Tag Archives: Plains All American

Crude By Rail, Emergency Readiness & Response, Hazmat notification, Oil stabilization, Parked trains, Phillips 66, Rail Safety, Sacramento Area Council of Governments (SACOG), Santa Maria Refinery

Sacramento Area leaders call for strong safety controls on oil trains headed west and south

Repost from The Sacramento Bee

Sacramento leaders call for more crude-oil train safety

By Tony Bizjak, 11/14/2014
A tanker truck is filled from railway cars containing crude oil at McClellan Park in March.
A tanker truck is filled from railway cars containing crude oil at McClellan Park in March. Randall Benton

Concerned about potential oil spills and fires, Sacramento leaders are calling for stronger safety controls on a Phillips 66 proposal to transport crude oil via trains through Sacramento neighborhoods to the oil company’s refinery in San Luis Obispo County.

In a letter approved Thursday by board members of the Sacramento Area Council of Governments, regional officials are asking San Luis Obispo County to require the oil company to notify local fire officials before any crude oil train comes through the area, limit the parking of crude-oil-laden trains in the urban area, provide funding for training on fighting oil fires, and require trains and tracks to have modern safety features.

SACOG officials said they are not taking a stance against rail shipments of crude oil in general.

“Our intent is not to prohibit any types of shipments, our intent is to ensure that where they are shipped that we impose the most reasonably feasible safety measures for our communities,” the agency’s attorney Kirk Trost said during a board briefing this week.

A boom in domestic oil production in North Dakota, Colorado, Texas and other Western states in recent years has prompted safety concerns after several high-profile oil-train explosions, including one in Canada that killed 47 people last year. The federal government is formulating new safety regulations, including a requirement for sturdier tank cars.

SACOG’s letter comes in response to a Phillips 66 proposal to ship oil via train five days a week to its Santa Maria Refinery in San Luis Obispo County. Many of those trains are likely to come through Northern California, via Roseville, and run through downtown Sacramento, West Sacramento, downtown Davis and East Bay cities. Some could take a route through Sacramento to Stockton, then west into the Bay Area. The route east of Roseville is unknown.

The Sacramento group, in its letter, also joined a growing national chorus of cities and states demanding that particularly flammable crude oil from the Bakken region of North Dakota be stripped of its more volatile elements before being loaded on trains.

In an email to The Sacramento Bee, Phillips 66 spokesman Dennis Nuss said Phillips does not plan to ship Bakken oil to its Santa Maria Refinery. He did not specify which types of crude oil the refinery will receive.

“Phillips 66 is working to ensure the long-term viability of the Santa Maria Refinery and the many jobs it provides,” he wrote. “Our plans for this project reflect our company’s commitment to operational excellence and safety while enhancing the competitiveness of the facility.”

SACOG, a transportation planning agency formed by the region’s six counties and 22 cities, previously called for similar safety measures on another oil company plan to transport oil, likely Bakken, through Sacramento to a Benicia refinery. Valero Refining Co. officials say they hope to start next year shipping two 50-car oil trains a day through Sacramento to that plant.

Railroads have long successfully argued that federal railroad regulations pre-empt states, counties and cities from imposing any rules on their operations. In their letter, Sacramento officials contend that San Luis Obispo County and Benicia can require the oil refineries to write safety measures into their contracts with the rail carrier companies. A rail law expert, Mike Conneran of the Hanson Bridgett law firm in San Francisco, said Sacramento’s argument might have legal merit, but likely will have to be tested in court.

Crude-oil trains have proliferated in recent years around the country as producers use newer fracking technologies to unearth previously trapped oil deposits in the West. California Energy Commission analysts say very little of that oil is being transported on rail into California currently, but they say as much as 22 percent of the state’s oil will arrive by train by 2016.

One such shipment comes through Sacramento, traveling on the rail line that cuts through North Sacramento, midtown, Land Park and Meadowview en route to Richmond in the Bay Area. The BNSF Railway company recently filed papers with state emergency officials indicating they are running up to two trains a week on that route, an increase from one train a week earlier this year.

Another major crude-by-rail facility, outside of Bakersfield, is expected to open before the end of this year and may take shipments of crude oil on rail that will come through Sacramento. A spokesman for Plains All American, owner of the facility, declined comment on the routes the trains will take, saying that will be a decision the railroad companies will make.

Read more here: http://www.sacbee.com/news/local/transportation/article3935260.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)
California Regulation, Crude By Rail, Federal Regulation (U.S.), Hazmat notification

CAL Energy Commission workshop: ‘wake up call’ on crude by rail

Repost from The Contra Costa Times
[Editor: Significant quote for Benicia and others along the Union Pacific rail line: “Union Pacific Railroad Spokeswoman Liisa Lawson Stark said the company is not transporting any Bakken crude into the state, but it is bringing in other types of oil.”  – RS]

California trying to catch up to dangers of crude oil shipped on railroads

By Doug Oakley, Oakland Tribune, 06/25/2014

BERKELEY — California agencies have very little authority to regulate a massive increase in crude oil shipments by rail, and only now are they realizing the magnitude of the potentially explosive situation, according to state officials speaking Wednesday at a workshop sponsored by the California Energy Commission.

“It’s a wake up call when you look at the projections,” said commission Chair Robert Weisenmiller. “We have to plan for the worst case.”

Only in the last month, thanks to an order by the U.S. Department of Transportation, have railroads begun to disclose to the state Office of Emergency Services shipments of 1million gallons or more of highly flammable Bakken crude oil. Before that happened May 7, nobody knew anything about the shipments or where they were going, Weisenmiller said.

The Valero Refinery is seen in Benicia, Calif. on Monday, May 6, 2013. The Bay Area’s five refineries have moved toward acquiring controversial
The Valero Refinery is seen in Benicia, Calif. on Monday, May 6, 2013. The Bay Area’s five refineries have moved toward acquiring controversial Canadian tar sands crude through rail delivery. (Kristopher Skinner/Bay Area News Group)

Crude oil rail shipments have increased 506 percent in 2013 to 6.3 million barrels, according to a report by the state Interagency Rail Safety Working Group released June 10. That number could increase to 150 million barrels of oil in 2016, it said. Petroleum spills on railroads in California increased from 98 in 2010 to 182 in 2013, according to the Office of Emergency Services.

In California, crude goes by rail to the cities of Richmond, Sacramento, Bakersfield, Carson, Long Beach and Vernon, according to the energy commission.

The only thing state and local governments can do to try and prevent a catastrophic disaster is to enforce federal rules and prepare local first responders, officials said. The regulatory effort falls on the California Public Utilities Commission President Michael Peevey.

“I’m not enthusiastic about having tens of thousands of tank cars running around California because accidents are inevitable,” Peevey said at the workshop. “There’s been a huge increase in volume and we have to step up our awareness and activities, in cooperation with the federal government, but the feds have the ultimate responsibility.”

The commission recently added seven rail safety inspectors who look at rail cars, railroad lines, bridges and shipping requirements, bringing the total to 59 inspectors statewide, which Peevey said was adequate for this year.

Peevey dismissed criticism that the PUC has been too easy on industry it is supposed to regulate, and assured the public it is up to the task.

“We’ve been pretty darn tough,” he said.

Weisenmiller said the state first needs to identify the areas most at risk for crashes and make sure the tracks are maintained. He acknowledged there is no way to prevent shipments from coming into the state, but the state can “get its act together and reach out to communities near rail lines and provide first responders with information and technical expertise,” so they can respond to an accident.

As the state tries to catch up and wrap its collective mind around the increased shipments, oil companies are attempting to add projects that would bring in more oil by rail.

Valero Refining Co. is planning on 100 cars per day to its Benicia facility by the first quarter of 2015; West Pac Energy is planning 70 cars per day to a facility in Pittsburg; Phillips 66 is planning a crude-by-rail project in Santa Maria that could bring shipments through the Bay Area; Alon USA is planning 200 cars a day in Bakersfield and Plains All American is planning for 200 cars a day in Bakersfield, according to the Oil by Rail Safety in California report.

Union Pacific Railroad Spokeswoman Liisa Lawson Stark said the company is not transporting any Bakken crude into the state, but it is bringing in other types of oil.

But Burlington Northern Santa Fe Railway is bringing in nine full train loads of Bakken per month into California, said spokeswoman LaDonna DiCamillo. She did not know how many tank cars each train has or what the actual volume is.

Lawson Stark said that even though railroads are now required to report shipments of the highly flammable Bakken crude oil to the Office of Emergency Services, the information most likely will not be available to the public. A spokesman for the office did not immediately return phone calls.