Tag Archives: Albany NY

Bakken Crude, Crude By Rail, Massive increase in crude-by-rail

Recent history: the rise of Bakken crude by rail

Repost from Bloomberg
[Editor: Significant quote: “‘The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline….The next challenge is exports.'”  – RS]

Bakken Rail Bet on a Feeling Pays Off for Global’s Slifka

By Lynn Doan Aug 1, 2014

When Eric Slifka landed in North Dakota’s Bakken shale field three years ago, he says he was overcome by “this feeling of a lot of growth. You could feel the pressure.”

The fervor was so strong that Slifka, chief executive officer of Global Partners LP (GLP) in Waltham, Massachusetts, decided in that single trip to carry Bakken crude on railcars that his company had been using to haul ethanol to New York. His first full trains started a wave of deliveries that rescued East Coast refiners from the brink of closing amid the rising cost of oil imported from Africa and the North Sea.

Shipments of U.S. oil by rail have since doubled to more than 1 million barrels a day, sparking a national debate over safety, and volumes may mount if the government allows more exports of crude, easing a four-decade ban. Global and other midstream carriers are preparing themselves for a chance to serve that market.

“The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline,” Bradley Olsen, managing director at energy investment bank Tudor, Pickering, Holt & Co., said by phone from Houston. “The next challenge is exports.”

Shale Boom
Global Partners, a tax-exempt master limited partnership with a $1.19 billion market value, was worth half that when Slifka flew into the Bakken in 2011 to meet a local entrepreneur who owned a rail facility along the Canadian Pacific (CP) line. North Dakota’s oil production had surged by a record 42 percent to 310,000 barrels a day. It would go on to surpass 1 million this April, helping turn the U.S. into the world’s largest oil producer.

The flood of domestic crude has put pressure on the federal government to lift a ban on U.S. exports imposed by Congress in 1975 in response to the Arab oil crisis. Crude-by-rail companies will have to compete with pipelines to bring supplies to the coast if the prohibition is lifted, Olsen said.

“Once you’re trying to export, you’re just trying to reach the water, and you don’t care about going to a specific refinery,” he said. “So you’re just as likely to ship it on a pipeline to get it to a dock.”

New Rules
The boom has also ignited regulatory battles from coast to coast. The derailment and explosion of an oil train in Lac-Megantic, Quebec, in July 2013 that killed 47 people thrust rail operations into the limelight.

In New York, Global is facing a ban on expanding its Albany operations to include tar sands. In Oregon, state regulators said in March that Global unloaded more oil than permitted at its Clatskanie terminal that sends Bakken crude along the Columbia River by barge.

Global said the Oregon complex is “in full compliance” with regulations in a March 5 e-mail. It sent a letter to Albany County on March 14 describing the county prohibition as “arbitrary and capricious.”

The U.S. Department of Transportation laid out a plan last week to phase out a generation of tank cars for crude shipments and impose speed limits, braking requirements and route stipulations.

While the industry is working with regulators to determine the safest way to ship oil, Slifka, now 49, said at an energy conference in Washington July 14 that “rail may actually be the safest mode of transportation for crude.”

Refinery Squeeze
On his first visit three years ago, so many companies were racing into the region to squeeze out oil from the Bakken that Slifka couldn’t find a hotel room. He said he stayed in Estevan, Saskatchewan, and drove 30 miles across the Canada-U.S. border to meet Don Bottrell, who owned a women’s clothing business, oil and gas wells and a trans-loading site in the area.

The biggest wave of refinery closings had meanwhile struck the East Coast as the price of North Sea Brent crude, the international benchmark, climbed. Sunoco Inc. was threatening to shut its Philadelphia refinery if it didn’t find a buyer, and it idled the Marcus Hook plant in Pennsylvania. ConocoPhillips halted output from its Trainer complex, and Hovensa LLC closed a plant in the U.S. Virgin Islands that supplied the region.

The North Sea grade cost as much as $8.52 a barrel more than West Texas Intermediate today, the highest premium since June 24. WTI was at $97.21 at about 11:16 a.m. in London and has traded below the international benchmark since the end of 2010.

Crude Champagne
“East Coast plants had the highest costs because they ran the champagne of oils, very light, very low-sulfur crudes predominantly from West Africa,” Kevin Waguespack, senior vice president of energy consulting firm Baker & O’Brien Inc., said by telephone from Houston July 28. “The Bakken reset their feedstock costs by several dollars a barrel. They’ve gone from losing to winning.”

EOG Resources Inc. (EOG), at the time the second-largest oil producer in the formation, moved its first trainload on BNSF Railway Co.’s tracks to Stroud, Oklahoma, on Dec. 31, 2009.

The first dedicated train of Bakken crude arrived at Global’s fuel terminal in Albany, which had handled ethanol and refined fuels such as gasoline, on Oct. 25, 2011.

Others followed. Enbridge Inc. (ENB)’s 80,000-barrel-a-day Eddystone rail complex outside Philadelphia received its first train in May. The Carlyle Group (CG) and Sunoco formed a joint venture to keep the Philadelphia refinery open and are adding a rail track that will take as many as 14 unit trains of Bakken oil a week. Delta Air Lines Inc. (DAL) bought Conoco’s Trainer plant and on July 21 signed a contract for 65,000 barrels a day, more than a third of the plant’s capacity, that will initially arrive by rail.

Global Expansion
Global bought a majority interest in two Bakken terminals after that first delivery to the East Coast, expanded its complex in Albany so it could send barges of oil down the coast, and secured a five-year contract to supply Phillips 66 (PSX)’s 238,000-barrel-a-day Bayway refinery in New Jersey in 2013.

The company bought the complex in Clatskanie, near Portland, the same year. On July 8 Global said it was building its first Gulf Coast oil-by-rail terminal in Port Arthur, Texas, as a destination for heavy crude from western Canada.

“If you look back historically on where oil is coming from and how it was transported, it has completely changed,” Slifka told an oil industry conference in Washington July 14. “You might as well take a pipeline map and turn it upside down.”

With the Port Arthur terminal, Global is positioned for the flood of petroleum that may soon be leaving the nation’s shores should federal policy makers relax the decades-old export ban. In June, the Commerce Department granted Enterprise Products Partners LP (EPD) and Pioneer Natural Resources Co. (PXD) permission to export ultra-light oil known as condensate.

“Nobody can be sure where the market is going or what we will be carrying, but we are sure that we have positioned ourselves to carry whatever it demands,” Slifka said at the meeting in Washington.

Reporter on this story: Lynn Doan in San Francisco.  Editors responsible for this story: Dan Stets and David Marino at Bloomdale, and Alaric Nightingale, Rachel Graham.
Air Quality, Bakken Crude, Crude By Rail, DOT-111, Proximity to residences, Rail routing

In Albany, one official calls for the recloation of residents of an entire housing project

Repost from Metroland.net, Albany NY

The Price of Oil Trains

As tensions mount over how to address the dangers of crude coming through Albany by rail, one official calls for the recloation of residents of an entire housing project
by Ali Hibbs, July 31, 2014

One year after oil tankers went off the rails and exploded in Lac-Megantic, Quebec—killing 47 people and leaving a community devastated—local political leaders and community members are growing increasingly concerned about a similar tragedy occurring closer to home.  A recent explosion in oil tanker traffic coming into the Port of Albany through South End neighborhoods, and the half-dozen literal explosions that have occurred across the United States and Canada since the Quebec tragedy—not to mention the local oil spill at Kenwood Yard last month—have those living in communities close to the tracks concerned for their health as well as their safety.

Over the last several months, how to best address these mounting concerns has become the cause of some political tension and has resulted in the formation of two separate local investigative bodies. Albany Mayor Kathy Sheehan announced the creation of her blue-ribbon panel on rail safety last week, following Albany County Executive Dan McCoy’s seemingly sudden declaration that residents of the Ezra Prentice public housing project in Albany’s South End should be immediately relocated to ensure their health and safety.  Ezra Prentice is adjacent to tracks on which oil tank cars travel and are often left sitting, providing an ominous—and malodorous—background to a park in which children play basketball.

photo by Ann Morrow

“Headaches, dizziness, feeling nauseous: These are not uncommon reactions to being exposed to fumes associated with crude oil operations,” said Christopher Amato of EarthJustice during a press conference held this week by McCoy’s advisory committee, announcing the introduction of a hotline that the public can call to report strong odors emanating from rail terminals or the Port of Albany itself—odors, they say, that may signify serious health hazards. Amato and EarthJustice represent the Ezra Prentice Homes Tenants Association, Sierra Club Atlantic Chapter and the Center for Biological Diversity in challenging the New York State Department of Environmental Conservation to require an environmental impact statement before any expansion of activities by oil companies at the port.

Anne Pope, a South End resident, regional director of the NAACP and a lifelong asthmatic, also spoke of the dangers of fumes produced by crude oil. She extolled McCoy for being proactive and went on to advocate for the evacuation of Ezra Prentice if there was nothing else that could be done to remove threats posed by the nearby trains.

McCoy began actively working to stanch the flow of oil into the Port of Albany earlier this year when he imposed a moratorium on the expansion of crude-oil processing until a comprehensive study on the health and safety effects on the community could be completed. After being told that his moratorium was “prejudicial to the [oil] company,” and had “no legal basis,” McCoy convened his Expert Advisory Committee on Crude Oil Safety in May, stating, “It’s clear that the scope of this investigation requires that we bring in independent experts to help us.”

During the last two years, the Port of Albany has experienced a dramatic surge in rail-borne crude oil carried by CSX and Canadian Pacific Railway Co. from the Bakken shale formation in North Dakota. At Albany, a purported 85,000 barrels of the oil-sands crude are loaded each day onto barges bound for refineries in New Jersey and New Brunswick by oil distribution companies such as Global Partners LP.  As Metroland reported last month, these developments came largely unbeknownst to anyone in the local community or government, save one—former Mayor Jerry Jennings. (As previously reported: In 2012, the DEC approved a permit allowing Global Partners to bring up to 1.8 billion gallons of crude oil into the Port of Albany annually and, according to documents pertaining to the approvals, Jennings was the only local politician who was notified—and he apparently didn’t bother to notify the public.)

Global Partners is currently seeking permission from New York State to expand its local role even further by installing a boiler system that would allow the company to import a heavier type of Bakken crude and heat it before shipping it back out of the region. This process brings with it even more concerns about possible deleterious effects on local air quality and environmental safety.

Until recently, Sheehan had insisted that the costs for safety measures, including air monitoring and environmental impact studies, should be covered by the oil and rail companies that are benefiting from expanded use of the port. In a statement responding to McCoy’s call for the removal of Ezra Prentice residents, she reiterated her stance and essentially deferred the issue of rail safety to state and federal government.

That, however, clearly is not enough for those currently living next door to the oil-laden tracks.

“I don’t know how many warnings we’re going to get,” said Charlene Benton, president of the Ezra Prentice Homes Tenants Association and resident of the community. “We have 156 children under the age of 16. . . . We have to do something.” Benton applauded the efforts of McCoy and others, but went on to say, “I don’t think we’ve done enough. . . . It’s time for us to begin to come together and come up with some resolutions.”

“I disagree that those living in the shadow of bomb trains should wait for federal action to create safer standards for rail transportation of crude oil,” wrote McCoy in response to Sheehan after she implied that his recommendation was rash and unwarranted. “Experts acknowledge that even if federal action were taken immediately ordering improved standards, it would take years for new oil tanker cars to come online.” (Fact: Recently proposed federal regulations would not force the total retirement of outdated, easily punctured DOT-111 tank cars like those involved in the Quebec incident until 2020.) “The people of Ezra Prentice live every day with the danger of these cars literally in their backyard. That is why I’m asking for the Albany Housing Authority to explore seeking federal assistance to relocate these residents now.”

In addition to the moratorium and push to explore options to evacuate Ezra Prentice—a move that many decried as premature, alarmist and overreaching—the office of the county executive also recently introduced legislation imposing harsher penalties on those who do not report oil spills within an hour of their occurrence. This was in response to the oil spill at Kenwood Yard last month, when workers neglected to notify authorities for five hours after four cars derailed. His advisory committee, headed by Peter Iwanowicz, executive director for Environmental Advocates of New York, has been working closely with concerned local politicians and residents to mitigate concerns and seek out answers.  The launch this Wednesday of the public reporting hotline (“Uncommon Scents”) is intended to help “an overall assessment of possible health and environmental impacts of the rail activities in the county,” according to Iwanowicz.

While Sheehan believes that McCoy has overstepped some boundaries when it comes to this issue, she also seems to have realized the importance that it holds for the community—and that waiting for the state or federal government to step in is unlikely to satisfy those who are living (and sleeping) with the daily reality of Bakken crude in their backyards. She released the names of those who will sit on her blue-ribbon panel this week, and has said that she anticipates they will have come up with long- and short-term recommendations for assuring rail safety by early September.

For anyone living near crude-carrying rail lines: Should you or any of your family members detect any new, unusually strong or disturbing odors in your area, the hotline number to call is 211.  Iwanowicz stresses, however, that if you believe you are in immediate danger, you should call 911 directly.

Bakken Crude, Crude By Rail, DOT-111, Ethanol, Federal Regulation (U.S.), Train speed

DOT proposes stricter oil train safety rules

Repost from Politico

DOT proposes stricter oil train safety rules

By Kathryn A. Wolfe  | 7/23/14
Anthony Foxx is pictured. | M.Scott Mahaskey/POLITICO
Anthony Foxx’s announcement follows a year-long spree of oil train crashes. | M.Scott Mahaskey/POLITICO

The Obama administration on Wednesday announced its long-awaited proposal to improve the safety of oil trains, a step meant to address a series of fiery derailments that have raised fears about the dark side of the North American energy boom.

The proposed rules include mandates for phasing out older, less-sturdy rail tank cars during the next two to five years, tightened speed limits, improved brakes and steps to address concerns that crude oil produced in North Dakota’s Bakken region is unusually volatile or flammable. The rules also include provisions that would affect the shipment of ethanol, another flammable liquid frequently transported by rail.

“We need a new world order on how this stuff moves,” Transportation Secretary Anthony Foxx told reporters in making the announcement.

“More crude oil is being shipped by rail than ever before,” Foxx said. “If America is going to be a world leader in producing energy, our job at this department is to ensure that we’re also a world leader in safely transporting it.”

The details of the White House-vetted proposal had been the subject of fierce lobbying by the oil industry, which maintains that Bakken crude doesn’t pose unusual dangers, and the railroads, which have long called for tougher tank-car standards but objected to calls for reduced speed limits. The rules would offer both industries incentives to go along — for instance, oil trains meeting the toughened standards for crashworthiness and brakes could travel as fast as 50 mph in all areas, while those that don’t could be limited to 30 mph or 40 mph.

“The fact that the proposed rule incorporates several of the voluntary operating practices we have already implemented demonstrates the railroad industry’s ongoing commitment to rail safety,” Ed Hamberger, CEO of the Association of American Railroads, said in a statement Wednesday. “We look forward to providing data-driven analyses of the impacts various provisions of the proposal will have on both freight customers and passenger railroads that ship millions of tons of goods and serve millions of commuters and travelers across the nationwide rail network every day.”

The American Petroleum Institute initially said it would review the proposal, but it later blasted out a statement rejecting “speculation by the Department of Transportation” about the safety of transporting Bakken crude.

“Multiple studies have shown that Bakken crude is similar to other crudes,” CEO Jack Gerard said. “DOT needs to get this right and make sure that its regulations are grounded in facts and sound science, not speculation.”

The DOT proposal drew initial praise from lawmakers, along with some calls to go further.

Wednesday’s rollout followed months of interim rules and voluntary agreements with the railroad and oil industries. It also came after a year-long spree of oil train crashes in communities from Quebec and North Dakota to western Pennsylvania, rural Alabama and Lynchburg, Virginia — including one that killed 47 people in the Canadian town of Lac-Mégantic last July.

Even without any fatalities so far in the U.S., oil train accidents in 2014 have already shattered records for property damage, based on POLITICO’s review of data from the federal Pipeline and Hazardous Materials Safety Administration. As of late May — a month after the Lynchburg derailment — the damage toll exceeded $10 million through mid-May, nearly triple the damage for all of 2013. The number of incidents at that point in the year — 70 — was also on pace to set a record.

Oil trains have also inspired local opposition in communities from Albany, New York, to Washington state and the San Francisco Bay area, where residents expressed alarm at finding that they had become key way stations in a network of virtual pipelines that carry oil from production hot spots like North Dakota and western Canada.

Sen. Chuck Schumer (D-N.Y.) urged DOT to see that the rules are “finalized, implemented and enforced as soon as possible.”

“These desperately needed safety regulations will phase out the aged and explosion-prone … tanker cars that are hauling endless streams of highly flammable crude oil through communities across the country and New York,” Schumer said in a statement Wednesday.

Sen. John Hoeven (R-N.D.) said the proposal “appears to be comprehensive,” adding that “we will continue to review these proposed standards to ensure they are workable and will keep our communities safe.”

But Sen. Patty Murray (D-Wash.) who chairs the Appropriations subcommittee overseeing DOT, said in a statement that “there is still more work to be done, by both regulators and industry.”

“I’m pleased that the proposed regulations address issues I outlined in the 2015 transportation spending bill, like enhanced rail tank car standards and improved classification of flammable liquids, that are much-needed steps to improve the safety of our rail system,” Murray said.

Bakken Crude, Crude By Rail, DOT-111, Explosion, Fire

Environmental groups to DOT: Ban Older Railcars for Bakken Oil

Repost from EarthJustice.org

Community Leaders, Advocates Call on Secretary of Transportation To Ban Use of Hazardous Rail Cars

Seek emergency order banning the use of hazardous rail cars to ship explosive crude oil

July 15, 2014
Crude-by-rail explosion
The fireball that followed the derailment and explosion of two trains, one carrying Bakken crude oil, on December 30, 2013, outside Casselton, N.D. — U.S. Pipeline and Hazardous Materials Safety Administration

Washington, D.C. — Today, two national environmental organizations filed a formal legal petition to compel the Secretary of the U.S. Department of Transportation to issue an emergency order prohibiting the use of hazardous rail cars—known as DOT-111s—for shipping flammable Bakken crude oil (See FAQ sheet for more info on petition). The National Transportation Safety Board has repeatedly found that the DOT-111 tank cars are prone to puncture on impact, spilling oil and often triggering destructive fires and explosions. The Safety Board has made official recommendations to stop shipping crude oil in these hazardous tank cars, but the federal regulators have not heeded these pleas (See quote sheet of on-record statements by public officials for more info).

“These oil tankers have been called the Ford Pinto of the rails,” said Ben Stuckart, City Council president in Spokane, Washington. “National Transportation Board members, U.S. Senators, and local officials are all on record on the danger of these antiquated, unsafe rail cars. It’s long past time for the government to take action to protect communities like mine.” Officials estimate between 13 and 16 oil trains a week come through Spokane, a major hub for rail traffic, although those numbers would skyrocket if planned oil terminals on the West Coast are built. Spokane is one of many towns across the country that has seen an organized and strong community opposition to these trains.

In September 2013, in the wake of the deadly Lac-Mégantic and other rail disasters, the federal government began a rulemaking process to set new safety standards for crude oil rail cars. Transportation Secretary Anthony Foxx has stated publicly that the DOT-111s will likely have to be phased out, and even questioned whether the industry’s replacement design is safe enough for U.S. communities. The draft rule is currently under review at the White House. But the groups believe that the process is moving too slowly and likely to drag on a year or more before a final rule is in place. While he has issued emergency orders addressing other urgent safety issues, all the Department has done to date is urge shippers to use the safest tank cars in their fleets. Immediately banning the use of DOT-111 tank cars to ship Bakken crude would reduce the risk of punctures and oil spills by over 75 percent, according to rail industry estimates.

“The continued use of potentially unsafe DOT-111 train cars is a disaster waiting to happen. The people of Albany County are standing up today to ask the federal government take swift action to improve rail safety,” said Albany County Executive Daniel P. McCoy. “In light of recent incidents in North America, a strong response from the federal government is needed to protect the public.” Trains carrying Bakken crude oil arrive daily into the Port of Albany, like many other towns across the country. Firefighters and first responders have hurried to train for impending disasters and increased risk.

“These exploding oil trains are in our backyards, where our kids play,” said Charlene Benton, president of the Ezra Prentice Homes Tenants Association in Albany, NY. “We’re putting our children’s and our neighbors’ lives in jeopardy here. Over the last three years, we’ve seen a huge increase in the number of these dangerous oil trains coming through our community. Our community has organized against these oil trains because we don’t want to be the site of another catastrophic disaster. We need a national emergency ban of these oil rail cars.”

The recent surge in U.S. oil production, much of it from Bakken shale, has led to a more than 4,000 percent increase in crude oil shipped by rail since 2005, mostly in long oil trains with as many as 120 cars and over 1.5 miles long. The Bakken crude has proven to be more explosive than shippers represented. And the Bakken crude has been shipped in the most dangerous tank cars on the market – the DOT-111s. The result has been oil spills, destructive fires, and explosions when oil trains have derailed. More oil spilled in train accidents in 2013 than the total in 1975-2012 combined. Canada has taken steps to ban many DOT-111s immediately and is phasing them out of hazardous transport altogether, which will shift even more of these tank cars to the U.S.

The petition follows closely on the announcement that the oil and rail industries have reached their own compromise proposal on rail safety, one that would only seek to slowly phase out dangerous DOT-111s over three years, and that would propose a weaker standard for new rail cars than the industry had previously proposed.

Meanwhile, it is estimated that 25 million Americans live in the dangerous blast zone along the nation’s rail lines. View this MAP of the nation’s rail lines and local actions against oil-by-rail or this MAP that shows your proximity to an oil rail line.

The petitioners are Sierra Club and ForestEthics, represented by Earthjustice.