The Benicia Herald published a separate section today, “The Year 2014 In Review.” Counting down dramatically from #14, the #1 story of the year was “Opponents, supporters of Crude-by-Rail Plan square off as city leaders mull decision.” Subtitle: “For second straight year, Valero Refinery’s permit request dominates Benicia news.”
Editor Marc Ethier will not be publishing the special section online. When asked, he indicated it would only be for print subscribers.
The article bends over backwards to present a balanced view of the controversy, giving Valero’s perspective and naming our local organized opposition, Benicians For a Safe and Healthy Community and other groups and government entities that were critical of the project and/or it’s environmental review.
It’s appropriate that our local paper recognized the controversy as the City’s #1 story last year. Benicia finds itself in the crosshairs of a growing nationwide debate, and Valero’s dangerous and toxic proposal would, if approved, affect communities all up and down the rails.
The Benicia Herald’s #6 story of 2014 was “Mayor, city attorney in free speech flap.” For more on this, see our Local Media page.
Environmentalists sue to stop crude-by-rail terminal in California
By Rory Carroll, Jan 29, 2015
An oil train moves through California’s Central Valley. The newly opened Bakersfield Crude Terminal has the capacity to receive two 100-car unit trains a day. Credit: Elizabeth Forsyth / Earthjustice
Environmental groups on Thursday sued a California regulator that permitted trains carrying crude oil to begin making deliveries at a terminal in Bakersfield, arguing the permit was issued in secret and the volatile crude could cause explosions.
The plaintiffs asked the California Superior Court to stop operations at the newly opened Bakersfield Crude Terminal in Taft until a full environmental review is conducted. The terminal, located in Kern County, began receiving crude in November from North Dakota and Canada and is owned by Plains All American Pipeline LP.
In their complaint, the groups point to emails obtained through a public records request that they say show the San Joaquin Air Pollution Control District helping the company avoid environmental and public reviews of the project.
The terminal can currently receive one 100-car unit train a day carrying crude from the Bakken shale formation as well as heavier tar sands crude from Canada. The terminal will ultimately expand to receive two unit trains per day, carrying as much as 61 million barrels of crude a year, making it one of the state’s largest crude-by-rail terminals, the groups said.
Crude oil shipments by rail in California have jumped in recent years as producers seek to move cheap, landlocked crudes from North Dakota and Canada to refineries along the West Coast.
The increase has raised environmental and safety concerns due to a series of fiery derailments, most notably the Lac-Mégantic rail disaster in Quebec in July 2013, which killed 47 people.
“The Bakersfield Crude Terminal evaded both state and federal environmental review and was permitted largely in secret. Given the potentially catastrophic damage from derailments of these tank cars full of volatile crude, these permits must be cancelled,” said Vera Pardee, senior attorney for the Center for Biological Diversity, one of the five environmental groups who are plaintiffs in the case.
Annette Ballatore-Williamson, an attorney for the air district, said the lawsuit misrepresents the nature of the permit, which only covered the construction of a couple storage tanks that emit about a half a pound of air pollution per day.
The facility and the rail terminal underwent significant environmental review and analysis by Kern County several years ago, she said.
“The problem from (the plaintiff’s) perspective is the statute of limitations on their claim against Kern County expired quite some time ago so now they are just looking for a target,” she said.
(Reporting by Rory Carroll; Editing by Andrew Hay and Lisa Shumaker)
Chevron Posts Lowest Quarterly Profit in Five Years
Oil Major to Pare Capital Budget by 13%, End Buybacks to Offset Low Crude-Oil Prices
By Daniel Gilbert and Chelsey Dulaney, Jan. 30, 2015
Gas prices are displayed at a Chevron fueling station in Richmond, Calif. in April Photo: Bloomberg News
Chevron Corp. said it would trim ambitious spending plans and stop buying back its shares as the collapse in oil prices erased billions of dollars from the company’s cash flow.
The San Ramon, Calif., company on Friday reported $3.5 billion in profit for the last three months of 2014, down 30% from a year ago and its lowest since the 2009 recession.
It also outlined plans to spend $35 billion this year to find and tap oil and gas, a 13% cut from last year’s budget, in response to oil prices that have slumped more than 60% since the summer to under $50 a barrel.
With less cash coming in, the company is suspending its share buyback program for 2015, which had cost $5 billion a year since 2012. Repurchasing shares shrinks the number available to the public and tends to increase their value. Its shares were down 67 cents at $102.33 in recent trading.
John Watson , Chevron’s chief executive, said the company remains on track to pump the equivalent of about 3.1 million barrels a day by 2017—20% more than its current levels—despite spending less. Oil prices must rise, he said, because companies won’t invest enough to make up for the natural declines of existing oil and gas wells, eventually reducing supplies.
“The projects that are going to meet demand going forward are more complex than 20 or 30 years ago, and so the costs of the projects will be higher, and will require a higher price than we’re seeing today,” Mr. Watson said.
Chevron’s spending plans remain ambitious relative to its rivals and its shrinking cash flow. On Thursday, Occidental Petroleum Corp. said it would spend a third less on producing oil and gas this year; ConocoPhillips said it would chop 15% off its capital budget, on top of a 20% cut in December; Royal Dutch Shell PLC said it would spent $15 billion less than planned over three years. Exxon Mobil Corp. , the biggest U.S. energy company, reports results on Monday.
Chevron generated $6.5 billion from its operations in the fourth quarter of 2014, down 38% from a year ago, but still better than analysts’ expectations. Unless oil prices rebound significantly, that rate of cash generation isn’t likely to cover the company’s spending on exploration and production, plus dividend payments that totaled $7.9 billion last year.
Even before oil prices fell, Chevron had been spending at a deficit, dipping into its pile of cash and borrowing more money. The company’s debt rose to $27.8 billion by the end of 2015, doubling in two years and marking the highest it has been in at least 20 years, according to data compiled by S&P Capital IQ.
The company still has $12.8 billion in cash, but that is about $3.5 billion less than at the beginning of 2014. Patricia Yarrington, Chevron’s finance chief, said it could borrow “tens of billions of dollars” more. And Mr. Watson, the CEO, said that while acquisitions aren’t a priority, “We are actively screening opportunities that are out there and we’ll take advantage of opportunities that we see.”
Overall, Chevron reported earnings of $3.47 billion, or $1.85 a share, down from $4.93 billion, or $2.57 a share, a year earlier. Results included a net $570 million gain on asset sales. Revenue fell 18% to $46.1 billion.
Analysts polled by Thomson Reuters had forecast earnings of $1.63 a share and revenue of $30.65 billion.
Chevron’s bottom line was helped by foreign-currency effects, which have been a drag on many U.S. companies’ results recently. Chevron said foreign currency helped its earnings by $432 million in the quarter, up from $202 million a year earlier.
The pain from lower oil prices was cushioned by Chevron’s business of refining crude into fuels like gasoline and diesel. The refining business, which in recent years has accounted for less than 15% of its profits, provided $1.5 billion in earnings–44% of the company’s total. Refining profits nearly quadrupled from a year ago, due to a combination of better margins and asset sales.
The fall in oil prices masked the company’s success at pumping more oil, as it began reaping petroleum from two major projects in the Gulf of Mexico’s deep waters in the last months of 2014. But overall, Chevron’s oil and gas output slipped about 1% from a year ago. On Friday, the company said production could increase up to 3% this year.
By RaeLynn Ricarte, January 29, 2015
A UNION Pacific freight train runs west along First Street, downtown The Dalles. The City of The Dalles has joined other Oregon and Washington cities in requesting greater federal oversight of oil train transports. Photo by Mark Gibson.
The Dalles City Council has joined Hood River, Mosier and other Oregon towns in urging state officials to pursue greater federal regulation of crude oil transports.
The resolution approved by a unanimous vote Monday, Jan. 26, also recommends that rules be put in place to require that rail companies pay for damages caused by catastrophic fire and explosions following a derailment or accident.
Councilor Dan Spatz asked to have the issue put on the agenda, but was not at the Jan. 26 meeting.
The initial resolution, which is a formal expression of the council’s opinion, did not mention finances. However, local conservationist John Nelson, who has been pursuing action regarding oil trains at the city level, gained agreement from city officials to have the language included. “It’s a very complicated issue,” said Nelson, who provided the council with two news articles about the potential dangers of having oil shipped via railroad.
He said a 2013 derailment in Quebec, Canada, that killed 47 people ended up costing $2.7 billion in cleanup, damages and settlements.
The Washington side of the Columbia River Gorge has become the Pacific Northwest’s major railroad avenue for moving oil -— about 18 trains weekly — from North Dakota to shipping terminals.
Burlington Northern Sante Fe Railroad carries Bakken crude from North Dakota that is extracted from underground rock formations and is reportedly more flammable than traditional crude.
Environmental organizations, such as the Sierra Club, are seeking greater regulation of oil transports given the potential for an increase in shipments with North America on track to lead the world in oil production within five years.
Councilor Taner Elliott was unsure that the city’s resolution, which is non-binding, would be as solid an approach as sending a letter requesting details about safety measures to railroad companies, gorge legislators and state officials.
He said the city could ask for a briefing about what measures would be taken if an emergency occurred and to be kept abreast of new safety standards.
He said conversations with BNSF and Union Pacific, which operates on the Oregon side of the Columbia River, revealed “staggering numbers” tied to their respective prevention and emergency response plans.
“It appears they are very involved,” said Elliott, who did not provide specifics about what he had learned.
Representatives from both railroad companies said Wednesday that they had not been invited to Monday’s council meeting to answer questions or address safety issues.
Nelson told the council that the city’s resolution would let state officials know they was concerned about the welfare of citizens, as well as the environment in the Columbia River Gorge National Scenic Area. He said there was no local source for the foam that was necessary to extinguish flames if an explosion occurred.
He said travel to and from Portland for that product could delay response time, which would further threaten human life or resources.
In addition, he said local fire departments did not have the manpower or equipment to fight a catastrophic fire.
At Monday’s meeting Mayor Steve Lawrence said, once the resolution was approved, the Community Outreach Team could follow up by voicing concerns during a visit to Salem in the spring.
Tim Schechtel, a downtown property owner in The Dalles, said the oil boom in America had created an “unprecedented” risk for communities along railroad tracks.
According to information obtained last year by a Chronicle reporter, oil is traditionally delivered via pipelines, but the growth in U.S. and Canadian production has exceeded what they can carry.
That has caused oil transport by rail to increase from 9,500 carloads in 2008 to 400,000 in 2013.
Schechtel said oil unit trains were more than one-mile long with 100 cars and the potential to carry three million gallons of crude.
According to BNSF, 18 unit oil trains travel through the gorge each week. Schechtel said that put 54 million gallons of crude near residential communities.
“A lot of people are chiming in on this, nationally as well as locally,” he said.
Schechtel said the bigger picture was that fossil fuels contributed to global warming and acid rain around the world. So it was not too much to ask big oil companies, which were making huge profits, to better protect the public safety.
Councilor Linda Miller asked Schectel to expand upon his statements about the problems caused by the use of petroleum products.
“So, do you want to stop all oil trains coming through or just to make things safer?” she asked.
“I think just make safer at this time,” said Schectel, who felt the issue of pollution should be addressed at some point in the future.
“The bottom line is, if we had a catastrophe, it would be overwhelming,” said Lawrence.
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