Union Pacific aims to be first railroad to haul liquefied natural gas
By Russell Hubbard, March 19, 2015 1:00 am
THE WORLD-HERALD
Union Pacific Railroad has applied for permission to haul liquefied natural gas, which would add another combustible cargo to a U.S. rail network already being criticized for transporting ethanol and crude oil through populated areas.
The Omaha-based railroad said the application for a permit from the Federal Railroad Administration is in response to a request for liquefied natural gas transportation from an existing customer. Union Pacific operates 32,000 miles of track in the western United States, which is home to many natural gas production and storage installations.
If Union Pacific is granted the permit, it would be a first. The Association of American Railroads said none of the six other Class I freight railroads are hauling liquefied natural gas.
The permit application coincides with a major bump in railway ethanol and crude oil cargo, which has attracted heavy opposition after a fatal oil train explosion in Canada in 2013 and three oil train fires so far this year in the United States and one in Canada.
“The timing for U.P. is awkward given recent accidents and mounting public apprehension,” said Joseph Schwieterman, a transportation sciences professor at Chicago’s DePaul University. “I am sure there will be pressure for a go-slow approach on it, but the fact is that railroads are the best bet to get significant amounts of natural gas to market given the decades it takes to permit and construct pipelines.”
Details about the application are secret. A Federal Railroad Administration spokesman said application and supporting materials are not available for public inspection during the review process. “Federal law limits our disclosure” of which customer is requesting transport of liquefied natural gas, Union Pacific spokesman Aaron Hunt said.
Liquefied natural gas, or LNG, however, is a well-known commodity. Liquefying the fuel — which most often moves via pipeline, truck and ship — compacts it enormously. That makes it attractive to shippers and those who want to store large quantities. Liquefied gas takes up 1/600th the space of the gaseous form. The liquid gas can then be converted back into its gaseous state for use or further shipment in pipelines.
Union Pacific’s permit request comes as U.S. natural gas production is climbing, up 37 percent since 2000. Part of the boom is the conversion of coal-burning electric plants to natural gas. There also are 128,000 vehicles in the United States running on compressed natural gas, up 12 percent since 2010.
“It has only been a matter of time for the railroads to get in on the natural gas boom,” Schwieterman said. “It is a fast-growing industry with fast-growing logistical needs.”
But some people are holding back. Eddie Scher, an officer with ForestEthics, a California-based lobbying group that advocates the gradual elimination of fossil fuels, said that transporting another flammable cargo on the rail network is a very poor idea.
“The rail system in America was built to connect population centers, with trains going through every downtown in the country,” Scher said. “It was never designed to haul hazardous materials, and in fact, you could say that if you were to design a rail system for hazardous materials, the one we have is the opposite of the one you would design.”
Scher said federal safety rules are already out of date for oil trains and their tank cars, with millions of gallons of oil a day riding the rails, up from nearly zero only five years ago, courtesy of skyrocketing production from new fields in Montana and North Dakota.
“To entertain the idea of new and potentially more dangerous cargo makes no sense at all,” Scher said.
Hauling dangerous cargo is nothing new for Union Pacific and other railroads, which haul chlorine, explosives and sulfur.
Safety is a main point of emphasis for every cargo, said Hunt, the Union Pacific spokesman. The national train accident rate has fallen 42 percent since 2000 and 79 percent since 1980, according to the railroad association. At Union Pacific, derailments have fallen about 7 percent since 2010, to three for every million miles of train travel.
“We have the same goal as everyone else, and it’s in the best interest of our customers, shareholders and the communities where our employees and their families live, work and play to operate as safely as possible,” Hunt said.
By April Baumgarten, Forum News Service, August 25, 2014
A train carrying crude oil tankers travels on the railroad bridge over the Missouri River on Aug. 16 in Bismarck. Dustin Monke/Forum News Service
DICKINSON, N.D. – What can be done to keep trains from becoming “Bakken bombs?”
It’s a question on the minds of many North Dakota residents and leaders, so much that some are calling on the state Industrial Commission to require oil companies to use technology to reduce the crude’s volatility. The words are less than kind.
“Every public official in America who doesn’t want their citizens incinerated will be invited to Bismarck to chew on the commissioners of the NDIC for failing to regulate the industry they regulate,” Ron Schalow of Fargo wrote in a Facebook message.
A train carrying Bakken crude derailed and exploded July 6, 2013, in Lac-Megantic, Quebec, killing 47 people. Another oil train crashed into a derailed soybean train on Dec. 30 near Casselton, N.D. No one was killed.
Schalow has started a campaign to require oil companies that drill in North Dakota to use stabilizers, a technology used in Texas to take natural gas liquids off crude to make it safer to ship. His online petition demands the Industrial Commission to force oil companies to remove all explosive natural gas liquids from crude before shipping it by rail. More than 340 people have signed the petition as of Saturday.
Schalow declined an interview, referring instead to his petition and Facebook page titled “The Bomb Train Buck Stops With North Dakota.”
Throughout North Dakota, residents have called on the state’s government to prevent future disasters like these, but some leaders say implementing stabilizers could cause more problems.
“Now you have to pipe from every one of these wells or you have to find a way to get it to this centralized location to be refined,” state Agricultural Commissioner Doug Goehring said. “That creates huge problems in itself.”
There is a difference between conditioning and stabilization, said Lynn Helms, the state’s Department of Mineral Resources director.
Oil conditioning is typically done at well sites in North Dakota, he said. The gases are first removed from crude. Then the water and hydrocarbons are removed with a heater treater. The crude oil is then put into a storage tank below atmospheric pressure, which reduces the volatility. Those gases can then be flared or transported to a gas processing plant.
“If crude oil is properly conditioned at the wellsite, it is stable and safe for transportation,” Helms said.
Oil that hasn’t been properly conditioned at the wellsite can be stabilized, Helms said, but that would include an industrial system of pipelines and processing plants.
Valerus, a company based in Houston, manufactures stabilizers for oil companies across the country, including in Texas, West Virginia and Canada. It’s a technology Texas has used at the wellhead for drilling the Eagle Ford shale since the early 2000s, said Bill Bowers, vice president of production equipment at Valerus. Recently, a centralized system with pipelines has been developed to transport the natural gas liquid safely.
“Most of that stabilization takes place at a centralized facility now,” he said. “There could be 100 wells flowing into one facility.”
The Railroad Commission of Texas has one rule that Helms has found regarding stabilization, he said. Rule 3.36 of the Texas Oil and Gas Division states operators shall provide safeguards to protect the general public from the harmful effects of hydrogen sulfide. This can include stabilizing liquid hydrocarbons
.Helms added he could not find any other rule requiring companies to use stabilizers, but the rule had an impact indirectly, Bowers said.
“I think what was happening is these trucking companies, either for regulation or just safety purposes, would not transport the crude if it was not stabilized,” Bowers said.
The process is relatively simple, he added.
“All we are really talking about is heating the crude, getting some of the more volatile compounds to evaporate and leaving the crude less volatile,” Bowers said.
The Industrial Commission has asked for public input on 10 items that could be used to condition oil. Though stabilization is not directly listed, it could be discussed under “other field operation methods to effectively reduce the light hydrocarbons in crude.”
The commission will hear testimony on Tuesday, Sept. 23, at the Department of Mineral Resources’ office in Bismarck. Written comment may be submitted before 5 p.m. Monday, Sept. 22.
New rules in North Dakota would regulate conditioning at well sites.
The hearing was brought on by a study from the North Dakota Petroleum Council and discussions held with U.S. Secretary of Transportation Anthony Foxx and Secretary of Energy Ernest Moniz regarding transportation issues.
Installing equipment at the wellhead for conditioning oil takes several weeks, Helms said. Stabilization, on the other hand, could take more than a year to install equipment – if not longer.
Helms said he couldn’t comment on the economic process.
“I do know that a large-scale industrial process would have a big imprint,” Helms said. “It would really exasperate our transportation problems because tens of thousands of barrels of oil would have to be trucked or piped to (a processing plant) and from it.”
Since there is a centralized system in Texas, companies can make a profit off the natural gas liquids. In North Dakota, companies would have to stabilize at the wellhead before pipelines are put in place.
“Given their preference, they won’t buy this equipment,” Bowers said. “They really don’t want to do it.”
There is no pipeline infrastructure to transport natural gas liquids from wellsites, meaning it would have to be trucked or shipped by rail. That could be more dangerous than shipping oil without stabilizing it, Goehring and Helms said.
“By themselves, they are more volatile and more dangerous than the crude oil with them in it,” Helms said. “The logical thing to do is to properly condition them at the wellsite.”
The crude could also shrink in volume, along with profits, Bowers said.
“It seems to me that in the Bakken people are quite happy with the arrangement,” he added. “They don’t believe necessarily that stabilization will change the safety picture.”
Schalow has criticized the Industrial Commission for not acting sooner, stating officials have had 10 years to address the issue.
Goehring said he was made aware of the process recently.
“I don’t believe anybody is withholding information or is aware of anything, nothing diabolical,” Goehring said.
Officials agreed that the process needs to be dealt with on multiple levels, including oversight on railroad safety. Public Service Commissioner Julie Fedorchak outlined a proposal on Thursday for a state-run rail safety program. If approved, the Public Service Commission would hire three staff members for the program.
The commission has been working on the proposal since before the Casselton derailment.
“I share (Schalow’s) concern about having a safe method of transportation, and I think everyone does,” Fedorchak said. “How we get there is the challenge and I think there is a number of different steps. I don’t think there is one solution.”
Many trains carrying Bakken crude travel through Fargo, where Schalow and Democratic Sen. Tim Mathern live.
Mathern follows Schalow’s Facebook page and said he did so out of his concern for transporting oil safely.
“My perspective is that we must preserve and protect our quality of life today and in the future,” Mathern said. “We must be careful that we don’t do kind of a wholesale of colonization of our resources in sending them out. … It’s almost like how do we make sure that we don’t have an industrial waste site as a state?
“In many of our larger cities, we have a section of town that is kind of an industrial waste site. Eventually, someone has to clean that up. Eventually, that is a cost to society, and I am concerned that we don’t let that happen to North Dakota.”
Mathern said safely transporting oil is no longer a western North Dakota or even a state issue; it’s a national issue that must be taken seriously because the oil is being transported throughout the country.
“There is enough responsibility to go around for everybody, including policy makers,” he said. “It’s not just one industry; it’s many industries. It includes the public sector. It includes governors and legislators, and people that are supposed to be attentive to citizens, and to be attentive to the future. We all have responsibility in this.
“This has worldwide consequences. This is an oil find that even affects the balance of power, even politically.”
Mathern said he doesn’t know what Schalow’s motivation is, but it isn’t just Schalow raising the questions.
“I don’t think this is a matter of blaming oil.” Mathern said. “This is a matter of being respectful for our citizens and being a good steward of this resource and a good steward of our future.”
Public comment
Residents unable to attend the North Dakota Industrial Commission on oil conditioning practices set for 9 a.m. on Tuesday, Sept. 23, in Bismarck may submit written comments to brkadrmas@nd.gov. Comments must be submitted by 5 p.m. CDT on Monday, Sept. 22.
Investigators are examining tracks, equipment and human performance factors to determine why two Union PacificCorp.UNP in Your ValueYour ChangeShort position trains collided head-on collided head-on in Arkansas early Sunday morning after it appears signals were functioning correctly, according to the National Transportation Safety Board.
The crash, which occurred at about 2:30 a.m. in Hoxie, killed two train crew members and injured two others, according to authorities. One tank car, containing unrefined alcohol, caught fire and burned for hours.
The two trains collided at a location where two main tracks converge into one main track, said Mike Hiller, the NTSB’s investigator in charge of the probe. The plan was for the southbound train, which was on the double track, to stop and wait for the northbound train to take the other track.
“We know that this did not happen and a collision occurred right at that point,” said Mr. Hiller. “We are still trying to gather data to find out why that southbound train did not stop.”
In addition to examining equipment such as the brakes, investigators have requested medical documents and are scheduling interviews to look at the human performance factors. They’ve also shipped the trains’ black boxes to Washington, D.C., for examination.
Liquid natural gas and sulfuric acid were among the hazardous materials on board, Mr. Hiller said. Neither train contained any crude oil tank cars, and all hazardous material was loaded properly into the correct type of tank cars, he added.
The northbound train carried 92 cars, 11 of which contained flammable liquid class hazardous materials including the car with the alcohol, Mr. Hiller said. It originated in North Little Rock, Ark. The southbound train originated in St. Louis, Mo., with 86 cars, 20 of which were carrying hazardous materials.
About 500 residents were evacuated as a precaution in an approximately 1.5 mile area Sunday.
New U.S. West Coast energy projects face tough opposition
By Edward McAllister
NEW YORK (Reuters) – The West Coast of the United States, long a battle ground for industrial and environmental interests, is set for another round of disputes as the region attracts key energy projects.
Huge new oil and gas fields have changed the way energy is transported across the United States, opening up the prospect of gas exports to Asia and increasing shipments of oil by rail. As this happens, the West Coast, from California to Washington, has become a major focus for energy developers.
Veresen Inc’s Jordan Cove liquefied natural gas (LNG) project in Coos Bay, Oregon, received approval from the Department of Energy on Monday to export gas to needy importers in Asia. Another project further north, known as Oregon LNG, is expected to receive similar approval within two months.
The two developments, both of which still need construction permits, would be the first of their kind on the West Coast outside of Alaska and represent a potentially new era for the United States, where a drilling boom has pushed output to record highs. The outcome of these projects could also set the standard for other energy developments in the region.
But opposition remains.
“Jordan Cove still needs a slew of federal and state permits to begin construction,” said Zack Malitz of San Francisco-based environmental group Credo, which is opposed to exports because it could lead to more drilling. “We still have time to sound the alarm.”
OIL, COAL
Energy projects have long met opposition in West Coast states where a stronger environmental lobby has made development approvals tougher to obtain than in other more oil industry-friendly states like Texas or Louisiana.
The strength of that opposition is being tested again as coal and oil producers look to the West Coast to broaden their business.
In recent years, mining and shipping industries have tried, and sometimes failed, to gain permission to move coal through ports in the Pacific Northwest to reach Asian markets. The Port of Coos Bay dropped its plans for a coal export terminal last spring after environmental challenges.
Now, three more export terminals remain on the drawing board. Backers of the Morrow Pacific project in Oregon expect to clear regulatory hurdles in the coming months.
Meanwhile, oil producers looking to tap west coast markets have proposed a number of terminals to receive and refine crude oil delivered on trains. Crude by rail has become a major industry in recent years, as new output overwhelms the existing pipeline network. But a number of explosive derailments have given pause to states considering more train traffic, especially loads carrying grades of crude oil from North Dakota considered more volatile than others.
In Washington State, which has the potential to become a major oil port if all pending projects are approved, opposition to moving more crude by rail is growing.
Public meetings held in October regarding a crude by rail terminal in the Port of Vancouver proposed by Tesoro Corp and Savage Services garnered tens of thousands of comments, many of which centered on concerns about crude train crashes and spills.
The project is in the permitting phase, and the final decision lies with Governor Jay Inslee.
Valero Energy Corp’s plan to build an offloading facility at its San Francisco-area refinery was pushed to the first quarter of 2015 from late 2013 to allow time for an environmental review after opponents voiced concerns to local officials.
The surge in the transport of crude oil by rail into California has caught the attention of lawmakers in Sacramento, who last week held a hearing to examine whether more resources should be dedicated to preventing and responding to accidents.
Currently, less than 1 percent of the state’s crude oil is delivered by rail. But with at least six new crude-by-rail facilities planned or under construction in California, that figure is expected to reach 25 percent by 2016.
“Regardless of whether it takes two years or four years, this is a significant change that represents an emerging threat to California’s natural resources,” Tom Cullen, administrator of the Department of Fish and Wildlife’s Office of Spill Prevention and Response, said at the hearing last week.
(Reporting By Edward McAllister in New York, Rory Carroll in San Francisco, Patrick Rucker in Washington D.C. and Kristen Hays in Houston; Editing by Joseph Radford)
