Northern California Representatives call for no delay in or weakening of new oil-by-rail safety standards

Repost from The Benicia Herald
[Editor: In an otherwise excellent report, this story fails to mention that Benicia’s own Representative Mike Thompson and 5 other Northern California legislators joined with Reps. Garamendi and Matsui in signing the letter.  Note as well that the fires in the West Virginia explosion burned for nearly 3 days (not 24 hours per this article).  See also Rep. Garamendi’s Press Release.  A PDF copy of the signed letter is available here.  See also coverage in The Sacramento Bee.  – RS]

Garamendi calls for no delay in oil-by-rail safety improvements

By Donna Beth Weilenman, March 4, 2015

U.S. Rep. John Garamendi, D-Fairfield, is urging the Department of Transportation to issue stronger safety standards for transporting oil by train “without delay.”

Garamendi, a member of the House Committee on Transportation and Infrastructure, made his call in a letter he authored after working with U.S. Rep. Doris Matsui, D-Sacramento, and circulated among members of the House.

He said the letter responds to news that the DOT may consider weakening oil train safety regulations and delaying a deadline for companies to comply with certain safety guidelines.

He said he also has been making his appeal to DOT officials in person as well as in committee hearings and in speaking with reporters, urging the department to adopt stronger safety measures designed to protect communities near rail lines.

He said several key intercontinental rail lines that reach West Coast ports and refineries lie within his Third District.

Those rail lines go through Fairfield, Suisun City, Dixon, Davis, Marysville and Sacramento, he said.

Garamendi is the leading Democrat on the House Committee on Transportation and Infrastructure’s Subcommittee on the Coast Guard and Maritime Transportation.

He pointed to a February accident in West Virginia in which a train carrying crude oil derailed and exploded, and said that was just the latest in a series of more frequently occurring incidents.

That accident happened in Fayette County, in which Garamendi said 28 tanker rail cars in a CSX train went off the tracks and 20 caught fire, accompanied by explosions and 100-yard-high flames.

Nearby residents were evacuated, and the fires burned for 24 hours.

West Virginia’s governor, Earl Ray Tomblin, issued a statement saying the train was carrying Bakken crude from North Dakota to Yorktown, Va. The train had two locomotives and 109 rail cars, according to a CSX statement.

CSX originally said one car entered the Kanawha River, but later said none had done so.

The company reported at least one rail car ruptured and caught fire. One home was destroyed, and at least one person was treated for potential inhalation of fumes.

The rail line said it was using newer-model tank cars, called CPC 1232, which are described as tougher than DOT-111 cars made before 2011. Garamendi confirmed that.

He also said the train was traveling at 33 mph, well below the 50-mph speed limit for that portion of the track.

According to a report by the Wall Street Journal and a statement from the North Dakota Industrial Commission, the oil contained volatile gases, and its vapor pressure was 13.9 pounds per square inch. A new limit of 13.7 pounds per square inch is expected to be set by North Dakota in April on oil carried by truck or rail from the Bakken Shale fields, though Brad Leone, a spokesperson from Plains All American Pipeline, the company that shipped the oil, said his company had followed all regulations that govern crude shipping and testing.

A few days before, another Canadian National Railways train derailed in Ontario.

“Families living near oil-by-rail shipping lines are rightfully concerned about the safety of the trains that pass through their communities,” Garamendi said.

“For that reason, I have repeatedly called on the Department of Transportation to use all the tools at their disposal to ensure that these shipments are as safe and secure as possible.”

He said he also wants the DOT to act quickly.

“Every day that strong and effective rules are delayed is another day that millions of Americans, including many in my district, are put at greater risk.

“While the Department has made this a priority, they must move with greater urgency to address this matter.”

He and Matsui have written Timothy Butters, acting administrator of the Pipeline and Hazardous Materials Safety Administration, and Sarah Feinberg, acting administrator of the Federal Railroad Administration, expressing “our strong concern that despite increased train car derailments and an overall delay in the issuance of oil-train safety regulations, the Department of Transportation may be considering a revision that could delay the deadline for companies to comply with important safety guidelines, including upgrading CPC-1232 tank cars to new standards.”

Citing the frequency of derailments, they wrote that such measures as stabilizing crude and track maintenance before transport should be added to those standards. “Any weakening of the proposed rule would be ill-advised,” they wrote.

The two wrote that the West Virginia accident was the third reported in February.

In addition to that one and the Ontario accident, another train carrying ethanol derailed and caught fire in Iowa.

“These are in addition to recent derailments in Northern California’s Feather River Canyon, Plumas County, and Antelope region where three train cars derailed earlier this year while en route from Stockton to Roseville,” they wrote.

The two said the need for safer train cars “has long been documented and is overdue.”

They said the DOT began updating rules in April 2012. Meanwhile, from 2006 to April 2014, 281 tank cars derailed in the United States and Canada.

They wrote that 48 people died and nearly 5 million gallons of crude oil and ethanol were released.

“Serious crude-carrying train incidents are occurring once every seven weeks on average, and a DOT report predicts that trains hauling crude oil or ethanol will derail an average of 10 times a year over the next two decades, causing billions of dollars in damage and possibly costing hundreds of lives,” they wrote.

In the wake of “this alarming news,” they wrote of their “great concern” that Pipeline and Hazardous Materials Safety Administration failed to meet its Jan. 15 deadline to release a final rule on crude-by-rail regulations.

They urged the DOT to maintain the timeline that gives companies two years to retrofit cars and to have provisions in place or additional regulations drafted to require stabilization of crude as well as better track maintenance technology.

“We understand that more than 3,000 comments to the rule were analyzed and we commend the DOT for its work with industry thus far on information sharing, slower speeds, and reinforced railcars, but the multi-pronged solutions for this important safety issue must be implemented as quickly as possible,” they wrote.

“We also believe that DOT should issue a rule that requires stripping out the most volatile elements from Bakken crude before it is loaded onto rail cars.

“This operation may be able to lower the vapor pressure of crude oil, making it less volatile and therefore safer to transport by pipeline or rail tank car,” they wrote.

In addition, they wrote that greater priority must be placed on track maintenance and improvement.

“We need safer rail lines that are built for the 21st century, including more advanced technology in maintaining railroad tracks and trains so that faulty axles and tracks do not lead to further derailments,” they wrote.

Saying 16 million Americans live near oil-by-rail shipping lanes, Garamendi and Matsui wrote that if “dangerous and volatile crude” is to be shipped through municipalities and along sensitive waters and wildlife habitat, “the rail and shipping industries must do more.”

The two praised the National Transportation Safety Board for investigating the accidents thoroughly.

But they added that those living near crude-by-rail tracks “should not have to live with the fear that it is only a matter of time.”

Instead, they wrote, the DOT should work toward “release of a strong and robust safety rule as soon as possible.”

US running out of room to store oil; price collapse next?

Repost from The Associated Press

US running out of room to store oil; price collapse next?

By Jonathan Fahey, AP Energy Writer, Mar 4, 1:01 PM EST
Older and newly constructed 250,000-barrel capacity oil- storage tanks north of Cushing, Okla. Extra crude is flowing into storage tanks now, especially in Cushing. (Michael Wyke/AP)
Older and newly constructed 250,000-barrel capacity oil- storage tanks north of Cushing, Okla. Extra crude is flowing into storage tanks now, especially in Cushing. (Michael Wyke/AP)

NEW YORK (AP) — The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months.

For the past eight weeks, the United States has been producing and importing an average of 1.1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub in Cushing, Oklahoma, pushing U.S. supplies to their highest point in at least 80 years, according to the Energy Department.

If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude – and probably gasoline, too – plummeting.

The supply growth may even be speeding up.  U.S. crude supplies rose 10.3 million barrels last week, the government said Wednesday, the largest weekly increase since October 2002.

“The fact of the matter is we are running out of storage capacity in the U.S.,” Ed Morse, head of commodities research at Citibank, said at a recent symposium at the Council on Foreign Relations in New York.

Morse has suggested oil could fall all the way to $20 a barrel from the current $50. At that rock-bottom price, oil companies, faced with mounting losses, would stop pumping oil until the glut eased. Gasoline prices would fall along with crude, though lower refinery production, because of seasonal factors and unexpected outages, could prevent a sharp decline.

The national average price of gasoline is $2.44 a gallon. That’s $1.02 cheaper than last year at this time, but up 37 cents over the past month.

Other analysts agree that crude is poised to fall sharply – if not all the way to $20 – because it continues to flood into storage for a number of reasons:

– U.S. oil production continues to rise. Companies are cutting back on new drilling, but that won’t reduce supplies until later this year.

– The new oil being produced is light, sweet crude, which is a type many U.S. refineries are not designed to process. Oil companies can’t just get rid of it by sending it abroad, because crude exports are restricted by federal law.

– Foreign oil continues to flow into the U.S., both because of economic weakness in other countries and to feed refineries designed to process heavy, sour crude.

– This is the slowest time of year for gasoline demand, so refiners typically reduce or stop production to perform maintenance. As refiners process less crude, supplies build up.

– Oil investors are making money buying and storing oil because of the difference between the current price of oil and the price for delivery in far-off months. An investor can buy oil at $50 today and enter into a contract to sell it for $59 in December, locking in a profit even after paying for storage during those months.

The delivery point for most of the oil traded in the U.S. is Cushing, a city of about 8,000 people halfway between Oklahoma City and Tulsa at an intersection of several pipelines. The city is dotted with tanks that can, in theory, hold 85 million barrels of oil, according to the Energy Department, though some of those tanks are used for blending or feeding pipelines, not for storing oil.

The market data provider Genscape, which flies helicopters equipped with infrared cameras and other technology over Cushing twice a week to measure storage levels, estimates Cushing is two-thirds full.

Hillary Stevenson, who manages storage, pipeline and refinery monitoring for Genscape, says Cushing could be full by mid-April. Supplies are increasing at “the highest rate we have ever seen at Cushing,” she says.

Full tanks – or super-low prices – are not a sure thing. New storage is under construction at Cushing, and there are large storage terminals near Houston, in St. James, Louisiana, and elsewhere around the country that will probably begin to take in more oil as prices fall far enough to cover the cost of transporting the oil.

Also, drillers are quickly cutting back because oil prices have plummeted from $107 a barrel in June. And demand is showing signs of rising.

Despite the enormous increase in crude stocks reported Wednesday, inventories of gasoline did not rise and diesel fuel inventories have fallen slightly over the past two weeks. That leads some to conclude that demand for crude could soon pick up, easing the surplus somewhat.

But many analysts believe oil prices will fall through the spring, before summer drivers start to relieve the glut.

Communities for a Better Environment sues Contra Costa County and Phillips 66

Repost from The Contra Costa Times

Rodeo refinery project subject of legal challenge

By Tom Lochner, 03/04/2015 11:37:08 AM PST

MARTINEZ — An environmental group has sued Contra Costa County over its approval of a propane and butane recovery project at a Rodeo refinery, contending it is a piece of a grander plan to process heavy, dirty tar sands crude that would come to California by rail.

Phillips 66, which owns the Rodeo refinery and another refinery near Santa Maria, in San Luis Obispo County, is a co-defendant in the suit, filed Wednesday in Contra Costa Superior Court in Martinez by Communities for a Better Environment. The two refineries together constitute the two-part San Francisco Refinery, according to the Phillips 66 website.

“Phillips 66 cannot meet its propane recovery objective without switching to a lower quality feedstock, like tar sands, and without other Phillips 66 projects to assist in that overall switch,” CBE attorney Roger Lin said in a news release.

CBE has said that the refinery, with the acquiescence of authorities, seeks to “piecemeal” what the environmental group describes as “a tar sands refining project that could worsen pollution, climate, and refinery and rail explosion hazards.” The environmental impact report, CBE contends, “hid the project from the public and failed to mitigate its significant environmental impacts.”

A rail spur project at the Santa Maria refinery, designed to receive about five trains a week, each with about 80 tank cars of crude oil, is under review by San Luis Obispo County.

The trains could arrive at Santa Maria from the south, via the Los Angeles basin, or the north, possibly along the shores of San Pablo and San Francisco bays and through San Jose.

Crude oil is partially refined at the Santa Maria refinery, then sent on to Rodeo via a 200-mile pipeline.

Phillips 66 spokesman Paul Adler said Wednesday that the Board of Supervisors got it right on Feb. 3 and that its decision “will help ensure the long-term viability of the Rodeo Refinery and the many jobs it provides.”

“Our plans for this project reflect our company’s commitment to operational excellence and safety while enhancing the competitiveness of the facility,” Adler said in an email.

“Following two years of careful analysis by the Contra Costa County board and its expert staff, claims that this project is a crude by rail project were dismissed,” Adler added. “Continued allegations by Communities for a Better Environment that this is a crude-by-rail project are inaccurate and misleading.”

Officials at County Counsel Sharon Anderson’s office could not immediately be reached for comment.

Along with the Rodeo project’s environmental impact report, the Board of Supervisors on Feb. 3 rejected two appeals of a November 2013 county Planning Commission-approved use permit for the project. The appellants were CBE and the law firm of Shute, Mihaly & Weinberger on behalf of the Rodeo Citizens Association. The board vote was 4-1, with Supervisor John Gioia voting no.

The Rodeo project calls for installation of new equipment to recover and sell propane and butane instead of burning it as fuel at the refinery or flaring off excesses.

Phillips 66 has said the project would reduce emissions of several pollutants, including sulfur dioxide, partly by using cleaner-burning natural gas as refinery fuel and because sulfur would be extracted to prepare the propane and butane for sale.

The new equipment would include a hydrotreater, six storage vessels and two new rail spurs related to shipping the recovered propane and butane out of the refinery in tank cars.

Lawsuit filed to Stop Tar Sands in the Bay Area

Reposted from Communities For a Better Environment

Lawsuit filed TODAY to Stop Tar Sands in the Bay Area!

This morning CBE sued Phillips 66 and Contra Costa County based on the County’s omission of critical crude quality information and its failure to mitigate the significant environmental, public health and safety impacts from Phillips 66’s Propane Fuel Recovery Project before approving the project and issuing permits.

Read more in CBE’s press release [here] ; and see today’s filings [here].

For safe and healthy communities…