California planners reject Valero oil-by-rail project
By Kristen Hays, Feb 12, 2016 1:29pm EST
Feb 12 Valero Energy Corp’s proposed oil-by-rail project at its northern California refinery was quashed by local planners this week, the first such facility on the U.S. West Coast to end a years-long wait for permits with a rejection.
The Benicia Planning Commission late Thursday unanimously renounced Valero’s request to build the project at the conclusion of four consecutive public hearings dominated by scores of opponents.
Valero first proposed building the rail facility at its 145,000 barrels per day Benicia refinery to offload up to 70,000 bpd of inland U.S. and Canadian heavy crude three years ago.
Several other West Coast rail projects await such decisions by local or state governments. Those include Tesoro Corp’s proposed 360,000 bpd railport in Washington State – the largest in the nation – and Phillips 66’s newly-trimmed 25,000 bpd facility at its Santa Maria refinery in Arroyo Grande, California.
Others gave up with U.S. crude prices down more than 70 percent since mid-2014 on global oversupply. That decline squeezed discounts of inland U.S. crude to global crudes, eroding oil-by-rail’s profitability.
Global Partners LP last month laid off workers and said the company would drop crude handling at its ethanol terminal in Oregon in the fallout of the oil rout.
Valero can ask the Benicia City Council to override planners and approve a permit for the project. A spokeswoman said on Friday that the company would “evaluate our options for appeal.”
The staff for Benicia’s planners recommended approval.
When Valero first proposed the project, oil-by-rail was growing fast and U.S. and Canadian crudes were much cheaper than global crudes, even with added transportation costs of moving via train. Rail also gave West Coast refiners a way to tap those crudes as no major oil pipelines cross the Rocky Mountains.
Not anymore. Shipments originating on top U.S. railroads fell 23 percent by the third quarter last year from the peak of 1.02 million bpd in the third quarter of 2014, according to the American Association of Railroads.
The Tesoro project remains under review by a state council in Washington, which will hold hearings in June and July.
San Obispo County planners are expected to decide on the Phillips 66 project next month, the company said. Staff for those planners recommended rejecting the facility.
Repost from Reuters [Editor: Significant quote: “Bakken transported on water poses unique risks since it is lighter and more volatile than other crudes…. ‘An oil barge accident in San Francisco Bay or off the coast of Los Angeles would be catastrophic,’ said Matt Krogh, a director at environmental group ForestEthics. ‘Bakken is simply too dangerous to move by barge or train and we don’t need this extreme oil,’ he said.” (emph. added) – RS]
California imports of Bakken crude by barge sets record in 2014
By Rory Carroll, SAN FRANCISCO, April 16, 2015
(Reuters) – California imports of Bakken crude oil from North Dakota on barges totaled a record 1.5 million barrels last year, 27 percent greater than the amount that reached the state by rail, the California Energy Commission told Reuters on Thursday.
The transport of Bakken crude by rail is controversial, with fiery derailments in recent years prompting safety and environmental concerns. In California, 15 cities and towns have passed resolutions opposing the trains in their towns.
But many California refineries do not have the infrastructure necessary to unload crude oil trains. Attempts to add rail extensions to those refineries have in some cases been delayed due to opposition from environmental groups.
To get the low-cost Bakken crude to California refineries, producers load it onto trains in North Dakota bound for transport terminals in the Pacific Northwest. From there it is loaded onto barges bound for California refineries, which are better equipped to receive crude from sea vessels.
David Hackett, president of Stillwater Associates, a refining consultancy, said the Global Partners LP transport terminal in Clatskanie, Oregon, is a key departure point for barges carrying Bakken to California.
The facility, on a small canal that feeds into the Columbia River, began quietly transshipping oil from trains to barges in 2012 and is now receiving so-called “unit trains”, mile-long trains that only carry crude oil.
Global Partners did not respond to a request for comment.
Hackett said refineries such as Tesoro Corp’s facility in Carson, California, are likely destination points for the barges.
Tesoro declined to discuss its movements of crude oil, saying the information is commercially sensitive.
Hackett noted that imports of Bakken either by rail or barge represent only a fraction of California’s total crude imports. California imported nearly 300 million barrels of crude from foreign countries such as Saudi Arabia and Iraq last year, he noted.
But Bakken transported on water poses unique risks since it is lighter and more volatile than other crudes, environmentalists say.
“An oil barge accident in San Francisco Bay or off the coast of Los Angeles would be catastrophic,” said Matt Krogh, a director at environmental group ForestEthics.
“Bakken is simply too dangerous to move by barge or train and we don’t need this extreme oil,” he said.
With little ado, the Putnam County Legislature last Wednesday (April 8) opposed two train-transit practices, one involving freight traffic — the unsafe shipping of incendiary crude oil along the Hudson River; and the other involving commuter lines — the levying of taxes to support the Metropolitan Transportation Authority, whose trains carry numerous county residents to work every day.
By 8-0 votes (with one member absent), the legislature urged New York State to revoke permits that allow volatile oil to travel on the Hudson and to reverse its finding that expanding an Albany oil transportation terminal raises no “significant” concerns. It likewise sought the repeal of the MTA taxes on payrolls and vehicles.
In other business at its formal monthly meeting, the legislature unanimously opted to legalize limited use of sparklers, popular Fourth of July “pyrotechnic” devices.
Barges and ‘bomb’ trains
In addressing the so-called “bomb” train question, the all-Republican legislature added its voice to a growing, bipartisan chorus of local governments in the Hudson Valley opposing the use of rail lines along the river, as well as barges, to move highly explosive oil without adequate safeguards. The legislature devoted much of a committee meeting in February to a background discussion of the issue. (See County Committee to Draft Call for Action on Bomb Trains.)
Its resolution, to be sent to Gov. Andrew Cuomo and state legislative officials, refers to use of “unacceptably dangerous” rail cars to move Bakken shale oil and heavy tar-sands oil, which originate in North Dakota and Alberta, Canada, and are more hazardous than other forms of fuel. The resolution says that daily two to three oil trains, each with 3 million gallons, travel down the western side of the Hudson, opposite Putnam. It points out that recent oil-train derailments in the United States and Canada caused “loss of property and significant environmental and economic damage” as well as, in one case, 47 deaths.
The resolution notes that one oil company, Global Partners LP, proposes to expand its oil terminals in Newburgh and New Windsor, across the Hudson from Putnam County, which could “double the number of trains and marine vessels” carrying such dangerous fuel along the Hudson, despite the presence of designated Significant Coastal Fish and Wildlife Habitats in the Hudson Highlands, Fishkill Creek and elsewhere. A similar expansion is proposed for an Albany facility, the legislature stated.
The resolution also declares that:
Under present laws, “no collaboration must take place between the railroads and the towns through which these rail cars [go].”
“There have been no spill-response drills in Putnam County waters.”
“Putnam County’s shorelines include private residences and businesses, public parks, and critical public infrastructure at significant risk in the case of a crude-oil spill” and that “tourism based on a clean environment is an important part of Putnam County’s economy.”
The legislature asked the state “to immediately revoke permits … allowing for the transport of up to 2.8 billion gallons per year of crude oil on the Hudson River [and] order full environmental impact studies, including the potential impacts of a crude oil spill in the Hudson River affecting Putnam County shoreline property, environmental resources, and drinking water.”
It similarly urged the state to rescind a “negative declaration of significance” on expansion of Albany oil operations and “order a full, integrated environmental impact study of the proposed expansion” of oil terminals in New Windsor and Newburgh, as well as Albany. Under present laws, “no collaboration must take place between the railroads and the towns through which these rail cars [go].”
“It’s not understood” how much risk the transport of volatile oil brings, said Carl Albano, the legislature’s chairman. “It’s a major, major issue in our backyard.”
Legislator Barbara Scuccimarra, who represents Philipstown, observed that the “bomb” trains run along the Hudson “over crumbling bridges and through towns and villages,” compounding the potential for devastation.
“There are really no safeguards in place and it’s scary. If we were to have an explosion, it would be catastrophic,” Legislator Dini LoBue added.
Repost from Reuters [Editor: At the 9/11/14 Benicia Planning Commission meeting, John Hill, vice president and general manager of the Valero Benicia Refinery, stated that Bakken crude has been refined at Valero. Commissioner Steve Young asked Hill to confirm his statement, which he did. Young then asked the means of transport, and Hill replied “by barge.” Our communities might well ask when, how much, and with what new volatile emissions output, etc…. – RS]
Exclusive: California getting more Bakken crude by barge than rail
By Rory Carroll, SAN FRANCISCO, Oct 23, 2014
A pumpjack brings oil to the surface in the Monterey Shale, California, April 29, 2013. REUTERS/Lucy Nicholson
(Reuters) – Shipments of Bakken crude oil from North Dakota to California by barge have quietly overtaken those by train for the first time, showing how the state’s isolated refiners are using any means necessary to tap into the nation’s shale oil boom.
While tough permitting rules and growing resistance by environmentalists have slowed efforts to build new rail terminals within California itself, a little-known barge port in Oregon has been steadily ramping up shipments to the state, a flow expected to accelerate next year.
From January through June, California received 940,500 barrels of the North Dakota crude oil from barges loaded at terminals in the Pacific Northwest, the highest rate ever, Gordon Schrempf, senior fuels analyst for the California Energy Commission, told Reuters.
Bakken crude transported to California on railcars, which has gained widespread attention after a series of fiery train derailments in North America, accounted for just 702,135 barrels over the same time period, according to published figures.
“We’re seeing marine transport of Bakken crude outpace rail for the first time,” Schrempf said. In 2013, rail shipments of 1.35 million barrels exceeded barge shipments of 1.33 million barrels. The year before, almost no crude arrived by barge.
Bakken shipments by barge and rail may only comprise a tiny portion of the crude California imports, at about 5,200 and 4,000 barrels per day respectively, with Alaska supplying over 20 times as much crude.
But companies, including refiner Tesoro Corp and logistics company NuStar Energy LP, have plans to significantly expand that volume with new terminals along the Pacific Northwest that would unload trains from North Dakota and pump the oil onto tankers.
They would help make California a major destination for Bakken oil, a trend that has drawn objections from environmental groups who have been seeking to stem the tide, often by blocking local permits to built oil-train offloading terminals.
“Bringing it in by barge gets you around cumbersome permitting and the growing citizen opposition to crude-by-rail,” said Lorne Stockman, research director of Oil Change International, a research and advocacy organization working on energy, climate and environmental issues.
To be sure, their objections may differ. The principle concern over transporting Bakken by rail is the risk that a derailment could cause a deadly explosion similar to the one in Lac Megantic, Quebec, last year that killed 47 people.
There is no suggestion that waterborne oil transportation poses similar explosive risks, although the environmental impact of a barge spill could be much greater.
“The barges are designed to carry the grade of oil that the Bakken is,” said Ted Mar, prevention branch chief for the state’s Office of Spill Prevention and Response and a former member of the Coast Guard.
That is small comfort to environmentalists, who oppose all forms of oil production, in particular shale crudes like Bakken, extracted through hydraulic fracking they fear contributes to global warming and poses a potential risk to water supplies.
“Our end goal is to leave these more dangerous, unconventional fuels in the ground,” said Jess Dervin-Ackerman, conservation manager for the San Francisco Bay Chapter of the Sierra Club.
SMALLER BUT CLOSER
With state production declining since the mid-80s, California’s refiners have increasingly relied on deliveries of crude by oceangoing tankers carrying 500,000 barrels or more from places like Alaska, Saudi Arabia, Ecuador and Iraq, which supplied two-thirds of their needs last year.
The refiners have been scrambling for several years to get better access to cheaper domestic shale oil by any means necessary, replacing costlier imports. But with the big shale fields to the east of the Rocky Mountains and a lack of major pipelines, it has not been easy.
The articulated tug barges (ATBs) now arriving are tiny by comparison to the tankers, carrying as little as 50,000 barrels.
Such shipments cost more than bringing Bakken directly to California by rail, but easily plug into existing port and terminal infrastructure – avoiding the need for new permitting that can take years.
While many are working to build out their own rail facilities, a handful of major rail-to-barge terminals along the Pacific Northwest coast that would ship over 500,000 bpd of Bakken crude have been in the works for several years. But most are incomplete, and several face delays.
One of the few exceptions is an idled ethanol terminal and processing plant in Clatskanie, Oregon, run by Global Partners LP. The facility, on a small canal that feeds into the Columbia River, began quietly transshipping oil from trains to barges in 2012 and is now receiving so-called “unit trains”, mile-long trains that only carry crude oil.
“Unit train volume into our Clatskanie terminal is up, and interest in the facility from prospective customers is at an all-time high,” Global Partners Chief Executive Eric Slifka said in August.
Global Partners did not respond to a request for comment.
Later that month, the firm received a new air permit from the Oregon Department of Environmental Quality that will allow it to ship as much as 1.84 billion gallons of volatile liquids, or some 120,000 bpd. It did not specify crude or ethanol.
Much of those shipments moved north to refineries in Washington, including BP’s Cherry Point in Puget Sound, and Phillips 66’s Ferndale facility. But both those plants are expanding their own facilities to bring more Bakken in by rail, likely curbing some demand for barges.
Top oil barge operator Kirby Corp, which runs vessels out of Clatskanie, is currently building two larger 185,000-barrel barges to deploy on the coast next autumn.
Environmentalists say they are monitoring the rise in Bakken-by-barge deliveries.
“This won’t pull our focus away from crude by rail, but rather expand the lens with which we look at dangers of Bakken entering our communities,” said the Sierra Club’s Dervin-Ackerman.
(Reporting by Rory Carroll, editing by Jonathan Leff and Marguerita Choy)
