Category Archives: Bakken Crude

CSX Railing More Crude, Warns Against Dropping Train Speeds

Repost from Natural Gas Intel’s Shale Daily

CSX Railing More Crude, Warns Against Dropping Train Speeds

Richard Nemec, July 18, 2014
Carloads_Of_Crude-20140717

Florida-based CSX Corp. senior executives on Wednesday underscored the continuing growth in the amount of crude oil being shipped by rail and voiced concerns about proposed federal regulations that would drop average train speeds in response to a series of tank car accidents in the past 18 months (see Shale Daily, Aug. 22, 2013).

Executives offered their comments as part of a 2Q2014 conference call. CSX earned $529 million (53 cents/share) in 2Q2014, compared with year/ago earnings of $521 million (51 cents). Record revenues were $3.2 billion, up 7% from 2Q2013.

CSX CEO Michael Ward and Executive Vice President Clarence Gooden talked about the robust crude oil shipping market. Coal shipments are expected to remain higher, too, as natural gas prices hover at about $3.50/Mcf.

“The biggest part of our surge [in business] on our northern network was driven by crude-by-rail and our coal business,” Gooden said. “Our coal business was much higher than expected primarily as a result of [high] gas prices, a colder winter and utility responses.”

Gooden said he sees future crude shipment expansions along the East Coast. “There are expansions there going on as we speak,” he said. “They are predominantly in the Philadelphia and New Jersey areas; we have two customers that are looking at expanding in the Jersey area.”

Every week, CSX is averaging about 2,014 oil tank cars and 20 trains with crude-by-rail, Gooden said. “We could see some slight increases in that going forward, although there are some finite limits for what the Bakken [Shale] can produce and the refiners can process.”

On the question of proposed new federal rail regulations from the Pipeline and Hazardous Materials Safety Administration (PHMSA), Ward said the industry is concerned about a proposed requirement to slow trains to 30 mph. In the longer term, he expects regulators to heed the industry’s warning about that proposed rule.

“While we have not seen the proposals, we have heard that a 30 mph speed limitation is one of the options being considered, and we think that would severely limit our ability to provide freight service to our customers, and also provide passenger and commuter services,” Ward said. “There are all kinds of corollary impacts of this.

“I would hope as we look at this with the federal government that we can show the modeling of how disastrous that could be for fluidity of the entire U.S. rail system as well as the impact on [long-haul] trucking. We think cooler heads will ultimately prevail” among federal regulators.

Other parts of the proposed federal rulemaking due to recent crude rail car derailments have the full support of the CSX executives, such as the proposed crude rail tank car designs (see Shale Daily,May 7).

“We’re quite excited about the potential for the new car design as well as the retrofits to the existing cars, and that is part of the proposed rulemaking [at PHMSA],” said Ward, adding that CSX has “done a number of things” to improve safety. “We think the next big thing to make things better is a stronger car for newbuilds as well as the retrofit to existing cars.”

Two studies: Bakken crude by rail – safety and volatility

[Editor: The following studies were recommended to me by a neighbor who supports Valero’s crude by rail proposal.  Both are loaded with valuable information, useful to anyone who wants facts to back up an argument for or against Valero’s project.  You can download the document by clicking on the green text.   Thanks, neighbor!  – RS] 

Center for Strategic and International Studies –
Safety of Crude Oil by Rail

By David Pumphrey, Lisa Hyland, and Michelle Melton, March, 2014

Summary

In the last several years, rail has come to play an important role in the transportation of growing U.S. crude oil production. Over the last seven months, a number of serious accidents have resulted in intense review of the safety of shipping large quantities of oil by rail. The focus has been on classification of the oil, the integrity of tank cars, and rail operations. Regulatory processes have been initiated to attempt to deal with these issues in a timely manner. This issue analysis provides facts that illuminate the players, concerns, current status of regulatory action, as well as the potential issues going forward.

Further regulation of crude by rail is a near certainty, but the ultimate scope and pace remains unclear. Whether regulatory action actually slows down what has become a burgeoning transportation option for crude oil producers and refiners is an open question. It is increasingly unlikely that regulatory action—unless truly drastic—will stop shipment of crude by rail. However, moving forward, regulatory action such as phasing out older tank cars, rerouting trains, or imposing stringent requirements for testing, could impact the economics of crude by rail.   [MORE – a 9-page report in PDF format]

Congressional Research Service –
CRS Report – Crude Oil Properties Relevant to Rail Transport Safety

by Anthony Andrews, Specialist in Energy Policy, February 18, 2014

Summary

The dramatic increase in U.S. crude oil production, coupled with the increase in crude oil transport by rail, has raised questions about whether properties (e.g., flammability) of these crude types—particularly Bakken crude oil from North Dakota—differ sufficiently from other crude oils to warrant any additional handling considerations. The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Safety Alert to notify emergency responders, shippers, carriers, and the public that recent derailments and resulting fires indicate that the type of crude oil transported from the Bakken region of North Dakota may be more flammable than traditional heavy crude oil. The alert reminds emergency responders that light sweet crude oil, such as that coming from the Bakken region, pose significant fire risk if released from the package (tank car) in an accident. PHMSA has expanded the scope of lab testing to include other factors that affect proper characterization and classification of crude oil such as volatility, corrosivity, hydrogen sulfide content and composition/concentration of the entrained gases in the material.

All crude oils are flammable, to a varying degree. Further, crude oils exhibit other potentially hazardous characteristics as well. The growing perception is that light volatile crude oil, like Bakken crude, is a root cause for catastrophic incidents and thus may be too hazardous to ship by rail. However, equally hazardous and flammable liquids from other sources are routinely transported by rail, tanker truck, barge, and pipeline, though not without accident.

A key question for Congress is whether the characteristics of Bakken crude oil make it particularly hazardous to ship by rail, or are there other causes of transport incidents, such as poor maintenance practices, inadequate safety standards, or human error.  [MORE – a 13-page report in PDF format]

 

Time Magazine: A Year After a Deadly Disaster, Fears Grow About the Danger of Crude Oil Shipped By Rail

Repost from Time Magazine
[Editor: The message is getting out far and wide with this mainstream publication’s observance of the one-year anniversary of the killer wreck in Lac-Mégantic.  An intensely personal account of what it is like to live near these rolling “bomb trains.”  – RS]

A Year After a Deadly Disaster, Fears Grow About the Danger of Crude Oil Shipped By Rail

Sebastien Malo, July 10, 2014

When 21-year-old mother Kahdejah Johnson was told two years ago that she’d secured a spot at the Ezra Prentice Homes, a quiet housing project in Albany, she felt confident she’d found a stable home to raise her newborn son. With its manicured lawns and tidy beige row houses, the Ezra Prentice Homes are a far cry from the crumbling housing projects of large cities. “When people come into town they’re like ‘These are your projects? These are condos!’” says Johnson.

But today, Johnson is losing sleep over how close her house is to railroad tracks congested, day and night, with tanker cars carrying crude oil, visible just outside her bedroom window. The fear of an accident is so great that Johnson has taken to evacuating her apartment some nights, to spend the night at her mother’s home, further from the tracks. “Now I’m afraid to be in my own home,” she says. “Do you know how fast we could die here?”

Albany is one of a growing number of cities where residents like Johnson fear the devastating consequences of accidents involving railcars filled with crude oil. They have reason to fear—on July 6, 2013, a train carrying oil derailed in the Canadian town of Lac-Megantic, causing an explosion that destroyed more than 30 buildings and killed more than 40 people. This past Sunday, Johnson and other Albany residents held a vigil to commemorate the Lac-Megantic derailment—and draw attention to the growing opposition to transporting crude oil by rail

“Jo-Annie Lapointe, Melissa Roy, Maxime Dubois, Joanie Turmel,” participants in the vigil intoned into a microphone, naming Lac-Megantic residents killed in the explosions. In a line, they held portraits of each of the deceased and read their names, pinning the pictures to a black metal fence. “You may not say that they lived right next door to you, but they were your neighbors,” said Pastor McKinley Johnson, who officiated part of the ceremony. “You may not say that you understand all the language, but they’re your sister and your brother.”

As in Lac-Megantic, oil tankers containing highly flammable crude oil from the Bakken oil fields in North Dakota and Montana roll right through their residential areas. Rows of train-cars filled with crude oil often stand idle for hours on the tracks that hug the curves of the housing project, so tightly only 15 feet at most separate the two in some areas. “Once I found out that these are the same tanks that were in Canada, I was like ‘Oh my God, someone pray for us, We’re in danger’,” Johnson said.

This fear is a consequence of the unconventional oil boom in states like North Dakota, where for the last several years producers have been using hydrofracking techniques to pump oil previously locked in underground shale rock. The new oil fields have helped America’s oil production rise to a 28-year high. But that crude oil has to get to refineries, most of which are located in coastal cities—and much of that oil is moving by rail. Nationally, transport of crude oil by train has jumped 45-fold between 2008 and 2013, according to a recent Congressional Research Service report.

While the U.S. has yet to experience a rail catastrophe on the scale of Lac-Megantic, the country has had its share of close calls. The National Transportation Safety Board counts five “significant accidents” of trains containing crude oil in the United States in the past year alone. The latest, in Lynchburg, Virginia, saw a train carrying crude Bakken oil derail and burst into flames in the town’s center this April, producing black plumes of smoke and billows of flames taller than buildings nearby. The crude oil also spilled into the James River, though one was injured.

The worrying trend has opened a new front to the national environmental debate. Some 40 cities and towns across the country scheduled similar events to mark Lac-Megantic’s one-year anniversary. Many of the rallies will take place in the usual hotbeds of environmental activism —in places like Seattle and Portland—but also in blue-collar tows like Philadelphia and Detroit, where activists will voice demands ranging from a moratorium on oil-trains traffic to increased safety controls.

But the problem has also presented environmentalists with a conundrum. One of the factors behind the rapid rise of railroad shipment of crude oil has been the shortage of oil pipelines, which could move greater quantities of oil from landlocked states to coastal refineries. Front and center to this debate is the multi-billion dollar Keystone XL pipeline project, which would connect the oil sands of western Canada to the Gulf Coast, but which President Obama has yet to approve—in part because of objections raised by environmentalists, who fear the potential for a spill.

Fewer pipelines has meant more oil moved via rail. “If Keystone had been built we wouldn’t be moving nearly the volume of oil that we’re moving by rail,” said Charles Ebinger, the director of the Energy Security Initiative at the Brookings Institution.

That has exposed the Keystone’s opponents to criticism that by standing in the way of pipeline projects, they are raising the risk of rail accidents. Though hazardous material like crude oil makes its way safely via rail 99.998 percent of the time, according to the Association of American Railroads, a plethora of research suggests that pipelines result in fewer spillage incidents, personal injuries and fatalities than rail. That includes an authoritative environmental review the State Department released last January, which concluded that “there is… a greater potential for injuries and fatalities associated with rail transport relative to pipelines.”

Still, environmentalists like Ethan Buckner of ForestEthics, the group coordinating the string of events to commemorate the Lac-Megantic tragedy, reject that dichotomy. “The industry is trying to present Americans with a false choice between pipelines and rails,” he says. “We want to choose clean energy.”

Back in Albany, the vigil was deemed a success, drawing a crowd of about a hundred. But Kahdejah Johnson wasn’t among them. Why not? Her fear, she said, got the best of her. “Honestly, I don’t really hang by my house,” she said. “I don’t like to be in that area if I don’t have to be there.” She is now on a waiting list to be transferred to another development—something she’s told could take up to four years. In the meantime, the trains will keep rolling.

Benicia OKs Sacramento request for more time to review crude oil rail shipment plans

Repost from The Sacramento Bee

Benicia OKs Sacramento request for more time to review crude oil rail shipment plans

By Tony Bizjak, Saturday, Jul. 12, 2014
Lac-Megantic-One-Year-Later
Family and friends cross the railroad track along the crash site after a memorial service early Sunday, July 6, 2014 in Lac-Megantic, Quebec, for the 47 victims of last year’s devastating oil train derailment (AP Photo/The Canadian Press, /Paul Chiasson

Benicia has granted a request by Sacramento officials and others for extra time to review a plan by Valero Refining Co. to run two trains daily carrying crude oil through downtown Sacramento, Roseville, West Sacramento and Davis to its Bay Area refinery. The Sacramento Area Council of Governments, which represents local cities and counties, had requested extra time, saying they are concerned about the project’s safety risks. The new response deadline is Sept. 15, officials said.

Valero is asking the city of Benicia for an OK to begin receiving daily crude-by-rail shipments, including possibly the more volatile oil from the North Dakota Bakken fields. Federal officials issued a warning this year about that fuel after several train explosions, including one that killed 47 people in Canada.

The Valero plan, involving two 50-car trains a day through Sacramento, is among the first of what California officials say is an expected boom in crude-by-rail shipments through the state, prompted by the lower cost of North Dakota and Canadian crude.

The draft environmental report, issued last month by Benicia, included an analysis that says a derailment and spill might happen only once every 111 years. That analysis was authored by a University of Illinois professor, Christopher Barkan, who formerly worked for the American Association of Railroads and does research supported by the association. Barkan, an expert on hazardous rail transport, said in an email that his work for Benicia was not influenced by his association with the railroad association.

Local officials say they plan to issue written responses to that assessment this summer. City of Davis official Mike Webb has challenged the report risk assessment, saying, “It only needs to happen once to be a real problem.”

Also on Friday, a coalition of activists who oppose rail shipments of crude oil called on the state Legislature or the governor to ban or place a moratorium on construction of any more crude rail terminals similar to the one Valero is proposing.

The state Office of Spill Prevention and Response announced it will conduct a series of public workshops later this month soliciting opinions on how it should expand its work to inland areas, including along rail lines. The new state budget includes funding, from oil refinery fees, for the spill office to deal with the expected increase in crude oil shipments by rail. The agency will release information on its “legal and regulations” Web page on Friday.