Repost from Bloomberg Business News [Editor: A local resident observed that the photo below was taken at the docks here in Benicia, California — home of Valero Benicia Refinery. The Bloomberg story says that the contaminated oil originated with Chevron and was stored at Plains All American in Martinez. But maybe there’s more to the story? Maybe Valero was an additional source or storage facility for the ship’s contents? My source says that the tanker Hellespont Protector has been seen about twice over the last few months, and is a new one around here. (Background on current efforts of the oil industry to overturn the 1975 U.S. crude-export ban.) – RS]
Contaminated Oil That No One Wants Is Heading to Asia
By Lynn Doan and Dan Murtaugh, April 26, 2015 4:00 PM PDT
One million barrels of oil. Enough to fill more than 60 Olympic-sized swimming pools. And there it sat in tanks outside San Francisco — for three years — despite crude prices that topped $100 a barrel.
This isn’t the prized “light, sweet” kind of crude that is pumped out of the ground in Texas, or even the thick, sticky stuff from Alberta’s tar sands. Rather, it’s what’s known as “orphaned oil” that is so contaminated with organic chlorides that it can corrode the insides of even the biggest refineries.
Now, it’s on the move — and guessing exactly where is turning into a sort of parlor game for some in the oil market. All that is known is that Chevron Corp., which flushed the oil from a pipeline in September 2012 and has seen its value drop by $50 million since then, is loading it onto two tankers bound for Asia.
“It’s really kind of a bizarre incident,” said Gordon Schremp, a senior fuels specialist at the California Energy Commission who was notified by industry representatives of the planned exports.
It’s a rare shipment, considering most crude is barred from leaving U.S. borders. It just so happens that an exemption has been in place since 1992 allowing limited amounts of California oil to leave the country.
The only reason exports don’t happen very often is because California’s refiners keep almost all the state’s oil for themselves.
The saga began on Sept. 17, 2012, when Chevron told shippers that its pipeline delivering California crude to San Francisco-area refiners was contaminated. Chevron ended up pushing an estimated 1 million barrels through the pipe to get rid of the chlorides.
And so the tainted oil sat in tanks at a Plains All American Pipeline LP terminal in Martinez until this month, when all the red tape, including getting an export license from the Commerce Department, was finally cut, Schremp said.
When the contamination was discovered, heavy crude from California’s San Joaquin Valley cost $97 a barrel. It’s now $46. The difference, multiplied by 1 million barrels, is more than $50 million. And that’s not counting the cost of storing the oil for more than two years, which could add millions more.
West Texas Intermediate futures, the benchmark for U.S. crude, rose 9 cents to $57.24 a barrel at 11:53 a.m. local time on the New York Mercantile Exchange. Prices dropped about 44 percent in the past year.
Kent Robertson, a spokesman for Chevron, declined to comment on the exports. Brad Leone and Meredith Hartley, spokesmen for Plains, didn’t respond to requests for comment.
Oil tanker Hellespont Protector, one of the two vessels chartered to carry the crude, was anchored in the San Francisco Bay on Friday, shipping data compiled by Bloomberg show. The other, Energy Champion, is headed for Qingdao, China, a place with no refineries. It may be a stopover, or it may not be headed to a refinery at all.
Schremp, who wasn’t told where the outcast barrels are headed, said they could be used as fuel for large ships or burned in a power plant.
If refiners know about the contamination ahead of time, they can blend in additives as a cure, but it’s an expensive solution that erodes the value of the crude, said David Hackett, president of energy consultant Stillwell Associates LLC in Irvine, California.
Wherever it lands, chances are it’ll be the first and last California oil that Asia sees for a while. California crude prices have been getting stronger and refiners across the Pacific have been flooded with supplies from much closer by.
Asked whether the rare cargoes are a bellwether for future exports of California oil, Schremp said, “It’s not like it makes perfect economic sense to move barrels that way into the world market — this was an export of circumstance.”
Richmond councilman: Don’t let industry dominate debate
Residents should demand clean air
By Eduardo Martinez, Open Forum, March 26, 2015
As host to one of the biggest petroleum refineries in California, Richmond needs its residents to remain vigilant. The Bay Area Air Quality Management District is considering new refinery regulations that would require Chevron to disclose and measure the toxic emissions of its Richmond refinery and reduce them if they rise above stipulated limits, as has often occurred in the past. The air district held public workshops last week in Richmond, Martinez, Benicia and San Francisco. I urge concerned citizens to submit additional comments to the district before its March 27 deadline.
We need citizens to stand up because Big Oil doesn’t give up. The oil industry is spending tens of millions of dollars to derail our state’s landmark climate-change law, AB32. And it’s using some of the same sneaky tactics that Chevron deployed against me when I ran for Richmond City Council. Telling the truth is too risky, I guess: The vast majority of Californians want clean air and a livable climate.
Chevron, the oil giant that ranks by assets as the 18th biggest company in the world according to Forbes, spent some $3 million on advertising against me and other candidates when we ran in November’s election.
Despite being outspent by 20 to 1, my team and I fought back with a grassroots campaign that showed how people power still can triumph over big money. And I can tell you, standing up to a bully feels good, especially when you win.
The industry’s battle plan was revealed in a slide deck prepared by its lobbying arm, the Western States Petroleum Association, which was leaked to Bloomberg BusinessWeek. Instead of engaging in open public debate about clean energy and climate progress, the association has created and funded front groups that appear to consist of ordinary people — who just happen to share the industry’s point of view.
Oil companies also invoked the bogeyman of higher taxes. “Stop the Hidden Gas Tax” proclaimed countless billboards, TV and radio ads for weeks before Jan. 1, 2015, the day transportation fuels came under the AB32 emissions cap.
There was no hidden tax. Nor has the industry’s broader claim — that AB32 would weaken California’s economy and drive away businesses — proved true. In fact, California’s economy has grown since AB32 began. We have the largest advanced energy industry in the United States, employing more than 430,000 workers, and the Golden State’s manufacturing sector leads the nation in total output. The U.S. Bureau of Labor Statistics announced that California vaulted over Texas as the state with the largest job growth during the past year. All this growth — and our per capita carbon emissions have dropped 17 percent since 1990.
To be sure, this increased prosperity still hasn’t reached all Californians. But the solution is not to gut our clean air laws; it is to accelerate our development of renewable energy sources and improved energy efficiency — labor-intensive activities that employ more people than drilling for oil and gas.
We need to keep shining a light on the activities of opponents to clean energy.
As a resident and public official in Richmond, I care about petroleum use for another reason as well. In 2012, an explosion at Chevron’s Richmond refinery led some 15,000 people to seek hospital treatment. The refinery’s typical emissions also take a terrible toll, as I witnessed during my 18 years as an elementary school teacher. So many students were afflicted with asthma that our school founded an Asthma Club to help kids, teachers and parents cope. That should not be.
Californians deserve clean air, a stable climate and public policy that prioritizes those goals. We should strengthen, not weaken, AB32. Tell the air district that.
Eduardo Martinez serves on the Richmond City Council.
In March of 2014, Andrés Soto confirmed his nagging fears: Mile-long trains loaded with highly explosive crude oil had been rolling through his hometown of Richmond, California, unannounced, since the previous September.
Soto, a longtime activist and organizer for Communities for a Better Environment, had previously heard about the oil industry’s push to bring crude-by-rail to the west coast. In late January, his organization came across an industry report highlighting the local rail yard’s intentions to allow the practice. The following month, crude-by-rail popped back up on Soto’s radar after a woman from La-Mégantic, Quebec, spoke to Richmond residents about how her town was destroyed after 63 tankers filled with explosive crude oil derailed and exploded, creating a fireball that killed 47 people.
Though the woman’s eyewitness account terrified him, Soto figured he would deal with the issue if and when it came to Richmond. He assumed, as most people would, that local residents would get plenty of time and opportunity to weigh in on any decision to allow crude-by-rail next to their homes, schools and businesses.
He was wrong.
A Glut of Oil, Brought on By Fracking and Tar Sands
Since late 2012, as hydraulic fracturing and tar sands drilling created a glut of oil, the industry has scrambled to transport as much of it as possible from remote drill sites in North Dakota and Canada to the east and west coasts, where it can potentially be shipped overseas to more lucrative markets. Along the way, these trains run through many small towns and main streets, underneath large cities and over bridges, and even along steep mountainsides and wetlands in pristine wilderness areas like Glacier National Park. But while communities along the tracks take on the risk of these volatile visitors, which occasionally derail and explode, they often aren’t told what’s in them, or even when they’ll be charging through.
“This latest betrayal is just part of a lifelong experience,” says Soto, who, as a Richmond native, has seen firsthand the many environmental injustices forced upon residents of this industrial town. The city has around 400 pollution sites and the surrounding area has a high number of industrial accidents, making Richmond’s county, one of the most dangerous places to live.” Many Richmond residents suffer high rates of asthma, cancer and heart disease. Some of Soto’s own family members, who all grew up in Richmond, have been diagnosed with cancer and rare auto-immune diseases.
But the threat of crude-by-rail is not unique to industrial towns like Richmond. Because trains have played such a major role in shaping America over the past two centuries, today you can find them in every kind of community, carrying benign goods like grain, hogs and, of course, us. But with the growth in crude-by-rail, coupled with lax regulations, these icons of American culture are viewed more warily as their foreboding tank cars chug by, filled with crude oil and marked with barely perceptible warning signs.
Oil rail shipments have increased 6,000 percent from 2008 to 2014, which adds up to about 800,000 barrels of oil transported across America per day, according to the National Transportation Safety Board. The increase in rail traffic, however, has not been met with increased regulatory scrutiny. For example, oil trains are not subject to the same strict routing requirements placed on other hazardous materials, so while trains carrying chlorine are barred from travel through the middle of cities, trains carrying explosive crude oil can pass through with no problem.
Also, fire departments, police and first responders often don’t know basic safety information, like whether a train passing through their town will be carrying extremely flammable Bakken shale oil from North Dakota, or tar sands oil from Alberta, Canada, which is notoriously difficult to clean up. As a result, many communities learn of crude by rail projects by accident—or because of one.
More crude oil was spilled in U.S. rail incidents in 2013 than was spilled in the nearly four decades since the federal government began collecting data on such spills. Data: ESRI; Federal Railroad Administration; Bureau of Transportation Statistics
Lack of Environmental, Public Review, Despite Accidents
Given the lack of regulations and increased rail traffic, it’s not surprising that crude-by-rail accidents have skyrocketed, spilling oil, starting fires, causing explosions and tragically costing lives. The largest accident happened in July of 2013 in Quebec, but since then a number of derailments have occurred, including an accident in Lynchburg, Virginia, where a train carrying crude oil derailed in the downtown area, creating a 200-foot high fireball, prompting the evacuation of some 300 people, and spilling crude into the nearby river.
Yet, shipping crude-by-rail has, so far, escaped significant environmental and public review. This is partly because it is so new and partly because many of the permitting decisions—decisions that will impact thousands of citizens—are being made at the most local of planning levels. Only recently, in response to community outcry and litigation, have these decisions been brought to the public’s attention. And where full and complete environmental and public health reviews have begun, citizens, officials and scientists have largely been opposed to these projects and their risks.
Soto and Peesapati stand near crude oil rail cars. The city of Richmond is in the background. Chris Jordan-Bloch / Earthjustice
Richmond residents found out from news reports that crude-by-rail was going through their city only after local media spotted the trains in Richmond’s rail yard, about a half-mile from an elementary school. State officials with the California Energy Commission didn’t know about the project, and the only agency that did was the local air quality district, which issued an operating permit to Kinder Morgan in February of 2014 without any notice or public process. Though the California Environmental Quality Act requires regulatory agencies to conduct full environmental impact assessments of such projects, the air district avoided its responsibilities by putting the project in the same category as vehicle registration and dog licenses.
Earthjustice quickly sued Kinder Morgan and the air district on behalf of environmental justice and conservation groups for ignoring the well-known and potentially catastrophic risks to public health and safety, and for turning a blind eye to permitting the project in an already polluted and overburdened low-income community.
Similar stories of “discovering” these pipelines on wheels can be found all across the country.
In Hoquiam, Washington, a small town in Grays Harbor, people were largely unaware of plans to turn the major estuary, which is home to commercial and tribal fishing, into an industrial crude oil zone.
Members of the Quinault Indian Nation, outraged at plans to build three crude oil shipping terminals, which threaten the tribe’s treaty-protected fishing and gathering rights, turned to Earthjustice after local agencies permitted the projects based on the conclusion that they would have no significant environmental impact.
An aerial view of Grays Harbor, WA, where planned crude oil terminals threaten treaty-protected fishing and gathering rights. Photo courtesy of Quinault Indian Nation
“It makes no sense whatsoever to allow Big Oil to invade our region,” says Fawn Sharp, president of the Quinault Indian Nation. “We all have too much at stake to place ourselves square in the path of this onrushing deluge of pollution, to allow mile-long trains to divide our communities and jeopardize our air, land and waters.”
The Quinault and a group of conservation organizations appealed the permits. And in October of 2013, the Washington Shorelines Hearings Board agreed with the tribe, rejecting the permits for the proposed terminals for failure to address significant public safety and environmental issues. Two of the terminal projects have begun full environmental review processes, and the tribe and local community are fully engaged in opposing them.
On the other side of the country, many residents of a housing project in Albany, New York, discovered that crude-by-rail was coming only after they started seeing—and hearing—long lines of oil-filled rail cars chugging close to their homes and the community playground. They soon found out that in 2012 Global Companies LLC received state permits allowing it to double crude oil storage and loading capabilities at its Port of Albany terminal.
To access the port—which adjoins low-income communities and a playground and is within blocks of an elementary school, a senior facility and a center for the disabled—trains carrying the explosive crude travel a rail line that passes directly through the heart of the city. Yet, the State Department of Conservation approved the project without requiring a full environmental impact review and without complying with its own environmental justice policy, which requires community participation and input on such proposals.
“Some of our clients can literally stick their hand out of their kitchen window and almost touch the trains going by,” says Earthjustice attorney Christopher Amato, who, on behalf of a number of groups sent a letter to the New York Department of Conservation, asking the agency to require a full environmental assessment that takes into account not just the rail project but all of the impacts that will come with turning the Port of Albany into a major oil shipping hub.
In March of 2014, Albany residents successfully convinced the county to halt the expansion plans. The news followed pressure by a broad coalition—including community and environmental groups like Earthjustice.
Crude-by-Rail Proposals Continue, as Communities Take Action
Despite significant pushback from communities, the oil and gas industry continues to ramp up its crude-by-rail operations to take advantage of the current fracking boom around the country. In Washington, Oregon, and California, there are more than a dozen known proposals for new or expanded crude-by-rail capacity.
In addition, certain members of Congress are calling for the lifting or loosening of the ban on crude oil export to other countries.
“Both coasts are in the crosshairs of the oil industry,” says Kristen Boyles, an Earthjustice attorney who represents tribes and conservation groups in Washington and Oregon who are fighting crude-by-rail.
In February of 2014, the Department of Transportation took the first initial steps to making crude-by-rail safer now, issuing an order that requires railroads to inform state emergency management officials about the movement of large shipments of crude oil through their states and urging shippers to avoid using older model tanks cars that are easily ruptured in accidents.
Residents applaud at Berkeley City Hall, following a vote in March 2014, opposing a proposed crude-by-rail project. Mauricio Castillo / Earthjustice
In addition, communities, no longer content to just lie down on the tracks and hope for additional regulations, are taking matters into their own hands. In December of 2013, two Chicago aldermen proposed that its City Council declare the DOT-111 tank cars a “public nuisance” and ban them from the city. And in February and March of 2014, city councils in Spokane, Seattle and Bellingham, Washington, passed resolutions requiring greater disclosures by railroads on traffic and routes, while Minnesota and the Washington state legislatures debated rail safety bills. Most recently, the city of Richmond and the neighboring city of Berkeley passed resolutions demanding tighter regulations or outright bans of the shipping of crude-by-rail through their communities.
“We didn’t go looking for this fight,” says Soto, who has spent much of his life fighting social injustice and shows no signs of slowing down. “But we’re going to fight it all the same.”
Attorney General Confirms CBE Concerns over Chevron Refinery
June 9, 2014
A CBE News Release – A.G. Kamala Harris cited refinery safety, air pollution, and climate protection concerns with Chevron’s proposed Richmond refinery expansion—the same concerns raised by CBE.
Urging the City of Richmond “to revise the EIR so that it will fully inform the public and the City Council of the local and statewide impacts of this Project,” Attorney General Kamala Harris cited refinery safety, air pollution, and climate protection concerns with Chevron’s proposed Richmond refinery expansion—the same concerns raised by Communities for a Better Environment (CBE) last month.
The Attorney General’s June 6th comment letter identified at least five issues that need further evaluation in the Environmental Impact Report (EIR) for the Chevron Expansion (“Modernization”) Project:
Safety hazards of the proposed project;
Potential project impacts on statewide climate protection objectives;
disparately impacted local community;
Feasible measures to cut local air pollution; and
Reasonable alternatives that may be environmentally superior to the project as currently proposed.
Specific concerns Harris raised include, among others, increased safety hazards from refining higher sulfur oil, increased carbon emission intensity, and the reliance on ‘emission reduction credits’ that do not require emission reductions in the communities directly affected by the proposed project’s potential air pollution.
CBE called on the City to revise and recirculate Chevron’s draft EIR, in comments documenting these same concerns submitted May 2, 2014. Last week CBE challenged air quality officials’ action granting a permit for the project without any valid air quality or environmental review. The Richmond Planning Commission has scheduled a decision on the project and EIR for a public hearing on July 9, 2014.