Bakken Crude, Derailment, Diluted bitumen (Dilbit), Emergency Readiness & Response, Evacuation zone, Explosion, Federal Regulation (U.S.), Fire, Massive increase in crude-by-rail, Moratorium, Rivers, Tar sands crude, Volatile gases, Wildlife

Fourth Oil Train Accident in Three Weeks Shows Need for Immediate Moratorium

Repost from The Center for Biological Diversity

Another Oil Train Derails and Catches Fire in Ontario

Fourth Oil Train Accident in Three Weeks Shows Need for Immediate Moratorium

Center for Biological DiversityGOGAMA, Ont.— An oil train derailed and caught fire early this morning in Ontario near the town of Gogama, the second such incident in Ontario in three weeks, and the fourth oil train wreck in North America in the same time period. Since Feb. 14, there have also been fiery oil train derailments in West Virginia and Illinois. The Illinois wreck occurred just two days ago, and the fire from that incident is still burning.

“Before one more derailment, fire, oil spill and one more life lost, we need a moratorium on oil trains and we need it now” said Mollie Matteson, a senior scientist with the Center for Biological Diversity. “The oil and railroad industries are playing Russian roulette with people’s lives and our environment, and the Obama administration needs to put a stop to it.”

In the United States, some 25 million people live within the one-mile “evacuation zone” of tracks carrying oil trains. In July 2013, a fiery oil train derailment in Quebec resulted in the loss of 47 lives and more than a million gallons of oil spilled into a nearby lake. A report recently released by the Center for Biological Diversity also found that oil trains threaten vital wildlife habitat; oil trains pass through 34 wildlife refuges and critical habitat for 57 endangered species.

Today’s Ontario accident joins an ever-growing list of devastating oil train derailments over the past two years. Oil transport has increased from virtually nothing in 2008 to more than 500,000 rail cars. Billions of gallons of oil pass through towns and cities ill-equipped to respond to the kinds of explosions and spills that have been occurring. Millions of gallons of crude oil have been spilled into waterways. In 2014, a record number of spills from oil trains occurred.

There has been a more than 40-fold increase in crude oil transport by rail since 2008, but no significant upgrade in federal safety requirements. The oil and rail industries have lobbied strongly against new safety regulations that would help lessen the danger of mile-long trains carrying highly flammable crude oils to refineries and ports around the continent. The Obama administration recently delayed for several months the approval of proposed safety rules for oil trains. The proposed rules fall short because they fail to require appropriate speed limitations, and it will be at least another two and a half years before the most dangerous tank cars are phased out of use for the most hazardous cargos. The oil and railroad industries have lobbied for weaker rules on tank car safety and brake requirements.

The administration also declined to set national regulations on the level of volatile gases in crude oil transported by rail, instead deciding to leave that regulation to the state of North Dakota, where most of the so-called “Bakken” crude originates. Bakken crude oil has been shown to have extremely high levels of volatile components such as propane and butane but the oil industry has balked at stripping out these components because the process is expensive and these “light ends” in the oil bring a greater profit. The North Dakota rules, which go into effect next month, set the level of volatile gases allowed in Bakken crude at a higher level than was found in the crude that set the town of Lac Mégantic, Quebec on fire in 2013, or that blew up in the derailment that occurred last month in West Virginia.

The crude involved in today’s accident may be another form of flammable crude, called diluted bitumen, originating in Alberta’s tar sands region. The Feb. 14 derailment and fire in Ontario on the same rail line involved an oil train hauling bitumen, otherwise known as tar sands.

“Today we have another oil train wreck in Canada, while the derailed oil train in Illinois is still smoldering. Where’s it going to happen next? Chicago? Seattle?” said Matteson. “The Obama administration has the power to put an end to this madness and it needs to act now because quite literally, people’s lives are on the line.”

In addition to its report on oil trains, the Center has sued for updated oil spill response plans, petitioned for oil trains that include far fewer tank cars and for comprehensive oil spill response plans for railroads as well as other important federal reforms, and is also pushing to stop the expansion of projects that will facilitate further increases in crude by rail.

The Center for Biological Diversity is a national, nonprofit conservation organization with more than 825,000 members and online activists dedicated to the protection of endangered species and wild places.

Bakken Crude, Federal Regulation (U.S.), Hazmat notification, Oil stabilization, Rail infrastructure, Rail inspection, Tank car design, Train speed

Dems to Obama: Use Powers to Crack Down on Oil Rail Transportation

Repost from The PJ Tatler

Dems to Obama: Use Powers to Crack Down on Oil Rail Transportation

By Bridget Johnson, March 9, 2015 – 2:50 pm

Wisconsin Democrats are urging President Obama to explore using his executive authority to take “immediate” action against “dangerous” trains transporting oil from hugely successful production areas in North Dakota.

Sen. Tammy Baldwin (D-Wis.) and Rep. Ron Kind (D-Wis.) noted that the Obama administration missed a Jan. 15 deadline to release final Department of Transportation and the Pipeline and Hazardous Materials Safety Administration rules on oil train accidents.

“We write to you today with deep concerns about the risk that trains carrying crude oil continue to pose to our constituents.  Oil train accidents are increasing at an alarming rate as a result of the increased oil production from the Bakken formation in North Dakota. Congress has provided additional funding to study safer tank cars, hire more track inspectors, and repair rail infrastructure. We urge your Administration to use this funding, along with its regulatory powers, to improve oil train safety as quickly as possible,” Baldwin and Kind wrote to Obama today.

“…It is time for you to take immediate action and we request that your Administration issue final rules without further delay. We believe that recent accidents make clear the need for rules stronger than those originally proposed.”

Baldwin and Kind said that the primary risk is crumbling rail infrastructure, including not enough Federal Railroad Administration inspections and old bridges.

“The danger facing Wisconsin communities located near rail lanes has materialized quickly. Just a few years ago, an oil train in the state was a rare sight. Today, more than 40 oil trains a week pass through Wisconsin cities and towns, many more than 100 tank cars long,” the lawmakers wrote. “It is clear that the increase in oil moving on the rails has corresponded with an uptick in oil train derailments. In addition to the derailment in Illinois on Thursday March 5, 2015, there have been derailments in North Dakota, Virginia, Alabama, West Virginia, and a fatal explosion in Lac-Megantic, Quebec.”

“These catastrophes have illuminated the many areas ripe for improvement, as well as additional measures needed to be taken in order to ensure safety when transporting crude oil by train.”

They want new regulations for the stabilization of oil to make crude “less likely to ignite,” new safety requirements for tank cars, new speed limits for oil trains, and “increased transparency” about oil shipments as “it is also important that our communities are aware of what is being shipped in their backyard.”

Supporters of the Keystone XL pipeline have noted the need for a comprehensive energy infrastructure that involves rail and roads, though Baldwin voted against the pipeline in January.

Baldwin sought amendments requiring that tar sands producers pay into the Oil Spill Liability Trust Fund, and guarantees that American consumers get the Keystone oil before foreign export markets.

“Working with Canada we can achieve true North American energy security and also help our allies,” sponsor Sen. John Hoeven (R-N.D.) said then. “For us to continue to produce more energy and compete in the global market we need more pipelines to move crude at the lowest cost and in the safest and most environmentally friendly way. That means that pipelines like the Keystone XL are in the vital national interest of our country.”

Oil Industry, Oil prices, Oil producers, Tar sands crude

Tar Sands Going the Way of the Dodo? – Energy companies canceling tar sands projects

Repost from OneEarth.org

Are Tar Sands Going the Way of the Dodo?

Energy companies are canceling their tar sands projects.

By Brian Palmer | March 6, 2015
Photo: O.F.E.

Shell withdrew its application to extract tar sands from Canada’s Pierre River mine last week. The cancellation is news in itself, but the oil company’s decision to walk away from a massive seven-year project says a great deal about the viability of tar sands generally. Last year, the Canadian Association of Petroleum Producers cut its 2030 tar sands production forecast by 400,000 barrels per day. Last week, the energy consultancy Wood Mackenzie predicted that cash flows from tar sands would drop $21 billion in the next two years. The industry is undeniably shrinking.

Tar sands won’t disappear tomorrow, of course—most of the expense comes in opening the mine, so producers will keep operating their existing mines for several decades. New mines, however, are economically unfeasible. It’s difficult to break even in the tar sands business at current low oil prices. Over the medium term, the lack of pipeline access challenges any prospects for profitability. (That’s why the industry is so desperate for the Keystone XL and Energy East pipelines.) Looking deeper into the future, the specter of carbon taxation is enough to scare energy executives away.

All this is good news for the climate. Tar sands are the most carbon-intensive form of energy on the planet, emitting three or four times more greenhouse gas than conventional crude oil (which isn’t exactly good for the environment either). Here’s a brief rundown of all the canceled or deferred Canadian tar sands projects in recent months, and how much carbon they could have pumped into the atmosphere.

Pierre River Mine
Company: Shell
Stated reason for withdrawal: “Our current focus is on making our heavy oil business as economically and environmentally competitive as possible.”
Projected barrels per day: 225,000
Carbon saved from the atmosphere each day, in tons: 21,000

Corner Oil Sands Project
Company: Statoil
Stated reason for withdrawal: “Costs for labor and materials have continued to rise in recent years…Market access issues also play a role, including limited pipeline access.”
Projected barrels per day: 40,000
Carbon saved from the atmosphere each day, in tons: 3,700

Christina Lake Expansion
Company: MEG Energy
Stated reason for withdrawal: None given
Projected barrels per day: 150,000
Carbon saved from the atmosphere each day, in tons: 14,000

Narrows Lake
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 130,000
Carbon saved from the atmosphere each day, in tons: 12,200

Grand Rapids
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 180,000
Carbon saved from the atmosphere each day, in tons: 16,800

Telephone Lake
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 90,000
Carbon saved from the atmosphere each day, in tons: 8,400

MacKay River Expansion
Company: Suncor
Stated reason for withdrawal: “Cost management has been an ongoing focus…In today’s low crude price environment, it’s essential we accelerate this work.”
Projected barrels per day: 40,000
Carbon saved from the atmosphere each day, in tons: 3,700

Joslyn Mine
Company: Total
Stated reason for withdrawal: “Costs are continuing to inflate when the oil price and, specifically, the [net profit] for the oil sands are remaining stable at best—squeezing the margins.”
Projected barrels per day: 160,000
Carbon saved from the atmosphere each day, in tons: 15,000

* * *

Tally that up and these canceled or postponed projects represent nearly 95,000 tons of carbon dioxide staying in the ground rather than floating into the atmosphere. That’s the equivalent of taking 6.6 million cars off the road. Murmurs in the energy industry suggest that several other projects will soon be deferred or canceled, as oil prices show few signs of recovering. Stay tuned.

Crude By Rail, Tar sands crude

Tar sands crude-by-rail: industry failing prior to explosions

Repost from NRDC Switchboard, Anthony Swift’s Blog
[Editor:  Normally, I only post current news and views.  This October 2014 post by the NRDC’s Anthony Swift gives an interesting contextual background to recent disclosures of the volatile nature of tar-sands diluted bitumen (dilbit).  Even before the dilbit trains began derailing and exploding, the outlook for tar-sands crude-by-rail was poor.  See also the link to the September 2014 OCI report, “Wrong Side of the Tracks.”  – RS]

The tar sands train that couldn’t

By Anthony Swift, October 21, 2014

News from Canexus today indicates that it is only getting worse for the Bruderheim terminal.  A major customer has terminated its contract. Now only 40% of capacity is under contract. But not even that is being used. Last week, the 100,000 bpd capacity terminal loaded only 13,200 bpd.

The issue of whether significant quantities of tar sands crude will move by rail if projects such as the Keystone XL tar sands pipeline are not built is a major part of the ongoing debate about tar sands expansion. The assertion that rail is a viable alternative to pipelines to the Gulf Coast is important for tar sands proponents because any claim that Keystone XL passes the President’s climate test rests on the weak argument that carbon intensive tar sands crude will be developed at the same rate with or without the massive pipeline.

This is the first in a series of blogs discussing and building upon the evidence presented in the Oil Change International report ‘Wrong Side of the Tracks’. The report details the challenges the Canadian tar sands industry faces in getting its dirty product to market via rail in the face of ongoing pipeline delays caused by rising public opposition to tar sands production and related pipelines.

In today’s blog we look at the ongoing underperformance of the first unit train loading terminal in Alberta with access to tar sands crude. It is a tale of budget overruns, missed targets and operational failures.

Many observers hailed the beginning of unit train shipping for tar sands crude as a new era in which tar sands producers could use North America’s existing rail network to circumvent opposition by environmentalists and indigenous communities. But almost one year after the first tar sands unit train facility was completed, tar sands unit trains are limping along and the rush of tar sands crude they are supposed to deliver is yet to materialize. Far from proving the economic viability of tar sands by rail, the first companies to experiment in this sector have encountered operational issues, high costs and low returns.

The crude-by-rail boom started in North Dakota, where producers demonstrated the economic feasibility of shipping light crude by rail via unit trains. Unit trains are loaded as a single unit, generally of between 80 and 120 cars, delivering their cargo to a single destination with lower costs than having a train carrying a variety of freight cars pick up and deliver those cars via various switching yards.  By 2013, North Dakota’s oil producers had built fifteen crude-by-rail terminals with over one million barrels per day (bpd) of capacity.

By comparison, the tar sands industry had been very slow to adopt crude-by-rail. However, in the face of severe pipeline bottlenecks and delays, companies began looking for ways to replicate the crude-by-rail boom in North Dakota and ship diluted bitumen (dilbit) by unit train.

In mid-December 2013, a little known company – Canexus Corp. – got ahead of the game by opening the first unit train terminal with access to tar sands crude in Bruderheim (near Edmonton), Alberta.

The week the terminal began loading its first train vice president Jamie Urquhart told Platts Commodity News, “our aim will be to transport about 62,400 barrels per day diluted bitumen during the first phase and increasing to 98,100 bpd by July 2014 through increasing the number of trains to 11 a week”. In its environmental review of the Keystone XL pipeline, the State Department claimed that Canexus had contracts to ship 150,000 bpd of diluted bitumen and used the company’s estimates to support the low end of the Department’s estimate of the cost of tar sands by rail (see Section 1.4 pages 85 and 102).

Since then, the terminal has faced dramatic cost overruns and has operated at only a small fraction of its capacity. Construction ran 60 percent over budget jumping to CAD$360 million. Only 60 percent of capacity is under contract – less than half of the volume assumed by the State Department. Even then the project has yet to operate at even 50 percent of designed capacity.

From December to late June, loading averaged a little over 19,000 barrels per day, around 30 percent of the figure touted by Urquhart, and the highest ever weekly recorded rate was 31,000 bpd.[1]  By July, which was when the company had predicted it would be raising throughput to nearly 100,000 bpd, the terminal was shut down for a three-month overhaul. Average loadings since it restarted in September are at a paltry 9,000 bpd compared to the facility’s maximum 100,000 bpd capacity.

In addition to overhauling malfunctioning equipment, another reason that Bruderheim shut down was to connect it to a pipeline coming from the Cold Lake tar sands region. The pipeline is part owned by tar sands producer MEG Energy. MEG Energy signed a deal with Canexus to ship its dilbit by rail from the Bruderheim terminal. However in August, when Canexus attempted to connect to MEG’s pipeline as it prepared to restart the rail terminal, MEG refused access. Canexus took MEG to court claiming it was violating contractual commitments and the connection went ahead in early September

The question of why MEG initially refused permission for Canexus to connect to its pipe remains a mystery. Could it be that MEG is getting cold feet over sending tar sands by rail? Given that throughout 2014, traders have reported that shipping tar sands to the Gulf Coast by rail is unprofitable because low prevailing oil prices do not cover the high costs of rail, this would not be surprising. The ruinous economics of shipping tar sands by rail to the Gulf Coast is described in the Oil Change report Wrong Side of the Tracks and will be the subject of a future blog in this series.

What is clear is that far from proving the feasibility of tar sands by rail as an alternative to pipelines, the company pioneering this activity has proven it to be a highly risky business. Canexus’s share price is down nearly 50 percent since the beginning of the year, it has cut dividends and replaced its CEO. It is also considering selling Bruderheim in order to revive its balance sheet and support its other core businesses.

CUS-Stock-Chart-1024x567.jpg

It remains to be seen whether Bruderheim will be able to ramp up loadings to anywhere near the touted figures of 60,000 to 90,000 bpd or 10 to 14 trains a week. Thus far it has only rarely loaded a single full unit train per week.

Whatever the reason for MEG’s action against Canexus, it is clear that the tar sands industry’s first foray into large scale crude-by-rail has gotten off to a shaky start. It stands in stark contrast to the bubbling optimism for the trade projected in the Department of State’s analysis of the Keystone XL pipeline, which concluded that shipping tar sands by rail would be a viable alternative to the pipeline and therefore not permitting the pipeline would not achieve any net environmental benefits.

The experience so far at Bruderheim clearly contradicts that conclusion.

[1] Figures from Genscape Petrorail Report, a subscription only publication that monitors activity at various North American crude-by-rail terminal including Bruderheim. Figures are reported weekly so weekly totals are averaged to barrels per day.

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