Bakken Crude, Bay Area Refineries, California Air Resources Board (CARB), California Environmental Quality Act (CEQA), Greenhouse gas emissions, Heavy crude, Light sweet crude, Shell Oil

Contra Costa Times editorial: Shell’s new plan may serve to blaze new trail

Repost from The Contra Costa Times
[This editorial also appeared on May 24, 2014 in the print edition of the Vallejo Times Herald.]

Contra Costa Times editorial: Shell’s new plan may serve to blaze new trail

05/22/2014
The Shell Refinery is seen in Martinez, Calif. on Monday, May 6, 2013. The Bay Area's five refineries have moved toward acquiring controversial Canadian tar sands crude through rail delivery. (Kristopher Skinner/Bay Area News Group)
The Shell Refinery is seen in Martinez, Calif. on Monday, May 6, 2013. The Bay Area’s five refineries have moved toward acquiring controversial Canadian tar sands crude through rail delivery. (Kristopher Skinner/Bay Area News Group)

Discussions about reducing California’s greenhouse gas emissions often become both heated and hyperbolic. But a plan being advanced by one of the East Bay leading refineries should be neither.

The management of Shell Oil’s Martinez refinery has decided that it can operate effectively at current levels without using heavy crude oil as a base in some of its operations. Heavy crude requires much more energy, water and heat to process than the lighter crude.

We were thrilled to learn that Shell has filed paperwork with the county regarding its intent to shut down its coker operation, one of its dirtiest processes. Shell plans to replace it with processes that handle lighter crude, but not the more volatile bakken crude.

That is, indeed, good news for Shell’s neighbors in Martinez, but it is even better news for the environment.

Shell General manager Paul Gabbard told our editorial board that the process change will cut the refinery’s greenhouse gas emissions by 700,000 metric tons a year, which he said is equivalent to taking 100,000 cars off the roads.

It is not insignificant, especially during a drought, that this process change also will cut Shell’s water use by an estimated 15 percent. That works out to a savings of about 1,000 gallons of water per minute.

There also will be about 300 temporary construction jobs for local workers as the conversion is made.

But the biggest news is that Shell officials think this change, which they hope to have completed by 2018, will allow the refinery to meet the state’s stringent standards for greenhouse gas reduction before the 2020 deadline.

In 2006 the Legislature passed AB32, California’s landmark effort to decrease greenhouse gas emissions. Most oil refiners in the state were not happy about the law.

After all, the legislation was designed to dramatically reduce the levels of six different emissions that are quite often associated with the manufacture of petroleum products.

Not only did it seek to reduce the levels of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons emitted, it sought to do so by a whopping 25 percent statewide by 2020.

Many companies moaned that its target emissions were impossible to meet. The bill implicitly acknowledged that the goals were ambitious because it instructed the California Air Resources Board to develop regulations and “market mechanisms” that could allow for industrial operations that couldn’t meet the standards to purchase pollution credits through an auction from operations that had excess credits.

But if Shell’s reckoning is correct, and we think it is, it won’t need to do that — and this action could blaze a dramatic new trail that others in the industry should consider following.

Global Warming Solutions Act of 2006 (AB 32), Heavy crude, Light sweet crude, Martinez CA, Shell Oil

Shell Martinez moves to clean up its act; will NOT receive crude by rail

Repost from The Martinez News Gazette
[Editor: Unconfirmed reports suggest that the light, sweet crude delivered to Shell by ship will first be transported across Canada by rail.  – RS]

Shell Martinez to shut down flexicoker, reduce green house gas emissions

Rick Jones | May 18, 2014

MARTINEZ, Calif. – In a major undertaking billed as the “Greenhouse Gas Reduction Project,” Shell is proposing to upgrade and modernize its Martinez refinery to significantly reduce greenhouse gas emissions, save water, improve efficiency, and stay relevant in the changing energy landscape, Shell representatives said Tuesday.

In a presentation to the News-Gazette staff, Shell Martinez Refinery General Manager Paul Gabbard stated the renovated refinery will become “cleaner, safer and more efficient – with less impact on the environment and our community.”

Also in attendance at the presentation was Steve Lesher, manager of communications and sustainable development; Teresa Makarewicz, health and safety director and Erin Hallissy, public affairs representative and communications.

The $450 million upgrade project will allow Shell to refine more light, sweet crude oil. With current production and transportation methods, heavy crudes have a more severe environmental impact than light ones, the representatives said. Heavy crude refining techniques require more energy input than light crude.

“In my view, in my career it’s rare when a project makes so much business sense and it makes environmental and community sense at the same time,” Gabbard said. “It’s a very nice marriage of what the world wants us to do and what we think we have to do anyway.”

The Global Warming Solutions Act of 2006 (AB 32) requires businesses to reduce greenhouse gas emissions to 1990 levels by the year 2020. Gabbard said this project gets the Shell Martinez Refinery on track for that goal.

According to Shell, the project will cut greenhouse gas emissions at the refinery by 700,000 metric tons a year – the equivalent of taking 100,000 cars off the road.

Water use at the refinery will be reduced by 15 percent, saving 1,000 gallons a minute.

A significant environmental impact of heavy crude is carbon dioxide output, which can be as much as three times that of light crude of the same quantity.

“The climate change, AB 32, required us to go more carbon friendly,” Gabbard explained. “It changes our business model. We’ve had this business model for 30 years and now we are going to change it up. What are we going to do for the next 50 years? It dovetails, in our view, to exactly what the world, state and community wants us to do.”

The project will create over 300 temporary construction jobs for local workers represented by local trade unions, reps said.

Major events conducted at the refinery where 1,500 workers are brought in for maintenance will go from four per year down to three per year, Gabbard pointed out.

The refinery, which will mark its 100th year in Martinez in 2015, receives heavy crude which requires refinement that is heavy in carbon emissions.

Gabbard said the plant will shut down the flexicoker, built in 1983, one of the major operating units in the facility. The ever-present blue flare from the coker’s column will no longer be seen.

The modernization will cut sulfur dioxide emissions by up to 25 percent, with no increase in NOx (nitrogen oxide). Electricity use will decline, and the upgrade does not expand the refinery nor increase the amount of oil processed.

“The amount of crude we bring in, the amount of product we send out, won’t change,” Gabbard said.

What will change is the amount of crude being brought in by tankers. The pipeline from the Central Valley of California brings the heavy crude type; Shell has been receiving less and less from that source as the oil fields dry up. With the change to a lighter crude, the amount of crude coming to Martinez via pipeline will drop further.

With the transport of crude by rail a significant issue in the East Bay, Gabbard was quick to say that Shell does not and will not receive crude by railway.

“We are not going to [receive] rail crude, we are not building rail crude facilities,” Gabbard said. “There will be no crude rail unloading for Shell in Martinez.”

The refinery’s physical footprint will decrease by eliminating a major processing unit. Due to higher assessed value, Shell’s property taxes will increase.

The proposed project will go through full county review, including an Environmental Impact Review (EIR). On June 3, Shell will meet with the Contra Costa County Board of Supervisors to seek approval of the EIR consultant. Preliminary paperwork has already been submitted to the county. The hope is to conclude the permit process by May 2015.

Construction could start mid-2016, with the project being completed by 2018.

Shell anticipates using local labor for the project by mid-2015.

Monterey Shale, Post Carbon Institute, Tight oil, US Dept of Energy, US Energy Information Administration (EIA)

Gov’t Slashes California Oil Estimate

Repost from Post Carbon Institute

U.S. Department of Energy Agency Reduces Monterey Tight Oil Estimate by Over 95%

Oakland, California (May 20, 2014) — In an article released this evening, the Los Angeles Times reports that the U.S. Energy Information Administration (EIA) has drastically reduced its estimate of recoverable oil in California’s Monterey shale formation from 13.7 billion barrels to just 0.6 billion barrels—a reduction of over 95%.

The downgrade has major implications for California’s energy and economic future, as well as the debate over hydraulic fracturing (“fracking”) and other forms of well stimulation-enabled oil development. The perception of an impending oil boom has dominated energy policy discussions in California since the release of a 2011 report by the EIA which had estimated up to 15.4 billion barrels of recoverable tight oil—64% of the nation’s total—in the state’s Monterey shale formation. The estimate was widely cited by drilling proponents, and economic forecasts based on it projected millions of new jobs and billions in new tax revenue.

[IMAGE]

“The oil had always been a statistical fantasy,” said geoscientist J. David Hughes, author of Drilling California: A Reality Check on the Monterey Shale, an influential report critical of the EIA’s original Monterey estimates. “Left out of all the hoopla was the fact that the EIA’s estimate was little more than a back-of-the-envelope calculation.”

Hughes’s report, published by PSE Healthy Energy and Post Carbon Institute in December 2013, was the first public analysis of actual oil production data from the Monterey Shale and the formation’s geological characteristics. The report found that all data suggested that the EIA estimates were wildly over-optimistic.  INTEK, Inc., the source of the EIA’s original estimate, has since admitted that its Monterey figures were derived from technical reports and presentations from oil companies rather than hard data.

“We’re pleased that the EIA has corrected what was a groundless and highly misleading over-estimation of the potential of the Monterey,” said Asher Miller, Executive Director of Post Carbon Institute. “We hope that everyone—from the EIA to policymakers and the media—will learn a cautionary lesson from what transpired here in California as we wrestle with questions about what the future of American energy policy can and should be.”

“Now that Californians have a more accurate idea of what promise the Monterey Shale does and does not hold,” added Dr. Seth B. Shonkoff, Executive Director of Physicians, Scientists and Engineers for Health Energy, “we must carefully weigh the benefits against the costs associated with fracking and other forms of well stimulation-enabled oil and gas development.”

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ABOUT J. DAVID HUGHES
J. David Hughes is a geoscientist who has studied the energy resources of Canada and North America for nearly four decades, including 32 years with the Geological Survey of Canada as a scientist and research manager. Over the past decade, Mr. Hughes has researched, published and lectured widely on global energy and sustainability issues in North America and internationally. He is a Fellow of the Post Carbon Institute and a board member of Physicians, Scientists & Engineers for Healthy Energy.

ABOUT PSE HEALTHY ENERGY
 Physicians, Scientists & Engineers for Healthy Energy provides a multi-disciplinary approach to identifying reasonable, healthy, and sustainable energy options for everyone. PSE Healthy Energy empowers citizens and policymakers by organizing and supplying objective, evidence-based information.

ABOUT POST CARBON INSTITUTE
 Post Carbon Institute provides individuals, communities, businesses, and governments with the resources needed to understand and respond to the interrelated economic, energy, and environmental crises that define the 21st century. PCI envisions a world of resilient communities and re-localized economies that thrive within ecological bounds.

Bakken Crude, Derailment, DOT-111, Emergency Readiness & Response, Explosion, Rail industry, Tank car retrofit

BNSF Railway: Future of crude by rail depends on safety

Repost from The Kansas City Star
[Editor: Significant quote by BNSF Executive Chairman Matt Rose: “Without focus on the elements of safety, the social license to haul crude by rail will disappear, to say nothing of the regulatory agencies’ response.”  – RS]

BNSF: Future of crude by rail depends on safety

James MacPherson, The Associated Press | 2014-05-21

BISMARCK, N.D. — The future of crude oil shipments by train depends on proving to the public that it can be done safely, the head of BNSF Railway Co. said Wednesday.

“Without focus on the elements of safety, the social license to haul crude by rail will disappear, to say nothing of the regulatory agencies’ response,” BNSF Executive Chairman Matt Rose told several hundred people at the Williston Basin Petroleum Conference in Bismarck.

BNSF is based in Fort Worth, Texas, but is part of Warren Buffett’s Berkshire Hathaway Inc., based in Omaha, Nebraska. The railroad is the biggest player in the rich oil fields of Montana and North Dakota, hauling about 75 percent of the more than 1 million barrels that moves out of the region daily.

Rose told the conference that the railroad is committed to preventing accidents like its Dec. 30 crash outside Casselton that left an ominous cloud over the town and led some residents to evacuate. The disaster in the small town west of Fargo was one of at least eight major accidents during the last year, including an explosion of Bakken crude in Lac-Megantic, Quebec that killed 47 people. Other trains carrying Bakken crude have since derailed and caught fire in Alabama, New Brunswick and Virginia.

Rose last month joined U.S. Secretary of Transportation Anthony Foxx at the North Dakota crash site, where options for enhancing tank car standards were discussed.

The crash occurred when a train carrying soybeans derailed in front of a BNSF oil train, causing that train to also derail and set off fiery explosions. The crash spilled about 400,000 gallons of crude oil, which took nearly three months to clean up.

Rose said the railroad has learned from the disaster and has done such things as decreased train speeds in some areas and increased inspections. The railroad also announced in February that it would voluntarily purchase a fleet a of 5,000 strengthened tank cars to improve safety for hazardous materials shipments. The company said it hoped to accelerate the transition to a new generation of safer tank cars and give manufacturers a head start in designing them as federal officials consider changes to the current standards.

Not everyone in the oil sector is eager to transition to stronger tank cars. At the expo a day earlier, Kari Cutting, vice president of the North Dakota Petroleum Council, said it was “not proven that extra steel is going to prevent those breaches.”

Cutting also said the newer, stronger DOT-111 tank cars have 14 percent less capacity than older tank cars. Cutting said making those cars the standard will require hundreds more trains to make up the lost volume, actually increasing the risk of accidents.

Oil from North Dakota began being shipped by trains in 2008 when the state reached capacity for pipeline shipments. The state is now the nation’s No. 2 oil producer, behind Texas.

BNSF said it plans to invest $5 billion in its railroad this year, including $900 million to expand capacity where crude oil shipments are surging. Its 2014 spending plan is about $1 billion more than last year, a record, Rose said.

Much of the upgrades will be aimed at safety, he said.

“BNSF believes, at the end of the day, that every rail accident is preventable,” Rose said.

Read more here: http://www.kansascity.com/2014/05/21/5037936/bnsf-future-of-crude-by-rail-depends.html#storylink=cpy

For safe and healthy communities…