Category Archives: Crude By Rail

Crude By Rail, Diluted bitumen (Dilbit), Raw bitumen (undiluted tar sands heavy crude), Rawbit-By-Rail, Tar sands crude, Volatility

Canadian oil trains carrying more undiluted raw bitumen

May 5, 2015 Roger Straw

Repost from Reuters
[Editor: How, you ask? Quote: ” …raw bitumen can be shipped on heated and coiled rail cars without diluent.” Less volatile, and therefore supposedly safer, unless you consider the overall safety of the planet. Cheaper for Canadian oil companies, though, so surely a hot ticket. They’re actually planning to DILUTE the stuff to send it down pipelines to a rail facility, then REMOVING some or all the diluent before loading it as “raw” bitumen – onto oil train tank cars. All for you and me – gee, no thanks. – RS]

Canadian oil trains shift to carry less-volatile crude

CALGARY, Alberta | By Nia Williams, May 5, 2015 1:00am EDT

May 5 (Reuters) – A growing share of Canadian oil-by-rail traffic is made up of tough-to-ignite undiluted heavy crude and raw bitumen, say industry executives, as companies scramble to cut expenditures with the price of crude down more than 40 percent since June.

By eliminating the cost of diluting with ultra-light condensate, heavy oil offers rail shippers an opportunity to claw back a few dollars per barrel in transportation costs.

Official data does not break down the different Canadian crudes shipped by rail but interviews with industry executives suggest undiluted heavy and raw bitumen shipments now make up roughly a quarter of the estimated 200,000 barrel per day (bpd) oil-by-rail market.

An added bonus is that heavy crude and bitumen are far less combustible than the Bakken and Canadian synthetic crudes involved in fiery crashes that spurred the Canadian and U.S. governments on Friday to tighten safety rules for trains carrying oil.

With very high boiling and flashpoints they fall outside Packing Groups 1 and 2, used to classify the more volatile types of crude oil for transport, and are already shipped in double-hulled cars, meaning they should be unaffected by last week’s tank car phase-out rules.

Oil-by-rail shipments have come under increased scrutiny and public outrage following 10 oil-train derailments involving fires in less than two years.

“The business is moving back to where it started, which is as a vehicle to move undiluted heavy oil,” said John Zahary, chief executive of Altex Energy, which operates crude-by-rail terminals.

Normally, rail is more expensive than shipping by pipeline, but undiluted rail shipments offer better returns because shippers do not need to add between 15 and 30 percent condensate per barrel, which often trades at a premium to U.S. benchmark crude.

Overall rail volumes have dipped in recent months, as the shrinking gap between U.S. and cheaper Canadian crude prices has eroded arbitrage opportunities. Total crude-by-rail export volumes, not including shipments within Canada, dipped 5 percent quarter-on-quarter in the final three months of 2014 to 173,000 bpd, according to the National Energy Board.

Still, Jarrett Zielinksi, chief executive officer of TORQ Transloading, said the proportion of heavy undiluted crude shipped is growing.

TORQ’s overall volumes fell to approximately 25,000 bpd this year, but it is now moving essentially 100 percent undiluted conventional heavy, up from around 85 percent last year.

Meanwhile, Altex moved around 35,000 bpd of conventional heavy last month and has just finalized plans for a 100,000 bpd unit train facility in Lashburn, Saskatchewan.

RAWBIT-BY-RAIL

Like heavy crude, raw bitumen can be shipped on heated and coiled rail cars without diluent. But it is a much smaller segment of the market due to the infrastructure needed at both loading and unloading facilities.

Canadian National Railway is pushing hard towards shipping more of this so-called neat bitumen to improve both economics and safety.

“It’s the wave of the future,” James Cairns, CN vice-president of petroleum and chemicals, told a recent conference. “When we move bitumen it doesn’t even move as a dangerous commodity. The safest crude you can move by rail is a heavy, neat bitumen crude.”

MEG Energy Corp and Keyera Corp have looked at building diluent recovery units. This would enable them to receive diluted bitumen by pipeline at rail terminals, remove all or some of the diluent and then load the raw bitumen onto railcars.

Both companies have put those plans on hold due to low oil prices but said they could be developed in future.

(Additional reporting by Allison Martell in Toronto; Editing by Jeffrey Hodgson and Alan Crosby)

Air Quality, Clean Air Act, Crude By Rail, Derailment, Environmental review, Explosion, Public Health, Public permitting, Volatility

EPA Cites Bakersfield Oil Train Terminal for Clean Air Act Violations; Permit Invalid

May 4, 2015 Roger Straw

News Release from Earthjustice

EPA Cites Bakersfield Oil Train Terminal for Clean Air Act Violations

Federal agency says California oil train terminal is major air pollution source, permit is invalid without significant environmental review

Contact: Maggie Caldwell, Earthjustice, 415-217-2084, mcaldwell@earthjustice.org, Monday, May 4, 2015

The newly opened Bakersfield Crude Terminal in Taft which the EPA has found in violation of the Clean Air Act. | Elizabeth Forsyth / Earthjustice

Taft, CA —The U.S. Environmental Protection Agency has cited the Bakersfield Crude Terminal for 10 violations of the Clean Air Act, declaring the California crude-by-rail facility a major air pollution source that should have been subjected to rigorous environmental review during the permitting process. The federal agency found that the terminal’s permit is invalid and that the facility lacks required pollution controls and emissions offsets, and that it is in violation of the Clean Air Act’s public notice and environmental review requirements.

In January, Earthjustice and Communities for a Better Environment sued the San Joaquin Valley Air Pollution Control District, which issued the invalid permit, over the permitting process for the facility’s expansion— a process that was conducted without public review. Earthjustice is representing the Association of Irritated Residents (AIR), ForestEthics, Sierra Club and the Center for Biological Diversity.

A public records request revealed communications between San Joaquin Valley Air District officials and the project manager for the terminal that included advice from the officials about how the project could avoid public noticing and pollution controls. The Air District approved the massive expansion in a piece-meal permitting process that allowed one of the largest crude oil operations in California to expand largely out of public scrutiny.

“The EPA’s announcement declares the Air District’s permit a sham and that the Bakersfield terminal is operating illegally,” said Elizabeth Forsyth, Earthjustice attorney. “Air District officials went out of their way to exclude the public from the process and speed the approval through, ignoring the environmental review required by state and federal law. We applaud EPA for stepping in and enforcing the Clean Air Act.”

EPA’s action could subject the terminal to serious Clean Air Act fines, and should force the Bakersfield Crude Terminal to undergo the major source permitting required by the Clean Air Act.

“The EPA stepped in to protect California from this crude-by-rail facility’s dangerous air pollution,” said Vera Pardee, an attorney with the Center for Biological Diversity. “Federal intervention is urgently needed because the air district and Kern County officials have utterly failed to safeguard public health and the environment. They’re turning a blind eye to air pollution and environmental risks such as catastrophic explosions linked to these massive trains full of volatile crude.”

“EPA’s notice of violation should serve as a wake up call to local authorities around the country who help polluters when they should be protecting public health,” said Matt Krogh, ForestEthics Extreme Oil Campaign Director. “Oil trains threaten 25 million Americans who live in the blast zone, plus millions more who live downwind of a refinery, downstream of where an oil train crosses a river, or in the Bakken and tar sands producing regions of North Dakota and Alberta, Canada.”

“In Kern County, with the worst air in the nation, the air district has harmed the health of the public by intentionally allowing this facility to violate the Clean Air Act,” said Tom Frantz, with Association of Irritated Residents.

“Given the increased pollution and hazards from refining and transporting a lower quality crude, there is immediate need for a moratorium that halts new permits and construction of extreme oil infrastructure, not the opposite fast track permitting process that Air District officials put this massive crude by rail terminal on – and in secret,” said Roger Lin, attorney with Communities for a Better Environment.

“The US Environmental Protection Agency’s announcement today is a significant step forward for Bakersfield and Kern County residents who bear all the burdens of volatile, accident-prone crude by rail transport and none of the benefits,” said Gordon Nipp Bakersfield resident and Sierra Club Kern-Kaweah Chapter Vice Chairman. “This terminal wreaks havoc on our region’s already compromised air quality and our communities now fear the risk of exploding trains.”

The agency also weighed in on the issue of vapor pressure of Bakken crude, declaring it unreasonable to underestimate the vapor pressure when permitting a crude-by-rail site and requiring vigorous monitoring and reporting of what crude oil is actually shipped. One way many of these facilities get around major source permitting is by cherry-picking the volatility of the crude oil being shipped, estimating the vapor pressure on the low end of the spectrum, which would keep emissions of volatile organic compounds under the threshold for triggering Clean Air Act review.

In addition to emitting volatile organic compounds from the off-loading of crude oil, the facility endangers Bakersfield and other communities in California by increasing the amount of explosive crude oil transported by rail through the state. There have been multiple incidents of train derailments and explosions across the nation and in Canada. An oil train that derailed in Lac Megantic, Quebec, destroyed most of the town center, burning more than 30 buildings to the ground and killing 47 people. Just this year, there have been four derailments and explosions in West Virginia, Illinois and Ontario involving oil trains.

Read EPA’s Notice of Violation.

Bakken Crude, Canadian regulation, CPC-1232, Crude By Rail, Derailment, DOT-111, Explosion, Federal Regulation (U.S.), Fire, Hazmat notification, Oil industry lobby, Rail industry lobby, Rail Safety, Tank car design, Tank car maintenance, Tank car retirement, Tar sands crude, Train braking systems, Train speed

ForestEthics: Oil Trains Too Fast, New Safety Rules Too Slow

May 4, 2015 Roger Straw

Repost from ForestEthics (Also appearing in the Huffington Post)

Oil Trains Too Fast, New Safety Rules Too Slow

By Todd Paglia, Executive Director, May 1, 2015

In the first three months of 2015 four oil train accidents sent emergency responders scrambling, crude oil spilling into drinking water supplies, and fireballs blasting into the sky. The string of accidents in February and March demonstrate the severe threat from Bakken crude and Alberta tar sands moving on mile-long oil trains. These derailments and explosions set a bar we can use to measure the new oil train standards announced today by the US and Canadian governments.

Would the new rules have prevented any of the 2015 accidents and, ultimately, will they reduce the threat of oil train catastrophes like the 2013 Lac Megantic, Quebec, explosion that killed 47 people? The answer is no, and the reason is speed: the regulations move too slow and the trains continue to move too fast.

The rules announced at a joint press conference today by US and Canadian officials arrive decades late and with the sticky fingerprints of the oil and rail industry all over them. The administration has slowed down and narrowed the scope of the rules so the most dangerous tank cars stay on the rails for at least two and a half years. Other unsafe tank cars have five or seven years before they must meet new higher standards.

Not that the new standards will help much: All four 2015 accidents involved CPC-1232 cars, the newer tank cars that are supposedly safer than the dangerous DOT-111s. But to be clear, neither the upgraded cars or new cars built to the new standard will prevent an explosion if the train is moving at normal speeds.

So we can begin to look for new and upgraded cars (like the ones that exploded in recent months) in the years to come, but those living along the tracks can still expect to see the worst cars continue to roll by their homes for a very long time. The administration effectively allows rail companies to keep antiquated tank cars on the rails in trains with fewer than 35 crude oil tank cars (or 20 in a row.) That means oil trains hauling up to a million gallons of explosive crude oil in the most dangerous tank cars will keep rolling through a downtown near you FOREVER.

The administration trumpets new electronically controlled pneumatic brakes for oil trains. While it’s good news that oil and rail companies will use state-of-the-art technology, the administration is giving them until 2021 to install the new better brakes. That’s six years too long to require what should be a basic minimum safety requirement.

And while these upgrades to the tank car fleet creep slowly into place, the trains will continue flying down the tracks at reckless speeds. The new rule allows oil trains to travel at more than twice the rated “puncture velocity” of even the new tank cars that they will (in some cases) eventually require. That means that oil trains carrying three million gallons of explosive crude will continue to travel at 50 mph across North America, except in a small number of “high threat” urban areas where they must go 40. The new speed limits offer little comfort because three of the four of the explosive accidents in 2015 occurred at speeds below 35 mph. (The accident in Gogama, ON, occurred at 43 mph, just three mph over the “high-priority” speed limit.) The Galena, Illinois, derailment occurred at only 23 mph, proving that the speed limits in the rule are inadequate to protect anyone.

In the final insult to injury, the administration walked too quickly away from notification standards in an earlier draft of the rule, leaving citizens and emergency responders in the dark about where these trains are running and when.

The Obama Administration took its time developing new rules for hazardous materials on trains that run through the heart of America: they looked at the threat of exploding oil trains, but heavy industry lobbying made them flinch. The administration failed to learn the lessons of Lac Megantic or the four explosive oil train accidents we’ve seen so far in 2015 alone. They have given public safety the cold shoulder, instead embracing the oil and rail industry lobbyists peddling this dangerous cargo.

We were fortunate that none of the 2015 accidents caused fatalities. ForestEthics and our many partners will continue pushing the administration to do a lot better and hope that our luck holds while we stop these dangerous trains from crisscrossing North America. But it shouldn’t be a matter of luck. Secretary Foxx and President Obama have chosen to roll the dice instead of writing strong rules that protect the 25 million of us living in the blast zone.

More by Todd Paglia:

Bakken Crude, Crude By Rail, Derailment, Rail Safety, Risk Assessment

Pennsylvania hires expert to evaluate, advise on oil train risks

May 4, 2015 Roger Straw

Repost from Railway Track & Structures

Pennsylvania hires Zarembski to evaluate, advise on freight system risk mitigation

May 4, 2015

Pennsylvania hires Zarembski to evaluate, advise on freight system risk mitigation The state of Pennsylvania has hired Dr. Allan M. Zarembski to a three-month contract to assess the state freight system, which hosts 60-70 crude oil trains a week.

Zarembski, who is an internationally recognized expert in the area of railway track and structures, vehicle-track dynamics, failure and risk analysis, safety, railway operations, and maintenance, will evaluate Pennsylvania’s freight rail system and advise Pennsylvania Gov. Tom Wolf on risk reduction and safety. Zarembski will also work to identify areas of high risk and make recommendations for crude-by-rail safety measures, as well as identify ways to implement those measures as efficiently and cost-effective as possible.

“My administration is focused on the safety of Pennsylvanians and protecting people from the potential disaster resulting from Bakken crude oil train derailments,” said Gov. Wolf. “I have expressed grave concern regarding the transportation of crude oil in the commonwealth and have taken several steps to prevent potential disasters. Zarembski is an internationally recognized rail expert and he has extensive experience with rail safety and risk analysis. Pennsylvania sees some of the largest volume of Bakken crude oil transportation by rail in the United States and the potential for disaster is too great to ignore. I will continue to take steps to ensure the safety of Pennsylvania’s citizens.”

A University of Delaware research professor and the director of the railroad engineering and safety program, Zarembski has extensive experience in rail operations, including freight operations, transit, commuter and inter-urban rail. Zarembski has authored or co-authored more than 170 technical papers, more than 120 technical articles and two books “The Art and Science of Rail Grinding” and “Tracking R&D” both published by Simmons Boardman Books.