NEXTGEN CLIMATE FOUNDER & PRESIDENT TOM STEYER CALLS FOR ANSWERS FROM BIG OIL ON GAS PRICE SPIKE IN CALIFORNIA
Steyer Says If Oil Company Executives Won’t Answer Questions They Should Face Subpoena
May 5, 2015 3:53 PM
SAN FRANCISCO—NextGen Climate Founder and President Tom Steyer today spoke at a Chevron gas station about the recent gas price spike in California and called on the State Senate to subpoena oil company executives if they refuse to provide answers to basic questions about their pricing and oil refining practices.
“As everyone knows, the oil companies have been charging Californians up to $1 billion per month more for gasoline than if we paid the national average,” Steyer said. “It’s time to put an end to the Big Oil giveaway, and start giving Californians a fair shake.”
Steyer also highlighted recent comments made by Chevron during its first quarter earnings call with investors last week. Chevron’s general manager of investor relations, Jeff Gustavson, noted that refining margins “increased earnings by $435 million driven by unplanned industry downtime and tight product supply on the U.S. West Coast.”
As Steyer noted, Chevron is saying for the oil industry, “their problems were good for their profits.” Steyer also highlighted the problem with the lack of transparency into the oil industry’s business practices, saying “we don’t have the facts we need in order to know if we’re paying fair prices based on the market, or if oil companies are deliberately taking actions which lower supplies and drive profits higher.”
Oil company executives had the opportunity to show up for a Senate hearing in March, to answer questions and allow Californians to judge whether they are being unfairly gouged at the pump. But industry executives refused to show up, instead sending a paid economist who then claimed he didn’t speak for the oil companies. If these executives continue refusing to answer for their business practices, the State Senate should subpoena these executives to force them to answer to Californians. Once Big Oil answers this call, we can begin to fix California’s rigged gasoline market and give Californians the fair shake they deserve.
###
NextGen Climate is focused on bringing climate change to the forefront of American politics. Founded by Tom Steyer in 2013, NextGen Climate acts politically to prevent climate disaster and promote prosperity for all Americans.
Crude Oil Rail Shipments Sabotage Freedom of Information Act
By James Conca, May 5, 2015 @ 4:40 AM
New regulations from the U.S. Department of Transportation declare that details about crude oil rail shipments are exempt from public disclosure (Tri-City Herald).
This ends DOT’s existing regulations that required railroads to share with state officials, and the public, information about shipping large volumes of dangerous crude oil by rail. These disclosure requirements were put in place last year after a Bakken crude oil train-wreck in Lynchburg, Virginia.
Now, railroads will only have to share this information with emergency responders who will be mum. And the information will be exempt from the Freedom of Information Act as well as public records and state disclosure laws (SSI).
True, the new regulations do cover critical oil train operations in terms of “speed restrictions, braking systems, and routing, and adopts safety improvements in tank car design standards and a sampling and classification program for unrefined petroleum-based products.” All good things long needed to address the growing dangers in rail transport of crude.
But after the Lynchburg derailment and inferno, the feds required railroads to notify emergency response agencies if shipments over a million gallons crude oil were going through their states. Railroads complied, but asked states to keep that information confidential.
Since then, the industry argued that details about the crude oil rail shipments were sensitive from a security and customer protection standpoint and should not be available to the public, although it’s more likely they just don’t want to get hassled by a public trying to restrict shipments from going through their towns, across their rivers and along their coasts.
At first, the Federal Railroad Administration disagreed with the industry (Federal Register), saying that information about the shipments was not sensitive from any standpoint.
But they seemed to have quietly caved to industry pressure.
The twin forces of the new North American energy boom and the lack of pipeline capacity have combined to suddenly and dramatically increase crude oil shipping by rail. The energy boom is not going away, and the XL pipeline is on hold indefinitely, so the increase in rail will continue.
Crude is a nasty material, very destructive when it spills into the environment, and very toxic when it contacts humans or animals. It’s not even useful for energy, or anything else, until it’s chemically processed, or refined, into suitable products like naphtha, gasoline, heating oil, kerosene, asphaltics, mineral spirits, natural gas liquids, and a host of other products.
Thus, the need to get it to the refineries that can handle it, mostly along the coasts. Without new pipelines, it’s going to go by rail.
But fiery derailments of crude oil trains in North America are becoming almost frequent, along with many simple spills (dot111). Every minute of every day, shipments of two million gallons of crude are traveling over a thousand miles in hundred-tank-car trains (PHMSA.gov), delivering as much oil as is expected by the Keystone XL Pipeline.
A clear example of this danger came on July 6, 2013, when a train carrying 72 tank cars, and over 2,000,000 gallons of Bakken oil shale crude from the Williston Basin of North Dakota, derailed in the small town of Lac-Megantic, Quebec. Much of the town was destroyed and forty-seven people were killed.
According to billionaire Warren Buffett, these new federal standards for shipping crude oil by rail will definitely slow-up the industry, and as CEO of Berkshire Hathaway’s BNSF railroad and its Union Tank Car business, he should know (Tri-City Herald).
Buffett says railroads are critical for transporting potentially dangerous products across the United States, and he thinks it makes more sense for railroads to haul them instead of trucks or pipelines, a controversial stand given the historical data (Pick Your Poison).
So what is the safest way to move crude oil?
The short answer is: truck worse than train worse than pipeline worse than boat (Oilprice.com). But that’s only for human death and property destruction. For the amount of oil spilled per billion-ton-miles, it’s truck worse than pipeline worse than rail worse than boat (Congressional Research Service). Even more different is for environmental impact, where it’s boat worse than pipeline worse than truck worse than rail.
But the accident frequency trend is against rail. Oil trains are getting bigger and towing more and more tanker cars. From 1975 to 2012, trains were short and spills were rare and small, with about half of those years having no spills above a few gallons (EarthJustice.org). Then came 2013, in which more crude oil was spilled in U.S. rail incidents than was spilled in the previous thirty-seven years.
The danger seems to be centered in the rail tank cars themselves (The Coming Oil Train Wreck). If these new regulations makes the rail cars safer, makes them go slower and routes them around environmentally sensitive or vulnerable areas, that’s wonderful.
But I don’t see why we aren’t allowed to know when the crude oil trains are near us.
Repost from Reuters [Editor: How, you ask? Quote: ” …raw bitumen can be shipped on heated and coiled rail cars without diluent.” Less volatile, and therefore supposedly safer, unless you consider the overall safety of the planet. Cheaper for Canadian oil companies, though, so surely a hot ticket. They’re actually planning to DILUTE the stuff to send it down pipelines to a rail facility, then REMOVING some or all the diluent before loading it as “raw” bitumen – onto oil train tank cars. All for you and me – gee, no thanks. – RS]
Canadian oil trains shift to carry less-volatile crude
CALGARY, Alberta | By Nia Williams, May 5, 2015 1:00am EDT
May 5 (Reuters) – A growing share of Canadian oil-by-rail traffic is made up of tough-to-ignite undiluted heavy crude and raw bitumen, say industry executives, as companies scramble to cut expenditures with the price of crude down more than 40 percent since June.
By eliminating the cost of diluting with ultra-light condensate, heavy oil offers rail shippers an opportunity to claw back a few dollars per barrel in transportation costs.
Official data does not break down the different Canadian crudes shipped by rail but interviews with industry executives suggest undiluted heavy and raw bitumen shipments now make up roughly a quarter of the estimated 200,000 barrel per day (bpd) oil-by-rail market.
An added bonus is that heavy crude and bitumen are far less combustible than the Bakken and Canadian synthetic crudes involved in fiery crashes that spurred the Canadian and U.S. governments on Friday to tighten safety rules for trains carrying oil.
With very high boiling and flashpoints they fall outside Packing Groups 1 and 2, used to classify the more volatile types of crude oil for transport, and are already shipped in double-hulled cars, meaning they should be unaffected by last week’s tank car phase-out rules.
Oil-by-rail shipments have come under increased scrutiny and public outrage following 10 oil-train derailments involving fires in less than two years.
“The business is moving back to where it started, which is as a vehicle to move undiluted heavy oil,” said John Zahary, chief executive of Altex Energy, which operates crude-by-rail terminals.
Normally, rail is more expensive than shipping by pipeline, but undiluted rail shipments offer better returns because shippers do not need to add between 15 and 30 percent condensate per barrel, which often trades at a premium to U.S. benchmark crude.
Overall rail volumes have dipped in recent months, as the shrinking gap between U.S. and cheaper Canadian crude prices has eroded arbitrage opportunities. Total crude-by-rail export volumes, not including shipments within Canada, dipped 5 percent quarter-on-quarter in the final three months of 2014 to 173,000 bpd, according to the National Energy Board.
Still, Jarrett Zielinksi, chief executive officer of TORQ Transloading, said the proportion of heavy undiluted crude shipped is growing.
TORQ’s overall volumes fell to approximately 25,000 bpd this year, but it is now moving essentially 100 percent undiluted conventional heavy, up from around 85 percent last year.
Meanwhile, Altex moved around 35,000 bpd of conventional heavy last month and has just finalized plans for a 100,000 bpd unit train facility in Lashburn, Saskatchewan.
RAWBIT-BY-RAIL
Like heavy crude, raw bitumen can be shipped on heated and coiled rail cars without diluent. But it is a much smaller segment of the market due to the infrastructure needed at both loading and unloading facilities.
Canadian National Railway is pushing hard towards shipping more of this so-called neat bitumen to improve both economics and safety.
“It’s the wave of the future,” James Cairns, CN vice-president of petroleum and chemicals, told a recent conference. “When we move bitumen it doesn’t even move as a dangerous commodity. The safest crude you can move by rail is a heavy, neat bitumen crude.”
MEG Energy Corp and Keyera Corp have looked at building diluent recovery units. This would enable them to receive diluted bitumen by pipeline at rail terminals, remove all or some of the diluent and then load the raw bitumen onto railcars.
Both companies have put those plans on hold due to low oil prices but said they could be developed in future.
(Additional reporting by Allison Martell in Toronto; Editing by Jeffrey Hodgson and Alan Crosby)
Repost from the New York Times [Editor: The reporter admirably gives industry spokespersons plenty of space to refute the claims of this study. But don’t quit reading there. Farther down in the article is scientific rebuttal and further explanation: “Dr. Brantley described the geology in northern Pennsylvania as being similar to a layer cake with numerous layers that extend down thousands of feet to the Marcellus Shale. The vertical fractures are like knife cuts through the layers. They can extend deep underground, and can act like superhighways for escaped gas and liquids from drill wells to travel along, for distances greater than a mile away, she said.” – RS]
Fracking Chemicals Detected in Pennsylvania Drinking Water
By Nicholas St. Fleur, May 4, 2015
An analysis of drinking water sampled from three homes in Bradford County, Pa., revealed traces of a compound commonly found in Marcellus Shale drilling fluids, according to a study published on Monday.
The paper, published in the Proceedings of the National Academy of Sciences, addresses a longstanding question about potential risks to underground drinking water from the drilling technique known as hydraulic fracturing, or fracking. The authors suggested a chain of events by which the drilling chemical ended up in a homeowner’s water supply.
“This is the first case published with a complete story showing organic compounds attributed to shale gas development found in a homeowner’s well,” said Susan Brantley, one of the study’s authors and a geoscientist from Pennsylvania State University.
The industry has long maintained that because fracking occurs thousands of feet below drinking-water aquifers, the drilling chemicals that are injected to break up rocks and release the gas trapped there pose no risk. In this study, the researchers note that the contamination may have stemmed from a lack of integrity in the drill wells and not from the actual fracking process far below. The industry criticized the new study, saying that it provided no proof that the chemical came from a nearby well.
In 2012, a team of environmental scientists collected drinking water samples from the households’ outdoor spigots. An analysis showed that the water in one household contained 2-Butoxyethanol or 2BE, a common drilling chemical. The chemical, which is also commonly used in paint and cosmetics, is known to have caused tumors in rodents, though scientists have not determined if those carcinogenic properties translate to humans. The authors said the amount found, which was measured in parts per trillion, was within safety regulations and did not pose a health risk.
Dr. Brantley said her team believed that the well contaminants came from either a documented surface tank leak in 2009 or, more likely, as a result of poor drilling well integrity.
The nearby gas wells, which were established in 2009, were constructed with a protective intermediate casing of steel and cement from the surface down to almost 1,000 feet. But the wells below that depth lacked the protective casing, and were potentially at greater risk of leaking their contents into the surrounding rock layers, according to Dr. Brantley.
In April 2011 the three homeowners in Bradford County sued the drilling company, Chesapeake Energy Corporation, over reports of finding natural gas and sediment in their drinking well water. In May of that year, the Pennsylvania Department of Environmental Protection cited the oil and gas company for violating the Pennsylvania Oil and Gas Act and Clean Streams Law by letting natural gas enter the drinking wells, though the company admitted no fault. In 2012, the homeowners settled the lawsuit and the company bought the three households.
As a result of that suit, the state environmental protection agency recommended that the drilling company require that their wells extend what are known as intermediate casings beyond 1,000 feet.
Dr. Brantley described the geology in northern Pennsylvania as being similar to a layer cake with numerous layers that extend down thousands of feet to the Marcellus Shale. The vertical fractures are like knife cuts through the layers. They can extend deep underground, and can act like superhighways for escaped gas and liquids from drill wells to travel along, for distances greater than a mile away, she said.
Katie Brown, an energy consultant with Energy in Depth, an advocacy group for the Independent Petroleum Association of America, said the authors had no evidence that the small traces they found of 2BE, which is also used in many household items, came from a drilling site.
“The entire case is based around the detection of an exceedingly small amount of a compound that’s commonly used in hundreds of household products,” Ms. Brown wrote in an email. “The researchers suggest the compound is also found in a specific drilling fluid, but then tell us they have no evidence that this fluid was used at the well site.”
Garth T. Llewellyn, a hydrogeologist with Appalachia Hydrogeologic and Environmental Consulting and the lead author of the report, said that when his team sampled water wells that were farther away from the drilling sites, they did not find any of the compounds found in the three households. “When you include all of the lines of evidence, it concludes that that’s the most probable source,” he said.
Victor Heilweil, a hydrogeologist from the University of Utah who was not involved with the study but reviewed its details, said it was noteworthy for showing “the detailed geologic fabric explaining how these contaminants can move relatively long distances from the depth to the drinking well.”
An environmental scientist from Stanford University, Rob Jackson, who also reviewed the paper, said it “clearly shows an impact of oil and gas drilling on water quality.” But he emphasized that this instance was an exception.
The dates of the incident were not surprising to Scott Anderson, a senior policy analyst with the environmental advocacy group Environmental Defense Fund, who said that well integrity was generally poor around 2008 and 2009. He said that using casings of steel and cement at depths below 1,000 feet was a good idea in this region. But he also noted that the industry has strengthened its practices since then, including increased use of intermediate casings.
“Industry knows how to construct wells properly, but the fact is that they don’t always do so,” Mr. Anderson said. “My hope would be that papers like this will encourage industry and its regulators to do a better job of doing what they already know they are supposed to do.”
You must be logged in to post a comment.