Tag Archives: Bakken crude

Bakken Crude, Crude By Rail, Oil Industry, Oil prices, Oil refineries

Does zero Bakken crude for Irving Oil indicate a trend?

Repost from Railway Age
[Reference:  see the 8/20/15 Wall Street Journal article, Canada’s Largest Refinery Shifts from Bakken Shale Oil to Brent Crudes.  – RS]

Does zero Bakken crude for Irving Oil indicate a trend?

By  William C. Vantuono, Editor-in-Chief, August 28, 2015
Irving Oil Ltd. Saint John, N.B. refinery
Irving Oil Ltd. Saint John, N.B. refinery

Irving Oil Ltd., operator of Canada’s largest crude oil refinery, has stopped importing crude oil sourced from the Bakken shale formation in North Dakota and shipped by rail in favor of cheaper crudes from such producers as OPEC, “reflecting a shift in crude costs affecting East Coast refiners during a global slump in oil prices,” the Wall Street Journal recently reported.

The 320,000-barrel-a-day refinery in Saint John, N.B., one of the biggest by volume in North America, had been receiving 100,000 barrels a day by rail, a high reached two years ago that was only temporarily affected by the Lac Mégantic disaster. (The Montreal, Maine & Atlantic crude oil train that derailed on July 6, 2013, claiming 47 lives, was bound for the refinery). Today, CBR shipments the refinery are zero, a move “that reflects shifting economics in the energy industry even as the price of oil—including Bakken crude—has slumped to six-year lows,” said the WSJ. “About 90% of the crude oil Irving currently buys is shipped by sea from such producers as Saudi Arabia and those in western Africa, with the remainder coming by rail from such western Canadian oil-sands operators as Syncrude Canada Ltd. and Royal Dutch Shell PLC. A year ago, Bakken crude made up about 25% of Irving’s feedstock and in 2013 it supplied nearly one-third of its procurement volume, or about 100,000 barrels a day. ‘The Bakken price has gone up’ relative to other crudes when CBR costs are factored in,’ [an Irving Oil executive] said.”

“A once-yawning gap, between the cost of oil produced in North America and overseas crudes priced at the Brent global benchmark, has narrowed since 2013,” the WSJ noted. “Refiners on North America’s east coast can now import crude shipped by sea for less than the cost of shipping it by rail from shale oil producers in North Dakota and elsewhere in the U.S.”

Production of U.S. shale oil, especially that from the Bakken, led to CBR shipments increasing exponentially due to a lack of pipelines. CBR is more expensive than by shipping by pipeline and even by ship, and fewer refiners are willing to pay a premium for CBR. <p< Whether Irving Oil’s decision to abandon Bakken crude for a single refinery reflects a broader trend that will affect CBR movements remains to be seen. Two other refiners have followed suit, but the situation may not be permanent.

“Refiners PBF Energy Inc. and Phillips 66 both said they increased procurement of overseas crudes at the expense of CBR in the second quarter, though they signaled it is unclear if that will continue throughout the rest of the year,” the WSJ reported. “‘Our ability to source sovereign waterborne crudes was far more economic to the East Coast facilities, and that’s what we did,’ PBF Energy CEO Tom Nimbley said in late July. Phillips 66 CEO and Chairman Greg Garland told investors last month, ‘We actually set [crude-by-rail] cars on the siding. We brought imported crudes in the system.’ But, he added, ‘I’d say given where our expectations are for the third quarter, I’d say cars are coming off the sidings, and we’re going to import less crude.’”

CBR traffic has dropped substantially compared to last year, “reflecting both the worsening economics of CBR and better pipeline access to refineries on the Gulf of Mexico,” the WSJ noted. According to Association of American Railroads figures, U.S. Class I railroads originated 111,068 carloads of crude oil in the second quarter of 2015, down 2,201 carloads from the first quarter and some 21,000 fewer carloads than the peak in 2014’s third quarter.

 

Bakken Crude, Crude By Rail, Derailment, Emergency Readiness & Response, Federal Regulation (U.S.), Fire, Funding for emergency response, Hazmat notification, Massive increase in crude-by-rail, Per-barrel tax, Public safety funding, Rail inspection, Rail Safety, Spill, State regulation, Track maintenance, Volatility

States Step Up Scrutiny of Oil Train Shipments

Repost from GOVERNING The States and Localities

States Step Up Scrutiny of Oil Train Shipments

Some states are looking to prevent more derailments and spills, but the freight industry doesn’t want more regulation.
 By Daniel C. Vock | August 26, 2015
In 2014, several CSX tanker cars carrying crude oil derailed and caught fire along the James River near downtown Lynchburg, Va. (AP/Steve Helber)

When it comes to regulating railroads, states usually let the federal government determine policy. But mounting concerns about the safety of oil trains are making states bolder. In recent months, Oregon, Pennsylvania and Washington state have taken steps to strengthen oversight of the freight rail industry.

The three join several other states — mostly led by Democrats — in policing oil shipments through inspection, regulation and even lawsuits. Washington, for example, applied a 4-cent-per-barrel tax on oil moved by trains to help pay for clean-ups of potential spills. The new law also requires freight rail companies to notify local emergency personnel when oil trains would pass through their communities.

“This means that at a time when the number of oil trains running through Washington is skyrocketing, oil companies will be held accountable for playing a part in preventing and responding to spills,” said Democratic Gov. Jay Inslee when signing the measure this spring.

The flurry of state activity comes in response to a huge surge in the amount of oil transported by rail in the last few years. Oil from the Bakken oil fields in North Dakota and nearby states must travel by train to refineries and ports because there are few pipelines or refineries on the Great Plains. The type of oil found in North Dakota is more volatile — that is, more likely to catch on fire — than most varieties of crude.

Public concerns about the safety of trains carrying oil have increased with the derailments in places like Galena, Ill.; Mt. Carbon, W. Va.; Aliceville, Ala.; Lynchburg, Va.; Casselton, N.D.; and especially Lac-Megantic, Quebec, where 47 people died in 2013.

Federal regulators responded to these incidents by requiring railroads to upgrade their oil train cars, to double check safety equipment on unattended trains, and to tell states when and where oil trains would be passing through their borders. This last requirement was hard won. This summer, the Federal Railroad Administration tried to encourage states to sign nondisclosure agreements with railroads about the location of oil trains. After several states balked, the agency relented.

California, Louisiana, New Jersey, Ohio and Oklahoma have all signed nondisclosure agreements, while Idaho, Illinois, Montana, North Dakota, Washington and Wisconsin have refused to do so, according to the Reporters Committee for Freedom of the Press.

A Maryland judge earlier this month ruled against two rail carriers, Norfolk Southern and CSX, that wanted to block the state’s environmental agency from releasing details of their oil shipments. The railroads have until early next month to decide whether to appeal.

“The ruling isn’t the first time railroads have lost their bid to keep the oil train reports secret,” wrote reporter Curtis Tate of McClatchy, one of the news organizations that requested the records, “but it is the first court decision recognizing the public’s right to see them.”

Many states want this information so that fire departments and other emergency personnel can prepare for a potential derailment. California passed a law last year imposing clean-up fees on oil shipped by rail. The railroad industry challenged the law in court, but a judge ruled this summer that the lawsuit was premature. Minnesota passed a similar law last year, and New York added rail inspectors to cope with the increase in oil train traffic. A 1990 federal law lets states pass their own rules to prepare for oil spills, as long as those rules are at least as rigorous as federal regulations.

In Pennsylvania, which handles 60 to 70 oil trains a week, Democratic Gov. Tom Wolf asked a University of Delaware expert to help to improve safety of oil trains traveling through the state. The professor, Allan Zarembski, produced 27 recommendations for the state and the railroads. He called on the state to improve its inspection processes of railroad tracks, particularly for tracks leading into rail yards, side tracks and refineries that often handle oil trains. The professor also encouraged the state to coordinate emergency response work with the railroads and local communities.

Zarembski’s suggestions for the railroads focused on how they should test for faulty tracks, wheel bearings and axles. Most major derailments in recent years were caused by faulty track or broken equipment, not human error, he noted in his report.

Bakken Crude, Crude By Rail, Derailment, Emergency Readiness & Response, Explosion, Fire, Hazardous cargo transparency, Hazmat notification, Let it burn, Lynchburg VA

As oil train burned, firefighters waited 2 hours for critical details

Repost from McClatchyDC

As oil train burned, firefighters waited 2 hours for critical details

By Curtis Tate, August 21, 2015

HIGHLIGHTS
•  Oil train burned for 2 hours before railroad official arrived
•  Firefighters lacked key details about train and its cargo
•  Incident led railroads to offer more information, training

Contract workers begin cleaning up the site of an oil train derailment in Lynchburg, Va., on May 1, 2014.
Contract workers begin cleaning up the site of an oil train derailment in Lynchburg, Va., on May 1, 2014. Curtis Tate – McClatchy

Newly released documents show that firefighters responding to an oil train derailment and fire last year in Lynchburg, Va., waited more than two hours for critical details about the train and what was on it.

The Lynchburg Fire Department’s battalion chief, Robert Lipscomb, told investigators that it took multiple calls to get a representative from the correct railroad to come to the scene, according to an interview transcript published Friday by the National Transportation Safety Board. And by the time someone arrived, the massive fire had almost burned out.

The April 30, 2014, derailment of a CSX train released more than 30,000 gallons of Bakken crude oil into the James River and led to the evacuation of about 350 people. No one was injured.

Because of Lynchburg and other oil train derailments, railroads, including CSX, have improved their lines of communication with local emergency responders and offered them more training opportunities.

Rob Doolittle, a CSX spokesman, said Friday that safety was the company’s highest priority and that it “looks forward to reviewing the NTSB’s findings and recommendations when its investigation into this incident is complete.”

NTSB investigators interviewed Lipscomb, who led the response to the derailment, the next day. He told them his department probably wouldn’t have changed how it handled the incident if they’d had more information from the start.

“We did it the way we did it because that’s what we were looking at,” he said.

However, he expressed frustration that it took railroad officials more than two hours to arrive.

We really wanted to know what was on that train. Robert Lipscomb, battalion chief, Lynchburg Fire Department

“We really wanted to know what was on that train,” Lipscomb told investigators.

The confusion even included not knowing what railroad to call. Norfolk Southern also operates trains through downtown Lynchburg parallel to the CSX tracks.

Lipscomb said both railroads were notified, and officials from Norfolk Southern arrived within 45 minutes of the derailment. However, they determined quickly that it was not one of the railroad’s trains.

“They did stay on scene to kind of, I guess, be of some assistance, but they weren’t able to help us at all really because it wasn’t their train,” Lipscomb said.

Other issues Lipscomb identified: The paperwork identifying the train’s cargo was in the locomotive, but firefighters didn’t know where to find it. They also couldn’t find the train crew.

Firefighters knew from the red hazardous materials placards on the tank cars that the train was carrying crude oil. But they didn’t know how much was on the train or what kind of oil it was.

Lipscomb said he kept looking at his watch and proposed “taking it to the next level” by calling the state’s deputy secretary of public safety if a CSX representative didn’t arrive by five minutes past 4 p.m., more than two hours since the derailment.

“I’m like, ‘I’ve got to know; we’ve got to have someone here,’” Lipscomb said, “and before my time ran out, he showed up.”

Anhydrous ammonia, Bakken Crude, California Regulation, Civil penalties, Crude By Rail, Derailment, Ethanol, Liquified petroleum gas, Rail Safety, State regulation, Train crew size, Violations of law

Rail safety bill sent to CA Governor – requires minimum 2-person crews

Press Release from California State Senator Lois Wolk
[Editor:  Significant quote: “According to the CPUC, of all the industries subject to their oversight — energy, water, telecommunications, and transportation — rail accidents result in the greatest number of fatalities each year”  See also coverage in The Reporter, Vacaville, CA.  – RS]

Wolk rail safety bill sent to Governor

FOR IMMEDIATE RELEASE

August 21, 2015, Contact: Melissa Jones, (916) 651-4003 
Bill requires minimum two–person train crews

SACRAMENTO—The State Assembly voted 51-28 yesterday to approve legislation by Senator Lois Wolk (D-Davis) to protect communities along rail lines and railroad workers by requiring trains and light engines carrying freight within California to be operated with an adequate crew size. The bill now goes to the Governor.

“Today’s freight trains carry extremely dangerous materials, including Bakken crude oil, ethanol, anhydrous ammonia, liquefied petroleum gas, and acids that may pose significant health and safety risks to communities and our environment in the case of an accident,” said Wolk.

“With more than 5,000 miles of railroad track that crisscrosses the state through wilderness and urban areas, the potential for derailment or other accidents containing these materials is an ever present danger. I urge the Governor to sign this bill into law, providing greater protection to communities located along rail lines in California, and to railroad workers.”

SB 730 prohibits a freight train or light engine in California from being operated unless it has a crew consisting of at least two individuals.   It also authorizes the California Public Utilities Commission (CPUC) to assess civil penalties, at its discretion, against anyone who willfully violates this prohibition.

The CPUC supports SB 730, stating that requiring two-person crews is a straightforward way of ensuring two qualified crew members continue to operate freight trains in California.  According to the CPUC, of all the industries subject to their oversight — energy, water, telecommunications, and transportation –rail accidents result in the greatest number of fatalities each year.

“Senator Wolk’s legislation helps keep us at the forefront of rail safety,” said Paul King, Deputy Director of the Office of Rail Safety for the CPUC. “Senator Wolk’s bill would ensure that freight trains continue to have the safety redundancy that a second person provides. Such redundancy is a fundamental safety principle that is evidenced in certain industries, such as using two pilots in an airplane cockpit, or requiring back-up cooling systems for nuclear reactors.”

The bill is also supported by the Brotherhood of Locomotive Engineers & Trainmen, International Brotherhood of Teamsters; California Labor Federation, AFL-CIO; California Teamsters Public Affairs Council; and United Transportation Union.

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