KQED Science report on WesPac, Pittsburg

Repost from KQED Science

Bay Area Residents Resist Crude-by-Rail as Accidents Rise

Molly Samuel, KQED Science | February 17, 2014
Bay Area Residents Resist Crude-by-Rail as Accidents Rise

The city of Pittsburg, 20 miles east of Oakland, is considering approving a new oil terminal to supply crude to Bay Area refineries. The oil would come via ship, pipeline and railroad. But there have been a number of recent accidents around the United States involving rail shipments of crude oil, and some locals are concerned about the safety of the project.

‘A Dynamite Factory in Our Backyard’

On a Saturday morning in January, about 150 people gathered at a playground in Pittsburg. Greg Osorio, a local pastor stepped up to a microphone and got the rally started.

“They want to put a dynamite factory in our backyard with crude oil bombs,” he said. “Right next to housing. Turn around and look at that.”

A cluster of faded yellow metal oil tanks sit just behind the park. Each one is the size of a house. Right now they’re empty, and have been for 15 years. But they soon could be filled with crude oil.

Riding the Crude-by-Rail Boom

Tank cars on the tracks in Pittsburg. (Molly Samuel/KQED)
Tank cars on the tracks in Pittsburg. (Molly Samuel/KQED)

WesPac, an Irvine-based company, is proposing to re-open and upgrade the tanks. The property, which includes a power plant that’s still in use, once belonged to PG&E and is now owned by an energy company called NRG. WesPac wants to take over the tanks to bring in oil, store it and redistribute it to Bay Area refineries to make into gasoline, diesel, jet fuel and other products. The $200 million project would be able to store up to 375,000 barrels of oil in 17 tanks.

“It’s consistent with the types of operations that are going on in that area already,” said Art Diefenbach, the project manager for WesPac. This is an existing facility in a traditionally industrial town, he says, so the project makes sense here. After the tanks were decommissioned, neighborhoods grew up around them, but Diefenbach says that won’t present a problem.

“We’ll be installing additional safety equipment and noise reduction equipment and air pollution control equipment so that it’s actually going to be better than it is today,” he said.

Better, he means, than sitting empty. Plus, the project would create up to 40 permanent jobs, though those wouldn’t be guaranteed to Pittsburg residents.

But community members aren’t just concerned about the oil in the tanks; they’re also concerned about the trains that would deliver it.

Barrels of oil coming into California by train, 2009-2013. Data from the California Energy Commission.
Barrels of oil coming into California by train, 2009-2013. Data from the California Energy Commission.

In 2008, there was no oil coming into California by rail. Last year in December alone, trains carried more than a million barrels into the state.

That’s because there’s an oil boom in North Dakota and Canada, explained Tupper Hull, the spokesman for the Western States Petroleum Association.

“The problem that we have is, there’s not a terribly good infrastructure to get oil to the coasts where most of the refining and frankly most of the customers are, for that energy, located,” he said.

Without pipelines, oil companies are turning to trains. While crude delivered by rail accounts for a little less than two percent of all the oil California uses now, that may be changing. WesPac is one of six crude-by-rail projects being considered in the state. If they all get approved, rail could provide a quarter or more of California’s oil, according to the California Energy Commission.

More Trains, More Accidents

But more crude-by-rail has led to more crude-by-rail accidents. Last summer in Quebec, 47 people died when an oil train exploded. In the past four months, there have been derailments in Pennsylvania, North Dakota, Alabama and New Brunswick, Canada.

KQED - Oil Train Accidents 17 Feb 2014“People here are concerned about that happening,” said Andres Soto, an organizer with Communities for a Better Environment. “They’d rather prevent it than respond to it.”

Pittsburg is a city that’s weathered industrial catastrophes before. In 1944, 320 people were killed when two Navy munitions ships in nearby Port Chicago exploded.

Andres Soto says he thinks oil companies aren’t being transparent about safety concerns.

“They don’t want to admit the risk,” he said. “Because if they did, the community would say, ‘Not in my backyard.’ And the people have a right to say that.”

There have been some responses: The National Transportation Safety Board is making recommendations to improve crude-by-rail safety; Governor Jerry Brown’s budget proposal boosts funding for the agency that cleans up oil spills; Attorney General Kamala Harris wrote a letter to the Pittsburg planning department, expressing her concerns about the WesPac project, particularly the impacts on air quality and the risk of accidents.

Tupper Hull says the companies he works with are aware of the safety concerns, and he expects there will be more regulations.

Pittsburg residents George and Lyana Monterrey are among those leading protests against the oil terminal. (Molly Samuel/KQED)
Pittsburg residents George and Lyana Monterrey are among those leading protests against the oil terminal. (Molly Samuel/KQED)

“We’re in one of these eras where the market has brought us good news, and now we’re catching up on the regulatory and the infrastructure side.” Good news, he said, because this is domestic oil—rather than from overseas—and it’s cheap.

Lyana Monterrey, a Pittsburg resident and one of the people leading the charge against the project, isn’t buying it.

“Not here,” she said. “Not next to a community. You don’t sacrifice people, community for your profits. That’s wrong. That’s an injustice.”

The city of Pittsburg is currently considering the project. The city council is expected to decide on its fate soon.

The oil tanks are the round shapes on the map.

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2014 — The Year In Bomb Train Derailments

February 16, 2014
This a running list of bomb train derailments in North America in 2014.

By “bomb train,” I mean those trains hauling one or more cars of crude oil, fuel oil, ethanol, methanol, propane, butane, liquified natural gas (methane), ammonium nitrate or high-nitrogen fertilizer, phosphoric acid or some other highly volatile or especially toxic or corrosive cargo. (The list does not include coal train derailments, which, of course, are a whole nuther problem.)  I’ve also indicated whether a detonation resulted.

So far in North America in 2014, we have seen an average of one bomb train derailment every 5 days ….

  • 1/07 – Plaster Rock, NB (6 days from Jan. 1), detonation
  • 1/20 – Philadelphia, PA (13 days later)
  • 1/26 – Edmundston, NB (6 days later)
  • 1/28 – Molino, FL (2 days later)
  • 1/31 – New Augusta, MS (3 days later)
  • 2/06 – Sedalia, CO (6 days later)
  • 2/11 – South Shore, KY and Jacksonville, FL (5 days later)
  • 2/13 – Vandergrift, PA (2 days later)
  • 2/16 – 3 days and counting ….

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Rail Safety: Nothing Doing?

Repost from Desmogblog, by Justin Mikulka, Fri, 2014-02-14

Why Nothing Is Being Done to Improve Oil by Rail Safety (via Desmogblog)

Since the oil train explosion in Lac-Megantic in July of 2013, we have learned that there are some obvious safety issues that need to be addressed regarding transportation of crude oil by rail. The first is that the majority of the rail cars transporting…

Continue reading Rail Safety: Nothing Doing?

Crude Oil: Follow the Money

Repost from The New York Times Business/Energy

Conflict in Oil Industry, Awash in Crude


caption="Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States." data-mediaviewer-credit="Andrew Burton/Getty Images" />Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States. Andrew Burton/Getty Images
caption=”Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States.” data-mediaviewer-credit=”Andrew Burton/Getty Images” />Workers drilling for oil outside Watford City, N.D. New production techniques have created a glut of crude oil in the United States. Andrew Burton/Getty Images

HOUSTON — T. Boone Pickens has personified the nation’s oil industry for more than a generation. So when he made an offhand comment at a conference here a few weeks ago expressing reservations about lifting the nation’s ban on exports of crude oil, he startled some of his old allies in the business.


Scott Sheffield, chief executive of Pioneer Natural Resources and one of the top oil executives in the state, picked up the phone to have a chat. “We had lunch and he made sense,” said Mr. Pickens, who has since revised his position.


Chalk one up for the oil producers, who have begun lobbying the Obama administration, Congress and the public to let them export the bounty of crude oil flowing out of new shale fields across the country.


Opposing them are their erstwhile cousins, the independent refiners, who insist that they need abundant, economical domestic supplies of oil so they can compete with foreign refiners.


It is a rare clash in a deeply guarded industry that involves arguments over national security, pricing at the pump and, after all is said and done, who will get a bigger share of earnings from the current drilling rush.


“What we have here is a food fight for the profits that will come either from exports of crude oil or exports of refined products,” said Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis, who testified before Congress recently in favor of lifting the ban. “It’s like an argument inside a family business but one that could result in huge market distortions that can either hurt the consumer or our national security.”


Producers like Mr. Sheffield warn that a mounting glut of certain grades of oil in some regions of the country will eventually force a halt to unprofitable drilling if exports are not allowed.


“Nobody wants the collapse of the oil industry,” Mr. Sheffield said in an interview. “You would be importing crude oil from the Middle East all over again.”


On the other side of the debate are some of the nation’s biggest refiners, who argue against unlimited exports of crude oil even as they export increasing amounts of refined products like diesel and gasoline. To their way of thinking, the oil producers are merely trying to increase their profits at the expense of American consumers.


“They are seeking the highest price available,” Bill Day, a vice president at the Valero Energy Corporation, a large independent refiner, said of the producers. “If anything, unlimited exports would raise the price of American crude to the international level, which is why the producers want this step to begin with.”


The debate began in earnest two months ago when Energy Secretary Ernest Moniz suggested at a New York energy conference that it might be time for the country to reconsider the export ban that was instituted in the 1970s, when OPEC oil embargoes threatened the American economy. Congress at the time made oil exports illegal except for some shipments to Canada. The ban on exports of Alaskan North Slope crude was lifted in 1996.


The topic has renewed interest thanks to the oil industry’s reversal of fortunes in recent years. Only seven years ago the country’s domestic oil production appeared to be in a downward spiral. But with the advent of new extraction techniques, entire new fields were opened, replacing oil imports from unfriendly or unruly places like Venezuela and Nigeria.


Suddenly parts of the Midwest and Gulf of Mexico regions are overflowing with superior grades of crude, leading to a slump in prices and a gap of as much as $10 between American oil benchmark prices and the dominant world Brent price.


Even under current restrictions, crude exports are growing quickly. Shipments to Canada have already roughly tripled since 2012 to around 200,000 barrels a day. Some analysts say they think that figure will double by the end of the year.


While the entire oil industry has profited from all the domestic production, which has increased by about 60 percent to eight million barrels a day since 2005, refiners have particularly benefited. American refiners became darlings of Wall Street by buying cheaper domestic crude and now export 3.4 million barrels a day of gasoline, diesel and other refined products, mostly to Latin America and Europe.


Not surprisingly, both the producers and the refiners say they are on the side of consumers and national security, and each side has academic and consultancy reports to back up its position.


The producers argue that if they could freely export, they would increase world oil supplies, forcing down the international Brent benchmark crude price, which in turn would reduce the price of gasoline at the pump. “The American consumer is held captive by the restrained market,” said Jack Ekstrom, a vice president at the Whiting Petroleum Corporation, a major producer in the North Dakota Bakken shale field. “When you have additional supplies coming on to market, the price naturally comes down.”


Executives at the refineries, which struggled for decades, counter that adding another million barrels of United States oil of daily supply to a global market of 90 million barrels a day will make little difference. Instead, they say, domestic crude prices will climb higher and with them gasoline prices.


“The export ban works,” Graeme Burnett, chairman of Monroe Energy, which operates Delta Air Lines’ refinery in Trainer, Pa., told a Senate Energy Committee hearing last month. “We still have a long way to go to protect against oil market volatility and achieve true energy independence.”


Refinery executives concede that they cannot argue against free trade when they are exporting products themselves. Michael C. Jennings, chief executive of the HollyFrontier Corporation, said in an interview that he could support ending the oil export ban as long as other regulations that he said penalize the refiners, including federal mandates for the refining of expensive biofuels, were also reformed.


Such sweeping energy reforms are not likely to be enacted by Congress soon. But in their talks with Commerce Department officials and members of Congress, refiners and producers appear to be closing in on some short-term compromises.


Some executives have suggested that Commerce Department officials could approve swaps of lighter American crudes to Mexico for their heavier sour crudes without violating current oil export regulations. That would give the producers another market and give refiners more oil to process.


There appears to be growing support for recharacterizing condensates, the hydrocarbon liquids used for petrochemical production, from crude to natural gas liquids, so they might be exported under current regulations. That would ease gluts in Rocky Mountain and South Texas fields where drilling has already slowed.


And perhaps more oil could be sent to countries with free trade agreements with the United States.


Such compromises, some executives say, could look something like the arrangements for export of liquefied natural gas from the United States. While gas producers supported exports and some chemical companies opposed them, the Obama administration responded by approving export terminals slowly to gauge the impact on domestic energy prices in the future.


“The middle ground could probably be accomplished without any additional legislation,” said Stephen H. Brown, a vice president for federal government affairs at the Tesoro Corporation, a major Texas refiner, “and I think that is what this administration is probably hoping for.”


Such actions by the Commerce Department, Mr. Sheffield said, could be a “relief valve that would push off the problem for another two years.”


But after that, he and other executives said, the country will probably again face a glut of high-quality crudes if current production trends continue.


A version of this article appears in print on February 13, 2014, on page B1 of the New York edition with the headline: Conflict in Oil Industry

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