The University of Illinois Fire Service Institute introduces a new awareness-level course on Crude Oil by Rail. The class is in response to increase crude oil rail traffic from the Bakken oil fields in North Dakota and Montana, as well as the 2013 train explosion disaster in Lac-Megantic, Quebec.
The class is being offered through IFSI’s Cornerstone program that provides no-cost training to Illinois firefighters at their local fire department or regional training site.
The Crude Oil by Rail Awareness class introduces students with the recent increase in crude oil shipments by rail. This course covers the basic chemical and physical properties of the types of crude being transported. In addition, students learn about basic railcar design features, unit vs. manifest trains, common railroad terminology, and techniques for contacting and working with the railroad. The course will touch on tactics and strategies for handling crude oil train derailments, but will not teach the student how to employ these tactics. Lastly, the course will look at case studies of recent crude train derailments and discuss lessons learned.
Fire departments are encouraged to contact their IFSI regional representative to learn more and to schedule a class. The regional representatives are listed on IFSI’s web site at www.fsi.illinois.edu.
The Illinois Fire Service Institute is the statutory State Fire Academy for Illinois. In addition to training provided at its Champaign campus, the Institute offers one-day hands-on classes for fire departments at Regional Training Centers and local fire stations across the State. The mission of the Illinois Fire Service Institute is to help firefighters do their work through training, education, information and research.
Repost from the Billings Gazette [Editor: This is not a fluffy human interest story, but an important offering on the oil industry and regulators in North Dakota. Significant quote: “‘If you want to fix a problem, you go to the source of the problem,’ he said. ‘You don’t prepare for something that doesn’t have to happen.’” Another good quote: “Pressure to make North Dakota crude oil safe for interstate shipment is mounting on several fronts.”– RS]
North Dakota man relentless in push for safer oil by rail shipping
November 02, 2014, by Patrick Springer, Forum News Service
Ron Schalow of Fargo has been an outspoken advocate of stabilizing Bakken oil to remove volatile gases before it is shipped by rail. | David Samson / Forum News Service
FARGO, N.D. — Ron Schalow isn’t bashful about expressing his caustic opinions. He once wrote a book scolding President George W. Bush for failing to prevent the 9/11 terrorist attacks.
Part of the title can’t be printed here, but the subtitle read, “The 9/11 Leadership Myth.”
More recently, the Fargo man, a frequent writer of letters to the editor, has focused his attention on explosive Bakken crude oil and rail safety – an issue that has drawn national attention after a series of fiery train derailments, including an accident that killed 47 people in Canada and one late last year near Casselton.
Schalow launched a petition drive originally called the “Bomb Train Buck Stops in North Dakota,” which he renamed the “Coalition for Bakken Crude Oil Stabilization,” a reference to the process for removing volatile gases.
Improbable activist
Schalow’s background makes him an improbable activist. His early career was spent managing restaurants and bars, with a stint as a minor league baseball manager.
More recently, he worked for software companies including Microsoft in Fargo, but said he grew weary of corporate culture and office politics and turned to freelance work.
He has assembled a loose network of people concerned about the crude oil stabilization issue, including local officials in Minnesota and other states, but laments he has found little support for his crusade in North Dakota.
Still, North Dakota leaders have been under pressure from the federal government and other states, including Minnesota, to treat crude oil before shipping it around the country by rail to refineries.
The North Dakota Industrial Commission is preparing new standards, likely to take effect Jan. 1, to “condition” crude oil before transport to address safety concerns. Separately, federal officials are drafting more stringent safety standards for tanker cars.
“I think we have to take some responsibility over what’s going over the tracks into Minnesota and the rest of the country,” Schalow said. “It has a lot to do with this is a product that’s coming out of my state.”
By his own admission, 59-year-old Schalow is not a consensus builder. A freelance writer for marketing clients, he isn’t a joiner by nature. Bespectacled, with a goatee, he is soft-spoken but adamant in expressing his views.
He has peppered North Dakota officials, including petroleum regulators and the three-member Industrial Commission, with emails calling for action and asking who is in charge of what he sees as a vital issue of public safety.
“I’ve badgered them relentlessly,” he said.
He is dismayed by what he regards as a sluggish state response, even after an official “tabletop exercise” last June that estimated 60 or more casualties if an oil train derailed and exploded in Fargo or Bismarck.
The exercise simulated a disaster similar to the blast that killed 47 and destroyed much of the town of Lac-Mégantic, Quebec, in July 2013.
For Schalow, the key to ensuring the oil is safe is to remove the volatile gases before shipping. Anything else, in his view, is passing along a potentially deadly problem for others to face.
“If you want to fix a problem, you go to the source of the problem,” he said. “You don’t prepare for something that doesn’t have to happen.”
Derailments costly
Dealing with an explosive derailment can be costly. New York officials estimated, for example, it would take $40,000 in foam to extinguish one tanker car.
In the rail accident near Casselton last December, 20 tanker cars derailed, 18 of which were breached, unleashing a series of explosions and an enormous fireball. Intense heat kept the firefighters far from the flames, which they had to allow to burn out.
No one was seriously injured or killed in the crash.
“They can’t be prepared for combat explosions,” Schalow said, referring to the explosive fires that Bakken crude derailments have produced. “What would they do?”
North Dakota officials in the governor’s office and Department of Mineral Resources declined to talk about Schalow’s advocacy, but said the state is moving ahead to improve the safety of crude oil transportation.
“Gov. (Jack) Dalrymple takes rail transportation safety very seriously and he believes it’s important to have the public weigh in on this important issue,” said Jeff Zent, a spokesman and policy aide for the governor, the highest-ranking member of the Industrial Commission.
“That’s why the Industrial Commission will announce further regulations aimed at improving the safety of oil rail transportation,” he added.
“Our goal has always been to make crude oil as safe as possible for transport, within our jurisdiction,” said Alison Ritter, a spokeswoman for the North Dakota Department of Mineral Resources, which regulates oil and gas production.
The department is also working with “the appropriate federal agencies to better communicate our role to make crude oil as safe as possible for transport,” Ritter said.
In contrast to North Dakota, most crude oil in Texas is stabilized before shipment. Pipeline companies routinely require stabilization before accepting shale oil.
“How hard is it to stand up and say I’m against trains blowing up in my town?” Schalow asked, referring to public officials’ initial reluctance to impose tougher standards.
A recent Forum Communications poll found that 60 percent of respondents were concerned about the safety of shipping crude oil by rail, but there has been no real clamor from residents, Schalow said.
“It’d be nice if someone stood up and defended me once or twice,” he said. As for holding a meeting of supporters, well, “Who would I call and who would dare show up? There’s no political will in this state except for that anonymous 60 percent.”
In Minnesota, Gov. Mark Dayton has urged North Dakota to stabilize oil before loading crude onto trains. An estimated 50 North Dakota oil trains roll through Minnesota each week, many with 100 tanker cars.
Pressure to make North Dakota crude oil safe for interstate shipment is mounting on several fronts.
Other states, including New York and California, where refineries take Bakken crude, are considering safety requirements.
“There’s a lot more angst across the country than there is here,” Schalow said, adding that most of his contacts are from other states, including New York, California and Washington state.
“I think he’s a pretty straight shooter,” said Tim Meehl, mayor of Perham, Minn., who is concerned about oil trains traveling through his town. “I think everything he says has a lot of merit to it.”
Meehl has not met Schalow, but saw him at a meeting in Moorhead earlier this fall attended by Dayton and local officials, and has exchanged emails with Schalow.
“They don’t want to step on toes out there,” Meehl, a native of Oakes, N.D., said of North Dakota officials’ deference to oil interests. “We need the oil. We just need to do it in a safer way.”
In North Dakota, residents and politicians seem reluctant to do anything that risks discouraging energy production, a powerful economic engine, Schalow said.
‘Quiet acceptance’
“You can’t say anything that might impact business, no matter what,” he said, describing what he regards as North Dakota’s curious culture of quiet acceptance.
Regulators aren’t alone in singling out oil tanker cars. BNSF announced last week that it will charge a $1,000 fee for each older crude oil tank car, more prone to puncture than newer models. By one estimate, that would add about $1.50 a barrel to the transportation cost.
In Texas, energy companies have invested hundreds of millions of dollars to make crude safer to handle. The cost of stabilizing crude oil could trim potential revenue by perhaps 2 percent, according to the estimate of an unidentified industry executive interviewed by The Wall Street Journal.
Schalow has been an outspoken critic of the Bush presidency and North Dakota leadership, but said he really has no allies in either political party.
A conservative blogger once described him as a “truther” for his criticisms of Bush, whom he castigated for failing to take pre-emptive action against al-Qaida despite warning signs of their terrorist ambitions. Schalow dismisses the “truther” label as unfair, saying he offered no conspiracy theories in his book.
He said the paperback sold 4,000 or 5,000 copies after it came out in 2006. No book is forthcoming on the issue of Bakken crude safety, but Schalow is unlikely to stop writing his letters, emails and Facebook posts.
“I don’t think it’s a political issue,” he said. “I think it’s a public safety issue.”
U.N. Panel Issues Its Starkest Warning Yet on Global Warming
By JUSTIN GILLIS, NOV. 2, 2014
Machines digging for brown coal in front of a power plant near Grevenbroich, Germany, in April. Credit Martin Meissner/Associated Press
COPENHAGEN — The gathering risks of climate change are so profound that they could stall or even reverse generations of progress against poverty and hunger if greenhouse emissions continue at a runaway pace, according to a major new United Nations report.
Despite growing efforts in many countries to tackle the problem, the global situation is becoming more acute as developing countries join the West in burning huge amounts of fossil fuels, the Intergovernmental Panel on Climate Change said here on Sunday.
Failure to reduce emissions, the group of scientists and other experts found, could threaten society with food shortages, refugee crises, the flooding of major cities and entire island nations, mass extinction of plants and animals, and a climate so drastically altered it might become dangerous for people to work or play outside during the hottest times of the year.
“Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems,” the report found.
In the starkest language it has ever used, the expert panel made clear how far society remains from having any serious policy to limit global warming.
Doing so would require leaving the vast majority of the world’s reserves of fossil fuels in the ground or, alternatively, developing methods to capture and bury the emissions resulting from their use, the group said.
If governments are to meet their own stated goal of limiting the warming of the planet to no more than 3.6 degrees Fahrenheit, or 2 degrees Celsius, above the preindustrial level, they must restrict emissions from additional fossil-fuel burning to about 1 trillion tons of carbon dioxide, the panel said. At current growth rates, that budget is likely to be exhausted in something like 30 years, possibly less.
Yet energy companies have booked coal and petroleum reserves equal to several times that amount, and they are spending some $600 billion a year to find more. Utilities and oil companies continue to build coal-fired power plants and refineries, and governments are spending another $600 billion or so directly subsidizing the consumption of fossil fuels.
By contrast, the report found, less than $400 billion a year is being spent around the world to reduce emissions or otherwise cope with climate change. That is a small fraction of the revenue spent on fossil fuels — it is less, for example, than the revenue of a single American oil company, ExxonMobil.
The new report comes just a month before international delegates convene in Lima, Peru, to devise a new global agreement to limit emissions, and it makes clear the urgency of their task.
Appearing Sunday morning at a news conference in Copenhagen to unveil the report, the United Nations secretary general, Ban Ki-moon, appealed for strong action in Lima.
“Science has spoken. There is no ambiguity in their message,” Mr. Ban said. “Leaders must act. Time is not on our side.”
Yet there has been no sign that national leaders are willing to discuss allocating the trillion-ton emissions budget among countries, an approach that would confront the problem head-on, but also raise deep questions of fairness. To the contrary, they are moving toward a relatively weak agreement that would essentially let each country decide for itself how much effort to put into limiting global warming, and even that document would not take effect until 2020.
“If they choose not to talk about the carbon budget, they’re choosing not to address the problem of climate change,” said Myles R. Allen, a climate scientist at Oxford University in Britain who helped write the new report. “They might as well not bother to turn up for these meetings.”
The Intergovernmental Panel on Climate Change is a scientific body appointed by the world’s governments to advise them on the causes and effects of global warming, and potential solutions. The group, along with Al Gore, was awarded the Nobel Peace Prize in 2007 for its efforts to call attention to the climate crisis.
The new report is a 175-page synopsis of a much longer series of reports that the panel has issued over the past year. It is the final step in a five-year effort by the body to analyze a vast archive of published climate research.
It is the fifth such report from the group since 1990, each finding greater certainty that the climate is warming and that human activities are the primary cause.
“Human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, and in global mean sea-level rise; and it is extremely likely to have been the dominant cause of the observed warming since the mid-20th century,” the report said.
A core finding of the new report is that climate change is no longer a distant threat, but is being felt all over the world. “It’s here and now,” Rajendra K. Pachauri, the chairman of the panel, said in an interview. “It’s not something in the future.”
The group cited mass die-offs of forests, such as those killed by heat-loving beetles in the American West; the melting of land ice virtually everywhere in the world; an accelerating rise of the seas that is leading to increased coastal flooding; and heat waves that have devastated crops and killed tens of thousands of people.
The report contained the group’s most explicit warning yet about the food supply, saying that climate change had already become a small drag on overall global production, and could become a far larger one if emissions continued unchecked.
A related finding is that climate change poses serious risks to basic human progress, in areas such as alleviating poverty. Under the worst-case scenarios, factors like high food prices and intensified weather disasters would most likely leave poor people worse off. In fact, the report said, that has already happened to a degree.
In Washington, the Obama administration welcomed the report, with the president’s science adviser, John P. Holdren, calling it “yet another wake-up call to the global community that we must act together swiftly and aggressively in order to stem climate change and avoid its worst impacts.”
The administration is pushing for new limits on emissions from American power plants, but faces stiff resistance in Congress and some states.
Michael Oppenheimer, a climate scientist at Princeton University and a principal author of the new report, said that a continuation of the political paralysis on emissions would leave society depending largely on luck.
If the level of greenhouse gases were to continue rising at a rapid pace over the coming decades, severe effects would be avoided only if the climate turned out to be far less sensitive to those gases than most scientists think likely, he said.
“We’ve seen many governments delay and delay and delay on implementing comprehensive emissions cuts,” Dr. Oppenheimer said. “So the need for a lot of luck looms larger and larger. Personally, I think it’s a slim reed to lean on for the fate of the planet.”
Exxon, Shell, Chevron Pare Back as Rising Production Costs Squeeze Earnings
By Daniel Gilbert and Justin Scheck, Nov. 2, 2014
Extracting oil from Western Canada’s oil sands, such as at this Shell facility near Fort McMurray, Alberta, is a particularly expensive proposition. Bloomberg News
As crude prices tumble, big oil companies are confronting what once would have been heresy: They need to shrink.
Even before U.S. oil prices began their summer drop toward $80 a barrel, the three biggest Western oil companies had lower profit margins than a decade ago, when they sold oil and gas for half the price, according to a Wall Street Journal analysis.
Despite collectively earning $18.9 billion in the third quarter, the three companies— Exxon Mobil Corp. , Royal Dutch Shell PLC and Chevron Corp. —are now shelving expansion plans and shedding operations with particularly tight profit margins.
The reason for the shift lies in the rising cost of extracting oil and gas. Exxon, Chevron, Shell, as well as BP PLC, each make less money tapping fuels than they did 10 years ago. Combined, the four companies averaged a 26% profit margin on their oil and gas sales in the past 12 months, compared with 35% a decade ago, according to the analysis.
Shell last week reported that its oil-and-gas production was lower than it was a decade ago and warned it is likely to keep falling for the next two years. Exxon’s output sank to a five-year low after the company disposed of less-profitable barrels in the Middle East. U.S.-based Chevron, for which production has been flat for the past year, is delaying major investments because of cost concerns.
BP has pared back the most sharply, selling $40 billion in assets since 2010, largely to pay for legal and cleanup costs stemming from the Deepwater Horizon oil spill in the Gulf of Mexico that year.
To be sure, the companies, at least eventually, aim to pump more oil and gas. Exxon and Chevron last week reaffirmed plans to boost output by 2017.
“If we went back a decade ago, the thought of curtailing spending because crude was $80 a barrel would blow people’s minds,” said Dan Pickering, co-president of investment bank Tudor, Pickering, Holt & Co. “The inherent profitability of the business has come down.”
It isn’t only major oil companies that are pulling back. Oil companies world-wide have canceled or delayed more than $200 billion in projects since the start of last year, according to an estimate by research firm Sanford C. Bernstein.
In the past, the priority for big oil companies was to find and develop new oil and gas fields as fast as possible, partly to replace exhausted reserves and partly to show investors that the companies still could grow.
But the companies’ sheer size has meant that only huge, complex—and expensive—projects are big enough to make a difference to the companies’ reserves and revenues.
As a result, Exxon, Shell and Chevron have chased large energy deposits from the oil sands of Western Canada to the frigid Central Asian steppes. They also are drilling to greater depths in the Gulf of Mexico and building plants to liquefy natural gas on a remote Australian island. The three companies shelled out a combined $500 billion between 2009 and last year. They also spend three times more per barrel than smaller rivals that focus on U.S. shale, which is easier to extract.
The production from some of the largest endeavors has yet to materialize. While investment on projects to tap oil and gas rose by 80% from 2007 to 2013 for the six biggest oil companies, according to JBC Energy Markets, their collective oil and gas output fell 6.5%.
Several major ventures are scheduled to begin operations within a year, however, which some analysts have said could improve cash flow and earnings.
For decades, the oil industry relied on what Shell Chief Financial Officer Simon Henry calls its “colonial past” to gain access to low-cost, high-volume oil reserves in places such as the Middle East. In the 1970s, though, governments began driving harder bargains with companies.
Oil companies still kept trying to produce more oil, however. In the late 1990s, “it would have been unacceptable to say the production will go down,” Mr. Henry said.
Oil companies were trying to appease investors by promising to boost production and cut investment.
“We promised everything,” Mr. Henry said. Now, “those chickens did come home to roost.”
Shell has “about a third of our balance sheet in these assets making a return of 0%,” Shell Chief Executive Ben van Beurden said in a recent interview. Shell projects should have a profit margin of at least 10%, he said. “If that means a significantly smaller business, then I’m prepared to do that.”
Shell late last year canceled a $20 billion project to convert natural gas to diesel in Louisiana and this year halted a Saudi gas project where the company had spent millions of dollars.
The Anglo-Dutch company also has dialed back on shale drilling in the U.S. and Canada and abandoned its production targets.
U.S.-based Exxon earlier this year allowed a license to expire in Abu Dhabi, where the company had pumped oil for 75 years, and sold a stake in an oil field in southern Iraq because they didn’t offer sufficiently high returns.
Exxon is investing “not for the sake of growing volume but for the sake of capturing value,” Jeff Woodbury, the head of investor relations, said Friday.
Even Chevron, which said it planned to increase output by 2017, has lowered its projections. The company has postponed plans to develop a large gas field in the U.K. to help bring down costs. The company also recently delayed an offshore drilling project in Indonesia.
The re-evaluation has also come because the companies have been spending more than the cash they bring in. In nine of the past 10 quarters, Exxon, for example, has spent more on dividends, share buybacks and capital and exploration costs than it has generated from operations and by selling assets.
Though refining operations have cushioned the blow of lower oil prices, the companies indicated that they might take on more debt if crude gets even cheaper. U.S. crude closed Friday at $80.54 a barrel.
Chevron finance chief Patricia Yarrington said the company planned to move forward with its marquee projects and is willing to draw on its $14.2 billion in cash to pay dividends and repurchase shares.
“We are not bothered in a temporary sense,” she said. “We obviously can’t do that for a long period of time.”
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