Tag Archives: North Dakota

Modesto Bee editorial: Tell us when dangerous oil cars are rolling

Repost from The Modesto Bee

Our View: Tell us when dangerous oil cars are rolling

August 9, 2014

Tank cars suitable for carrying Bakken crude oil sit on the BNSF railroad tracks that run through Escalon in May. The cars were empty, but left unattended for several days at a time. MIKE DUNBAR — mdunbar@modbee.com

Anyone who bothered to examine the 40 black, cylindrical railway tankers parked within 60 feet of a neighborhood in Escalon would have noticed a couple of markings. First was the red diamond-shaped placard with a flame on it; the other was the designation “DOT 111” in a grid stenciled on the tank.Those markings are what you find on tank cars used to carry the most dangerous liquids across America – including the volatile crude oil extracted from Bakken shale deposits in North Dakota.

A BNSF official said those unattended tank cars left on one of the double tracks in Escalon for a total of seven days over several weekends from April to June were empty. Unfortunately, no one in the community of 7,000 knew enough about them to bother to ask what was in them.

“I’m not aware of what was in those cars,” said Escalon Fire Chief Rick Mello, who commands a staff of nine full-time firefighters and a volunteer force of 16. Up to 50 trains go through Escalon each day, and BNSF never notifies Escalon about what is moving along its tracks – unless asked.

That must change, because it’s entirely likely we’ll see far more of those cars in the future. And they won’t always be empty.

California’s Office of Emergency Services estimates shipments of Bakken crude will increase 25-fold by 2016 as 150 million barrels move to California’s refineries in the Bay Area, Southern California and eventually Bakersfield. Since all Bakken crude moves by rail, that could mean another 225,000 tank cars a year moving through Roseville, Sacramento, Modesto, Merced and beyond. Mother Jones magazine calls it a “virtual pipeline.”

The Wall Street Journal reported Bakken crude contains higher amounts of butane, ethane and propane than other crudes, making it too volatile for most actual pipelines. Those gases have contributed to the deaths of 47 people in the town of Lac-Megantic in Canada, where a train carrying Bakken crude derailed in July 2013 and exploded. Less dramatic derailments, some with fires, have occurred in North Dakota, Virginia and Illinois. The U.S. Department of Transportation reports 108 crude spills last year.

“When you look at the lines of travel from Canada and North Dakota, you figure if they’re headed for the Bay Area or to Bakersfield, the odds are that you’re going to see shipments going down the Valley,” said Assemblyman Roger Dickinson, who represents north Sacramento. That’s why he authored Assembly Bill 380, which would require the railroads to notify area first-responders whenever these trains are passing through.

But the nation’s railroads are largely impervious to local concerns; they’re governed by the U.S. Department of Transportation and they’re powerful.

In July, the DOT issued proposed new rules for safe transport, including increased cargo sampling, better route analysis, a 40 mph speed limit on trains labeled “high-hazard flammable,” and switching to the new, safer DOT 111 cars after Oct. 1, 2015. The new cars have double steel walls, better closures and heavier carriages. Currently, they make up about a third of the nation’s tanker fleet.

California’s Office of Emergency Services has issued 12 recommendations, ranging from allowing better data collection to phasing out those old tank cars to better training for first-responders.

Laudably, the railroads are already doing most of these things. Since the mid-1990s, BNSF has offered – at no charge – training for handling spilled hazardous materials and dealing with emergencies. One of Escalon’s eight full-time firefighters was trained at virtually no cost to the city. BNSF said they would even do on-site training for departments. But not every fire department has taken the courses. A BNSF spokeswoman said Sacramento sent only one firefighter to the most recent three-day training on dealing with hazardous materials, including Bakken crude.

The federal DOT issued an emergency order in May to require all carriers to inform first responders about crude oil being shipped through their towns and for the immediate development of plans to handle oil spills. Unfortunately, it contains a discomforting criteria: the order applies only to trains carrying 1 million gallons of Bakken crude, or roughly 35 tank cars. And to reach DOT’s definition of a “high-hazard flammable train,” a train must have 20 tank cars.

But a Bakken explosion in Virginia blew one tank car an estimated 5,500 feet; a photograph of another explosion showed a fireball rising 700 feet from a single car. Our first responders ought to know when even one car carrying such material is coming through.

Dickinson’s bill would make notification available on a real-time basis, without having to ask. His goal, said Dickinson, is to “give first responders better information on how to respond. The techniques and materials used in dealing with different chemicals, or even different types of oil, vary widely. ‘I know I’m dealing with oil, but what kind of oil?’ My bill is aimed at getting better, more timely, more complete information to responding agencies.”

But his bill mirrors federal orders on the size of the train; our first responders need to know when any hazardous shipment is moving through.

The incredible expansion of America’s oil resources is creating many positives – from more jobs to less dependence on foreign oil. But it’s happening so fast that we’re devising the safety aspects as we roll along this virtual pipeline from North Dakota to California in the west and to New Jersey in the east. Accidents are happening along the way. Federal rules don’t go nearly far enough to protect public safety in this new world. Dickinson’s bill and the state OES recommendations would help, but we need a broader dialogue. As Dickinson said, “we know we’re going to have derailments, no matter how careful people try to be.”

That’s why first-responders such as Escalon’s Chief Mello must “prepare for anything, any day.” Knowing what’s coming gives us a head start.

Oil trains to pass through Stockton

Repost from The Record, Stockton, CA
[Editor: Significant quote: “‘These aren’t rail cars filled with rubber duckies. They’re filled with dangerous crude oil,’ said Diane Bailey, a senior scientist with the Natural Resources Defense Council in San Francisco.”  – RS]

Crude oil transport danger for Stockton?

Deadly 2013 explosion in Quebec among incidents fueling concerns
By Alex Breitler, Record Staff Writer, August 03, 2014
Top Photo
A train passes through Stockton carrying crude oil and other flammable liquids Friday morning. | CRAIG SANDERS/The Record

It’s no misprint: Explosive crude oil shipments into California last year increased 506 percent.

And a series of high-profile derailments and fiery explosions across North America has fueled fears that those seemingly ubiquitous tanker cars could someday spell disaster here, too.

The surge has really just begun. In a few years the quantity of oil rolling down our railways will be “huge,” said Michael Cockrell, director of the San Joaquin County Office of Emergency Services.

“You’re looking at some really major transportation of oil, and it’s everywhere,” Cockrell said. “It’s going to be all up and down the state.”

The spike is tied to increased domestic drilling in North Dakota, where the Bakken shale formation produces especially valuable and especially volatile crude oil. Trains provide a fast and flexible way to transport that oil to West Coast refineries.

Stockton’s a bit off the beaten path for at least some of these shipments, which often enter the state via Donner Pass or the Feather River Canyon, traveling through Sacramento on the way to Bay Area refineries.

Still, with Stockton serviced by two major railroad companies and with tracks stretching through urban areas to the north, west and south, advocacy groups argue there is a risk here.

“These aren’t rail cars filled with rubber duckies. They’re filled with dangerous crude oil,” said Diane Bailey, a senior scientist with the Natural Resources Defense Council in San Francisco.

It’s impossible to say how many oil trains already roll through town. Railroads don’t divulge that information, citing security concerns. Only recently did they begin notifying local emergency response officials about incoming shipments.

But there are indications Stockton may have a part to play in the oil transportation boom.

Documents describing a controversial proposed terminal in Pittsburg show that trains carrying oil would come from the east, from Stockton. Plans call for up to one train per day, five days a week to arrive at the Pittsburg terminal. From there, the oil would be shipped through pipelines to refineries.

Plans are also in the works for a $320 million terminal at the Port of Stockton. Commissioners in 2012 approved a lease for the petroleum terminal and storage facility on 33 acres near Washington Street and Navy Drive, said Port Director Richard Aschieris.

It hasn’t been built yet. But Reuters reported last month that trains would deliver 70,000 barrels of oil per day to the port’s Targa Resources Partners terminal. The Houston-based company would then load the oil onto ships to be delivered to refineries.

Aschieris said that in addition to petroleum, Stockton’s terminal will also handle ethanol, natural gas, propane and other materials. He said it will generate $1.2 million a year in taxes for the city and county combined, along with 20 full-time, high-paying jobs.

Aschieris said the project makes sense from a safety perspective.

“No matter what they’re moving, if they move it onto a barge or ship, I would contend that is safer than putting it on trucks and taking it right in through the Bay Area,” he said.

As for the trains that would deliver the oil, Stockton’s flat terrain decreases the odds of a derailment, said Aschieris, who added that private railroads have made “huge investments” in improving local tracks.

The debate over the transportation of crude oil spreads far beyond Stockton and California.

In Quebec, 63 tanks cars of crude oil exploded in July 2013, killing 47 people. Eight other major accidents have been reported in the past two years.

Tellingly, train accidents involving crude oil have increased even while the overall number of train accidents and hazardous material spills has declined.

In late July, acknowledging that the growing reliance on trains “poses a significant risk to life, property and the environment,” the federal government announced plans to phase out older tank cars within two years. They also took action to improve notifications about oil shipments, to reduce the speeds at which oil trains travel through towns, and to encourage railroads to choose the safest routes.

Most crude oil is still transported by marine vessels. But the quantity sent by train has skyrocketed from 1 million barrels in 2012 to 6.3 million barrels last year, and experts say the number could climb as high as 150 million barrels by 2016, according to a report by a working group convened by Gov. Jerry Brown.

For Cockrell, with county Emergency Services, the oil shipments are yet another potential disaster to worry about.

Since railroads are regulated by the federal government, he said he’s concerned that local governments may have difficulty seeking assistance responding to a derailment, and that it might be difficult to seek reimbursement from the private railroads.

Many people could be affected by a large spill in an urban area, Cockrell said.

One advocacy group, San Francisco-based ForestEthics, recently issued “blast zone” maps showing the half-mile evacuation zones overlaid on rail routes that could conceivably carry shipments of crude oil. And the Natural Resources Defense Council has estimated that almost 4 million Californians could be at risk.

Opposition has grown to the proposed new oil terminal in Pittsburg. Other projects are in the works in Bakersfield, Benicia, Santa Maria and Wilmington (Los Angeles).

Mike Parissi, with San Joaquin County’s Environmental Health Department, said the county’s multi-agency hazardous materials team trains for potential railroad disasters – though not specifically for crude oil spills.

“The big thing with the crude oil is it’s very flammable,” he said. “But we can deal with any kind of flammable liquid incident that might come.”

Back at the port, Aschieris said crews there are used to handling hazardous materials. So are the railroads, said a spokeswoman for Burlington Northern Santa Fe, whose tracks pass through Stockton.

“We’ve actually handled hazardous material for many, many years, and we’ve done so safely,” said spokeswoman Lena Kent. “Unfortunately there have been a few high-profile incidents.”

She would not say how much crude oil her company sends through Stockton. She did say two crude oil trains per month enter the state, a tiny fraction of the 1,600 all-purpose trains that Burlington Northern operates throughout the country on any given day.

Union Pacific did not respond to a request for information about its shipments.

Bailey, the scientist with the Natural Resources Defense Council, says the trains should be rerouted, adding that they have a “stranglehold” on the cities through which they pass.

“I haven’t really seen anyone entertain this conversation,” she said. “Does it make sense to bring mass quantities of really dangerous crude oil through people’s cities, so close to their homes?”

 

REUTERS FACTBOX – California crude sources and oil-by-rail projects

Repost from Reuters

FACTBOX-California crude sources and oil-by-rail projects

Mon Jul 21, 2014

HOUSTON, July 21 (Reuters) – California refiners remain far behind peers elsewhere in the country in replacing expensive imports with cheaper North American crudes from a new production boom.

No major crude pipelines cross the Rocky Mountains, leaving the isolated region dependent on rail to tap the burgeoning bounty in Texas, North Dakota and other growing oilfields.

More than half of the 1.7 million barrels of crude processed by California refineries each day is imported, largely from Saudi Arabia, Ecuador, Iraq and Colombia. The rest comes from California and Alaska, where output is declining.

Several refiners and logistics or pipeline companies are trying to tap U.S. and Canadian crude via rail, but California’s tough regulatory environment and growing opposition in light of fiery crude train crashes elsewhere could halt current projects and stop new ones from starting up.

Tesoro Corp and Savage Companies are proposing a 360,000 barrels per day railport at the Port of Vancouver in Washington that, if approved, could potentially replace more than 40 percent of California’s imported crude. Once railed to Vancouver, crude would be loaded onto barges or ships bound for West Coast refineries.

Here is a rundown of California’s crude slate and existing and pending oil-by-rail projects:

CALIFORNIA CRUDE
California’s 1.7 million barrels per day (bpd) of crude processed in 2013 came from these three main sources:
* Imports: 875,564 bpd, 51 percent of the total
* California, 631,441 bpd, 37 percent
* Alaska, 201,720 bpd, 12 percent
The non-California supply arrives via ships or barges except negligible oil-by-rail shipments, which reached 15,715 bpd in the first quarter of 2014.
That is less than 2 percent of the overall 873,967 bpd that originated on top U.S. railroads throughout the United States in the same period.
By comparison, in 2003 a little more than one-third of the 1.8 million bpd of crude processed in California came from imports:
* Imports, 636,923 bpd, 34 percent
* California, 792,920 bpd, 42.5 percent
* Alaska, 438,805 bpd, 23.5 percent
Source: California Energy Commission
CaliforniaCBR

(Reporting By Kristen Hays, editing by Peter Henderson)

Recent history: the rise of Bakken crude by rail

Repost from Bloomberg
[Editor: Significant quote: “‘The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline….The next challenge is exports.'”  – RS]

Bakken Rail Bet on a Feeling Pays Off for Global’s Slifka

By Lynn Doan Aug 1, 2014

When Eric Slifka landed in North Dakota’s Bakken shale field three years ago, he says he was overcome by “this feeling of a lot of growth. You could feel the pressure.”

The fervor was so strong that Slifka, chief executive officer of Global Partners LP (GLP) in Waltham, Massachusetts, decided in that single trip to carry Bakken crude on railcars that his company had been using to haul ethanol to New York. His first full trains started a wave of deliveries that rescued East Coast refiners from the brink of closing amid the rising cost of oil imported from Africa and the North Sea.

Shipments of U.S. oil by rail have since doubled to more than 1 million barrels a day, sparking a national debate over safety, and volumes may mount if the government allows more exports of crude, easing a four-decade ban. Global and other midstream carriers are preparing themselves for a chance to serve that market.

“The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline,” Bradley Olsen, managing director at energy investment bank Tudor, Pickering, Holt & Co., said by phone from Houston. “The next challenge is exports.”

Shale Boom
Global Partners, a tax-exempt master limited partnership with a $1.19 billion market value, was worth half that when Slifka flew into the Bakken in 2011 to meet a local entrepreneur who owned a rail facility along the Canadian Pacific (CP) line. North Dakota’s oil production had surged by a record 42 percent to 310,000 barrels a day. It would go on to surpass 1 million this April, helping turn the U.S. into the world’s largest oil producer.

The flood of domestic crude has put pressure on the federal government to lift a ban on U.S. exports imposed by Congress in 1975 in response to the Arab oil crisis. Crude-by-rail companies will have to compete with pipelines to bring supplies to the coast if the prohibition is lifted, Olsen said.

“Once you’re trying to export, you’re just trying to reach the water, and you don’t care about going to a specific refinery,” he said. “So you’re just as likely to ship it on a pipeline to get it to a dock.”

New Rules
The boom has also ignited regulatory battles from coast to coast. The derailment and explosion of an oil train in Lac-Megantic, Quebec, in July 2013 that killed 47 people thrust rail operations into the limelight.

In New York, Global is facing a ban on expanding its Albany operations to include tar sands. In Oregon, state regulators said in March that Global unloaded more oil than permitted at its Clatskanie terminal that sends Bakken crude along the Columbia River by barge.

Global said the Oregon complex is “in full compliance” with regulations in a March 5 e-mail. It sent a letter to Albany County on March 14 describing the county prohibition as “arbitrary and capricious.”

The U.S. Department of Transportation laid out a plan last week to phase out a generation of tank cars for crude shipments and impose speed limits, braking requirements and route stipulations.

While the industry is working with regulators to determine the safest way to ship oil, Slifka, now 49, said at an energy conference in Washington July 14 that “rail may actually be the safest mode of transportation for crude.”

Refinery Squeeze
On his first visit three years ago, so many companies were racing into the region to squeeze out oil from the Bakken that Slifka couldn’t find a hotel room. He said he stayed in Estevan, Saskatchewan, and drove 30 miles across the Canada-U.S. border to meet Don Bottrell, who owned a women’s clothing business, oil and gas wells and a trans-loading site in the area.

The biggest wave of refinery closings had meanwhile struck the East Coast as the price of North Sea Brent crude, the international benchmark, climbed. Sunoco Inc. was threatening to shut its Philadelphia refinery if it didn’t find a buyer, and it idled the Marcus Hook plant in Pennsylvania. ConocoPhillips halted output from its Trainer complex, and Hovensa LLC closed a plant in the U.S. Virgin Islands that supplied the region.

The North Sea grade cost as much as $8.52 a barrel more than West Texas Intermediate today, the highest premium since June 24. WTI was at $97.21 at about 11:16 a.m. in London and has traded below the international benchmark since the end of 2010.

Crude Champagne
“East Coast plants had the highest costs because they ran the champagne of oils, very light, very low-sulfur crudes predominantly from West Africa,” Kevin Waguespack, senior vice president of energy consulting firm Baker & O’Brien Inc., said by telephone from Houston July 28. “The Bakken reset their feedstock costs by several dollars a barrel. They’ve gone from losing to winning.”

EOG Resources Inc. (EOG), at the time the second-largest oil producer in the formation, moved its first trainload on BNSF Railway Co.’s tracks to Stroud, Oklahoma, on Dec. 31, 2009.

The first dedicated train of Bakken crude arrived at Global’s fuel terminal in Albany, which had handled ethanol and refined fuels such as gasoline, on Oct. 25, 2011.

Others followed. Enbridge Inc. (ENB)’s 80,000-barrel-a-day Eddystone rail complex outside Philadelphia received its first train in May. The Carlyle Group (CG) and Sunoco formed a joint venture to keep the Philadelphia refinery open and are adding a rail track that will take as many as 14 unit trains of Bakken oil a week. Delta Air Lines Inc. (DAL) bought Conoco’s Trainer plant and on July 21 signed a contract for 65,000 barrels a day, more than a third of the plant’s capacity, that will initially arrive by rail.

Global Expansion
Global bought a majority interest in two Bakken terminals after that first delivery to the East Coast, expanded its complex in Albany so it could send barges of oil down the coast, and secured a five-year contract to supply Phillips 66 (PSX)’s 238,000-barrel-a-day Bayway refinery in New Jersey in 2013.

The company bought the complex in Clatskanie, near Portland, the same year. On July 8 Global said it was building its first Gulf Coast oil-by-rail terminal in Port Arthur, Texas, as a destination for heavy crude from western Canada.

“If you look back historically on where oil is coming from and how it was transported, it has completely changed,” Slifka told an oil industry conference in Washington July 14. “You might as well take a pipeline map and turn it upside down.”

With the Port Arthur terminal, Global is positioned for the flood of petroleum that may soon be leaving the nation’s shores should federal policy makers relax the decades-old export ban. In June, the Commerce Department granted Enterprise Products Partners LP (EPD) and Pioneer Natural Resources Co. (PXD) permission to export ultra-light oil known as condensate.

“Nobody can be sure where the market is going or what we will be carrying, but we are sure that we have positioned ourselves to carry whatever it demands,” Slifka said at the meeting in Washington.

Reporter on this story: Lynn Doan in San Francisco.  Editors responsible for this story: Dan Stets and David Marino at Bloomdale, and Alaric Nightingale, Rachel Graham.