Gov. Brown Approves New Rules On Crude Oil Shipments
September 26, 2014
A KPIX 5 crew captured this video of Bakken crude oil getting unloaded from a train at a rail yard in Richmond. (CBS)
SAN FRANCISCO (KPIX 5) — Earlier this year, KPIX 5 reported on crude oil being brought into the Bay Area by rail. Until now, companies haven’t been required to give cities a heads up, but that’s about to change.
Gov. Jerry Brown has signed into law new rules requiring oil shipments to be disclosed. This means that companies have to tell state and local agencies that potentially explosive crude oil is headed their way.
The rules would allow agencies to have their emergency responders ready, in case there is an accident.
KPIX 5 has reported on plans to bring crude by rail into the East Bay, mainly Pittsburg. And we’ve recently learned it has also been going on in Richmond.
Last year’s rail disaster in Canada has prompted the push for new regulations. A train carrying crude oil derailed and caused a massive explosion and fire, killing 47 and mostly flattening the town of Lac-Mégantic.
Brown also signed into law a requirement for oil companies to reveal more details about the fracturing process.
Repost from AP in The San Francisco Chronicle [Editor: To paraphrase, ‘Bakken is no more volatile, we are already conditioning it, it would cost too much.’ …well, what did we expect them to say? – RS]
Oil reps say ND has proper rail shipment rules
By James MacPherson, Associated Press, September 23, 2014
In this June 5, 2012 file photo provided by Rangeland Energy, LLC, a train leaves the company’s crude oil loading terminal near Epping, ND. Oil industry representatives told North Dakota regulators Tuesday, Sept. 23, 2014, that the state has proper regulations in place to treat Bakken crude for shipment by rail. North Dakota’s Industrial Commission is considering new rules that would remove extra hydrocarbons from Bakken crude, a process some say might make the oil more safe for rail transport. Bakken crude has been linked to fiery oil train crashes like one outside Casselton, N.D., last December that left an ominous cloud over the town and led some residents to evacuate. | Photo: Courtesy Of Rangeland Energy, LLC, AP
BISMARCK, N.D. (AP) — Oil producers in North Dakota are objecting to any new state regulations that would require them to reduce the volatility of crude before it’s loaded onto rail cars.
North Dakota’s Industrial Commission is considering new rules that would require companies to remove certain liquids and gasses from crude oil train shipments, a process some say would make such transport safer. But oil industry officials told the commission Tuesday that the state already has proper regulations in place.
“To date, no evidence has been presented to suggest that measureable safety improvements would result from processes beyond current oil conditioning,” Hess Corp. spokesman Brent Lohnes said.
Oil trains in the U.S. and Canada were involved in at least 10 major accidents during the last 18 months, including an explosion in Lac-Megantic, Quebec, that killed 47. Other trains carrying Bakken crude have since derailed and caught fire in Alabama, Virginia, North Dakota.
But Kari Cutting, vice president of the North Dakota Petroleum Council, said nine of the incidents involved derailments and one was due to a leaky valve.
“The material contained in these railcars was not the cause,” Cutting said.
A federal report released earlier this year by the Pipeline and Hazardous Materials Administration says oil from North Dakota’s prolific Bakken formation may be more flammable than other crudes. But a report funded by the North Dakota Petroleum Council says Bakken oil is no more dangerous to transport by rail than other crudes and fuels.
Oil from North Dakota began being shipped by trains in 2008 when the state reached capacity for pipeline shipments. The state is now the nation’s No. 2 oil producer, behind Texas.
Cutting, whose group represents more than 500 companies working in North Dakota’s oil patch, said the each of the more than 11,000 oil wells in the state already has equipment in place to stabilize or condition the oil before shipment.
“Requiring stabilization beyond current conditioning practices would be a costly, redundant process that would not yield any additional safety benefits,” she said.
Industry officials also pointed out that stripping liquids and gases from Bakken crude would result in even-more volatile products that would still have to be shipped by rail.
Outside the Bismarck building where the commission was meeting, members of an environmental-minded landowner group hoisted a large banner that read, “Stop Bomb Trains, Stabilize Bakken Crude.”
Theodora Bird Bear of Mandaree, a spokeswoman for the Dakota Resource Council, told reporters that oil companies are cutting corners to boost their bottoms lines.
“When they talk about saving money, what they are really talking about is reducing public safety,” Bird Bear said.
Members of the group said the issue of safer Bakken oil goes well beyond North Dakota’s border.
“No one in this country feels safe around these rail lines,” Scott Skokos said.
Minnesota Gov. Mark Dayton on Tuesday sent a letter to Gov. Jack Dalrymple, asking for additional safety measures for oil trains leaving North Dakota.
Alison Ritter, a spokeswoman for the regulatory panel, said a decision on whether to change state rules could come within 90 days.
Letter from Union Pacific & BNSF attorneys to Governor Brown
By Roger Straw, Editor, The Benicia Independent
On September 15, 2014, San Francisco Baykeeper offered highly critical comments to the City of Benicia on Valero’s Draft EIR. With their comments, Baykeeper attached a VERY interesting letter from attorneys for the two railroads that operate in California, claiming that preemption under The Federal Rail Safety Act and the Interstate Commerce Commission Termination Act render the State of California pretty much helpless in protecting against oil spill prevention and emergency response.
The letter specifically holds that the Federal Clean Water Act is useless as a preemption workaround.
Addressed to Dana Williamson, Cabinet Secretary in Governor Brown’s office and dated July 3, 2014, the letter addresses issues discussed in a June 18, 2014 meeting between Ms. Williamson and the lawfirm Latham & Watkins. The letter is signed by Maureen E. Mahoney of Latham & Watkins LLP, Counsel for Union Pacific Railroad Co. and BNSF Railway Co.
Note that this document is lawyer-talk, and I am not versed in legalese, so I hope my interpretation in the previous paragraph is accurate. I’m advised by a local activist attorney that the document is significant, so am posting it here to highlight the rail industry’s views and their efforts to influence decision-makers in Benicia and elsewhere in California.
Safety of Citizens in Bomb Train Blast Zones in Hands of North Dakota Politicians
2014-09-05, Justin Mikulka
Lac Megantic train explosion
When North Dakota Congressman Kevin Cramer was asked recently if it was scientifically possible to make Bakken crude oil safer by stripping out the explosive natural gas liquids with a process like oil stabilization, his response was quite telling.
“So scientifically can you do it? Sure, but you have to look at it holistically and consider all of the other elements including economics, and is the benefit of doing something like that does that trump other things like speed of trains, and what kind of cars,” he said.
This is very similar to the comments made by Lynn Helms of the North Dakota Department of Mineral Resources according to the July 29 meeting minutes provided to DeSmogBlog by the Industrial Commission of North Dakota.
“In response to a question regarding other mechanisms besides oil conditioning in the field, Mr. Helms stated there are other mechanisms — none of them without a significant downside….It makes sense to do the conditioning in the field. There are other options to do it downstream somewhere in a very large and very expensive operation.”
In a June 24 e-mail obtained by DeSmogBlog through a freedom of information request, Helms identified himself as “the primary contact for Governor Dalrymple’s team on the crude safety issue” in response to an inquiry from the Department of Energy about who would be working on the issue of Bakken crude oil safety.
As the point person on this issue for North Dakota, Helms’ opinions carry significant weight. And just like Congressman Cramer, Helms is pointing out the “significant downside” of stabilization, which is that it is an expensive operation.
It is well established that stabilization works and would make oil trains much safer. Not even North Dakota politicians are arguing that point anymore. But the industry doesn’t want to pay for it. And right now, the only ones who could mandate them to stabilize the oil via new regulations are the three members of the Industrial Commission of North Dakota.
What About The Feds’ Oil-By-Rail Regulations?
The reason North Dakota politicians are discussing this issue at all is because the federal government has essentially punted the question.
In the 200 pages of new proposed oil-by-rail regulations released in July, there is not a single line about requiring the oil or rail companies to stabilize the oil prior to shipping.
Stabilization is a process that removes the explosive natural gas liquids from the oil and is required by pipeline companies. This process would turn the current Bakken “bomb trains” into simple oil trains. They would still pose a threat of oil spills, but would no longer threaten to kill people in massive explosions like the one in Lac-Megantic, Quebec, or be a target for terrorism.
While the proposed regulations don’t require stabiliazation, they do include three questions that indicate lawmakers are aware that stabilizing or “degassifying” the crude makes it safer and that producers have the ability to reduce the volatility of crude oil prior to shipping it by rail.
Is the current exception for combustible liquids sufficient to incentivize producers to reduce the volatility of crude oil for continued use of existing tank cars?
Would an exception for all PGIII flammable liquids further incentivize producers to reduce the volatility of crude oil prior to transportation?
What are the impacts on the costs and safety benefits of degasifying to these levels?
As previously reported by DeSmogBlog, the regulators in charge of finalizing the new proposed oil-by-rail regulations are big believers in cost-benefit analysis. And looking at their questions, it is clear they know the oil can be made less volatile. But they want to hear more from the industry about the costs of doing this before doing anything. And instead of requiring stabilization, they are looking for ways to “incentivize” the producers to do it.
Oil Conditioning vs. Oil Stabilization
The North Dakota Industrial Commission is holding a hearing on September 23rd during which it is requesting input on how to make the Bakken crude oil safer for transport. The headline of its press release, “Hearing set on oil conditioning practices,” almost ensures that oil stabilization will never be required in North Dakota.
Oil conditioning is not the same as oil stabilization. Oil conditioning can be done with all of the existing equipment already in the field in North Dakota and thus the cost is minimal. However, in situations where the industry needs to ensure it strips out all the volatile natural gas liquids from the oil, as in the Eagle Ford formation in Texas, they use a different process called stabilization.
Helms and the members of the Industrial Commission like to cite the North Dakota Petroleum Council Study on Bakken Crude Properties when claiming that Bakken crude is no different than other crude oils and thus doesn’t require stabilization. However, that very report makes it clear that conditioning, done with the equipment currently available, is insufficient and was never designed to achieve the type of results expected from stabilization.
From the report, prepared by industry consultant Turner and Mason:
The data consistency [sic] indicates that field equipment is limited in its ability to significantly impact vapor pressure and light ends content.
This is consistent with the expected capabilities of the equipment.
The field equipment is designed to separate gas, remove water and break emulsions to prepare crude for transport, and not remove significant levels of dissolved light ends from the crude.
Meanwhile, at the August 26 meeting of the North Dakota Industrial Commission, Helms once again acknowledged the effectiveness of stabilization, as reported by Petroleum News: “This is very routinely done with high gravity condensate — oil that condenses out of a gas well as it is produced,” Helms said. “That has to be stabilized before it can move through the system.”
Helms word choice is telling. Oil that “has to be stabilized before it can move through the system.” Oil that is moved by pipeline has to be stabilized before it can be moved because pipeline companies require it. The rail companies do not.
Despite his acknowledgement of how stabilization is routine in the pipeline business, at the August meeting, Helms was also sure to point out that in North Dakota they expected to choose conditioning as their solution, as reported by Petroleum News.
Helms agreed, saying conditioning is likely more suitable for North Dakota since the equipment is already in place on well sites but he’d like to hear from others at the upcoming hearing.
“We haven’t closed the door to (stabilization),” Helms said. “We want to hear what people have to say.”
However, if the North Dakota Industrial Commission actually wanted to hear what people have to say about stabilization, the press release about the September 23rd hearing probably should have actually mentioned stabilization. It doesn’t.
The North Dakota Industrial Commission
If there is going to be any regulation requiring stabilization of the Bakken crude it will require the three members of the North Dakota Industrial Commission to make it happen.
Governor Jack Dalrymple is one member of the commission. And his point man on this issue, Helms, has already made it clear he supports conditioning over stabilization.
North Dakota Attorney General Wayne Stenehjem is another member. When a report by the Pipeline and Hazardous Safety Materials Administration recently concluded that Bakken oil was more flammable than most other crude oils, Stenehjem responded to the science by saying, “It seems like they are picking on us.”
The third member of the commission is Agricultural Commissioner Doug Goehring. At the August 26th meeting of the commission, Petroleum News reported that Goehring opposed stabilization for an unlikely reason for someone who helped oversee the massive expansion of the Bakken oil production.
Agriculture Commissioner Doug Goehring voiced his concern with dotting the landscape with stabilizer units.
“We’ve been trying hard to shrink that footprint out there on the landscape, and that’s going to make that awfully difficult.”
So in all likelihood, stabilization is off the table and conditioning will be the new regulation. Helms and others often say conditioning is already being done because the equipment is already in the field. Yet, according to the minutes from the July meeting of the Industrial Commission, Governor Dalrymple said: “Right now we are assuming producers are doing conditioning but we do not have a mechanism to verify that.”
So, let’s get this straight. It is more than a year after the explosion of a Bakken crude train in Lac-Megantic that killed 47 people. And it’s been more than eight months since a train of Bakken crude exploded in Casselton, ND. And the best the regulators can do is hold a hearing to talk about how to do regulate a practice that’s inadequate and they already assume is being done?
