HIGHLIGHTS
• Valero wants to bring trains carrying crude through Sacramento region to Benicia refinery
• Even without a catastrophe, oil trains pose a serious threat to public health and safety
• With clean energy and efficiency, California doesn’t need to take the risk
Railroad tracks lead to Valero’s refinery in Benicia. The company wants to ship oil there with two, 50-car trains a day. Manny Crisostomo Sacramento Bee file
If approved, proposed new oil train terminals at refineries in California would turn our railways into crude oil superhighways. Mile-long oil trains would haul millions of gallons of toxic, explosive crude through downtown Sacramento and dozens of other California cities and towns. An estimated 5 million Californians live in the one-mile evacuation zone along oil train routes.
In Benicia, city officials are close to a final decision on the proposed Valero oil train terminal. It’s essential that City Council members, who hold a hearing on Tuesday, understand why oil trains are too dangerous for our communities. There is no sure way to protect public health while transporting crude oil by rail.
Tom Steyer
Valero wants to bring two 50-car trains carrying about 3 million gallons of oil to its Benicia refinery every day. The environmental review of the proposal cites the “potentially significant” hazard of a spill and fire.
In 2013, the oil train explosion in Lac Megantic, Quebec, demonstrated the danger. It killed 47 people, destroyed dozens of buildings and poisoned a local lake. Three years later, residents still live with fear and anxiety, and scientists have recorded an “unprecedented” spike of fish deformities.
Steve Young
But it doesn’t take a catastrophe for oil trains to pose a serious threat to public health and safety. They disrupt traffic, delay emergency response and bring more poisoned air and increased disease. That’s why six counties and 22 cities around Sacramento have already said no to these trains. But the safety of all Californians living in the blast zone lies in the hands of Benicia city officials who will decide whether to approve Valero’s permit.
On Feb. 11, after days of testimony from experts and community members, the city Planning Commission voted unanimously to deny the permit. Valero has appealed to the Benicia City Council, which will make the final decision.
Something similar is happening in San Luis Obispo County, where the county staff and the California Coastal Commission recommended that the county reject the Phillips 66 oil train terminal proposal. The county Planning Commission must decide soon, but the final decision will rest with county supervisors.
Last year, NextGen Climate, the Natural Resources Defense Council, ForestEthics and Communities for a Better Environment released a report on oil industry plans to ship dirty Canadian tar sands crude to West Coast refineries. The report found that heavy crude would increase carbon pollution by as much as 26 million metric tons – the equivalent of adding 5.5 million cars to the road.
The good news is that we don’t have to live with these oil risks barreling through town. We can make our communities safer by transitioning to clean energy. A recent report by the Union of Concerned Scientists revealed that improvements in fuel efficiency and energy technology could help us cut oil consumption in half by 2030.
There’s no place for extreme tar sands or Bakken crude in California’s emerging clean energy economy – and there’s no place in our communities for dangerous, unnecessary crude oil trains.
Industry opposes proposal for 2-member train crews in light of Lac-Megantic disaster
Joan Lowy, The Associated Press , March 14, 2016 3:51PM EDT
Wrecked oil tankers and debris from a runaway train in Lac-Megantic, Que. are pictured July 8, 2013. (Sûreté du Québec handout via CP)
WASHINGTON — Trains would have to have a minimum of two crew members under rules proposed Monday by U.S. regulators. The move is partly in response to a deadly 2013 crash in which an unattended oil train caught fire and destroyed much of a town in Canada, killing 47 people.
The Federal Railroad Administration is also considering allowing railroads that operate with only one engineer to apply for an exception to the proposed two-person crew rule, according to a notice published in the Federal Regulator.
The proposal is opposed by the Association of American Railroads, which represents major freight railroads. Many railroads currently use two-person crews, but some industry officials have indicated they may switch to one engineer per train once technology designed to prevent many types of accidents caused by human error becomes operational.
Most railroads expect to start using the technology, called positive train control or PTC, between 2018 and 2020. It relies on GPS, wireless radio and computers to monitor train positions and automatically slow or stop trains that are in danger of colliding or derailing.
A 2008 law requires PTC technology on all tracks used by passenger trains or trains that haul liquids that turn into toxic gas when exposed to air by Dec. 31, 2015. After it became clear most railroads wouldn’t make that deadline, Congress passed a bill last fall giving railroads another three to five years to complete the task.
There is “simply no safety case” for requiring two-person crews, Edward Hamberger, president of the railroad association, said in a statement. Single-person crews are widely and safely used in Europe and other parts of the world, he said.
There will be even less need for two-person crews after PTC is operational, he said. PTC “is exactly the kind of safety redundancy through technology for which the (railroad administration) has long advocated,” he said.
But Senator Richard Blumenthal, a Democrat, said two-person crews are needed on trains in the same way it’s necessary to have two-pilot crews on planes.
“The cost of adding a second, skilled crewmember pales in comparison to the costs of avoidable crashes and collisions,” Blumenthal said. It’s important that the railroad administration impose what safety regulations they can now since railroads “have dragged their feet” on implementing PTC, he said.
On July 6, 2013, a 74-car freight train hauling crude oil from the Bakken region of North Dakota that had been left unattended came loose and rolled downhill into Lac-Megantic, a Quebec town not far from the U.S. border. The resulting explosions and fire killed 47 people and razed much the downtown area. The train had one engineer, who had gone to a hotel for the night.
Would Saving A Livable Climate Destroy Buffett’s Fossil Fuel Empire?
By Joe Romm, March 11, 2016 8:00 AM
BNSF oil train derailment in 2013. CREDIT: BRUCE CRUMMY, AP
Billionaire Warren Buffett has bet the future of his company Berkshire Hathaway on dirty energy. In recent years he has been building a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and burns the most climate-destroying fuels.
The final part of this series on Buffett looks at how BNSF Railways is the engine of his carbon-intensive conglomerate, creating a massive risk for shareholders in this increasingly carbon-constrained world — a risk the “Oracle of Omaha” needs to be far more upfront about.
Is Warren Buffett “The Profiteer” of “Climate Killers”?
When Rolling Stone named Warren Buffett one of its 17 “Climate Killers” in 2010, they called him “The Profiteer.” They zeroed in on his recent purchase of “Burlington Northern Santa Fe railroad for $26 billion — the largest acquisition of Buffett’s storied career.”
Why? BNSF is “the nation’s top hauler of coal, shipping some 300 million tons a year.” That is especially convenient for Buffett because, as noted in Part 2, Berkshire Hathaway Energy has four major utilities that still rely on coal for over half their electricity generation.
CREDIT: BNSF
But BNSF is so much more than just the top hauler of coal. As their website proudly attests “BNSF is the largest transporter of crude oil in North America” — and we all know how well the whole crude-by-rail thing has been going.
2015 “has already been the costliest by far for crude train explosions,” BloombergBusiness reported in December. A “BNSF train that derailed and exploded in Illinois” last March “carrying highly explosive crude from North Dakota” created some $5.5 million in damage.
From 2010 through mid-2014, oil shipped by rail in the United States increased from about one million barrels of oil every month to 25 million! At the same time, Canadian imports increased 50-fold, as we’ve reported. BNSF was a driving force behind that explosion.
CREDIT: EIA DATA
Also, last October we learned about “what is believed to be the largest frac sand unit train to date in North America.” You guessed it: “The 150-car unit train, operated by BNSF, carried 16,500 tons of frac sand used in hydraulic fracturing.”
Warren Buffett Bets Big On The Tar Sands
But wait, there’s more. You may recall from Part 1 that last year, the billionaire spent $240 million buying another chunk of Canadian tar sands giant Suncor, upping his overall bet on the climate-destroying liquid fuel to $1.1 billion — a fact Buffett does not share with shareholders in his list of Berkshire Hathaway’s climate risks.
On top of that, as BNSF’s website also proudly attests, the railroad “is positioned to act as a gateway to the Canadian oil sands.” Seriously.
Indeed several years ago, a BNSF employee magazine explained how invested the railway was in all aspects of tar sands (aka bitumen) development. The key point is that “Before bitumen can move through a pipeline to its destination, it must be blended with diluents (diluting agents),” lighter weight hydrocarbons like natural gasoline or butane:
BNSF has been moving single carloads of diluents from U.S. refineries to the Canadian border…. The inbounds are then interchanged with Canadian railroads, then moved to Edmonton, with the final move to the oil sands’ processing center via pipeline.
Last year, BNSF moved about 9,000 carloads of diluents for the project, with the majority of loads originating from the Gulf Coast, California, and Kansas. This year, about 12,000 carloads are anticipated to move.
There’s more: Beyond shipping diluents, “BNSF has also transported turbines, other large machinery and pipes for use at the drilling sites.”
There’s still more to this empire. In 2015, Buffett “nearly doubled Berkshire’s position in Phillips 66,” one of the country’s leading oil (and gas) refiners and processors. The company has 15 refineries which can refine a total of 2.2 million barrels of crude per day.
In January of this year alone, Buffett spent a staggering $832 million to buy yet more Phillips 66 stock. At more than $5 billion, it is his sixth-largest holding. He now owns 14 percent of the “Number 7” company on the Fortune 500 list.
Phillips 66 is a major co-owner of the Wood River Refinery in Illinois, which in recent years made investments “to expand the capacity to handle the bitumen from the Alberta oil sands by nearly 700%.” Also not coincidentally, for the last year, Phillips 66 has been trying to get California planning commissioners to let it build a 1.3-mile rail spur to its Santa Maria refinery. Why? As the Sierra Club explained last month, “The oil giant seeks to transport tar sands crude from Canada in mile-long trains — each laden with over 2 million gallons of dirty crude.”
Both A Livable Climate And Buffett’s Empire Cannot Thrive
Yes, the Oracle of Omaha has a thing for the Canadian tar sands. But more than that, over the last several years he has built a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and even burns the most carbon-intensive fossil fuels. It would be a brilliant strategy except for two small details.
First, climate science makes clear we have to leave most fossil fuels — and virtually all of the most carbon-intensive — in the ground to avoid global catastrophic warming. Second, over the past 18 months, the leading nations of the world unanimously agreed on a plan whose goal is to do just that, and the overwhelming majority of them made detailed pledges to slow or reverse carbon-intensive growth and replace it with carbon-free growth.
The domestic and international coal market has already collapsed as a result of growing environmental concerns and low-cost alternatives including renewables. If the world follows through on its plans to keep total warming below 2°C — a big “if,” for sure — then coal is going to continue to be squeezed out of the market in the coming decades and oil will almost certainly follow the same fate, peaking in demand by 2030, as I discussed last month.
Now whether or not you believe the world is going to achieve the plan it unanimously embraced in Paris in December, surely Buffett ought to at least mention to his shareholders the risks to Berkshire Hathaway if the world does. Yet, his latest annual letter to shareholders dismisses the risk of climate change.
Here is all Buffett says about the coal risk: “To begin with an obvious threat, BNSF, along with other railroads, is certain to lose significant coal volume over the next decade.” But he quickly dismisses this as a problem that is not “crucial to Berkshire’s long-term well-being.”
Last summer, BNSF executive chairman Matthew K. Rose noted the decline in U.S. coal transport and consumption. He said of his company’s major investment to upgrade its rail service to and from the coal-rich Powder River Basin, “That leaves us with millions of dollars in investment in what will eventually be stranded assets.”
Certainly, from a short-term business perspective, investing in oil-by-rail and tar-sands-by-rail to replace coal-by-rail appears to make sense. But what are the risks those investments will eventually become stranded assets, too? Low oil prices aren’t good for crude-by-rail, as BloombergBusiness explained in December. And aggressive climate action, which could well give us peak demand within 15 years, is not bullish for oil prices.
CREDIT: BLOOMBERG
Rather than informing shareholders about any of these risks, Buffett asserts the reverse: “Both BHE [Berkshire Hathaway energy] and BNSF have been leaders in pursuing planet-friendly technology.” Seriously?
I discussed in Part 2 how, despite BHE’s own investments in renewables, BHE is working to crush solar energy in Nevada and around the western United States. And it remains a huge user of coal. And as we’ve seen BNSF is a major deliverer of coal….
But here is how Buffett defends the fairly ludicrous claim that BNSF is somehow one of the “leaders in pursuing planet-friendly technology”:
BNSF, like other Class I railroads, uses only a single gallon of diesel fuel to move a ton of freight almost 500 miles. That makes the railroads four times as fuel-efficient as trucks!
Yes, BNSF is a very fuel-efficient way of delivering vast amounts of climate-destroying fuels to market.
Finally, is it only a coincidence that after outperforming the market for decades, the stock of Berkshire Hathaway has actually underperformed the S&P 500 over the last five years?
Again, if serious global climate action ultimately keeps oil prices low and renders much of the tar sands uneconomic, then Buffett’s carefully constructed fossil fuel empire is going to keep suffering — and deservedly so. After all, leading climate activists have been urging major investors to disinvest in fossil fuels for years. Buffett is doing the exact reverse!
BOTTOM LINE: Between Berkshire Hathaway and a livable climate, only one can thrive. That’s not a tough choice, is it?
Benicia, county to study industrial park’s economic future
By Todd R. Hansen, March 09, 2016
The Valero refinery in operation in Benicia’s Industrial Park. (Daily Republic file)
FAIRFIELD — Smoke stacks and refinery buildings rise up from what was once a military arsenal site, and five decades later, the evolution of what is now the Benicia Industrial Park continues.
“Our industrial park is quite old,” said Jasmin Powell, president of the Benicia Industrial Park Association and head of operations at Dunlop Manufacturing, which has been at the park since 1972.
“So some of the issues that we have been bringing up (as an association) is higher-speed Internet access, which has gotten better over the last couple of years,” Powell said in a phone interview Tuesday. “And our roads are in need of repair.”
The Solano County Board of Supervisors on Tuesday approved a letter of intent for a Collaborative Economic Development Initiative with Benicia, which could eventually create a redevelopment-style district to finance infrastructure improvements at the industrial park.
The city approved the initiative Feb. 23 and has earmarked $25,000 for a feasibility study that will likely come back to the City Council in June or July, Mario Giuliani, the Benicia Economic Development manager, said in a phone interview Monday.
The central focus of the study is the potential value of establishing an Enhanced Infrastructure Financing District to use property tax increments toward improving and building infrastructure at the industrial park.
“Essentially it is another tool . . . for the city to utilize to try to get financing into the industrial park,” Giuliani said. “It is probably the one (option) we are focusing on the most, but that’s not to say that when we do our feasibility study there won’t be other (financing) options.”
In essence, the city would be taking its share of increased property tax in the district area and investing it toward infrastructure. Unlike the defunct redevelopment system, that property does not have to be considered blighted.
Benicia receives 24 cents on each dollar of property tax, money that is typically spread across all general fund uses that include police, fire and city administration, as well as parks and recreation.
Giuliani said one of the things the feasibility study will address is the impact – if any – the loss of tax increments would have on other city services. However, the ultimate goal is that the improvements made would generate even greater tax revenue for all of those services.
“That is a policy decision the City Council will have to make,” Giuliani said.
Also to be determined is whether the county would appropriate its share of the property tax from within the district toward the infrastructure improvements.
Supervisor Linda Seifert, who represents the area, said she will wait and see what the feasibility study shows before deciding what role she would lobby the county to take – including funding options.
“I do have an interest in the county doing what it can to improve (the industrial park),” Seifert said Monday.
Powell said the association has not been part of the city-county discussions, but she was aware such talks were taking place.
On the same night the Benicia council approved the development initiative with the county, it conducted a workshop on a proposed 547-acre mixed-use development within the industrial park.
The Northern Gateway Project, proposed by the Shorts Development Group, targets the same area of the failed Seeno project several years ago. The Shorts Group has a purchasing option on the property. Like the Seeno project, the new proposal does include a residential element.
Seifert said she would not base her decision about county financial support on a specific project, decisions about which she said should be left up to the city and its residents.
The port-oriented industrial park is comprised of 3,000 acres and 7 million square feet of developed space near the junction of Interstates 680 and 780, according to the city’s Office of Economic Development. The park has 450 businesses that employ 6,500 people.
Powell said the park has lost companies because of infrastructure problems, noting specifically Internet access. The city provided about $750,000 for broadband installation in its 2012 budget, and approved $625,000 in a grant/loan program to help park businesses upgrade equipment and buildings.
The law establishing the Enhanced Infrastructure Financing District was signed by Gov. Jerry Brown in September 2014 and went into effect Jan. 1, 2015. It does not include school district shares of property tax.
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