SACRAMENTO, Calif.— As one of California’s largest oil producers enters bankruptcy, the Center for Biological Diversity and Sierra Club today urged Gov. Gavin Newsom to prevent California Resources Corporation and other troubled oil companies from shirking legal obligations to clean up their wells and prevent pollution. CRC filed for Chapter 11 bankruptcy on Wednesday.
Today’s letter calls on the governor to intervene in CRC’s bankruptcy proceedings to ensure the company sets aside enough money for well cleanup. CRC and its affiliates operate approximately 18,700 wells in California, which could cost more than $1 billion to properly plug, according to the Institute for Energy Economics and Financial Analysis. Of these, 7,826 are already “idle,” which means they’ve produced little to no oil in the past two years.
“Bankruptcy proceedings like these endanger California because oil companies like CRC can weaponize them to dump their environmental cleanup costs on the public,” said Kassie Siegel, an attorney at the Center for Biological Diversity. “Given the huge number of wells at stake, the Newsom administration should intervene quickly to protect the public from those costs and our environment from pollution. More big oil bankruptcies are coming, and Gov. Newsom has a responsibility to be ready.”
“CRC’s bankruptcy is likely just the first of many as the oil industry inevitably declines in California. Gov. Newsom has the tools to protect the public from Big Oil, but so far he hasn’t used them,” said Kathryn Phillips, director of the Sierra Club California. “It’s critical that Gov. Newsom ensure that failing oil companies are held accountable for cleaning up their own mess, rather than leaving taxpayers and workers to pay the price.”
Although oil companies are required to pay for the cost of properly plugging and abandoning wells, they have not set aside nearly the amount required for remediation. Statewide, the California Council on Science and Technology estimates that cleaning up California’s approximately 107,000 oil and gas wells would cost over $9.2 billion, yet the bonds that are supposed to cover these costs total only about $107 million.
Today’s letter also urges Gov. Newsom to take proactive steps to protect the public and the environment in anticipation of a likely wave of future oil and gas bankruptcies. These steps include:
Increasing and accelerating well plugging and abandonment requirements to reduce air and water pollution and create jobs.
Increasing bond requirements to ensure that oil and gas companies set aside enough financial resources to cover the full costs of remediation even if they become insolvent.
Ensuring that the oil and gas industry as a whole – not taxpayers –funds the remediation of truly “orphaned” wells, by increasing the administrative fee on well owners as needed.
Avoiding the accrual of additional well cleanup costs by halting approvals and permits for new oil and gas activity, including new wells and fracking permits.
Taking steps to ensure that oil and gas companies satisfy their obligations to workers by honoring their pension and healthcare commitments.
Despite the dire outlook for the company, Newsom has continued to issue CRC new permits to drill wells. State oil regulators have issued CRC and its affiliates permits to drill nearly 300 new wells so far this year, including 27 new permits in just the first week of July, all without conducting environmental review required by law. Newsom has approved this expansion of drilling operations despite CRC’s long record of violating safety and environmental regulations.
“As other companies flirt with insolvency, the governor should accelerate well remediation by solvent operators, increase bonding levels on existing wells, and stop digging the hole deeper by handing out new drilling permits,” said Siegel. “Forcing companies to clean up their own messes would create jobs, keep the public safe from unattended wells and make sure polluters are the ones paying for cleanup.”
Statewide, Newsom has issued 1,500 drilling permits for new wells so far this year. He also lifted a moratorium on fracking by authorizing 360 new fracking events over the past few months.
In 2014, CRC was created as a spin-off by Occidental Petroleum and took over Occidental’s California oil and gas wells. Since then, CRC has performed poorly, earning “junk bond” status from ratings agencies. CRC blamed the coronavirus pandemic and economic downturn for the bankruptcy, but CRC was at high risk of bankruptcy even before these events, as detailed in a report from the Institute for Energy Economics and Financial Analysis.
U.S. Not Prepared for Tar Sands Oil Spills, National Study Finds
By Codi Kozacek, Circle of Blue, 10 December, 2015 16:07
Report urges new regulations, research, and technology to respond to spills of diluted bitumen.
Spills of heavy crude oil from western Canada’s tar sands are more difficult to clean up than other types of conventional oil, particularly if the spill occurs in water, a new study by a high-level committee of experts found. Moreover, current regulations governing emergency response plans for oil spills in the United States are inadequate to address spills of tar sands oil.
The study by the U.S. National Academies of Sciences, Engineering, and Medicine confirmed what scientists, emergency responders, and conservationists knew anecdotally from a major oil spill that contaminated Michigan’s Kalamazoo River in 2010 and another spill in Mayflower, Arkansas in 2013. Tar sands crude, called diluted bitumen, becomes denser and stickier than other types of oil after it spills from a pipeline, sinking to the bottom of rivers, lakes, and estuaries and coating vegetation instead of floating on top of the water.
“[Diluted bitumen] weathers to a denser material, and it’s stickier, and that’s a problem. It’s a distinct problem that makes it different from other crude.”
–Diane McKnight, Chair Committee on the Effects of Diluted Bitumen on the Environment
“The long-term risk associated with the weathered bitumen is the potential for that [oil] becoming submerged and sinking into water bodies where it gets into the sediments,” Diane McKnight, chair of the committee that produced the study and a professor of engineering at the University of Colorado Boulder, told Circle of Blue. “And then those sediments can become resuspended and move further downstream and have consequences not only at the ecosystem level but also in terms of water supply.”
“It weathers to a denser material, and it’s stickier, and that’s a problem. It’s a distinct problem that makes it different from other crude.” McKnight added. Weathering is what happens after oil is spilled and exposed to sunlight, water, and other elements. In order to flow through pipelines, tar sands crude oil is mixed with lighter oils, which evaporate during the weathering process. In a matter of days, what is left of the diluted bitumen can sink.
The study’s findings come amid an expansion in unconventional fuels development and transport in North America. Over the past decade, Canada became the world’s fifth largest crude oil producer by developing the Alberta tar sands. U.S. imports of Canadian crude, much of it from tar sands, increased 58 percent over the past decade, according to the U.S. Energy Information Administration.
Though oil prices are at a seven-year low, and market turbulence is expected to persist for several more years, tar sands developers are working to double the current tar sands oil production — around 2.2 million barrels per day — by 2030. Pipelines to transport all of the new oil are expanding too, producing a greater risk of spills.
Whether tar sands producers achieve that level of oil supply is not assured. Public pressure is mounting in Canada and the United States to rein in tar sands development due to considerable environmental damage and heavy carbon emissions. U.S. President Barack Obama last month scrapped the Keystone XL pipeline, an 800,000-barrel-per-day project to move crude oil from Canada’s tar sands to Gulf of Mexico refineries. An international movement to divest from fossil fuels and a legally binding global deal to cut carbon emissions –if it is signed in Paris– could curb demand for tar sands oil.
The National Academies of Sciences, Engineering, and Medicine study adds new data to arguments made by critics of tar sands development.
“The study really confirms a lot of the information that has been out there, there are no real surprises,” Jim Murphy, senior counsel for the National Wildlife Federation, told Circle of Blue. “You don’t want these things to be affirmed because it’s bad news for communities. But the good part about a study like this is hopefully it will prompt some action. Some folks were hiding behind the lack of a study like this, saying we don’t really know. Those excuses have gone away.”
“The chief takeaway is that this is a different oil, it presents different challenges, and responders and regulators simply don’t have the structures in place to deal with the challenges,” he added.
Nonetheless, energy companies are pursuing pipeline expansions, most notably in the Midwest and Great Lakes regions. Enbridge, Canada’s largest transporter of crude oil, operates a 3,000-kilometer (1,900-mile) pipeline network, known as the Lakehead System, that carries crude oil from Canada to refineries on the Great Lakes. The Lakehead system, in concert with Enbridge’s Canadian main line, is capable of transporting 2.62 million barrels of oil per day. The pipeline responsible for the 2010 oil spill in Kalamazoo was part of the Lakehead system. A link in the Lakehead system ruptured in 2010 and spilled more than 3 million liters (843,000 gallons) of tar sands oil into southern Michigan’s Kalamazoo River. It was the largest inland oil spill in U.S. history and its effects still linger because of oil that sank and is embedded in the river’s sediments.
“The chief takeaway is that this is a different oil, it presents different challenges, and responders and regulators simply don’t have the structures in place to deal with the challenges.”
–Jim Murphy, Senior Counsel
National Wildlife Federation
Enbridge is currently pursuing upgrades to its Alberta Clipper pipeline, which runs through Minnesota and Wisconsin, in order to boost the line’s capacity to 800,000 barrels per day from 450,000 barrels per day. A second project aims to increase the capacity of Line 61, a pipeline that runs from Wisconsin to Illinois, from 560,000 barrels per day to 1.2 million barrels per day. Opposition to the company’s operation of a pipeline that runs beneath the Straits of Mackinac, where Lake Michigan and Lake Huron join, has been especially fierce, though the line does not currently carry tar sands oil.
“I think at the very least we should be saying no to more tar sands through the [Great Lakes] region until we get a firm handle on how to deal with the unique challenges that tar sands spills present,” Murphy said. “We should also be taking a hard look, as the president did with the Keystone XL decision, about the other negative impacts of more tar sands oil, like the consequences in Alberta with the habitat destruction there, and also the higher carbon pollution content of the fuel.”
The National Academies study concluded that the characteristics of diluted bitumen are “highly problematic for spill response because 1) there are few effective techniques for detection, containment, and recovery of oil that is submerged in the water column, and 2) available techniques for responding to oil that has sunken to the bottom have variable effectiveness depending on the spill conditions.”
“Broadly, regulations and agency practices do not take the unique properties of diluted bitumen into account, nor do they encourage effective planning for spills of diluted bitumen,” it continued.
The study’s authors made a series of recommendations to help reduce the damage from future tar sands spills, including:
Update regulations that would require pipeline operators to identify and provide safety sheets for each crude oil transported by the pipeline, catalogue the areas and water bodies that would be most sensitive to a diluted bitumen spill, describe how they would detect and recover sunken oil, provide samples and information about the type of oil spilled to emergency officials, and publicly report the annual volumes and types of crude oil that pass through each pipeline.
Require the Pipeline and Hazardous Materials Safety Administration (PHMSA), the federal agency that regulates pipelines in the United States, to review spill response plans in coordination with the U.S. Environmental Protection Agency and U.S. Coast Guard to determine if the plans are capable of responding to diluted bitumen spills.
Develop methods to detect, contain, and recover oil that sinks to the bottom of water bodies.
Require government agencies at the federal, state, and local level to use industry-standard names for crude oils when planning spill responses.
Revise oil classifications used by the U.S. Coast Guard to indicate that diluted bitumen can sink in water.
Collect data to improve modeling of diluted bitumen oil spills.
Improve coordination between federal agencies and state and local governments when planning and practicing oil spill response exercises.
Develop a standard method for determining the adhesion –a measure of how sticky the oil is–of diluted bitumen in the event of a spill.
After the study’s release, PHMSA said it would develop a bulletin advising pipeline operators about the recommendations and urge voluntary improvements to their spill response plans. The agency also plans to hold a workshop next spring to hear public input on how to implement the recommendations, coordinate with other federal organizations to “advance the recommendations”, and work with industry representatives to improve spill response planning.
“We appreciate the work the National Academy of Sciences has done over the last few years in analyzing the risks of transporting diluted bitumen, including its effects on transmission pipelines, the environment and oil spill response activities,” Artealia Gilliard, PHMSA spokesperson and director for governmental, international and public affairs, said in a statement. “All pipelines transporting crude oil or any other hazardous liquid are required to meet strict federal safety regulations that work to prevent pipeline failures and to mitigate the consequences of pipeline failures when they occur.”
Codi Yeager-Kozacek is a news correspondent for Circle of Blue based out of Hawaii. She co-writes The Stream, Circle of Blue’s daily digest of international water news trends. Her interests include food security, ecology and the Great Lakes.
CSX Provides Update on W.Va. Oil Train Derailment Cleanup
By JOHN RABY Associated Press, Jul 21, 2015, 7:51 PM ET
GLEN FERRIS, W.Va. – CSX is continuing to closely monitor the environmental impact of a fiery oil-train derailment in southern West Virginia, a spokeswoman said Tuesday.The company held a public informational meeting that drew a sparse turnout Tuesday evening at the Glen Ferris Inn.
On Feb. 16, 27 cars of a CSX train’s 109 cars derailed during a snowstorm in Mount Carbon. Twenty of the cars leaked oil, some of which burned or was released into the ground.
Under a March consent order with the U.S. Environmental Protection Agency, the railroad agreed to a long-term plan for cleaning up and restoring the area around the derailment.
“It’s important for the community to know that we said we would be here,” CSX spokeswoman Melanie Cost said. “This is part of that process. We want to keep the open dialogue for them.”
Donna Shabdue lives near the derailment site and was forced to evacuate her home for more than a day. She showed up to the meeting to voice her concerns about local emergency response and pleaded for quickly informing the public about future incidents.
“They need to have a plan,” she said. “We didn’t know what to do. There needs to be a siren somewhere go off to evacuate. We didn’t know what to do. I just want out of there safely.”
The train was carrying 3 million gallons of Bakken crude and headed to Yorktown, Virginia. In recent years, trains hauling crude from the Bakken region of North Dakota and Montana have been involved in fiery derailments in six states.
The Federal Railroad Administration is investigating the West Virginia accident, which shot fireballs into the sky, burned down a nearby house and caused fires on the ground that smoldered for days.
The cause of the derailment hasn’t been released. Speed had previously been ruled out as a factor. The FRA has said the train was going 33 mph at the time of the crash. The speed limit was 50 mph.
CSX said more than 181,000 gallons of crude oil was recovered after the accident. About 10,000 tons of soil has been removed and shipped for disposal. Additional soil removal is planned next to the Kanawha River and a tributary at the derailment site.
Air, water and soil sampling continues. The water monitoring is at five locations along the river, including a drinking water intake, because of the occasional presence of oil sheens. CSX said the local drinking water supply has been unaffected by the spill.
Oil-absorbing booms were attached to a metal wall more than 410 feet long in the river as an additional containment measure. The wall will eventually be taken down once the sheens are no longer detected, Cost said.
Cost declined to disclose how much the company has spent on the cleanup.
CULBERTSON, Mont. — Five train derailments have occurred in less than two years in the northeastern Montana County where crews continue cleaning up after last week’s oil train derailment.
In addition to the two train derailments that occurred last week within a 20-mile stretch of Roosevelt County, two railcars also derailed at Culbertson in February, according to the Federal Railroad Administration database, which is updated through April.
The cause of that incident, which did not cause injuries or release of hazardous material, was attributed to human error, according to information submitted to the FRA.
The area also had two train derailments in 2014, including the derailment of two Amtrak cars in April of that year in the neighboring community of Bainville.
Two people were hurt in the derailment, which caused more than $100,000 in damage to Amtrak equipment and nearly $500,000 in damage to the track, the FRA database shows.
The cause that derailment is listed as “track roadbed settled or soft,” according to information submitted to the FRA.
The other 2014 incident, which involved one railcar that derailed in December at Culbertson, was attributed to a broken wheel, the FRA database shows.
The entire state of Montana had 19 train derailments in 2014, the FRA information shows.
Last Tuesday, nine railcars derailed near Blair, Mont., damaging about 1 mile of track. The cause remains under investigation.
BNSF Railway inspects the track in that area at least four times per week, spokesman Matt Jones said.
The FRA and the Pipeline and Hazardous Materials Safety Administration continued collecting evidence Monday to investigate the cause of Thursday’s derailment involving 22 oil tankers. Four of the derailed tank cars leaked oil, the FRA said, and spilled an estimated 35,000 gallons of oil.
The train was not speeding at the time it derailed, an FRA spokesman said. It was traveling 44 miles per hour in a 45-mph zone, the spokesman said.
BNSF environmental specialists continue to clean up at the site. Oil will be removed from the remaining tank cars in the next several days, and the cars will be removed after that, Jones said.
Crews are excavating contaminated soil, said Daniel Kenney, enforcement specialist with the Montana Department of Environmental Quality, which is monitoring the cleanup. The spill was not reported to have contaminated any water sources and has not threatened human health, Kenney said.
The North Dakota Department of Mineral Resources confirmed Monday that Statoil, the company that owns the oil that was on the train, is in compliance with the state’s oil conditioning order.
The order, which took effect in April, aims to reduce the volatility of Bakken crude oil.
Statoil was meeting the order by operating its equipment at specific temperatures and pressures, said Department of Mineral Resources spokeswoman Alison Ritter. Companies also can comply by submitting vapor pressure tests to the state.
The train with was loaded by Savage Services in Trenton, N.D., and headed to Anacortes, Wash., the FRA said.
Jeff Hymas, a spokesman for Savage Services, said Monday the railcar inspection protocols at the Trenton terminal are consistent with FRA and BNSF requirements.