Tag Archives: American Petroleum Institute

Crude By Rail, Derailment, Explosion, Massive increase in crude-by-rail, Rail vs. Pipeline, Train vibrations

Berkshire-Hathaway-owned newspaper: Nebraska has emerged as ground zero in oil transport showdown

Repost from The Omaha World-Herald

Nebraska has emerged as ground zero in oil transport showdown

September 21, 2014, By Russell Hubbard
SARAH HOFFMAN/THE WORLD-HERALD | Oakland, Nebraska, and the tracks that carry trains through town have been together for more than 100 years. But trains hauling crude oil in tanker cars through Oakland and other parts of the state are a recent development, and concerns about safety grow. Oil pipelines such as the proposed Keystone XL have their opponents as well.

OAKLAND, Neb. — If you visit here and turn off Oakland Avenue toward the railroad tracks, you just might find Brendan Murray prowling up and down the street, cataloging the cracks in the pavement and the scars on the buildings.

Safe transport of oil
SARAH HOFFMAN/THE WORLD-HERALD | Brendan Murray holds a piece of a building that fell near the tracks. He often walks Oakland Avenue cataloging cracks in the pavement and on buildings that he suspects are caused by vibrations from oil trains.

The owner of an apartment building facing the railroad tracks says problems with his 100-year-old structure accelerated with the massive increase in BNSF Railway trains hauling crude oil in tanker cars. Murray also says a derailment and crude oil fire would be deadly for Oakland, population 1,244.

“Keep it underground,” Murray says, referring to transporting crude by pipeline.

Not so fast, says Jane Kleeb. She is not a fan of crude trains either, but she is also the director of Bold Nebraska, the group opposed to construction of the Keystone XL pipeline. It would bring 1 million barrels of crude oil per day across the state.

Kleeb said her group doesn’t expect the world economy to forgo fossil fuels and survive on renewables right now. But she said the pipeline proposed to transport northern crudes to refineries presents too much environmental risk.

“Accidents are going to happen and it is Nebraska that is going to wind up paying for it,” Kleeb said.

All of which leaves a rather obvious question: If neither by train nor pipeline, just how is oil supposed to get from where it is produced to where it is refined into fuels and other materials that power the U.S. economy?

With its main modes of transport assaulted on all sides, the petroleum industry faces a major showdown, and Nebraska is shaping up to be ground zero.

Central to both major U.S. railroads hauling crude oil — Union Pacific is based in Omaha and BNSF’s parent company is based here — the Cornhusker State is also the terminus of the existing Keystone pipeline and is the proposed ending point for the much-debated and delayed Keystone XL.

“Some of the people who don’t want us to transport oil don’t want us to use oil,” said John Felmy, chief economist for the American Petroleum Institute, a group funded by oil companies. “We need to do a better job about telling our story, but we also need to be honest about the realities of energy.”

The United States last year consumed 6.89 billion barrels of petroleum products, producing 2.7 billion barrels itself, making it the global leader. Oil is everywhere — about 71 percent goes for gasoline and other fuels. Other common uses are rubber, fabrics and solvents.

There are no current replacements for oil, Felmy said, calling renewable energies promising and worthy of development but not an immediate substitute. And “choking off the supply points and the transport links would have serious implications for the economy,” Felmy said.

One of those transport links runs through Oakland. The rear of the buildings along Oakland Avenue, 20 or so brick and masonry two- and three-floor structures, face the north-south railroad tracks operated by BNSF Railway, the employer of 5,000 people in Nebraska that is owned by Omaha’s Berkshire Hathaway Inc.

The closest buildings, such as Murray’s 12-unit apartment building, are about 45 yards away.

The tracks and the town in Burt County have been together for more than 100 years. But the oil trains are a recent development. Oil shipments from North Dakota’s recently tapped shale formations first hit 800,000 barrels a day late last year, up from fewer than 100,000 barrels a day in 2010.

BNSF is by far the largest carrier, its oil trains entering Nebraska at South Sioux City from routes in Iowa. Oil has been a growth business for BNSF: Volumes from shale formations such as those in North Dakota have risen to 620,000 barrels per day last year, from 59,000 barrels per day in 2010.

Transporting crude has been a huge boost for BNSF, bought for $26 billion in 2009 by Omaha’s Berkshire Hathaway. BNSF operating revenue, the main financial metric by which railroads are gauged, has risen almost 60 percent since 2009, to about $22 billion last year from $14 billion.

“You can feel the ground surging when they come through now,” said the 72-year-old Murray, a graduate of Omaha’s Benson High School who later owned a general contracting company. “It’s just that the railroad has always been here and people don’t pay it much attention anymore.”

A tour of Murray’s street reveals a collapsed brick wall, lots of hairline cracks and loose masonry. Murray acknowledges that most of the buildings are 100 years old or older, and that he can’t prove the cause. But he said he suspects the culprits are the heavy liquid cargo and the increased frequency of trains passing by because of sharply higher crude shipments.

BNSF says: Nonsense. “We know of no mandated statutes requiring maximum or minimum weights for trains, although there are different weight rails according to the type, size and speed of trains,” said BNSF spokeswoman Roxanne Butler.

The railroads say oil by rail, while the subject of much debate, is quite safe.

In 2012, according to the Association of American Railroads, the incident rate for release of hazardous materials from rail cars was 0.013 per thousand carloads, down from 0.14 in 1980. That means, the association says, that 99.99 percent of hazardous rail cargo shipments are incident-free.

It is a highly regulated industry. Federal regulators set the standards for hauling crude and other hazardous materials, from the route selection and track inspections to train speeds and personnel training, the railroad association says.

“According to the Federal Railroad Administration, 2013 was the safest year in history for the rail industry,” said BNSF’s Butler. “In 2013, BNSF experienced the fewest number of mainline derailments in its history. Rail is the safest mode of land transportation for freight in general and is one of the safest ways to transport crude oil and hazardous materials.”

Butler said BNSF considers all accidents preventable, and is spending $5 billion this year on capital improvements. The Fort Worth, Texas-based company, about tied with Union Pacific as largest U.S. railroad in 2013 operating revenue, also inspects track more frequently than required by regulators, Butler said.

Union Pacific is spending $4.1 billion on capital improvements this year, much of that related to track safety.

U.P. Chief Executive Jack Koraleski said the industry also is working with the Department of Transportation to make existing crude tank cars safer, and to develop a new and stronger one.

There has never been a fatal U.S. oil-train incident, though 47 people were killed last year when one derailed and blew up in Quebec, Canada.

Koraleski, whose company employs about 8,000 people in Nebraska, said the probabilities of such accidents are small and the trade-offs worth it.

“We have been hauling crude by rail for a long time,” said Koraleski, whose oil shipments rose 20 percent last year. “If the pipelines don’t, and the railroads don’t, the alternatives are fully negative for the U.S. economy.”

As for the Keystone XL pipeline proposed by pipeline operator TransCanada, it is on hold pending permit approval by President Barack Obama.

It should not be approved, said Kleeb, the director of Bold Nebraska. She said the pipeline endangers the Ogallala Aquifer and only encourages oil companies to spend additional money chasing harder-to-get deposits, such as shale formations in the northern United States and southern Canada. Those require rocks underground to be broken up under high pressure to release the petroleum.

Kleeb says she and her group are not against fossil fuels, acknowledging that it would be impractical to go 100 percent renewable immediately. She also said ceasing production from hard-to-get deposits in North Dakota’s Bakken region isn’t going to send the economy into a malaise. The Bakken produces about a million barrels a day out of the 19 million consumed each day in the country.

“What we need to do is slow down,” Kleeb said. “The oil isn’t going anywhere. You can make all the money you need to make.”

Mark Johnson, the Nebraska spokesman for TransCanada, said pipelines are the most efficient method of transporting oil between distant points, passing along the lowest costs to consumers.

“The bottom line is that the United States needs oil and it is going to get to market one way or another,” Johnson said.

The Keystone pipeline, now about four years old, runs from the southern Canadian province of Alberta and terminates in southern Nebraska at Steele City, the proposed endpoint for the Keystone XL.

Johnson said danger to the Ogallala is low, with nature having provided the aquifer with a deep and effective filtering system of sand and rock. Pipelines and oil wells already dot the Ogallala landscape, Johnson said, and the existing Keystone pipeline has operated without serious incident.

Like oil-train accidents, pipeline incidents tend to be attention-grabbing, such as the one in Kalamazoo, Michigan, in 2010, when an oil pipeline broke and spilled almost 1 million gallons. Cleanup costs have approached $1 billion.

From 1994 through 2013, there were 2,715 significant pipeline incidents, according to the federal Pipeline & Hazardous Materials Safety Administration. That is an average of 136 a year, defined as causing death or hospitalization, incurring costs of more than $50,000, or erupting in fire or explosion. The incidents have caused 40 deaths and 132 injuries.

Joseph Schwieterman, a professor at Chicago’s DePaul University specializing in transportation, said perfect safety in the U.S. economy’s supply chain — train or pipeline or any other mode — is an unreasonable expectation.

“The accidents that happen are headline makers, but the risks are manageable,” he said. “The hype is out of proportion.”

Schwieterman also said there is a generational component to opinions on oil production and the transportation of its products.

“Oil invokes a negative, visceral reaction among young people,” Schwieterman said, acknowledging that high-profile troubles such as the 2010 BP Gulf Coast oil rig blowout has had the same effect on some people as the Exxon Valdez tanker spill in 1989.

“People tend to forget about the value of energy independence,” he said, “and that such independence will come at a certain price.”

The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

 

Canadian regulation, Crude By Rail, Oil stabilization, Tank car identification, Volatility

Canada: Dangerous crude could still travel in misclassified tank cars

Repost from The Globe and Mail, Toronto, Canada

Dangerous crude could still travel in misclassified tank cars, TSB says

Kim Mackrael and Grant Robertson, Sep. 04 2014
People from several juristictions including the Ministry of the Environment for Canada and Quebec, and the RCMP prepare to do some investigative work in the area of the nine remaining tank cars sitting on the tracks in Nantes, PQ on July 11, 2013. This is where the ill-fated train that derailed in Lac-Mégantic originated from early Saturday morning. (Peter Power/The Globe and Mail)
People from several jurisdictions including the Ministry of the Environment for Canada and Quebec, and the RCMP prepare to do some investigative work in the area of the nine remaining tank cars sitting on the tracks in Nantes, PQ on July 11, 2013. This is where the ill-fated train that derailed in Lac-Mégantic originated from early Saturday morning. | (Peter Power/The Globe and Mail)

Canada’s transportation safety agency is raising concerns that dangerous crude oil could still be travelling by rail inside misclassified tank cars, despite assurances from the federal government that the problem has been fixed.

In a recent letter to Transport Canada, the Transportation Safety Board said new requirements to test oil don’t explicitly address its “variability,” including the fact that different products are sometimes blended together before they are shipped.

The letter was sent just days before the TSB issued its final report on the Lac-Mégantic rail tragedy, in which a train loaded with volatile crude oil exploded last summer, killing 47 people and levelling much of the Quebec town. The agency’s report, made public last month, found that more than a dozen different factors contributed to the crash, including a failure to apply enough hand brakes, a weak safety culture at the railway and lax regulation by the federal government.

TSB tests conducted early in the investigation showed that the oil on the train was more volatile than its shipping documents had indicated and it recommended that new measures be taken to ensure shipments are classified accurately. The federal government responded by toughening the rules for testing crude oil samples, including new provisions requiring a shipper to make information about the sampling method they use available to the government upon request.

However, those new regulations “do not explicitly address the variability in the properties of mined gases and liquids, such as petroleum crude oil,” the letter from the TSB says. While the properties of manufactured dangerous goods, such as gasoline, are better understood and relatively predictable, the agency warned that crude oil and natural gas can vary from one well to another and in the same well over time.

Oil that comes from different sources may also be blended when it’s loaded onto rail cars, the TSB notes. That means crude that was deemed relatively safe during one set of tests – for example, at the time crude is extracted from a well – could be mixed with more dangerous oil when it is loaded onto tank cars, and the overall risk may not be reflected by the original test results. The TSB letter also raises questions about the department’s ability to enforce its own classification rules.

Oil is widely known to be flammable, but regulators in Canada did not previously believe it had the potential to explode and cause the kind of destruction it did in Lac-Mégantic. The train that derailed there was carrying light crude from the Bakken formation, which straddles North Dakota, Montana, Saskatchewan and Manitoba. Bakken crude and other light shale oils are now widely believed to be more volatile than conventional oil.

A spokesperson for Transport Canada said there are “strict requirements” under the Transportation of Dangerous Goods Act that compel companies to classify dangerous goods properly. “Testing criteria are harmonized with [United Nations] requirements and are the same as for the U.S.,” the spokesperson wrote in an e-mail. She added that the department is working with the crude oil industry, U.S. regulators and Natural Resources Canada to develop standardized tools and processes for crude oil testing.

The American Petroleum Institute recently developed a new set of classification and rail loading standards for its members to approve, which are expected to be made public later this month. Both Transport Canada and the U.S. Pipeline and Hazardous Materials Safety Administration were involved in the process, according to the API, but the new standards would not be enforceable unless regulators chose to adopt them.

In the meantime, some companies are choosing to adopt new testing methods – in addition to those required by federal regulations – to ensure they are accurately measuring the possible dangers of the crude they’re extracting or transporting. Producers in North Dakota are also increasingly looking to stabilize the crude before they ship it, in a process that removes the most volatile components from the main product, reducing the potential dangers of shipping it by rail.

A separate safety advisory from the TSB, which was also issued days before the agency’s final report on Lac-Mégantic, warned that some of the problems identified at Montreal, Maine & Atlantic Railway may also exist at other short-line railways. The safety agency said runaway trains occur at a greater rate at short-line railways than larger railways and suggested short-line employees may not always receive the training they need to operate safely.

Bakken Crude, Blast zone, Crude By Rail, Fracking, Hazmat notification, Massive increase in crude-by-rail, Rail routing, Tank car design, Traffic, Train braking systems, Train speed

Bill Moyers & Company: America’s Exploding Oil Train Problem

Repost from Bill Moyers & Company

America’s Exploding Oil Train Problem

by John Light, September 2, 2014
FILE - In this July 16, 2013, file photo, railroad oil tankers are lined up at the Port of Albany, in Albany, N.Y. While the federal government has ordered railroads to give states details about shipments of volatile crude oil from North Dakota's Bakken shale region, New York officials haven't decided whether to share that information with the public. (AP Photo/Mike Groll, File)
In this July 16, 2013, photo, railroad oil tankers are lined up at the Port of Albany, in Albany, NY. (AP Photo/Mike Groll, File)

If you reside in the US, there’s around an eight percent chance that you live in an oil train’s blast zone. And there’s a fight going on at the state and federal levels, between monied interests and regulatory agencies, over efforts to ensure that these trains — which have shown a tendency to burst into flames — will be relatively safe.

The increased use of hydraulic fracturing — fracking — has made oil that was previously inaccessible available to drillers. The crude then has to make its way to refineries, and while the boom in pipeline projects has received quite a bit of attention, roughly 60 percent of it travels by rail.

On Friday, California legislators passed a bill that would require railroads to tell emergency officials when oil trains filled with explosive Bakken crude — oil from a particularly productive region in western North Dakota — would pass through the state. The law reflects growing concern, across America, about the dangers of these trains moving through dense communities, including Sacramento, California’s capital.

Oil tanker cars move along a web of routes that crisscross the United States. In 2013, about 400,000 cars made the journey, a 4,000 percent increase over the previous five years. The boost in oil cars has been so great that less lucrative industries are having trouble finding rail transport for their products. In March, General Mills announced that it had lost 62 days of production on such favorites as Cheerios because the trains that had shipped agricultural products were being leased by the fossil fuel industry.

Most oil reaches its destination without any problems, but as production has skyrocketed, the railroads have become increasingly taxed. Those who live near railways have noticed the uptick, with trains rumbling through towns much more frequently, and at much higher speeds.

Last July, a tanker train filled with North Dakota crude derailed in the middle of the night in Lac-Mégantic, a small Canadian town near the border with Maine; the resulting inferno killed 47 people. Since then, derailments in Casselton, North Dakota, and Lynchburg, Virginia, have led to evacuations. The Lac-Mégantic disaster spurred protests from fire chiefs and town officials who said that they were ill-equipped to deal with a possible derailment.

In the year since, officials have moved to formalize several safety measures. This July, the Obama administration proposed a plan that involves banning certain older tank cars, using better breaks on car, restricting speeds and possibly rerouting trains.

That first point, phasing out old tank cars, is a key area of contention. For the most part, the opposition isn’t coming from the railroads; it’s the oil companies that lease the tank cars that are fighting the new regulations. As Bloomberg Businessweek’s Matthew Philips explained earlier this summer:

It’s helpful to understand the three industries with something at stake here: railroads, energy companies, and tank-car manufacturers. The railroads own the tracks but not the tank cars or the oil that’s inside. The oil often belongs to big energy companies such as refiners or even trading firms that profit from buying it near the source—say, in North Dakota—and selling it elsewhere. These energy companies tend to lease the tank cars from large manufacturing companies or big lenders such as General Electric (GE) and CIT Group (CIT).

Although it is never their oil on board, the railroads usually end up in the headlines when something goes wrong. That’s why they have been eager for a rule to make energy companies use stronger tank cars. Meanwhile, the oil industry has been busy issuing studies trying to prove that the oil coming out of North Dakota is safe enough to travel in the existing tank cars. The energy lobby also thinks railroads need to do a better job of keeping the trains on the tracks. Tank-car manufacturers, meanwhile, simply want some clarity around what kind of cars they need to build.

Canada, following the Lac-Mégantic disaster, announced plans to phase out one older tank car that has been linked to several accidents over the next three years; the Obama administration proposal would do it in two.

But the oil industry doesn’t want that. Leading the charge is the American Petroleum Institute, an organization that, so far in 2014, has spent $4 million lobbying regulators and Congress. They’ve pushed back against labeling Bakken crude as more hazardous than other crude oil, even though many studies have found that it is.

Environmental groups blame this lobbying effort for several weaknesses in the proposed rules. For one, they would only apply to trains that have 20 or more carloads of Bakken crude. “If the rule is approved as drafted, it would still be legal to transport around 570,000 gallons (the equivalent of the fuel carried by seven Boeing 747s) of volatile Bakken crude in a train composed of 19 unsafe, [aging] tank cars—and none of the other aspects of the new rules, including routing, notification, train speed, and more would apply,” wrote Eric de Place of the sustainability think-tank Sightline Institute, who also criticized the proposal for not immediately banning older tankers.

And even if the regulations were to be put in place despite the API’s attempts to weaken them, there’s the distinct possibility that regulators will fall short. The government has often taken a hands-off approach in determining what gets shipped, and how — and in enforcing existing rules requiring that officials in the cities it passes through be informed that potentially hazardous shipments are coming. In These Times reported that government inspections to make sure railroads are properly labeling the product they are shipping (the Bakken crude was improperly labeled in the Lac-Mégantic disaster) are supposed to be unannounced, but are sometimes pre-arranged. Meanwhile, railroads are cutting back on the number of crew members manning trains, a move that some workers feel will lead to less safe travel.

“No one would permit an airliner to fly with just one pilot, even though they can fly themselves,” wrote John Previsich, the president of the Sheet Metal, Air, Rail and Transportation union’s transportation devision. “Trains, which cannot operate themselves, should be no different.”

John Light blogs and works on multimedia projects for Moyers & Company. Before joining the Moyers team, he was a public radio producer. His work has been supported by grants from The Nation Institute Investigative Fund and the Alfred I. duPont-Columbia Awards, among others. A New Jersey native, John studied history and film at Oberlin College and holds a master’s degree in journalism from Columbia University
Bakken Crude, Crude By Rail, DOT-111, Export of North American crude, Oil stabilization, Reid vapor pressure levels, Tar sands crude, Train speed, Volatile gases

Regulators Ignore One Proven Way to Eliminate Bakken Bomb Trains: Oil Stabilization

Repost from DeSmogBlog

Regulators Ignore One Proven Way to Eliminate Bakken Bomb Trains: Oil Stabilization

Justin Mikulka, 2014-08-08

On the same day that the Obama administration released long-awaited new safety regulations for the oil-by-rail industry, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released another report with their testing results for Bakken crude oil. The conclusion reached by PHMSA is that Bakken crude oil “is more volatile than most other types of crude.”

These results don’t come as a surprise since the five oil trains that have crashed and exploded in the last year all were carrying Bakken crude.

Of course, the new regulations released simultaneously do not require the oil industry to do the one thing that would eliminate this problem: oil stabilization.  A well known and proven method for removing the natural gas liquids from crude oil that makes the oil “stable” and non-explosive.

While the new regulations do not offer any proposals to require the oil industry to remove the volatile components of Bakken crude, on page 144 of the proposal they do acknowledge that this is possible. They request comments on the following question:

Is the current exception for combustible liquids sufficient to incentivize producers to reduce the volatility of crude oil for continued use of existing tank cars?

Essentially they are acknowledging that if the industry stabilized the oil it wouldn’t be explosive and thus they would be able to continue to use the existing DOT-111 rail cars to transport it. Just like those tank cars will be able to transport Alberta tar sands oil because it is not explosive.

The week before the release of the new regulations, the American Petroleum Institute and the American Association of Railroads released a joint statement stating that they were in agreement on two things that shouldn’t be part of the finalized new regulations — lower train speeds and mandatory stabilization. And while the proposed regulations do offer some requirements for lower trains speeds, they include nothing about mandatory stabilization.

In May, Myron Goforth, the president of Dew Point Control LLC, a manufacturer of stabilization equipment put the situation in simple terms for Reuters.

“It’s very easy to stabilize the crude – it just takes money,” Goforth said. “The producer doesn’t want to pay for it if he can ship it without doing it.”

So without regulations to require the stabilization of Bakken crude, the public will be put at risk so that the oil companies can make higher profits. And with the new proposed regulations, the regulators have made it clear they will not stand in the way of Big Oil to keep the people safe.

The good news for the public is that Big Oil’s greed might actually lead to them having to stabilize Bakken crude.

There is currently a major lobbying effort by the oil industry to lift the ban on exporting American crude oil. And in order to ship the oil to other countries, the oil companies may be required to stabilize the Bakken crude. One industry analyst recently commented to Platts on what would happen if stabilization was required for export.

“You could stabilize and go. You’d still have to put it into rail cars and ship it to the coast, but at least you’d be selling it at a global market price instead of at the WTI discount. Who wouldn’t do that? Everybody would do it.”

It isn’t like the regulators weren’t aware of this possibility before they put out the new proposed regulations for oil by rail. In the many private meetings held at the Office of Information and Regulatory Affairs (OIRA) prior to the release of the regulations, one company stood out from the oil and rail companies making up the majority of the meetings: Quantum Energy Ltd.

On June 2nd Quantum Energy met with OIRA and presented a simple three-page presentation. The presentation explains how regular crude oil has a Reid Vapor Pressure (RVP) of 5-7 psi and Bakken crude has an RVP between 8-16 psi. To put that in perspective, gasoline typically has a RVP of 9 psi.

Higher RVP correlates to higher volatility and explosiveness.

The last slide in the Quantum presentation shows that “post stabilization” Bakken crude would have a RVP of 1.5 – 6 psi.

So why was an energy company arguing the case for stabilization to OIRA prior to the new regulations? Because they are in the stabilization business and they are getting ready for the export ban to be lifted.

Russell Smith, executive vice president for Quantum, explained their position to Platt’s prior to the release of the new regulations.

“We’re not advocating if they do or if they don’t [require stabilization]. Quite frankly, we don’t care. Our business plan is centered around exportability.”

It appears that the safety of the people located within the blast zones of the bomb trains will not ultimately be addressed by regulators until the oil can be shipped to other countries, at which point they will require the oil to be stabilized to reduce the risk of explosions.

As the analyst said, “Who wouldn’t do that? Everybody would do it.”

Image credit: Lac-Megantic deadly oil-by-rail disaster, via Shutterstock.