All posts by Roger Straw

Editor, owner, publisher of The Benicia Independent
Bakken Crude, Crude By Rail, DOT-111, Explosion, Fire

Environmental groups to DOT: Ban Older Railcars for Bakken Oil

Repost from EarthJustice.org

Community Leaders, Advocates Call on Secretary of Transportation To Ban Use of Hazardous Rail Cars

Seek emergency order banning the use of hazardous rail cars to ship explosive crude oil

July 15, 2014
Crude-by-rail explosion
The fireball that followed the derailment and explosion of two trains, one carrying Bakken crude oil, on December 30, 2013, outside Casselton, N.D. — U.S. Pipeline and Hazardous Materials Safety Administration

Washington, D.C. — Today, two national environmental organizations filed a formal legal petition to compel the Secretary of the U.S. Department of Transportation to issue an emergency order prohibiting the use of hazardous rail cars—known as DOT-111s—for shipping flammable Bakken crude oil (See FAQ sheet for more info on petition). The National Transportation Safety Board has repeatedly found that the DOT-111 tank cars are prone to puncture on impact, spilling oil and often triggering destructive fires and explosions. The Safety Board has made official recommendations to stop shipping crude oil in these hazardous tank cars, but the federal regulators have not heeded these pleas (See quote sheet of on-record statements by public officials for more info).

“These oil tankers have been called the Ford Pinto of the rails,” said Ben Stuckart, City Council president in Spokane, Washington. “National Transportation Board members, U.S. Senators, and local officials are all on record on the danger of these antiquated, unsafe rail cars. It’s long past time for the government to take action to protect communities like mine.” Officials estimate between 13 and 16 oil trains a week come through Spokane, a major hub for rail traffic, although those numbers would skyrocket if planned oil terminals on the West Coast are built. Spokane is one of many towns across the country that has seen an organized and strong community opposition to these trains.

In September 2013, in the wake of the deadly Lac-Mégantic and other rail disasters, the federal government began a rulemaking process to set new safety standards for crude oil rail cars. Transportation Secretary Anthony Foxx has stated publicly that the DOT-111s will likely have to be phased out, and even questioned whether the industry’s replacement design is safe enough for U.S. communities. The draft rule is currently under review at the White House. But the groups believe that the process is moving too slowly and likely to drag on a year or more before a final rule is in place. While he has issued emergency orders addressing other urgent safety issues, all the Department has done to date is urge shippers to use the safest tank cars in their fleets. Immediately banning the use of DOT-111 tank cars to ship Bakken crude would reduce the risk of punctures and oil spills by over 75 percent, according to rail industry estimates.

“The continued use of potentially unsafe DOT-111 train cars is a disaster waiting to happen. The people of Albany County are standing up today to ask the federal government take swift action to improve rail safety,” said Albany County Executive Daniel P. McCoy. “In light of recent incidents in North America, a strong response from the federal government is needed to protect the public.” Trains carrying Bakken crude oil arrive daily into the Port of Albany, like many other towns across the country. Firefighters and first responders have hurried to train for impending disasters and increased risk.

“These exploding oil trains are in our backyards, where our kids play,” said Charlene Benton, president of the Ezra Prentice Homes Tenants Association in Albany, NY. “We’re putting our children’s and our neighbors’ lives in jeopardy here. Over the last three years, we’ve seen a huge increase in the number of these dangerous oil trains coming through our community. Our community has organized against these oil trains because we don’t want to be the site of another catastrophic disaster. We need a national emergency ban of these oil rail cars.”

The recent surge in U.S. oil production, much of it from Bakken shale, has led to a more than 4,000 percent increase in crude oil shipped by rail since 2005, mostly in long oil trains with as many as 120 cars and over 1.5 miles long. The Bakken crude has proven to be more explosive than shippers represented. And the Bakken crude has been shipped in the most dangerous tank cars on the market – the DOT-111s. The result has been oil spills, destructive fires, and explosions when oil trains have derailed. More oil spilled in train accidents in 2013 than the total in 1975-2012 combined. Canada has taken steps to ban many DOT-111s immediately and is phasing them out of hazardous transport altogether, which will shift even more of these tank cars to the U.S.

The petition follows closely on the announcement that the oil and rail industries have reached their own compromise proposal on rail safety, one that would only seek to slowly phase out dangerous DOT-111s over three years, and that would propose a weaker standard for new rail cars than the industry had previously proposed.

Meanwhile, it is estimated that 25 million Americans live in the dangerous blast zone along the nation’s rail lines. View this MAP of the nation’s rail lines and local actions against oil-by-rail or this MAP that shows your proximity to an oil rail line.

The petitioners are Sierra Club and ForestEthics, represented by Earthjustice.

Crude By Rail, Derailment, donner, Draft EIR, Explosion, Public Comment, Valero Crude By Rail, Yolo County

Yolo County Supervisors send letter to Benicia critical of Draft EIR

Repost from The Sacramento Bee
[Editor: This story is also covered on the Woodland Daily Democrat.  – RS]

Yolo supervisors challenge Benicia on crude oil train plans

By Tony Bizjak, Jul. 15, 2014
GVH2EIRKB.3STF
Steve Helber / The Associated Press | Several CSX tanker cars carrying crude oil derailed and caught fire along the James River near downtown Lynchburg, Va., in May. Emergency officials are pressing railroads for more information on oil train schedules and routes so they can be prepared.
ad more here: http://www.sacbee.com/2014/07/15/6558895/yolo-supervisors-challenge-benicia.html#storylink=cp

In a letter to be sent this week, Yolo County officials accuse the city of Benicia of failing to adequately review the potential for oil spills and fires resulting from a plan by the Valero Refining Co. to run two daily trains carrying crude oil through the Sacramento region to its Bay Area refinery.

A recently published environmental report by Benicia concludes the project will not cause any significant negative impact to cities and habitat up the rail line. That finding was based on an Illinois professor’s analysis saying a train incident causing an oil spill might happen only once every 111 years between Roseville and Benicia.

The Yolo letter, approved Tuesday by the Board of Supervisors, calls that analysis inaccurate and irrelevant because it doesn’t explore the potential magnitude of oil spills. A crude oil train crash and explosion last year in Lac Mégantic, Canada, killed 47 people and leveled several blocks of downtown.

“A catastrophic explosion and spill in a populated area is different from a 100-gallon spill in a shipyard that is quickly cleaned up,” the Yolo letter states. “Without considering the second half of the risk analysis, the (report) cannot conclude that the risk of a spill is insignificant.”

The Yolo board was split, 3-2, on sending the letter. Yolo Supervisor Matt Rexroad opposed the letter, saying he believes the risk of a spill is small and the county should focus its time on issues where it will have more impact. “There is only so much we can have an impact on,” he said. “You allocate resources (based on) how big you think risks are. I don’t know this one is worth fighting.”

Board Chairman Don Saylor took the opposite tack, saying the issue presents clear safety concerns for communities, businesses and people alongside the railways. “The fact is that a single spill or fire in Yolo County in areas such as downtown Davis, the campus of UC Davis or the many other communities in our region could result in significant property damage and injuries,” Saylor wrote in an email to The Sacramento Bee.

Other local cities and counties are expected to issue comments challenging the Benicia rail plan environmental analysis, which was published last month. Benicia officials have set a Sept. 15 deadline for receiving reactions. If its plans are approved, Valero officials have said they plan to begin train shipments early next year. The transports are among the first of what California officials say is an expected boom in crude-by-rail shipments through the state, prompted by the lower cost of North Dakota and Canadian crude.

Bakken Crude, Crude By Rail, CSX, Rail industry, Tank car design, Train speed

CSX Railing More Crude, Warns Against Dropping Train Speeds

Repost from Natural Gas Intel’s Shale Daily

CSX Railing More Crude, Warns Against Dropping Train Speeds

Richard Nemec, July 18, 2014
Carloads_Of_Crude-20140717

Florida-based CSX Corp. senior executives on Wednesday underscored the continuing growth in the amount of crude oil being shipped by rail and voiced concerns about proposed federal regulations that would drop average train speeds in response to a series of tank car accidents in the past 18 months (see Shale Daily, Aug. 22, 2013).

Executives offered their comments as part of a 2Q2014 conference call. CSX earned $529 million (53 cents/share) in 2Q2014, compared with year/ago earnings of $521 million (51 cents). Record revenues were $3.2 billion, up 7% from 2Q2013.

CSX CEO Michael Ward and Executive Vice President Clarence Gooden talked about the robust crude oil shipping market. Coal shipments are expected to remain higher, too, as natural gas prices hover at about $3.50/Mcf.

“The biggest part of our surge [in business] on our northern network was driven by crude-by-rail and our coal business,” Gooden said. “Our coal business was much higher than expected primarily as a result of [high] gas prices, a colder winter and utility responses.”

Gooden said he sees future crude shipment expansions along the East Coast. “There are expansions there going on as we speak,” he said. “They are predominantly in the Philadelphia and New Jersey areas; we have two customers that are looking at expanding in the Jersey area.”

Every week, CSX is averaging about 2,014 oil tank cars and 20 trains with crude-by-rail, Gooden said. “We could see some slight increases in that going forward, although there are some finite limits for what the Bakken [Shale] can produce and the refiners can process.”

On the question of proposed new federal rail regulations from the Pipeline and Hazardous Materials Safety Administration (PHMSA), Ward said the industry is concerned about a proposed requirement to slow trains to 30 mph. In the longer term, he expects regulators to heed the industry’s warning about that proposed rule.

“While we have not seen the proposals, we have heard that a 30 mph speed limitation is one of the options being considered, and we think that would severely limit our ability to provide freight service to our customers, and also provide passenger and commuter services,” Ward said. “There are all kinds of corollary impacts of this.

“I would hope as we look at this with the federal government that we can show the modeling of how disastrous that could be for fluidity of the entire U.S. rail system as well as the impact on [long-haul] trucking. We think cooler heads will ultimately prevail” among federal regulators.

Other parts of the proposed federal rulemaking due to recent crude rail car derailments have the full support of the CSX executives, such as the proposed crude rail tank car designs (see Shale Daily,May 7).

“We’re quite excited about the potential for the new car design as well as the retrofits to the existing cars, and that is part of the proposed rulemaking [at PHMSA],” said Ward, adding that CSX has “done a number of things” to improve safety. “We think the next big thing to make things better is a stronger car for newbuilds as well as the retrofit to existing cars.”

Oil Industry, Oil prices, Valero Energy Corporation

Global oil market: demand for road fuels has peaked and is now falling

Repost from The Economist
[Editor: An interesting European perspective on the future of world oil production and sales.  Note references to Valero near the end.  – RS]

A fuel’s errand

Making the most of a difficult business

| RUNCORN

THE sprawling acres of pipes, towers and tanks, which smash and rebuild hydrocarbon chains to turn crude oil into petrol, diesel and other useful stuff are vast and complicated. But the impressive scale of oil refineries is not matched by their profits. Refining in Britain is a miserable business these days.

In the 1960s big oil companies were so sure that demand for petrol would rise forever that they built the refineries to match. But demand for road fuels has peaked and is now falling—by 8% between 2007 and 2011. High fuel prices and stalling sales of vehicles that are anyway far more efficient are to blame. The result is wafer-thin margins and closures. Since 2009 two British refineries, at Coryton in Essex and in Teesside, have shut down. All but one of the remaining seven has been sold or been put up for sale in recent years.

Refineries operate in a global market. Petrol and diesel can be sent by tanker around the globe as readily as crude. Competing with sparkly, super-efficient new refineries in Asia and the Middle East is hard. Moreover, Britain’s older refineries were designed to produce petrol, which is increasingly the wrong fuel. Petrol sales by volume fell by 34% in the decade to 2011 while diesel grew by 73%. Around 40% of diesel is now imported. Nor do British refineries produce enough kerosene, which powers passenger jets, to supply the home market.

Big oil firms have sold up, preferring to invest in exploration and production. But why was anyone buying? For one thing, refineries are going cheap. Shell sold Stanlow to Essar Oil, an Indian firm, in 2011 for $350m (then £220m). In the same year Valero, an American refiner, bought Pembroke from Chevron for $730m.

The efforts to squeeze more returns from Stanlow show how refining can pay. Independent refiners like Essar and Valero are prepared to spend more time and money than big oil firms. Expertise and investment has put Stanlow, a 75m barrels-a-year refinery, well on the way in its plan to improve margins by $3 a barrel by 2014.

Essar aims to make Stanlow at least break even in bad times (in 2011 two-thirds of European refineries were losing money) and make decent profits when conditions improve. Generating energy using gas and tweaking technology to take crude from sources other than the North Sea, at better prices, is helping. Stanlow also has some natural advantages. It is the only refinery in the north-west and the closest to Liverpool, Manchester and Birmingham. Though refined fuel can be moved by pipeline, some 55% of the refinery’s output goes “off the rack”, loaded into road tankers to feed a big local market. More distant refineries, with higher transport costs, would have trouble competing.

But the market for fuel is still shrinking and tiny margins mean profits can be wiped out by small shifts in the price of crude or other costs. In the past five years Europe has lost 2.2m barrels a day (b/d) of refining capacity. Volker Schultz, Essar Oil’s boss in Britain, reckons that another 1m b/d needs to go. But that is not his only concern. Efforts in Britain to introduce a carbon floor-price will put its refineries at a disadvantage to European ones, and European environmental legislation will make the whole continent’s refineries even less competitive. It must seem to the industry as if it has a large hole in its tank and a small patch to fix it.