Franken wants more oversight of crude oil shipped by rail
April 6, 2014 By Melanie Sommer
In the wake of recent accidents involving trains carrying crude oil from North Dakota’s Bakken oil fields, U.S. Sen. Al Franken is calling for more federal oversight of oil transport by rail.
Franken, D-Minnesota, and Sen. Heidi Heitkamp, D-N.D., sent a letter to the Senate Appropriations Committee — which takes a lead role in writing the federal budget each year — urging the creation of a Safe Transportation of Energy Products Fund.
The new program would look at ways to improve the safety of transporting crude oil by train and oil tankers, the Northland News Center reports. The fund would pay for more safety inspections, disaster response training, studies and community outreach, among other things.
The senators also are asking for funding to hire more inspectors.
Lawmakers on the federal and state levels stepped up their scrutiny of oil shipments by rail after a train carrying crude oil collided with another train near Casselton, N.D. in late December, causing an oil spill and a spectacular fire which required the town to evacuate. Congressional committees held hearings on rail safety, and several bills increasing oversight of oil transportation are in committee in the Minnesota House.
The growth in rail transport of crude oil has increased dramatically in just the past few years, according to Franken’s office. About 800,000 barrels of crude per day are shipped via rail, which is a 6,000 percent increase since 2007.
Experts are also concerned about the safety of Bakken crude, specifically. Federal officials issued a safety alert in January warning that the crude oil pumped in that region may be more flammable — and therefore, more dangerous — than other forms of oil.
This map, produced by Minnesota 2020, shows the rail routes that go through Minnesota carrying crude oil.
A lot of what you’ve been hearing is not true. It’s time to set the record straight
COASTAL REFINERIES ARE FLOCKING TO OIL BY RAIL LIKE DROWNING MEN TO LIFE PRESERVERS.
Fred W. Frailey, Trains Magazine, Feb2014, Vol. 74 Issue 2, p17
Three years have passed since the village was rocked by the scandal, namely the remarriage, after half a century of divorce, of Mr. Big Rail and Ms. Crude Oil. People are still aghast. Who would have imagined these two would find each other attractive again? Yet a lot of loose tongues are still spreading gossip, and frankly, much of it is simply not true. To promote harmony in the village, your scribe this month wishes to set the record straight. Here are five commonly articulated myths that have no basis in fact.
1. It’s just a fling and won’t last. The way oil is priced worldwide virtually guarantees this marriage will endure. The world oil price (Brent) in recent years has usually been $10 to $25 a barrel higher than the West Texas Intermediate (WTI) price for oil from the U.S. interior, and oil from new discoveries in North Dakota and Canada is further discounted from the WTI price. Follow me so far? Refineries on the west and east coasts are not reached by pipelines from the country’s oil-producing midsection, and had to pay the Brent price (or something close to it) to buy oil from overseas or Alaska’s North Slope. It was difficult for these refiners to compete and stay in business.
Now these coastal refineries are flocking to oil by rail like drowning men to life preservers. If they can get oil $10 to $25 a barrel cheaper, they’re way ahead even after paying the railroads. Therefore, the east and west coasts, I maintain, will be the ultimate destination for much, if not most, of the oil coming from the Bakken shale formation in North Dakota and Saskatchewan. And the only way to get it there is by rail.
2. The Keystone XL pipeline will disrupt the marriage. Not at all. TransCanada’s XL, according to the environmental impact statement, is supposed to bring up to 730,000 barrels a day of stuff from Canada (more about “stuff” in a minute) to refineries on the U.S. Gulf Coast, and pick up another 100,000 barrels of North Dakota oil as it passes through that state. But there are problems with the XL. First, it may never be approved by the U.S. government. Second, Gulf Coast refineries are being flooded by light sweet crude oil of the sort North Dakota produces. I concede that pipelines can get North Dakota crude to the Gulf cheaper than railroads, but question whether there will be much appetite for it. Third, the “stuff” from Canada is not well-suited to pipelines.
3. Railroads cannot compete with pipelines head to head. In theory, that’s largely true. Between Point A and Point B, if there are no complicating hang-ups, pipe will underprice rail. Now, let’s talk about “stuff:’ The oil being extracted in northern Alberta, above Edmonton, is so heavy that you cannot do conventional drilling. Either you mine it and extract the oil from the sand, or you heat it underground and boil it out, so to speak. What you get is an oil called bitumen. Gulf Coast refiners are largely geared for this heavy oil – it’s a natural destination for this oil – but there’s a catch: Bitumen will not flow through a pipeline. Pipelines shippers have to buy condensate. transport it to northern Alberta, and then dilute the bitumen with it so that they end up pumping 72 percent bitumen and 28 percent condensate, or “stuff:’ So what goes through the pipe is 28 percent waste. At the other end, refiners have to remove the diluent. It’s a costly process. At least a couple of oil industry experts who have studied the economics of all this say bitumen can be shipped a lot cheaper by unit train, particularly if you use insulated tank cars with coils for steam injection to permit raw bitumen to be loaded and unloaded. Facilities that will do just that are being built or planned at both ends. The same experts say that even if you dilute the bitumen with 18 percent condensate to make it flow in and out of ordinary tank cars, unit trains are still the low-cost winner, although not by much.
4. Crude oil doesn’t explode. That was the prevailing wisdom before a runaway, unmanned crude oil train piled up in Lac-Megantic, Quebec, in July, killing dozens. And in November an Alabama & Gulf Coast crude oil train derailed over a wooden trestle near Aliceville, Ala., and press reports state that three cars of crude exploded (while other derailed cars did not). Today, I suppose the popular belief is that crude oil is explosive. The truth is that both myths are untrue (or true, take your pick). The lighter the crude oil, the more likely it will be to contain explosive elements such as butane and benzene that may separate from the heavy components during transport. If released and ignited, an explosion may result, according to published safety data sheets. Both the Lac-Megantic and Aliceville accidents involved light sweet crude that originated in North Dakota. As for tar-like bitumen, you could probably hit it with a flamethrower with no explosive effects.
5. The backlog of tank car orders is creating a bubble that will burst. That bit of village gossip had validity because after all, booms are followed by busts, and freight car manufacturers aren’t exempt. But after the Association of American Railroads in November got behind the idea of retrofitting (or reassigning or scrapping) 78,000 of the 92,001]. cars hauling flammable liquids such as ethanol and crude oil, it pretty much insured that the car builders will be turning out tank cars at their peak 24,000-a4 year rate for some time to come. That bust appears to be a long way off. ~
Fred W. Frailey is a TRAINS special correspondent and blogs on www.TrainsMag.com.
Thu, 2014-03-27 04:18Justin Mikulka Due to a massive increase in the movement of crude oil by rail in the past few years, communities across the country are facing the daunting prospect of becoming part of the oil industry’s infrastructure. In Pittsburg…
By David R. Baker, April 5, 2014
A BNSF Railway train, above, hauls crude oil near Wolf Point, Mont. Photo: Matthew Brown, Associated Press
Little noticed by neighbors, trains carrying crude oil from the Great Plains have been rumbling into a Richmond rail yard.
The cargo is the same kind of crude that fueled a deadly explosion last summer when a train carrying the oil derailed in a small Quebec town, killing 47. Now environmentalists are suing to prevent any more shipments to Richmond.
The suit, filed last week in state Superior Court in San Francisco, would revoke a permit issued by a regional agency in February that allows Kinder Morgan to unload oil trains in Richmond at a facility originally built to unload ethanol.
The Bay Area Air Quality Management District granted the permit without studying how the switch from shipping ethanol to oil could affect the environment, said Kristen Boyles, staff attorney with Earthjustice, the group that filed the suit on behalf of four other environmental organizations.
A placard on a tank car in North Dakota, below, warns that it’s carrying flammable crude oil. Trains like these are being used more frequently to deliver petroleum to California. Photo: Matthew Brown, Associated Press
“These things are going in without a lot of thought to their safety, their impact on the environment and their possible health effects,” Boyles said. “That’s what’s really frustrating with this situation – how little we know until this is rolling through our backyards.”
Kinder Morgan declined comment.
Ralph Borrmann, an agency spokesman, said the change in fuels handled by Kinder Morgan’s rail-yard facility would not increase air pollution – his agency’s primary concern.
“There were no emissions consequences as a result of the permit, no net increase of emissions, which is what we look at,” Borrmann said.
Just a few years ago, California didn’t import oil by rail. But that’s changing fast.
In 2009, railways carried just 45,000 barrels of oil into the Golden State, according to the California Energy Commission. By last year, that number had soared to 6.2 million barrels. A barrel equals 42 gallons.
Petroleum glut
California’s refineries have turned to rail to access a glut of petroleum in the Great Plains. Oil production in the Bakken Shale formation that lies beneath North Dakota and Montana has surged so much, so quickly, that area’s pipelines lack the capacity to transport the fuel. As a result, the Bakken oil sells at a discount to other kinds of crude.
Oil by rail is “about discounted oil, delivered to your doorstep,” said Gordon Schremp, senior analyst with the Energy Commission.
The amount of oil carried by rail is rising nationwide. While most of those shipments reach their destination without incident, the United States and Canada have recently seen a series of oil-train accidents leading to explosions and fires, including last July’s derailment in Lac-Megantic, Quebec. In January, the U.S. Pipeline and Hazardous Materials Safety Administration issued an alert warning that Bakken crude, much lighter than many other grades of oil, may be more flammable as well.
Benicia refinery
The warning spurred opposition to a series of oil-by-rail projects in California. Valero’s refinery in Benicia is seeking approval to build a rail yard that could move 70,000 barrels of oil each day, replacing more than half of the petroleum the refinery now imports from abroad, via ship.
In Pittsburg, another project would bring in oil by ship, pipeline and rail. The $200 million proposal, by WesPac Energy, would refurbish an old Pacific Gas and Electric Co. facility to import, store and supply oil to Bay Area refineries.
Community groups have spent months fighting those proposals. But most Richmond residents knew nothing about Kinder Morgan’s Richmond rail facility until television station KPIX reported on the issue last month.
Kinder Morgan applied to convert its existing ethanol offloading facility last year, and won an operating permit from the air district in February. KPIX filmed trucks carrying oil from the facility to the Tesoro refinery in Martinez.
Tesoro’s comment
A Tesoro spokeswoman on Friday declined to confirm whether the refinery collaborates with Kinder Morgan’s Richmond facility. But she said the refinery uses about 5,000 to 10,000 barrels of oil per day taken from rail shipments, equal to between two and four train shipments per month.
Earthjustice and its partners in the suit – the Asian Pacific Environmental Network, Communities for a Better Environment, the Natural Resources Defense Council and the Sierra Club – want Kinder Morgan’s operating permit in Richmond revoked until the company conducts a full environmental impact review.
“The risk of train accidents is huge with this kind of crude oil,” Boyles said.
A tanker truck is filled from railway cars containing crude oil on railroad tracks in McClellan Park in North Highlands on Wednesday, March 19, 2014. North Highlands is a suburb just outside the city limits of Sacramento, CA. (Randall Benton/Sacramento Bee/MCT) Photo: Randall Benton, McClatchy-Tribune News Service
