Mexico’s Pemex now shipping light crude to U.S. West Coast, including Valero Benicia

Repost from Reuters

Mexico’s Pemex quietly resumes light crude sales to U.S. West Coast

May 18, 2014

May 18 (Reuters) – Mexico’s Pemex has quietly begun shipping light Isthmus crude to a variety of West Coast refiners this year, according to U.S. and Reuters data, resuming such sales after a six-year hiatus.

The state-run oil company, which exported only about 100,000 barrels per day (bpd) of Isthmus last year, shipped about 340,000 barrels of the crude to Valero Energy Corp at Benicia, California, in January and February, according to U.S. government data.

It sent another 350,000 barrels (48,000 tonnes) to Tesoro Corp in San Francisco in March, according to Eikon’s trade flow database based on PIERS data. Pemex then exported another 150,000 barrels to Shell Trading at Anacortes, Washington, in May from the Salina Cruz terminal.

Isthmus is typically shipped to Gulf Coast and East Coast ports including Beaumont and Corpus Christi, Texas and Philadelphia, Pennsylvania.

The move is the latest in a series of new export contracts that Pemex has announced, aimed at diversifying the company’s base of clients. Pemex said it began shipping Olmeca crude to Europe in January, and last month said it started shipments of Isthmus to Hawaii.

A sweeping energy overhaul in Mexico passed late last year and pushed by President Enrique Peña Nieto seeks to inject competition into a sector dominated for decades by Pemex and to boost domestic crude output, which has fallen by a quarter since 2004 to about 2.5 million bpd.

Over the same period, the country’s oil export volumes have dropped by a third.

The light, sweet grade of Isthmus crude oil with 33.6 API degrees is mainly produced in the southern Gulf of Mexico’s Campeche zone with a principal loading port at Pajaritos.

Pemex had halted exports of Maya crude to the U.S. West Coast in 2008.

The Mexican oil giant exported a total of 1.2 million bpd of crude oil last year.

Pemex normally supplies Exxon Mobil Corp one monthly cargo of 500,000 barrels in Houston. Pemex also delivers Total Petrochemicals at Port Arthur, Texas, 150,000 barrels of Isthmus monthly.

Citgo Petroleum, PBF Holding, Atlantic Trading, Chevron and Shell also buy varying sized cargoes of Isthmus occasionally.

(Reporting by David Alire Garcia in Mexico and Marianna Parraga in Houston; editing by Jessica Resnick-Ault and G Crosse)

CEO hopes town where 47 died will OK oil trains

Repost from The San Francisco Chronicle, Biz & Tech

CEO hopes town where 47 died will OK oil trains

David Sharp, Associated Press  |  May 16, 2014

FILE - In this July 6, 2013 photo, smoke rises from flaming railway cars that were carrying crude oil after it a train derailed in downtown Lac Megantic, Quebec, Canada. A large swath of the town was destroyed after the derailment, sparking several explosions and fires that claimed 47 lives. John Giles, top executive of Central Maine and Quebec Railway, that purchased the railroad responsible for the derailment, said Friday, May 16, 2014 that they plan to resume oil shipments after track safety improvements are made.

Paul Chiasson, AP  – FILE – In this July 6, 2013 photo, smoke rises from flaming railway cars that were carrying crude oil after it a train derailed in downtown Lac Megantic, Quebec, Canada. A large swath of the town was destroyed after the derailment, sparking several explosions and fires that claimed 47 lives. John Giles, top executive of Central Maine and Quebec Railway, that purchased the railroad responsible for the derailment, said Friday, May 16, 2014 that they plan to resume oil shipments after track safety improvements are made.

PORTLAND, Maine (AP) — The company buying the assets of a railroad responsible for a fiery oil train derailment that claimed 47 lives in Quebec plans to resume oil shipments once track safety improvements are made, its top executive said Friday.

John Giles, CEO of Central Maine and Quebec Railway, said he hopes to have an agreement with officials in Lac Megantic, Quebec, within 10 days that would allow the railroad to ship nonhazardous goods, restoring the vital link between the railroad’s operations to the east and west of the community.

The company plans to spend $10 million on rail improvements in Canada over the next two years with a goal of resuming oil shipments in 18 months, he said.

“In the interest of safety, and I think being sensitive toward a social contract with Lac Megantic, we have chosen not to handle crude oil and dangerous goods through the city until we’ve got the railroad infrastructure improved and made more reliable,” he told The Associated Press.

The oil industry is relying heavily on trains to transport crude in part because of oil booms in North Dakota’s Bakken region and Alberta’s oil sands.

In July, a train transporting Bakken oil was left unattended by its lone crew member while parked near Lac Megantic. The train began rolling and sped downhill into the town, where more than 60 tank cars derailed and several exploded. The accident killed 47 people and destroyed much of the town. Three workers were charged this week in Canada with criminal negligence.

Canadian Prime Minister Stephen Harper wants the railroad and Lac Megantic residents to work together on a final plan.

“Any plan the company has should take into account the tragedy the people of Lac Megantic have gone through and should be done in collaboration with the administration of the city,” said Carl Vallee, a spokesman for the prime minister.

Transportation Minister Lisa Raitt said only that she was monitoring the situation.

Mayor Colette Roy-Laroche, who had no comment on Friday, previously told the new operator that she wanted the railroad to be re-routed around the downtown.

News that the new railroad is already talking about resuming operations upset Yannick Gagne, owner of the cafe-bar that was at ground zero of the tragedy.

“People are still in distress, in pain, facing financial problems, and we’re talking about the train company starting up,” the Musi-Cafe owner said.

Giles said he intends to move slowly and understands the community’s concerns. He said he hopes to convince the people of Lac Megantic that the rail is safe enough for shipments of dangerous goods by this fall. He said he wouldn’t press for crude oil shipments until later.

“I want to get the railroad in position that by January 2016 that I can at least begin to compete for potential crude business moving east-west,” Giles said.

What business may be available at that point is unclear, the company said.

New York-based Fortress Investment Group was the winning bidder for the assets of Hermon, Maine-based Montreal, Maine and Atlantic Railway, which declared bankruptcy after the disaster. Central Maine and Quebec Railway closed on the sale of U.S. assets on Thursday and is expected to close of the Canadian assets in a couple of weeks.

Giles made his comments Friday in a telephone interview from Bangor, where his company had called former Montreal, Maine and Atlantic workers for a two-day meeting to talk about safety and operations.

He said the rail is in rough shape, with speeds reduced to 10 mph in many sections in Canada. He said the goal is to improve the track to safely increase train speeds to 25 mph. He also said he has no plans to operate trains with a single crew member.

With repairs, the company can transport crude safely, Giles said.

“The railway is important to the community, people, jobs and commerce,” he said. “We believe and we’ve proven … that we can handle every type of commodity safely and efficiently.”

___

Associated Press writer Rob Gillies contributed to this report from Toronto.

Expert Presentations: Oil Spill Prevention & Response Forum, Vallejo, CA

Powerpoint Presentations from the Oil Spill Prevention & Response Forum, Vallejo 16May2014:

1. Ernie Sirotek – Petroleum Crude by Rail
2. Gordon Schremp – OSPR Meeting Vallejo – CEC Final 5-6-14 GDS
3. Neil Gambow – New Regulations for Tank Car Construction
4. Joy Lavin-Jones Regs PP
5. Ed Hughlett – Casualty Lessons Learned CMA 2014
6. Lexia Littlejohn – First 96 Hours.CMA Presentation.Littlejohn
7. M Thomas OSPR Regulatory Overview
8. Nicole Stewart Spill Prevention and Response Day – KM
9. Geoffrey Ashton – LNG in NA safe bunkering procedures

Oil industry: no reason to regulate bakken crude differently

Repost from NGI’s Shale Daily
[Editor: NGI stands for Natural Gas Intel.  This report on oil industry trade groups is interesting, if not exactly reliable.  – RS]

Trade Group: No Reason to Regulate Bakken Crude Differently

Charlie Passut  |  May 15, 2014

Crude oil from the Bakken Shale isn’t significantly more dangerous than crude from other plays to transport by rail and poses a lower transport risk than other flammable liquids, but it may contain higher amounts of dissolved flammable gases compared to heavier crudes, according to a report commissioned by the American Fuel & Petrochemical Manufacturers (AFPM).

AFPM, which represents nearly all of the petroleum refiners and petrochemical manufacturers in the United States, said it surveyed 17 of its members and collected approximately 1,400 samples of Bakken crude for its 38-page report, which was released Thursday. The trade association said it commissioned the report at the request of the U.S. Department of Transportation (DOT).

“The results show that while Bakken crude (and other light crudes) may contain higher amounts of dissolved flammable gases compared to some heavy crude oils, the percentage of dissolved gases would not cause Bakken crude to be transported under a DOT hazard class other than Class 3 Flammable Liquid and does not support the need to create a new DOT classification for rail transportation,” the report said.

DOT has been investigating a series of train derailments involving rail cars containing Bakken crude. The investigation is part of DOT’s Operation Classification, also known as the “Bakken Blitz,” (see Shale Daily, Feb. 26).

Last February, DOT issued an emergency order [Docket No. DOT-OST-2014-0025] requiring rail carriers to test crude oil before transport, and to classify crude as a Packing Group (PG) I or II hazardous material, effectively forbidding its classification under PG III, a “low danger” category.

DOT issued a second emergency order last week [Docket No. DOT-OST-2014-0067], advising against the use of older, more vulnerable rail cars for the shipment of Bakken crude (see Shale Daily, May 7). Railroads were also required to notify the appropriate state emergency response commissions when the trains carrying more than 1 million gallons of Bakken crude are moving through their states.

According to the AFPM survey, the flashpoint for Bakken crude ranged from -59 to 50 degrees Celsius. The trade association said that meant it meets the criteria for transport as a PG I, PG II or PG III material or as combustible liquids. It also found that Bakken crude’s initial boiling point ranged from 2.2 to 66.9 degrees Celsius. AFPM said oil with an initial boiling point of 35 degrees Celsius or lower could be shipped as PG I, but other oils could be sent as PG II, PG III or as combustible liquids.

The vapor pressure of Bakken crude at 50 degrees Celsius tested at a maximum 16.72 pounds per square inch absolute (psia). Meanwhile, rail tank car pressures on delivery tested at a maximum of 11.3 pounds per square inch gauge (psig), which AFPM said demonstrates that Bakken crude may be safely transported in DOT Specification 111 tank cars.

“Measured tank car pressures show that even the older DOT 111’s authorized to transport Bakken crude oil are built with a wide margin of safety relative to the pressures that rail tanks may experience when transporting Bakken crude oil,” the report said.

Last week, two DOT agencies — the Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) — issued a safety advisory strongly urging those shipping or offering Bakken crude to use tank car designs with the highest level of integrity available in their fleets. The agencies advised offerors and carriers to try and avoid using older legacy DOT Specification 111 or CTC 111 tank cars for the shipment of Bakken crude.

AFPM added that of all the samples taken of hydrogen sulfide (H2S) concentrations, only one sample tested above the short term exposure limits set by the Occupational Safety and Health Administration. The lone high sample tested at a maximum 23,000 ppm. “Where they exist, high H2S concentrations are addressed under existing transportation and workplace safety regulatory provisions without affect to rail tank car authorizations,” the report said.

The report also compared the Reid Vapor Pressure (RVP) — a measurement for volatility — of Bakken crude to other types, including crude from the Eagle Ford Shale in Texas and the Denver-Julesburg (DJ) Basin in Colorado. Other crudes tested were Louisiana Sweet (LLS), West Texas Intermediate (WTI), Arabian Super Light, Agbami, Sarahan Blend, Brent, Alvheim blend, Arabian Heavy, Alberta Dilbit and Alba.

The report said Bakken crude had an RVP of 7.83 psia. By comparison, crude from the DJ Basin tested at 7.82 psia, the Eagle Ford was 7.95 psia, LLS was 4.18 psia and WTI was 5.90 psia. Arabian Super Light tested at the highest RVP (20.7 psia) while Alba was the lowest (1.6 psia).

“While survey data on specific samples of Bakken crude oils (like other light crude oils) showed higher gas content than assay data, it may be expected that similar variations arise in the case of non-Bakken crude oils,” the report said. “The data suggests that Bakken crude oil is within the norm for what might be expected in the case of light end content in light crude oils.”

The report was prepared by Frits Wybenga, hazardous materials consultant for the Rockville, MD-based firm Dangerous Goods Transport Consulting Inc.

Last July, an unattended freight train transporting Bakken crude rolled downhill, derailed and exploded in Lac-Megantic, Quebec, killing 42 people (see Shale Daily, July 9, 2013).

Six months later, a 90-car crude oil train loaded with Bakken crude heading to a refinery in Florida derailed in a rural area near Aliceville, AL. According to DOT, more than 20 cars derailed and at least 11 ignited, causing an explosion and fire. Although no one was injured in the incident, an undetermined amount of crude fouled a wetlands area, causing an estimated $3.9 million in damage.

On Dec. 30, 2013, a BNSF train carrying Bakken crude hit a grain train traveling in the opposite direction that had derailed earlier near Casselton, ND. The crash caused 21 cars carrying crude to derail, 18 of which subsequently ruptured and exploded (see Shale Daily, Dec. 31, 2013). There were no injuries, but about 1,400 were evacuated. Damage was estimated at $8 million.

For safe and healthy communities…