Tag Archives: Bakken crude

Wall Street Journal: Fewer Oil Trains Ply America’s Rails

Repost from The Wall Street Journal

Fewer Oil Trains Ply America’s Rails

Safety concerns, low crude prices depress train traffic

By Alison Sider, April 6, 2015 3:30 p.m. ET
In March, oil-train traffic was down 7% from a year earlier. The slowdown comes amid safety concerns. Photo: David Paul Morris/Bloomberg News

The growth in oil-train shipments fueled by the U.S. energy boom has stalled in recent months, dampened by safety problems and low crude prices.

The number of train cars carrying crude and other petroleum products peaked last fall, according to data from the Association of American Railroads, and began edging down. In March, oil-train traffic was down 7% on a year-over-year basis.

Railroads have been a major beneficiary of the U.S. energy boom, as oil companies turned to trains to move crude to refineries from remote oil fields in North Dakota and other areas not served by pipelines. Rail shipments of oil have expanded from 20 million barrels in 2010 to just under 374 million barrels last year, according to the U.S. Energy Information Administration.

About 1.38 million barrels a day of oil and fuels like gasoline rode the rails in March, versus an average of 1.5 million barrels a day in the same period a year ago, according to a Wall Street Journal analysis of the railroad association’s data.

Oil-train traffic declined 1% in the fourth quarter of 2014 as crude-oil prices started to tumble toward $50 a barrel. More recently, data from the U.S. Energy Department show oil-train movements out of the prolific Bakken Shale in North Dakota have leveled off as drillers there have begun to pump less, though oil-train shipments from the Rocky Mountain region have risen.

WSJ_Shipped-By-US_Rail_2014-15The slowdown comes as federal safety experts call for stronger tank cars. On Monday the National Transportation Safety Board recommended an aggressive five-year schedule for phasing out or upgrading older railcars used to haul crude-oil. A string of oil train accidents in recent months have resulted in spills, intense fires and community evacuations. The NTSB said railcars in use today rupture too quickly and aren’t fire-resistant enough.

A few incidents have involved more modern tank cars—the CPC-1232 model. The NTSB also said the new railcar’s design isn’t sturdy enough. “We can’t wait a decade for safer rail cars,” said NTSB Chairman Christopher A. Hart Monday in a letter to federal transportation regulators.

Opponents of a fast phaseout have said that if tougher standards are introduced too quickly it will create a railcar shortage and make some oil train operations unprofitable.

Many refiners, including Philadelphia Energy Solutions, say they are still committed to shipping oil on trains. Chief Executive Phil Rinaldi in December said he likes that railroads don’t require long-term contractual agreements the way pipelines do. That allows his plant managers to buy crude only when it’s needed.

With pipelines, “you have to pay for that transit whether it makes sense or not,” Mr. Rinaldi said. “With rail, that’s not the case.”

Railroad operators have warned investors that their outlook for transporting crude is slightly weaker than it was last year, said David Vernon, a rail analyst at Sanford C. Bernstein & Co.

BNSF Railway Co., which is responsible for about 70% of U.S. oil-train traffic, operated as many as 10 trains a day last year, but is averaging nine a day now, a spokesman said.

Phillips 66 refinery plan threatens Rodeo California residents’ safety

Repost from The San Francisco Chronicle, Open Forum

Refinery plan threatens Rodeo residents’ safety

By Janet Pygeorge and Laurel Impett, April 6, 2015 4:08pm
Contra Costa County officials approved a controver sial expan sion of the Phillips 66 refinery in Rodeo. Photo: Rich Pedroncelli / AP / FILE
Contra Costa County officials approved a controver sial expan sion of the Phillips 66 refinery in Rodeo. Photo: Rich Pedroncelli / AP / FILE

The fracking boom in North Dakota and increased recovery of tar sands oil in Canada have prompted dramatic growth in transport of crude oil by rail throughout the United States from regions that pipelines don’t serve. Bay Area refineries and oil and gas companies already are planning for increased rail traffic and expanded operations. These plans are understandably alarming residents because of the potential for oil-train explosions. The Contra Costa County Board of Supervisors, however, does not share this alarm.

The supervisors made that clear in February when they rubber-stamped a proposed operational expansion of the Phillips 66 refinery in Rodeo. Analyses done by Communities for a Better Environment, a nonprofit environmental justice organization that has sued to overturn this approval, show that the refinery’s expansion would significantly increase air pollution, greenhouse gas emissions and public safety risks.

The board’s position defies both science and common sense. This refinery is located in the middle of an earthquake liquefaction zone. Phillips 66 plans to dramatically increase the number of railcars that are regularly staged at the plant; it also plans to begin processing propane and expand its processing of butane, both highly explosive.

The proposal includes plans to store 630,000 gallons of liquid propane about half a mile from homes, churches, a school and a park. And yet the environmental analysis approved by the board claimed that there would be no significant risks associated with this operational expansion.

In the case of a large earthquake, Phillips 66’s operational expansion would place huge swaths of Rodeo at significant risk of death and destruction, with damage radiating from the refinery up past San Pablo Avenue to as far away as where I-80 runs through Rodeo. It is simply unacceptable for our county officials to allow this expansion without requiring stringent attention to public health and safety by putting aggressive safeguards in place.

In terms of air quality impacts, this refinery has a dismal track record. It received more than 200 notices of violation from the Bay Area Air Quality Management District between 2003 and 2014. According to the California Environmental Protection Agency, it is the seventh-most-toxic polluter of all California facilities with large chemical releases. Phillips 66’s proposed changes would significantly increase the level of air pollution the facility produces, but the company used accounting tricks to hide the ball in its air-quality analysis. County officials did not question the refinery’s flawed analytical approach.

The Board of Supervisors showed its hand when it approved Phillips 66’s operational expansion without requiring investments to protect the health and safety of residents. Three different lawsuits have been filed against the county for lack of appropriate oversight in this matter. Contra Costa residents must demand better from local elected officials.

Join us in demanding that the county put an end to approving dirty industry at the expense of the public’s health and safety. Enough is enough.

Ultimately, if elected officials won’t stand up for health and safety, the court should intervene and protect the best interests of this community.

Janet Pygeorge is president of Rodeo Citizens Association, one of the groups that has filed suit in this matter. Laurel Impett is a planner with Shute, Mihaly & Weinberger LLP, the law firm that represents the association.

Why more pipelines won’t solve the problem of oil-train explosions

Repost from Grist

Why more pipelines won’t solve the problem of oil-train explosions

By Ben Adler on 6 Apr 2015
Shutterstock | Shutterstock
In the last few years, the grassroots environmental movement has energetically opposed constructing big new oil pipelines in North America. Their opposition is understandable, since, on a global level, fossil fuel infrastructure encourages fossil fuel consumption, contributing to climate change, and, on a local level, oil pipelines leak and explode. But conservatives have been delighted to argue that greens are endangering the public and being short-sighted. Oil that comes out of the ground has to get to market somehow, and currently a huge amount of it is being shipped on freight trains. The result? An epidemic of oil train derailments, causing spills and even deadly explosions.

Is it fair to blame activists for this? Should climate hawks throw in the towel and accept Keystone XL as the lesser evil?

No and no — and I’ll explain two key reasons why.

First: Much of the oil criss-crossing the U.S. on trains is coming from North Dakota and traveling out along east/west routes where there aren’t even any proposals for big new pipelines. You can’t blame activists for that. Keystone would connect the Alberta tar sands to refineries on the Gulf Coast, but wouldn’t do anything to help move North Dakota’s fracked bounty. Right now rail is the main option for that. “Keystone XL would enable tar-sands expansion projects, but is unlikely to reduce crude-by-rail,” says Anthony Swift, an attorney at the Natural Resources Defense Council. But don’t just take his word for it. Oil-loving, Keystone-supporting North Dakota Sen. Heidi Heitkamp (D) makes the same point: “I am not someone who has ever said that the Keystone pipeline will take crude off the rails. It won’t,” Heitkamp said in November. “Our markets are east and west and it would be extraordinarily difficult to build pipelines east and west.”

Second: Climate activists are supporting something that actually would go a long way toward solving the problem of dangerous oil trains: strict regulation of those trains.

In the long term, of course, climate hawks want to keep the oil in the soil, and they are pushing for structural changes — like an end to federal leases for oil drilling offshore and on federal land — that would reduce the amount of oil we produce in the U.S. But in the short term, they’re not just being unrealistic and saying “no” to all oil transport — they’re pushing to make that transport safer.

The Department of Transportation has the authority to impose rules on oil trains’ design and speed, which would reduce the risk of them leaking and exploding when they derail or crash. DOT made an initial proposal in July of last year and is expected to finalize it in May. Green groups have been disappointed by the proposal, though — both the weakness of the rules and the slowness of the timetable. If all goes according to plan, the rules would be implemented later this year, but their requirements would still take years to phase in.

Fortunately there’s now a stronger proposal that climate hawks can get behind: a new Senate bill that would impose stiffer requirements than those being proposed by the Obama administration. Sen. Maria Cantwell (D-Wash.) introduced the Crude-By-Rail Safety Act late last month, along with three Democratic cosponsors: Tammy Baldwin (Wis.), Patty Murray (Wash.), and Dianne Feinstein (Calif.). It got immediate backing from big green groups.

Here are four critical things that need to be done to make oil trains safer, three of which are included in Cantwell’s bill:

  1. Stop the transport of oil in an old model of rail car, called the DOT-111, that was designed back in the ‘60s. DOT-111s “have a number of manufacturing defects that make them much more likely to rupture in a derailment,” says Swift. So environmentalists want to get 111s off the rails immediately. That’s exactly what Cantwell’s Senate bill would do. DOT, in contrast, proposes to delay that transition. “DOT only slowly phases out 111s by 2017 and the rest of fleet by 2020, and we think the industry is pushing to move the phaseout to 2025,” says Devorah Ancel, an attorney at the Sierra Club. “It’s very concerning.”
  2. Require steel jackets around vulnerable rail cars that carry oil. DOT would require freight companies to transition to a newer, sturdier model of car called the CPC-1232, but even those cars aren’t sturdy enough — they have already been involved some fiery accidents, including one in West Virginia in February and one in Illinois in March. Cantwell’s bill would go further, requiring CPC-1232s to be jacketed, and then calling for “new tank car design standards that include 9/16th inch shells, thermal protection, pressure relief valves and electronically-controlled pneumatic brakes.”
  3. Clamp down on the amount of flammable gases permitted in the oil on train cars. Oil fracked in North Dakota’s Bakken shale carries more volatile gases with it than your average crude, making explosions more common. DOT’s proposed rules do nothing to curb that. Cantwell et al would limit the volatility of the oil being transported and increase fines for violations.
  4. Reduce train speeds. Currently, the speed limit for crude-by-rail is 50 mph, and that’s voluntary. DOT would make a speed limit mandatory, but would only lower it to 40 mph, and even that may only apply in “high threat urban areas” with more than 100,000 people. “The question of speed limits is crucial,” says Swift. “You need to dramatically reduce the speed at which these trains are moving.” Swift notes that CPC-1232s may puncture when going above 18 mph, but environmental groups stop short of explicitly calling for that speed limit. NRDC says, “Crude oil unit trains must adhere to speed limits that significantly reduce the possibility of an explosion in the event of a derailment.” That would presumably fall somewhere between 18 mph and 40 mph. Stricter speed limits is the one major needed reform that the Senate bill doesn’t address.

Cantwell’s bill also doesn’t compensate communities when accidents happen (the DOT proposal doesn’t either). But the bill’s sponsors intend to introduce future legislation to establish an oil spill liability trust fund paid for by fees from the companies moving crude oil. “Taxpayers should not be on the hook to bail out communities after a disaster caused by private companies,” said Cantwell.

It’s hard to imagine this bill passing both houses of an intensely pro-business, pro–fossil fuel Republican Congress. But Senate Democrats hope that by raising the issue they can build public awareness and support for stronger rules.

The bill could put pressure on the Obama administration to adopt the strongest possible version of its proposal. During the public comment period on DOT’s draft rules, the oil and rail industries argued for the weakest rules under consideration. Now the plans are being reviewed by the White House Office of Management and Budget, which tends to scale rules back in order to reduce their cost to business. Representatives from the oil and rail industries have been meeting with OMB to lobby for weaker rules.

Late last month, Chuck Schumer (N.Y.), who will take over as Senate Democratic leader after Harry Reid (Nev.) retires next year, announced that he and six colleagues — including Baldwin and Democratic Whip Dick Durbin (Ill.) — had sent a letter to OMB Director Shaun Donovan asking him to ensure “the rule is strong and comprehensive and that it is finalized as quickly as possible.” If nothing else, Schumer’s push and Cantwell’s bill will set up a countervailing force to the industry voices that the Obama administration is listening to.

The administration should protect public safety without being pushed by fellow Democrats — in this case, it has the power to do so without congressional approval. There is definitely a clear alternative to the false choice between pipelines and dangerous oil trains.

Oil industry perspective: Oil trains’ No. 1 safety threat is derailments

Repost from The Grand Forks Herald
[Editor:  Author Mark Green is employed by the American Petroleum Institute, which represents America’s oil and natural gas industry.  Read on for an interesting – and highly biased – insider perspective on crude by rail.  A letter defending the railroad industry, written by an AAR spokesperson appeared in the Herald on April 9.  – RS]

Oil trains’ No. 1 safety threat: Derailments

By Mark Green, Apr 5, 2015 at 4:45 a.m.

WASHINGTON — Amid the continuing public discussion over improving the safety of crude oil delivered by rail, it’s important that everyone — the energy industry, railroads, regulators, policymakers — stay focused on the facts and the science.

This is key to making meaningful improvements to freight rail transportation — which already delivers 99.998 percent of materials such as crude oil without incident. We say meaningful improvements because, as with everything we do, the oil and natural gas industry’s safety goal is zero incidents.

First, the science. A new Energy Department report found no data showing correlation between crude oil properties and the likelihood or severity of a fire caused by a train derailment. Also from the report:

“No single parameter defines the degree of flammability of a fuel; rather, multiple parameters are relevant. While a fuel with a lower flashpoint, wider range of flammability limits, lower auto-ignition temperature, lower minimum ignition energy and higher maximum burning velocity is generally considered more flammable, the energy generated from an accident has the potential to greatly exceed the flammability impact of these and any other crude oil property based criteria.”

That last point highlights the importance of preventing derailments in the first place — because, according to the report, the kinetic energy created by a derailment can play a bigger role in the size of a fire than the commodity the train is hauling.

The department’s findings on crude oil properties also are consistent with a Federal Railroad Administration report from last fall, which compared crude oil with denatured alcohol, another hazardous liquid transported by rail. The report cautioned against zeroing in on a single measurement in the quest for safety improvement:

“The data suggests that denatured alcohol may pose a greater risk of explosion than crude oil,” it declared.

“As such, using vapor pressure as a metric to identify potential hazards may not prove effective when considering real-world accident conditions involving tank cars loaded with flammable liquids.”

The facts on volatility are important because some believe that a single safety measure — a tank car design — will address rail transport safety. As then-PHMSA Administrator Cynthia Quarterman said last year, “Getting a new tank car is not a silver bullet; first we need to prevent derailments.”

The oil and natural gas industry has been leading the way for a comprehensive, holistic approach that includes three main thrusts: prevention, mitigation and response. On prevention, in addition to Quarterman, others agree — including the Brotherhood of Maintenance of Way Employees and the Railway Supply Institute, whose members build and own the majority of U.S. tank cars.

“The focus on accident prevention must forever remain the priority,” wrote Thomas Simpson, president of the Railway Supply Institute, in a Wall Street Journal letter to the editor:

“Forensic data from rail accidents shows that the forces involved are such that in many events, even the most aggressive of proposed new tank-car designs wouldn’t have totally eliminated the risk of a commodity release. Reductions in derailment frequency and severity are required to ensure that the billions of dollars to be spent on upgraded tank cars aren’t wasted. Shippers and rail-equipment suppliers don’t control the infrastructure or operating procedures used in transportation.

“An exclusive focus on tank-car design would represent a missed opportunity for real, fundamental safety improvements.

API President and CEO Jack Gerard underscored the need for a broad rail safety approach during a conference call with reporters that discussed a new first responders education course, developed jointly by the oil and natural gas and railroad industries:

“This is not a goal that can be reached through any single action or step,” he said. “Eliminating the last elements of risk requires a holistic and science-based approach to better prevent, mitigate and respond to derailments of trains carrying crude oil.”

First-responder training, which will be taught for the first time this weekend at a firefighters’ conference in Nebraska by instructors from BNSF and at the annual conference for short line railroads in Florida, is an example of industry advancing safety and preparedness, Gerard said. Industry has been and will remain engaged:

“I think our industry is very much engaged in this process,” he said.

“We’re leaders in improving in safety. We’re committed to safety, with zero incidents (as the goal).”