Tag Archives: Kern County CA

Air Quality, Bakken Crude, Crude By Rail, Earthjustice, McClellan Business Park, Sacramento Metropolitan Air Quality Management District

Groups Challenge Sacramento Air District’s Furtive Approvals of Crude Oil Project

Repost from The Sacramento Bee
[Editor: See also EarthJustice’s account, and a Public News Service brief that appeared in the Benicia Herald.  Significant quote: “It’s becoming increasingly clear in California that the oil industry is cozying up to decision-makers who are deliberately bypassing environmental and health laws to usher in perilous oil transport projects that put people in danger,” – EarthJustice attorney Suma Peesapati.  – RS]

Sacramento air quality officials sued over crude oil trains

By Tony Bizjak, Tuesday, Sep. 23, 2014

A Bay Area environmental group has filed a lawsuit against the Sacramento Metropolitan Air Quality Management District for failing to require an environmental review of a crude oil transfer station at McClellan Business Park.

The group, Earthjustice, accuses local air quality managers of quietly rubber-stamping permits for InterState Oil Company, allowing it to use McClellan as a site for transferring highly flammable crude oil from trains into tanker trucks headed to Bay Area refineries.

Earthjustice filed the complaint Monday in Sacramento Superior Court on behalf of the Sierra Club. It charges that Sacramento air quality officials and InterState failed to review the potential hazards of running trains of inadequately designed tank cars full of crude oil through neighborhoods, and asks the court to halt the transfer operations until a full environmental review is conducted.

InterState Oil Company has been making the transfers at McClellan since last year, initially without applying for a permit. Inspectors with the air quality district discovered the oil transfers and required InterState to file for a permit, but did not require the company to conduct any review of the environmental impact of the project. Permit documents allow InterState to unload an estimated 100 train cars every two weeks. Officials with InterState could not be reached for comment.

Air district official Larry Greene told The Sacramento Bee last month that the oil company had an existing permit to transfer denatured alcohol and that the switch to crude oil transfers didn’t cause any emissions increases. The district issued a permit this year for crude-oil transfers but considered that action “ministerial,” meaning it did not trigger an environmental review, Greene said.

Environmental groups said they see that stance as an abrogation of duty by local regulators.

“It’s becoming increasingly clear in California that the oil industry is cozying up to decision-makers who are deliberately bypassing environmental and health laws to usher in perilous oil transport projects that put people in danger,” said Suma Peesapati, Earthjustice attorney. “We saw it in Richmond, we saw it in Kern County, and now we’re witnessing it in Sacramento. If we’re going to stem the flood of fossil fuels into California and protect the public from hastily approved, poorly planned projects, we demand transparent and law-abiding leadership.”

“This is an example of a public agency skirting the law and failing to ensure that everything possible is done to protect the public,” said Terry Davis of the Mother Lode Chapter of the Sierra Club.

Earthjustice recently sued a similar operation in the Bay Area city of Richmond, where the Kinder Morgan oil transportation company currently moves volatile Bakken crude oil from trains to trucks that take it to local refineries. That lawsuit was rejected a few weeks ago in court when a judge ruled the six-month statute of limitations for a lawsuit had expired. That project involves 100-car oil trains that come through midtown Sacramento.

Attorney Peesapati of Earthjustice said she does not believe the statute of limitations issue applies in the Sacramento case because this week’s lawsuit is within six months of the air quality district’s initial permit issuance this year.

A handful of recent derailments and explosions involving trains carrying crude oil, notably the lighter and more volatile Bakken crude oil from North Dakota, have prompted federal and state officials to push for more rail safety measures.

Read more here: http://www.sacbee.com/2014/09/23/6729786/sacramento-air-quality-officials.html#storylink=cpy
Bakken Crude, Crude By Rail, Pipeline transport

Kern County approves California’s first big oil train project

Repost from Reuters
[Editor: Significant quote: “The company can ship railed-in crude Alon doesn’t process to other refiners via pipeline.”  Presumably this would be a Benicia Valero alternative to receiving direct rail shipments of Bakken crude?  – RS]

Alon USA Energy’s California oil-by-rail project approved

By Kristen Hays, September 9, 2014

The first substantial oil-by-rail project at a California refinery won approval on Tuesday despite a last-minute push for more scrutiny by some environmental groups.

The facility at Alon USA Energy Inc’s shuttered Bakersfield refinery in Kern County, home to about 65 percent of California’s heavy oil output, will push crude offloading capacity to as high as 150,000 barrels per day (bpd) from the current 13,000 bpd.

The Kern County Board of Supervisors approved the $100 million project after a lengthy environmental review. Alon Chief Executive Officer Paul Eisman told the board the project could start up by the third quarter next year.

“Now go put our people to work,” board Chairman Leticia Perez said.

The refinery, which has been operating as a terminal, will receive crude in railcars that meet the latest safety standards with thicker hulls and reinforced valves.

Some residents and environmental groups including Earthjustice and the Sierra Club opposed the project, citing dangers of crude trains and “plumes of toxic smoke” emitting from the plant.

Other residents, unions and economic development leaders want the refinery and rail project jobs and are satisfied with planned safety measures.

“That plant’s been a fixture in this town since way before I was born. Alon is ready to put it back to work at full capacity,” local contractor Sam Ackerman said.

The company can ship railed-in crude Alon doesn’t process to other refiners via pipeline. Credit Suisse said in a note to investors this week that the project could add $7 per share in value to shareholders.

Alon’s facility will be the second oil-by-rail terminal in Bakersfield, where pipeline company Plains All American will start up a 70,000 bpd project in October.

Both seek to increase California refiners’ access to booming inland U.S. and Canadian output, which is cheaper than imports that make up more than half of all crude processed in the state. Other refiners trying to do the same have faced delays as well as opposition in light of a string of fiery crude train crashes elsewhere in the last year.

The Alon project at the 70,000 bpd Bakersfield plant also includes upgrades to several units at the refinery to enable processing of light crude, including output from Texas and North Dakota’s Bakken shale, as well as equipment to offload undiluted Canadian bitumen.

The plant is already built to process California’s heavy crude, 65 percent of which is produced in Kern County.

The project’s approval comes nearly two years after the company shut down the plant because it was unprofitable.  Alon said reopening the refinery will bring 100 jobs as well as 30 more for the rail operation.

(Reporting By Kristen Hays; Editing by Ken Wills)
Alon USA Energy, Bakersfield CA, Crude By Rail

Oil-by-rail project for shut California refinery near approval

Repost from Reuters
[Editor: Significant quote: “…proposals have faced lengthy delays for comprehensive environmental reviews, public input, and revisions.  Valero Energy Corp, the largest U.S. refiner, postponed its plans to send crude by rail to its San Francisco-area refinery because of such delays, and withdrew permit applications for a similar project at its Los Angeles plant….’I think Bakersfield is probably the best place to build a rail facility in California, because it’s not sitting in San Francisco or LA, and it has access to pipes going north and south. It just seems like it’s going to be a struggle to develop rail in other locations,’ Plains’ Chief Operating Officer Harry Pefanis told analysts in May.”  – RS]

Oil-by-rail project for shut California refinery near approval

Kristen Hays, August 15 2014

(Reuters) – The first new crude-by-rail project at a California refinery is likely to win approval next month after more than a year of scrutiny, the head of the Kern County planning division told Reuters, and it could help reopen the shuttered plant.

The facility at independent refiner Alon USA Energy Inc’s Bakersfield plant would increase crude offloading capacity to 140,000 barrels per day from its current 13,000 bpd and open up significant access to cheaper inland U.S. and Canadian crudes.

Alon’s Bakersfield plant is in Kern County, home to about 65 percent of all California oil production, where crude has been produced for more than a century.

Alon shut the 70,000 bpd Bakersfield refinery in late 2012 because its reliance on more expensive imports and lack of access to other crudes without significant rail rendered the plant unprofitable.

Other California refiners also struggle with profitability because of reliance on expensive imported crude and costly fuel manufacturing regulations in the biggest gasoline market in the country.

“We’re supportive of what Alon is doing with this refinery,” said Lorelei Oviatt, director of the county’s planning and community development department. “This refinery is not operating at full capacity. We would like to see this refinery operating at full capacity.”

Alon didn’t respond to requests for comment.

The Alon project is among several proposed at California refineries, some of which face growing opposition in light of a spate of crude train crashes in the past year as the U.S. oil boom sent amounts of crude moving by train soaring.

The worst by far was in Quebec in July last year when a runaway crude train exploded in the town of Lac-Megantic, killing 47 people.

Several California refiners, largely isolated by the Rocky Mountains from the growing cheap bounty from oilfields in Texas, North Dakota and Canada, want to tap those sources via rail because no major pipelines carry crude from those areas into the Golden State, nor are any planned.

More than half of the 1.7 million barrels of crude processed by California refiners each day is imported.

But proposals have faced lengthy delays for comprehensive environmental reviews, public input, and revisions.

Valero Energy Corp, the largest U.S. refiner, postponed its plans to send crude by rail to its San Francisco-area refinery because of such delays, and withdrew permit applications for a similar project at its Los Angeles plant.

Kinder Morgan Energy Partners operates the state’s most substantial oil-by-rail facility at a terminal in Richmond, which handles up to 72,000 bpd. Local planners last year approved, without an environmental review, a revised ethanol offloading permit to allow the terminal to handle crude. But opponents are suing to temporarily shut it down and force that kind of review.

Tesoro Corp faces similar growing opposition for a 360,000-bpd railport project in southwest Washington state that could ship crude to California refineries by tanker.

That could let California refiners – which includes Tesoro’s Los Angeles-area plant – replace more than 40 percent of more expensive imported oil with North American crudes if all of it were shipped to the state.

Alon is considering possibly leaving the Bakersfield refinery shut and running the facility as a rail and logistics terminal.

If the refinery remains shut, the rail operation would be similar to a separate 70,000-bpd oil-by-rail facility Plains All American plans to open in October and eventually expand to 140,000 bpd. That project was approved two years ago before it was acquired by Plains.

Alon bought the Bakersfield plant out of bankruptcy in 2010 from Flying J Inc, which had shut it in early 2009 shortly after seeking bankruptcy protection. Alon restarted the hydrocracker in the summer of 2011, but operational problems led to more shutdowns and startups.

David Hackett, president of Stillwater Associates, a refining consultancy in Irvine, California, said the refinery’s spotty operational history may better support a future as a rail hub.

“They haven’t run it as a refinery in a long time. I don’t think they’ll restart Bakersfield, and I don’t understand why they didn’t pull this off two years ago,” he said.

ESTABLISHED OIL HUB

Bakersfield sits in the center of the state’s oil production where the oil industry is long established. Plains executives have said its crude-friendly climate and existing infrastructure make the area more attractive for such projects.

“I think Bakersfield is probably the best place to build a rail facility in California, because it’s not sitting in San Francisco or LA, and it has access to pipes going north and south. It just seems like it’s going to be a struggle to develop rail in other locations,” Plains’ Chief Operating Officer Harry Pefanis told analysts in May.

Alon had hoped to have its Bakersfield rail project up and running by the end of 2013, but it, like others in the state, underwent a lengthy environmental review and public comment.

Oviatt said the Kern County planning department had considered all issues during that review, including safety and spill preparedness.

Now the project is slated to go before the county’s board of supervisors for a vote at a Sept. 9 public hearing. Oviatt, who is not one of the five members of the board, said she expected a final decision at that time.

The planning department has signed off on it, and Oviatt said the board tended to be supportive of business.

“I can’t say how the board would vote, but I do believe that given their business-friendly attitude, they’re going to take all of this into serious consideration.”

(Reporting by Kristen Hays in Houston; Editing by Terry Wade, Lisa Shumaker, Jessica Resnick-Ault and Phil Berlowitz)