Federal Regulation (U.S.), Rail Safety, Spill prevention and response

Oil Companies Fined For Mislabeling Crude Shipments

Repost from Huffington Post / Reuters

U.S. Oil Companies Fined For Mislabeling Crude Shipments In First Move After Series Of Derailments

Reuters, 
Main Entry Image

In this Dec. 30, 2013 file photo, a fireball goes up at the site of an oil train derailment in Casselton, N.D. (AP Photo/Bruce Crummy, File) | ASSOCIATED PRESS

By Patrick Rucker
WASHINGTON, Feb 4 (Reuters) – Three oil companies operating  in North Dakota were fined $93,000 on Tuesday for wrongly  classifying fuel shipments in the first sanctions since a series  of fiery derailments put the energy industry under a spotlight.

The Department of Transportation said Hess Corp,  Marathon Oil Corp and Whiting Petroleum Corp   were cited for wrongly classifying cargo tanks that were hauling  crude oil from the field to a railhead.

Fuel shipments must be designated with a hazard class to  alert emergency responders in the event of an accident. Eleven  of eighteen samples of one survey were mislabeled, the DOT said  in a statement.

“The fines we are proposing today should send a message to  everyone involved in the shipment of crude oil: You must test  and classify this material properly,” said Transportation  Secretary Anthony Foxx.

A spate of explosive derailments, including one in Quebec  last July which killed 47 people, has led to concerns over the  safety of shipping crude oil by rail and improper labeling.

Officials have already warned that some fuel found in North  Dakota’s energy patch, the Bakken, could be more volatile and  explosion-prone than other crude oil and that shippers should  take precautions.

Typically, crude oil carries a ‘hazard class 3’  classification and can be shipped in a standard tank car. The  shipments are further assigned a ‘packing group’ to alert to  dangers – that portion of the shipping paper was faulty, the DOT  said.

While the DOT’s Pipeline and Hazardous Materials Safety  Administration (PHMSA) has been testing crude samples for months  and issued several industry warnings, Tuesday’s action is the  first sanction.

Phmsa Administrator Cynthia Quartersman said the fines  reflected “initial findings” and that officials would scrutinize  the corrosivity, pressure and other traits of Bakken crude.

The DOT did not specify which companies would be expected to  pay what share of the $93,000 fines but by any measure the sums  were small for large energy companies.

Officials from Hess and Marathon could not immediately be  reached for comment.

Jack Ekstrom, a spokesperson for Whiting, said that the  company had not yet been contacted by the DOT about a possible  fine.

Benicia Herald

Valero CBR top Benicia news story in 2013

Letter to the editor, The Benicia Herald
Friday, February 07, 2014
By Sabina Yates

In your Jan. 30 edition of the Benicia Herald, the top 13 stories of 2013 starts with No. 13, “Community pitches in to save beaten dog,” and ends with No. 1, on page 5, ”Valero Crude-by-Rail project delayed.”

You should put the top story on page one.

First things first! The Valero-Crude-by-Rail project is something that will affect Benicia far more than a beaten dog. There has been an increased number of derailments and fires around the country because of the huge increase in rail transport of crude. Union Pacific, which would be hauling the Valero crude, has not been involved in any of these fiery rail accidents – but have their older tank cars been upgraded to new safety standards proposed by the U.S. National Transportation Safety Board many times over the past years?

These measures would include requiring double-hulled cars that are more puncture resistant. However, the companies that actually would be responsible for most of the costs associated with improving rail car safety are the oil companies themselves.

In a recent New York Times article, the American Petroleum Institute states that ”the first step is to prevent derailments by addressing track defects and other causes of all rail accidents.” Sounds like “buck-passing” to me. And what about local and regional emergency response plans to alleviate the risk to public safety? There are a lot of reasons why the Valero Crude-by-Rail project rightfully deserved the top priority of the Benicia news of 2013, but isn’t this where there could have been more “inches” of type? And not on page 5.

-Sabina Yates

Bakken Shale, City of Benicia, Davis CA, Derailment

NPR reporter visits Davis, Benicia

Repost from NPR Marketplace:

Communities along rail lines worry about oil explosions

David McNew/Getty Images – A diesel tanker truck passes windmills along the 10 freeway on  near Banning, California.
by Sarah Gardner
February 6, 2014 – 10:29am
Ever lapsed into daydreaming while you sit at a railroad crossing, waiting for a long freight train to go by?

After a fatal oil train explosion in Quebec last summer killed 47 people and flattened a downtown, people aren’t daydreaming anymore. That disaster served as a wake-up call to a lot of communities living close to railroad tracks, who suddenly realized that was crude oil rolling by in tanker. As oil trains have had more accidents, and governments are examining the safety of rail oil shipments, some local residents are applying the brakes on what they see as a dangerous rush to move oil by train.

There are, however, powerful economic reasons why more oil is being shipped by rail, rather than through pipelines.

 

Reporter Sarah Gardner talked with Graham Brisben, CEO and founder, PLG Consulting, about moving oil by train:

Q: How much crude oil are we moving on trains?

A: It’s certainly growing. It’s up to about 400,000 carloads per year today. Although crude by rail gets a lot of attention — it’s a big focus in the media partly because it’s an area of growth for railroads, but also because there have been a number of high profile crude-by-rail accidents — the reality is it’s only 2 to 3 percent of total car loadings for the railroads.

Q: Why are they using trains to move oil to refineries?

A: Initially, when crude by rail got started, it occurred in the Bakken play in North Dakota. The initial idea was to use rail to get crude to market simply to bide the time until pipelines were built out with enough capacity. But once crude oil got going, the commodity traders and the exploration and production companies realized that rail gave them faster transit times, the ability to ramp up more quickly than pipelines, and the ability to take the crude oil to different destinations where a higher price could be received for those barrels.

Q: There’s not just one price?

A: No. Because crude oil trades at different prices at different places according to oil benchmarks (like West Texas Intermediate, Light Louisiana Sweet and Brent).

Q: Won’t crude by rail go away when more pipelines get built?

A: As the pipeline network gets built out in a north-south direction, the flow of crude from the Bakken in North Dakota will have more of a shift from rail back to pipeline. But going east-west, that business will persist. You’re simply not going to see a buildout of pipelines going east-west. It’s simply cost-prohibitive to go over the Rocky Mountains, for example.

Q: What about tar sands oil from Alberta, Canada?

A: That oil is coming to market both by pipeline and now, increasingly, by rail. First, it was the light, sweet crude out of the Bakken. Now, it’s heavy sour Canadian crude going to U.S. refineries.

Q: Who’s making money on all this?

A: Obviously this has been a bright spot for the railroads. And tank car builders and leasers have enjoyed some very flush returns. The other beneficiary has been commodity traders who take advantage of those price spreads. It’s also a good time to be in the refining business because of abundant domestic supply. They’re in a better position than they were five years ago.

Q: Federal regulators are moving to increase safety standards in light of recent accidents. Will those new regulations affect the economics of crude by rail?

A: Crude by rail is economically attractive enough to warrant the hard work it is going to take to improve safety. The measures that can be taken, in reality, aren’t all that difficult. We expect regulations on retrofitting tank cars with crude oil. Also it wouldn’t surprise me if there end up being routing guidelines away from population centers, along with the speed restrictions. And greater scrutiny of terminal operations.

Q: Railroads seem very old-fashioned somehow. Could we live without them?

A: Could we live? Yes. Could our economy survive without railroads? No.

City of Benicia

Update on Valero DEIR, Public Comments

The City of Benicia updated its Valero Crude by Rail web page today.  The Draft EIR, which missed its scheduled release in January, is now tentatively scheduled for release in March 2014.

In addition, the City posted Public Comments received through February 3, 2014.  Voices opposing Valero’s proposal have documented a great number of concerns and questions, all now a part of the public record.  Public comments can be studied on the City’s web page, or more easily in searchable PDF documents here on The Benicia Independent’s Project Review page.

For safe and healthy communities…