Repost from McClatchy DC [Editor: Incredible: The complaint says, “Despite BNSF’s distaste for the DOT-111 cars, (emphasis added) they are authorized bulk packaging for crude oil service.” “Distaste?” Really! Oh, and … the BNSF surcharge would suggest that $1000/car will help exactly whom if/when the next explosion occurs? Surely not those whose bodies and livelihoods are incinerated. See this story also at Bloomberg Business News and Courthouse News Service. – RS]
Refiners sue BNSF over fee on oil loaded in older tank cars
By Curtis Tate, McClatchy Washington Bureau, March 16, 2015
A trade group representing oil refiners has sued the nation’s largest hauler of crude oil in trains over a surcharge for oil loaded into older tank cars that have punctured and ruptured in numerous derailments.
The American Fuel & Petrochemical Manufacturers, a trade association for producers of gasoline, jet fuel, home heating oil and other refined products, sought an injunction last week in U.S. District Court in the Southern District of Texas to block BNSF Railway from imposing a $1,000 surcharge for every DOT-111 model tank car loaded with crude oil.
Tens of thousands of DOT-111 cars have carried a surge in domestic energy production, but their poor safety record in oil and ethanol train derailments has drawn fresh scrutiny from regulators, lawmakers and the National Transportation Safety Board.
BNSF hauls 600,000 barrels a day of crude oil, mostly from North Dakota’s Bakken region, to refineries on the east and west coasts. In October, the railroad announced it would impose a $1,000 surcharge on oil shipped in DOT-111 tank cars, effective Jan. 1.
But the trade group, which represents more than 400 companies, said in its complaint that BNSF asserted “unlawful regulatory authority” when it began imposing the surcharge.
The U.S. Department of Transportation regulates rail transportation, and until regulations require tank cars of a different design for oil shipments, the group’s complaint says that BNSF and other railroads are obligated by law to accept them in whatever cars the government currently allows.
“Despite BNSF’s distaste for the DOT-111 cars,” the complaint says, “they are authorized bulk packaging for crude oil service.”
One DOT-111 tank car holds about 30,000 gallons, or 700 barrels of oil. The complaint says the $1,000 surcharge adds $1.50 per barrel in rail transportation costs.
The trade group’s complaint says that BNSF’s surcharge causes “direct and substantial harm” to its clients and “breaches BNSF’s common carrier duty to ship hazardous materials.” By law, railroads must provide rail transportation on reasonable request.
Four crude oil trains have derailed and caught fire across North America since mid-February. One of them was a BNSF train that derailed earlier this month near Galena, Ill.
In all four derailments, the tank cars were a modestly improved version of the DOT-111.
Oil industry must join U.S. railroads to boost train safety – regulator
By Patrick Rucker, Mar 13, 2015 6:06pm EDT
WASHINGTON, March 13 (Reuters) – Rail operators are going to great lengths to prevent oil train derailments but the energy sector must do more to prevent accidents from becoming fiery disasters, the leading U.S. rail regulator said on Friday.
Oil train tankers have jumped the tracks in a string of mishaps in recent months that resulted in explosions and fires.
Several of those shipments originated from North Dakota’s Bakken energy fields. Officials have warned that fuel from the region is particularly light and volatile.
Sarah Feinberg, acting head of the Federal Railroad Administration, said the energy industry must do more to control the volatility of its cargo.
“(We) are running out of things that we can put on the railroads to do,” she said. “There have to be other industries that have skin in the game.”
A national safety plan for oil trains, due to be finalized in May, would require trains to have toughened tankers, advanced braking and other safety improvements.
The plan, however, would do nothing to mute the dangers of the fuel itself.
As officials try to prevent mishaps, they will also highlight the energy companies that supplied crude oil involved in accidents, Feinberg said.
Officials want to identify publicly “the owner of the product when we talk about these derailments,” she said.
The American Petroleum Institute said it hoped to work with the rail industry and other stakeholders to prevent mishap.
“Our safety goal, along with the railroads, is zero incidents,” said Brian Straessle, a spokesman for the trade group.
While U.S. officials have warned for more than 12 months that Bakken fuel can be volatile, the verdict is mixed on whether that contributes to the intensity of accidents.
In September, the FRA determined that Bakken crude oil may be no more explosion-prone than other fuels carried by rail.
Ethanol, a corn-based gasoline additive, “poses a similar, if not greater, risk as (Bakken) crude oil when released from a tank car failing catastrophically and resulting in a large fireball type fire,” according to a study from the agency.
On Friday, the FRA said that about 6,000 tankers had a top valve that allowed small amounts of oil to escape. The agency said it ordered the fitting to be replaced and said it would work with industry to identify and replace defective parts more quickly.
That defect was not believed to have played a role in any mishaps, the FRA said.
(Reporting by Patrick Rucker; Editing by Dan Grebler, Bernard Orr)
Crude oil train shipments dwindle in California, for now
By Tony Bizjak, 03/11/2015 9:47 PM
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June. Jake Miille / Special to The Bee
A year ago, California officials nervously braced for an influx of milelong trains carrying volatile crude oil to refineries in the Valley and on the coast – trains similar to the one that exploded two years ago in Canada, killing 47 people.
The trains never arrived. Although tank cars full of oil now roll daily through cities in the Midwest and East, provoking fears of crashes and fires, the number of oil trains entering California has remained surprisingly low, state safety regulators say, no more than a handful a month. In recent weeks, they appear to have dwindled to almost nothing.
The reasons appear to be mainly economic.
“Crude oil shipments from out of state have virtually stopped,” said Paul King, rail safety chief at the California Public Utilities Commission. “Our information is that no crude oil trains are expected for the rest of this month.”
Most notably, the BNSF Railway recently stopped running a 100-car train of volatile oil from the Bakken region of North Dakota through the Feather River Canyon and midtown Sacramento to the Bay Area. The trains, several a month, carried an estimated 3 million gallons of fuel each.
Bakken oil, a lighter type of crude, similar to gasoline, has gained a fearsome reputation since it entered the national scene a few years ago. A string of Bakken train explosions around the country prompted the federal government to issue a warning last year about the oil’s unusual volatility and launch efforts to write stiffer regulations on rail transport, including a proposal to require sturdier tank cars for oil.
Two more Bakken train derailments and explosive fires recently in West Virginia and Illinois triggered a new round of complaints that the federal government is dragging its heels in finalizing those regulations.
The BNSF train through Sacramento was believed to be the only train in California carrying 100 cars of Bakken oil. PUC rail safety deputy director King said his commission’s rail monitors have been told by owners of a Richmond oil transfer station in the Bay Area that refiners stopped the shipments in November as global oil prices dropped.
California Energy Commission fuels specialist Gordon Schremp said lower prices for other types of oil have made Bakken marginally less marketable in California, although that could easily change in the future.
Other projects, like a Valero Refining Co. plan to run two 50-car oil trains daily through Sacramento beginning this spring to its Benicia plant, have not yet gotten off the ground, in part because of political opposition. Under pressure from state officials, including Attorney General Kamala Harris, Benicia recently announced it is redoing part of its environmental and risk analysis of the Valero rail project. Valero has said it intends to ship lighter fuels, but has declined to say whether those will be Bakken.
State safety officials said the slowdown provides a bit more time to provide hazardous-materials training for more firefighters, as well as to put together a state rail-bridge inspection program and to upgrade disaster and waterway spill preparedness. But state officials said they still feel like they’re playing catch-up as they prepare for existing and future potential rail hazards.
“This apparent reprieve may seem helpful, but we still have substantial amounts of … hazardous materials traveling across California’s rail lines,” said Kelly Huston, deputy director of the state Office of Emergency Services. “It only takes one train to create a major disaster.”
Oil prices have begun rising again, and state officials say they expect Bakken shipments to Richmond and potentially elsewhere to be back on track at some point. “We don’t have any concrete info about when it will resume,” the PUC’s King said. “When prices come up, it is likely to resume, and that could be in months.”
Federal emergency rules require railroads to report to states when they run trains carrying more than 1 million gallons of Bakken crude, and then again when that amount changes by 25 percent or more. BNSF sent the state Office of Emergency Services a brief notice on Wednesday acknowledging it had not shipped more than 1 million gallons of Bakken on any train in the last week. The notice does not say how long ago the shipments stopped or when they may resume.
BNSF officials have contended in letters to the state that shipping information is proprietary and should be kept secret. A BNSF spokeswoman declined this week to discuss shipments with The Sacramento Bee, writing in an email, “Information regarding hazardous material shipments is only provided to emergency responders.”
King of the PUC said his monitors estimate that eight or more non-Bakken crude oil trains had been entering the state monthly from Canadian and Colorado oil fields recently, headed to refineries or transfer stations. The Canadian oil, called tar sands, is not considered as explosive as Bakken, but two tar-sands trains derailed and exploded in recent weeks in Ontario, creating fires that lasted several days.
The national concern about crude oil rail shipments follows a boom in domestic oil production, notably in North Dakota, where hydraulic-fracturing advances have freed up immense deposits of shale oil. Lacking pipeline access, North Dakota companies have turned to trains to ship the oil mainly to East and Gulf Coast refineries and to Washington state. Crude by rail shipments in the United States skyrocketed from 9,500 carloads in 2008 to 436,000 in 2013, according to congressional data.
California continues to produce a sizable amount of its own oil in Kern County and receives marine shipments from Alaska and foreign sources. Still, a recent state energy-needs analysis estimates the state could receive as much as 23 percent of its oil via train or barge from continental sources, including North Dakota, Canada, Texas and other Western states, in the coming years. That estimate is based on plans by refineries in Benicia, San Luis Obispo and Kern County to build rail facilities that can accommodate large crude transports.
Energy companies are canceling their tar sands projects.
By Brian Palmer | March 6, 2015
Photo: O.F.E.
Shell withdrew its application to extract tar sands from Canada’s Pierre River mine last week. The cancellation is news in itself, but the oil company’s decision to walk away from a massive seven-year project says a great deal about the viability of tar sands generally. Last year, the Canadian Association of Petroleum Producers cut its 2030 tar sands production forecast by 400,000 barrels per day. Last week, the energy consultancy Wood Mackenzie predicted that cash flows from tar sands would drop $21 billion in the next two years. The industry is undeniably shrinking.
Tar sands won’t disappear tomorrow, of course—most of the expense comes in opening the mine, so producers will keep operating their existing mines for several decades. New mines, however, are economically unfeasible. It’s difficult to break even in the tar sands business at current low oil prices. Over the medium term, the lack of pipeline access challenges any prospects for profitability. (That’s why the industry is so desperate for the Keystone XL and Energy East pipelines.) Looking deeper into the future, the specter of carbon taxation is enough to scare energy executives away.
All this is good news for the climate. Tar sands are the most carbon-intensive form of energy on the planet, emitting three or four times more greenhouse gas than conventional crude oil (which isn’t exactly good for the environment either). Here’s a brief rundown of all the canceled or deferred Canadian tar sands projects in recent months, and how much carbon they could have pumped into the atmosphere.
Pierre River Mine Company: Shell Stated reason for withdrawal: “Our current focus is on making our heavy oil business as economically and environmentally competitive as possible.” Projected barrels per day: 225,000 Carbon saved from the atmosphere each day, in tons: 21,000
Corner Oil Sands Project Company: Statoil Stated reason for withdrawal: “Costs for labor and materials have continued to rise in recent years…Market access issues also play a role, including limited pipeline access.” Projected barrels per day: 40,000 Carbon saved from the atmosphere each day, in tons: 3,700
Christina Lake Expansion Company: MEG Energy Stated reason for withdrawal: None given Projected barrels per day: 150,000 Carbon saved from the atmosphere each day, in tons: 14,000
Narrows Lake Company: Cenovus Stated reason for withdrawal: None given Projected barrels per day: 130,000 Carbon saved from the atmosphere each day, in tons: 12,200
Grand Rapids Company: Cenovus Stated reason for withdrawal: None given Projected barrels per day: 180,000 Carbon saved from the atmosphere each day, in tons: 16,800
Telephone Lake Company: Cenovus Stated reason for withdrawal: None given Projected barrels per day: 90,000 Carbon saved from the atmosphere each day, in tons: 8,400
MacKay River Expansion Company: Suncor Stated reason for withdrawal: “Cost management has been an ongoing focus…In today’s low crude price environment, it’s essential we accelerate this work.” Projected barrels per day: 40,000 Carbon saved from the atmosphere each day, in tons: 3,700
Joslyn Mine Company: Total Stated reason for withdrawal: “Costs are continuing to inflate when the oil price and, specifically, the [net profit] for the oil sands are remaining stable at best—squeezing the margins.” Projected barrels per day: 160,000 Carbon saved from the atmosphere each day, in tons: 15,000
* * *
Tally that up and these canceled or postponed projects represent nearly 95,000 tons of carbon dioxide staying in the ground rather than floating into the atmosphere. That’s the equivalent of taking 6.6 million cars off the road. Murmurs in the energy industry suggest that several other projects will soon be deferred or canceled, as oil prices show few signs of recovering. Stay tuned.
