Oil Shipments Turn Albany Into “Houston on the Hudson” As Communities Across Country Fight Oil-By-Rail Proposals (via Desmogblog)
Thu, 2014-03-27 04:18Justin Mikulka Due to a massive increase in the movement of crude oil by rail in the past few years, communities across the country are facing the daunting prospect of becoming part of the oil industry’s infrastructure. In Pittsburg…
Repost from the San Francisco Chronicle
Little noticed by neighbors, trains carrying crude oil from the Great Plains have been rumbling into a Richmond rail yard.
The cargo is the same kind of crude that fueled a deadly explosion last summer when a train carrying the oil derailed in a small Quebec town, killing 47. Now environmentalists are suing to prevent any more shipments to Richmond.
The suit, filed last week in state Superior Court in San Francisco, would revoke a permit issued by a regional agency in February that allows Kinder Morgan to unload oil trains in Richmond at a facility originally built to unload ethanol.
The Bay Area Air Quality Management District granted the permit without studying how the switch from shipping ethanol to oil could affect the environment, said Kristen Boyles, staff attorney with Earthjustice, the group that filed the suit on behalf of four other environmental organizations.
“These things are going in without a lot of thought to their safety, their impact on the environment and their possible health effects,” Boyles said. “That’s what’s really frustrating with this situation – how little we know until this is rolling through our backyards.”
Kinder Morgan declined comment.
Ralph Borrmann, an agency spokesman, said the change in fuels handled by Kinder Morgan’s rail-yard facility would not increase air pollution – his agency’s primary concern.
“There were no emissions consequences as a result of the permit, no net increase of emissions, which is what we look at,” Borrmann said.
Just a few years ago, California didn’t import oil by rail. But that’s changing fast.
In 2009, railways carried just 45,000 barrels of oil into the Golden State, according to the California Energy Commission. By last year, that number had soared to 6.2 million barrels. A barrel equals 42 gallons.
California’s refineries have turned to rail to access a glut of petroleum in the Great Plains. Oil production in the Bakken Shale formation that lies beneath North Dakota and Montana has surged so much, so quickly, that area’s pipelines lack the capacity to transport the fuel. As a result, the Bakken oil sells at a discount to other kinds of crude.
Oil by rail is “about discounted oil, delivered to your doorstep,” said Gordon Schremp, senior analyst with the Energy Commission.
The amount of oil carried by rail is rising nationwide. While most of those shipments reach their destination without incident, the United States and Canada have recently seen a series of oil-train accidents leading to explosions and fires, including last July’s derailment in Lac-Megantic, Quebec. In January, the U.S. Pipeline and Hazardous Materials Safety Administration issued an alert warning that Bakken crude, much lighter than many other grades of oil, may be more flammable as well.
The warning spurred opposition to a series of oil-by-rail projects in California. Valero’s refinery in Benicia is seeking approval to build a rail yard that could move 70,000 barrels of oil each day, replacing more than half of the petroleum the refinery now imports from abroad, via ship.
In Pittsburg, another project would bring in oil by ship, pipeline and rail. The $200 million proposal, by WesPac Energy, would refurbish an old Pacific Gas and Electric Co. facility to import, store and supply oil to Bay Area refineries.
Community groups have spent months fighting those proposals. But most Richmond residents knew nothing about Kinder Morgan’s Richmond rail facility until television station KPIX reported on the issue last month.
Kinder Morgan applied to convert its existing ethanol offloading facility last year, and won an operating permit from the air district in February. KPIX filmed trucks carrying oil from the facility to the Tesoro refinery in Martinez.
A Tesoro spokeswoman on Friday declined to confirm whether the refinery collaborates with Kinder Morgan’s Richmond facility. But she said the refinery uses about 5,000 to 10,000 barrels of oil per day taken from rail shipments, equal to between two and four train shipments per month.
Earthjustice and its partners in the suit – the Asian Pacific Environmental Network, Communities for a Better Environment, the Natural Resources Defense Council and the Sierra Club – want Kinder Morgan’s operating permit in Richmond revoked until the company conducts a full environmental impact review.
“The risk of train accidents is huge with this kind of crude oil,” Boyles said.
Repost from The Contra Costa Times
PITTSBURG — Heavy industry has long been woven into this city’s blue-collar fabric, ranging from chemical to steel to power plants. But so, too, are homes and upscale businesses along Pittsburg’s waterfront, which the city has worked to transform into a thriving bedroom community complete with a downtown cigar lounge and specialty food store that sells caviar.
Those two worlds collided with a developer’s proposal to ship domestic and imported crude oil to a vacant industrial parcel where 16 large storage tanks — now empty — once stored fuel oil used to run a former PG&E power plant more than 25 years ago.
The proposal has generated fierce community opposition, and in January city officials reopened a public review period for sections of a draft environmental impact report in response to safety, air quality and other environmental concerns. The controversy is a reminder of the tension that has long existed along the waterfront in Contra Costa County, which is home to power plants, refineries, manufacturing and other industrial sites that coexist uneasily with suburban housing developments and quaint downtowns.
“There are concerns at multiple levels. You’re bringing in something that is really flammable — material with the potential for explosion — and you are bringing it into a densely populated area,” said Susan Burkitt, who lives near the proposed project and is a founder of the Pittsburg Defense Council, which along with several environmental groups is fighting the plan.
To date, more than 4,000 residents in this city of 66,000 have signed a petition against the project, which would receive 88 million barrels annually of domestic crude oil from the Bakken region of North Dakota, Colorado, west Texas and New Mexico shipped by rail, as well as imported crude brought in by marine vessels, to a 125-acre parcel next to what is now the NRG power plant.
As part of the joint venture of WesPac Energy and Oiltanking Holding Americas, the oil would be shipped by pipeline from the terminal to local refineries. Pittsburg High School students have held an on-campus protest against the project and spoken out against it at City Council meetings.
Pittsburg, which takes its name from the legendary Pennsylvania steel town, has deep industrial roots. In 2010, steel manufacturer USS-Posco Industries marked 100 years of operations here, and Dow Chemical has been in Pittsburg since 1939.
Previous disputes have erupted over a decision by county supervisors in 1990 to locate the Keller Canyon landfill in Pittsburg and Dow’s plan to build a hazardous waste incinerator in 1992 (Dow later dropped the proposal). In 2009, refiner Tesoro stopped storing petroleum coke dust at its inactive terminal on East Third Street after neighbors complained about soot being spread into downtown.
The latest flap is not surprising, said former City Councilman Bob Lewis, who served from 1989 to 2002. “That’s a situation to be expected in Pittsburg, where residential uses are adjacent to industrial uses. It’s nothing new.”
But Joe Canciamilla, a former state assemblyman who served on the council from 1987 to 1996, said the city bears some responsibility for the conflict that has arisen over the WesPac project.
“The area is transitioning and becoming more residential than industrial. The city to some degree is responsible for engineering this kind of conflict by approving new residences close to a lot of these industrial sites,” said Canciamilla, referring to redevelopment efforts that have revitalized the city’s downtown. “The city spent millions of dollars subsidizing properties and development in the area, and then to turn around (and consider) putting in a massive new industrial development is certainly going to create some level of conflict.”
Critics point out that unlike the buffer zone around Dow’s Pittsburg operations, where the closest homes are about a mile away, there is no such buffer called for in the WesPac proposal. Growing national concerns about the safety of moving crude by rail has also spurred the opposition.
Drewcilla Wyatt’s home is about a quarter-mile from where WesPac wants to build a rail component that would unload 100 railcars of crude a day five days a week at an existing train yard along North Parkside Drive.
“Pittsburg has moved up since I came in. We have a functioning downtown,” she said. “We have enough trains. Trains run here all night and day. What if a train spills, what if it catches fire? This is so close to homes.”
Proponents of the $200 million project say it would help refineries take advantage of a domestic oil boom at a time when California production is falling. WesPac officials say the project would be safe, address environmental concerns raised by opponents, create jobs and provide $800,000 in yearly property tax and tidelands lease revenue to the city.
“I think WesPac is a very good fit for the city of Pittsburg. It is proposed to be developed in an area zoned for heavy industry, so that’s the only thing that can go in there,” said Brad Nail, who retired as the city’s economic director in 2011.
Nail said he understands that redevelopment in the area helped set the stage for conflict over the project. “But Pittsburg historically is an industrial town. … If you buy a home in the marina downtown area, you are very aware there is industry there.”
More than 1,200 housing units have been built since 1980 in the downtown and waterfront area, according to city records.
The desire to maximize the economic potential of Contra Costa’s waterfront has been a goal of Supervisor Federal Glover, who launched the Northern Waterfront Economic Development initiative last year.
Glover, a former Pittsburg councilman, has not taken a formal position on the WesPac project, and a consultant’s report prepared for his initiative concludes that the waterfront could become more competitive by bringing in new industries such as clean technology and green energy. But such changes are not going to happen right away, according to Glover.
“We are not going to run in tomorrow and be able to have all the nice green industries and the high-tech stuff,” he said. “It’s a blend, and how you are able to balance out what you have in the area.”
Repost from PLATTS McGraw Hill Financial
More conversions of California ethanol rail unloading terminals to crude service are unlikely, following Kinder Morgan’s switch of its Richmond, California, unloading facility, an analyst said Monday.
“The other big [ethanol] terminals aren’t as close to refiners, and there is a limited amount of ethanol capacity,” Stillwater Associates President David Hackett said on the sidelines of the American Fuel and Petrochemical Manufacturers Annual Meeting in Orlando, Florida.
Kinder Morgan late last year converted the terminal to crude service from ethanol service “after changes in the ethanol market made it attractive for us to look to other commodities,” spokeswoman Melissa Ruiz said Monday in an email.
The Richmond terminal is the only 100-car unit train crude-by-rail facility in California, she said.
“In order to handle crude oil, we had to file a new application with the Bay Area Air Quality Management District (BAAQMA) for permits, which we received last summer,” she said. “We began handling crude this past September, and the facility will serve Bay Area refiners.”
The terminal is located on the Burlington Northern Santa Fe rail yard in Richmond. The railed crude is trucked from the terminal, she said, noting that there are no pipelines or tank connections involved.
Ruiz declined to comment on the terminal’s current throughput or on which types of crude are received by the facility.
The rail terminal conversion comes after the leading US midstream company early last year scrapped its high-profile proposed Texas-to-California Freedom Pipeline on a lack of customer interest. The pipeline would have delivered 277,000 b/d of crude from the Permian Basin in West Texas to northern and southern California refining complexes.
Kinder Morgan said at the time that it would focus on providing crude-by-rail options for West Coast and Texas shippers.
Along the West Coast, refiners and midstream companies are planning to construct crude-by-rail unloading terminals, but are facing permitting delays opposition.
If California “doesn’t get crude by rail, their competitiveness will erode,” Hackett said during the Platts Barrel Talk panel discussion at the conference. “We do see some uptick in rail deliveries, but there is a lot of opposition to crude by rail in California with the environmental community.”
–Bridget Hunsucker, Edited by Katharine Fraser