Tag Archives: Crude by Rail

Railroad lobbyists winning again, in FRA rulemaking

From an email from Dr. Fred Millar
[Editor:  Millar refers here to an excellent series of articles in the Washington Post, “Deadline for train safety technology undercut by industry lobbying“, “Rail-safety deadline extension hitched to must-pass bill on transit funding” and “Senate passes transportation funding stopgap bill and rail-safety extension“.  Dr. Fred Millar is a policy analyst, researcher, educator, and consultant with more than three decades of experience assessing the risks associated with transporting hazardous materials.  – RS]

Railroad lobbyists winning again, in FRA rulemaking

By Fred Millar, October 28, 2015

This week’s excellent Washington Post reports by reporters Halsey and Laris outlined US railroad lobbyists’ ability to secure a three-year delay in implementing the key railroad safety equipment demanded on the original 2015 deadline by Congress in the Rail Safety Act of 2008.  There is a parallel and highly related story, so far unwritten, on how the railroads and allied interests relentlessly gain even more decisive and long-lasting ways to advantage profits over safety.

Even when Congress roused itself to demand more safety as in the 2008 RSIA, the seemingly permanent Reaganite legacy of “starving the beast” of government regulatory agencies grinds on to render the regulations pitifully weak.  Now the timid and under-staffed Federal Railroad Administration is quietly piddling away the once-in-a-generation opportunity from the 2008 law to impose a significant modern safety improvement regime [already seen in many industries] on the mighty railroads.

The public and Congressional alarm at several high-profile fatal rail disasters that led to the 2008 Rail Safety Improvement Act prompted Congress to include a strong mandate on the Federal Railroad Administration to impose a 20th Century type of Risk Reduction Program regime on the railroads.

This surprising loss by railroad lobbyists in Congress – although they secured some weakening amendments – led to strenuous railroad efforts to prevent the FRA from crafting any strong regulations.  The out-gunned FRA effectively suffered a regulatory failure of nerve, and buried the rulemaking process out of sight for four years, gaining only a weak-tea and partial consensus from railroads and rail labor in FRA’s own ad hoc Working Group of industry insiders.  A couple of ill-attended public hearings drew no public attention.

The resulting proposed rule in 2015 had two major safety-weakening features: first, it gave the railroads a new secrecy pot to hide railroads’ own safety risk information from discovery in court proceedings on railroad negligence.  Trial lawyers, citizens and some officials alarmed about the appalling secrecy already granted to railroads, for example in their decisions to route ultra-hazardous crude oil trains through major cities, filed comments opposing this new secrecy grant.

More importantly, FRA proposed to impose on the railroads only “a streamlined version” of a modern Risk Reduction Program regime.  The comprehensive and robust one mandated by Congress would have required significant new efforts by FRA to approve and oversee railroads’ Risk Reduction Programs, and to ensure compliance.  FRA staffers no doubt felt they were not up to that task, so punted the responsibilities —  to each covered railroad to create its own safety regimes and to decide how to measure their own effectiveness, with no federal guidance.

As FRA then-Administrator Joseph Szabo declared shortly after the Lac-Mḗgantic Quebec crude oil train disaster killed 47 in July 2013,  “The movement of this product is a game changer,” [referring to] the sharp rise in trainloads of volatile crude oil from North Dakota and other places. “We have to rethink everything we’ve done and known in the past about safety.” 

Undermining the most significant Congressional rail safety mandates we may ever see is hardly the new beginning we need.

East coast refineries slash deliveries of Bakken crude oil

Repost from Reuters
[Editor:  Significant quote: “EIA data shows PES imported more than double the amount between January and July, with cargoes from Nigeria, Chad and Azerbaijan.”] 

U.S. oil refiners look abroad for crude supplies as North Dakota boom fades

By Jarrett Renshaw and Catherine Ngai, November 3, 2015 12:52pm EST
Gasoline-making unit at a PBF Energy Inc refinery in Delaware City, Delaware August 21, 2015.  REUTERS/Charles Mostoller - RTX1P4UV
Gasoline-making unit at a PBF Energy Inc refinery in Delaware City, Delaware August 21, 2015. REUTERS/Charles Mostoller

PBF Energy Inc, one of the largest independent oil refiners in the United States, spent heavily in recent years to build the rail terminals at its Delaware City complex that it needed to take delivery of large loads of crude coming from North Dakota’s Bakken oil fields.

But now it is considering eliminating those deliveries altogether, and replacing them with foreign crude imports, according to two sources familiar with the situation. It has even closed its small Oklahoma City office that was only opened in 2013 and had served as a hub for the company’s trading in North Dakota’s oil, the sources said.

The sudden lack of interest in Bakken crude by PBF, which is run by Thomas O’Malley, one of the biggest names in the U.S. oil refining industry, reflects a dramatic recent change in the way East Coast refineries are sourcing the crude that they turn into everything from gasoline to heating oil and jet fuel.

The boom in the output of oil from North Dakota’s shale has ebbed as producers have begun to cut back in the face of the plunge in prices by nearly 60 percent since the summer of 2014.

North Dakota’s Bakken production peaked at 1.153 million barrels per day in June, and had fallen to 1.13 million barrels per day by August, according to state data.

The supply restraint has made Bakken crude relatively more expensive after transport costs than oil shipped from Latin America, the Middle East and Africa, prompting East Coast refiners to return to a foreign crude diet they derided as unprofitable five years ago.

Three companies that resuscitated failing oil refineries on the East Coast less than five years ago with the promise of cheap domestic oil are now looking overseas instead, four sources familiar with the plans told Reuters.

Together, PBF, Philadelphia Energy Solutions Inc and Delta Airline’s Monroe Energy are expected to cut their Bakken crude intake to the lowest levels since 2013, according to two oil traders who are familiar with East Coast rail arrangements.

PES, which bought a 335,000 barrel-a-day Philadelphia refinery that was slated for closure in 2012, has slashed its Bakken deliveries to just 17 trains in November from a peak of 100 trains a month during the summer, according to two sources familiar with the plant’s operations.

The planned deliveries mark the lowest monthly volume since the company built a new rail terminal to take advantage of the Bakken revolution. EIA data shows PES imported more than double the amount between January and July, with cargoes from Nigeria, Chad and Azerbaijan.

LOCKED INTO PAYING

The price of Bakken hasn’t fallen as much as other oil, nearly wiping out the entire $6 a barrel discount to the U.S. benchmark that it traded at in January and sending refiners scrambling for other sources. Meanwhile, a glut of other crudes has made importing – including transport costs of $2 to $3 a barrel – much more attractive.

Because bringing crude by rail from North Dakota to an East Coast refinery usually costs about $10 to $11 a barrel, without a deep discount for the oil, moving it across the country becomes unprofitable. As a result, Bakken crude is used in the U.S. Midwest and Canada where lower transportation costs make it a profitable option.

East Coast refineries accounted for about 10 percent of nationwide imports of crude in July, according to the latest data from the U.S. Energy Information Administration. That is expected to rise as the Bakken shipments fall further, analysts and traders say.

PBF had poured over $50 million into upgrading its Delaware City rail terminal and signed long-term volume commitments to unload at least 85,000 barrels per day from trains at a fixed $2 a barrel cost, regardless of whether it takes the oil. As a result, the company is locked into paying $170,000 a day.

In a conference call late last week, PBF disclosed that it is only budgeting to take 25,000 barrels a day of Bakken oil delivered by rail at its East Coast refineries in 2016.

The company’s spokesman Michael Karlovich said in an email that the company was transferring its single employee in the Oklahoma office to its headquarters in New Jersey, but declined to provide additional detail about the company’s Bakken strategy.

PBF’s Delaware City refinery imported about twice as much crude in July as in January, bringing in cargoes from Colombia and Peru, according to data from the U.S. Energy Information Administration. The company’s Paulsboro, New Jersey, refinery increased its imports by 50 percent in the same period.

PES declined to comment on the shifting crude slate, while Monroe Energy did not respond to requests for comment.

The refiners had previously found that relying on crude from the likes of Colombia, Mexico and Saudi Arabia was unprofitable. But now it may be different provided Bakken crude remains relatively expensive and the U.S. economy doesn’t head into a downturn.

That’s because the refiners are buoyed by increased U.S. fuel demand, partly because of the low oil prices. In 2010, demand was shrinking.

Additionally, they are supported by the closure of underperforming refineries in the Atlantic Basin during the last downturn. And then there is the current availability of deeply discounted crude oil from overseas.

“They are looking for the lowest cost supplies,” said Sandy Fielden, an analyst with RBN Energy. “A few years ago, that was North Dakota, but not today.”

(Reporting By Jarrett Renshaw and Catherine Ngai; Editing by Jessica Resnick-Ault and Martin Howell)

An Ethical Case Against Valero Crude By Rail

By Roger D. Straw, Benicia Herald Editor
October 30, 2015

Roger D. StrawIn June of 2013, I wrote a guest opinion for the Benicia Herald, “Do Benicians want tar-sands oil brought here?” I had just learned that the City of Benicia staff was proposing to give Valero Refinery a quick and easy pass to begin construction of an offloading rack for oil trains carrying “North American crude.” Valero was seeking permission to begin bringing in two 50-car Union Pacific trains every day, filled with a crude oil. Valero and the City would not disclose where the oil was coming from, but everyone knew of the boom in production in Canada (tar-sands crude) and North Dakota (Bakken crude).

At that time, my most pressing concern was that Benicia, my home town, not be the cause of destruction elsewhere. Tar-sands oil strip mining is the dirtiest, most energy-intensive and environmentally destructive oil production method in the world. It struck me then, and it still does, as a moral issue. Our beautiful small City on the Carquinez has a conscience. We have a global awareness and a responsibility to all who live uprail of our fair city. Our decisions have consequences beyond our border.

My article, and my conscience-driven concern, came BEFORE the massive and deadly oil train explosion in Lac-Mégantic, Quebec. That wreck and the many horrific explosions that followed involving Bakken crude oil and tar-sands “dilbit” (diluted bitumen) became the sad poster children of a movement to STOP crude by rail. It became all too easy for Benicians to base our opposition on a very legitimate self-protective fear. Not here. Not in our back yard. No explosions in OUR Industrial Park, in our town, on our pristine bit of coastal waters.

But fear mustn’t deaden our heart.

I was encouraged to read in the City’s recent Revised Draft EIR, that the document would analyze environmental impacts all the way to the train’s point of origin, including North Dakota and Canada:

“In response to requests made in comments on the DEIR, the City is issuing this Revised DEIR for public input to consider potential impacts that could occur “uprail” of Roseville, California (i.e., between a crude oil train’s point of origin and the California State border, and from the border to Roseville) and to supplement the DEIR’s evaluation of the potential consequences of upsets or accidents involving crude oil trains based on new information that has become available since the DEIR was published.” [emphasis added]

Sadly, the City’s consultants never made good on their intention. Our moral obligation to those uprail of Benicia extends, according to the consultants, to our neighbors in Fairfield, Vacaville, Davis, Sacramento, Roseville and to the good folks and mountain treasures beyond, but ONLY TO CALIFORNIA’S BORDER. What happens at the source, in Canada where boreal forests and humans and wildlife are dying; what happens in North Dakota where the night is now lit and the earth is polluted wholesale with oil fracking machinery – what happens there is of no concern to Benicians. Too far away to care. Their air, their land, their water is not our air, land and water. Evidently, according to our highly paid consultants, this is not, after all, one planet.

Or is it?

Our Planning Commissioners have more than a civic duty. They and we are called morally and ethically to understand our larger role in climate change and to protect the earth and its inhabitants. Our decision has consequences.

Together, we can STOP crude by rail.

CREDO Action generates over 1,800 letters opposing Valero Crude by Rail

Repost from CREDO Action
[Editor:  The following call to action arrived in thousands of email inboxes on October 27, 2015.  The response was huge – so far over 1800 CREDO-generated letters have been sent to the City of Benicia (in the first 24 hours).   The link here will take you to the CREDO Action page.  Letters deadline is 5pm on Friday, October 30, 2015.  – RS]

Tell the Benicia City Council: Block Valero’s dangerous oil trains terminal

Tell the Benicia City Council: Block Valero's dangerous oil trains terminal.

Oil giant Valero is trying to build a massive oil trains terminal at its refinery in Benicia.

Two 50-car oil trains per day would carry toxic fracked oil and tar sands across California to the refinery, passing through Roseville, Sacramento, Davis, Fairfield and other cities before reaching their destination in Benicia.¹

If approved by the Benicia City Council, the terminal would exacerbate local air pollution in Benicia and in communities along the rail route, expose those communities to the catastrophic danger of an oil train derailment and explosion, and fuel the climate crisis by encouraging fracking and tar sands extraction.

The Benicia City Council is accepting public comments on the project until 5pm on Friday, October 30, 2015. Local opposition has already delayed the project once – we need to speak out right now and demand that the city council block Valero’s dangerous oil terminal.²

Tell the Benicia City Council: Block Valero’s dangerous oil trains terminal. Submit a public comment directly to the city council.

The number of crude by rail accidents in recent years has skyrocketed. In addition to the deadly oil train explosion in Lac-Mégantic, Québec in July 2013, which killed 47 people, there have been nine major oil train explosions in the United States since the start of 2013.

In addition to the threat of deadly train derailments and explosions, Valero’s plan would worsen air quality for communities all along the rail line. In Benicia, shipping more fracked oil and tar sands to Valero’s refinery would only increase toxic refinery pollution. Further, oil trains leak dangerous chemicals, creating a toxic plume around rail lines up and down the rail route.³

With no end in sight to the record drought threatening California, there is simply no excuse for green-lighting any fossil fuel infrastructure project that will encourage the extraction of more dirty fracked oil and tar sands and exacerbating climate change.

Valero will get its way if we remain silent. Submit a public comment urging the Benicia City Council to reject Valero’s crude by rail project.

¹ Jaxon Van Derbeken, “Benicia sees cash in crude oil; neighbors see catastrophe,” San Francisco Chronicle, October 24, 2014
² Tony Bizjak, “Benicia plans more study of crude-oil train impacts,” Sacramento Bee, February 3, 2015
³ Diane Bailey, “Valero’s Promise to Benicia: We’ll only have an environmental disaster once every 111 years,” NRDC Switchboard, September 17, 2014

Send an email.

Tell the Benicia City Council:

Valero’s outrageous proposal to build an oil trains terminal at its refinery in Benicia threatens the health and safety of people all along the rail route.

If approved by the Benicia City Council, the terminal would exacerbate local air pollution in Benicia and in communities along the rail route, expose those communities to the catastrophic danger of an oil train derailment and explosion, and fuel the climate crisis by encouraging fracking and tar sands extraction.

I urge the Planning Commission and the City Council to reject Valero’s dangerous plan.

Click here to send this email.

Tell the Benicia City Council: Block Valero's dangerous oil trains terminal.

Oil giant Valero is trying to build a massive oil trains terminal at its refinery in Benicia.

Two 50-car oil trains per day would carry toxic fracked oil and tar sands across California to the refinery, passing through Roseville, Sacramento, Davis, Fairfield and other cities before reaching their destination in Benicia.¹

If approved by the Benicia City Council, the terminal would exacerbate local air pollution in Benicia and in communities along the rail route, expose those communities to the catastrophic danger of an oil train derailment and explosion, and fuel the climate crisis by encouraging fracking and tar sands extraction.

The Benicia City Council is accepting public comments on the project until Friday. Local opposition has already delayed the project once – we need to speak out right now and demand that the city council block Valero’s dangerous oil terminal.²

Tell the Benicia City Council: Block Valero’s dangerous oil trains terminal. Submit a public comment directly to the city council.

The number of crude by rail accidents in recent years has skyrocketed. In addition to the deadly oil train explosion in Lac-Mégantic, Québec in July 2013, which killed 47 people, there have been nine major oil train explosions in the United States since the start of 2013.

In addition to the threat of deadly train derailments and explosions, Valero’s plan would worsen air quality for communities all along the rail line. In Benicia, shipping more fracked oil and tar sands to Valero’s refinery would only increase toxic refinery pollution. Further, oil trains leak dangerous chemicals, creating a toxic plume around rail lines up and down the rail route.³

With no end in sight to the record drought threatening California, there is simply no excuse for green-lighting any fossil fuel infrastructure project that will encourage the extraction of more dirty fracked oil and tar sands and exacerbating climate change.

Valero will get its way if we remain silent. Submit a public comment urging the Benicia City Council to reject Valero’s crude by rail project.

¹ Jaxon Van Derbeken, “Benicia sees cash in crude oil; neighbors see catastrophe,” San Francisco Chronicle, October 24, 2014
² Tony Bizjak, “Benicia plans more study of crude-oil train impacts,” Sacramento Bee, February 3, 2015
³ Diane Bailey, “Valero’s Promise to Benicia: We’ll only have an environmental disaster once every 111 years,” NRDC Switchboard, September 17, 2014