthy Community provided a letter to the Planning Commission (c/o Benicia City Hall) on behalf of the public with questions regarding the City’s process for the Valero Crude by Rail Project EIR. This letter and staff’s response has been uploaded onto the City’s Valero Crude by Rail Project webpage under “Miscellaneous Information” located at the bottom of the page.
The PDF letter and response by Principal Planner Amy Million can be viewed here. (Note that I have requested the City provide a version of the document in searchable text.)
An analysis of the City’s response will be forthcoming.
By Jennifer Skene, March 13, 2015
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