Category Archives: Crude By Rail

Bakken Crude, California oil industry, Crude By Rail, Fracking, Oil prices

Wall Street Journal analyzes California fracking and crude-by-rail, discusses Valero Benicia plan, others

Repost from The Wall Street Journal
[Editor:  Following the money…  WSJ’s important analysis of refinery trends in California includes a brief discussion of current and proposed projects, including Valero Benicia, with quotes by Valero spokesperson Bill Day and Andrés Soto on behalf of Benicians For a Safe and Healthy Community.  Significant quote: “Opposition over safety has drawn out the permitting process in some cases, making some companies rethink their strategies. Valero Energy Corp. in March canceled plans to build an oil-train terminal near its Los Angeles refinery. But Valero still hopes to add a terminal to the company’s Benicia, Calif., plant, 35 miles northeast of San Francisco.   ¶“Every day that goes by that we’re not able to bring in lower cost North American oil, is another day that the Benicia refinery suffers competitively,” says spokesman Bill Day. The state last month asked Benicia for another safety review to better forecast the potential for derailments and other accidents.” – RS]

California Finally to Reap Fracking’s Riches

Crude-by-Rail From Bakken Shale Is Poised to Reverse State Refiners’ Rising Imports
By Alison Sider and Cassandra Sweet, Oct. 7, 2014
Tanker cars line up in Bakersfield, Calif., where Alon USA Energy recently received permission to build the state’s biggest oil-train terminal. The Bakersfield Californian/Associated Press

For the past decade, the U.S. shale boom has mostly passed by California, forcing oil refiners in the state to import expensive crude.

Now that’s changing as energy companies overcome opposition to forge ahead with rail depots that will get oil from North Dakota’s Bakken Shale.

Thanks in large measure to hydraulic fracturing, the U.S. has reduced oil imports from countries such as Iraq and Russia by 30% over the last decade. Yet in California, imports have shot up by a third to account for more than half the state’s oil supply.

“California refineries arguably have the most expensive crude slate in North America,” says David Hackett, president of energy consulting firm Stillwater Associates.

Part of the problem is that no major oil pipelines run across the Rocky Mountains connecting the state to fracking wells in the rest of the country. And building pipelines is a lengthy, expensive process.

Railroads are transporting a rising tide of low-price shale oil from North Dakota and elsewhere to the East and Gulf coasts, helping to keep a lid on prices for gasoline and other refined products.

Yet while California has enough track to carry in crude, the state doesn’t have enough terminals to unload the oil from tanker cars and transfer it to refineries on site or by pipeline or truck.

Just 500,000 barrels of oil a month, or 1% of California’s supply, moves by rail to the state today. New oil-train terminals by 2016 could draw that much in a day, if company proposals are successful.

Bakken oil since April has been about $15 a barrel cheaper than crude from Alaska and abroad, according to commodities-pricing service Platts. That would cover the $12 a barrel that it costs to ship North Dakota crude to California by rail, according to research firm Argus.

The state’s lengthy permitting process has contributed to the shortage of oil-train terminals. Some California lawmakers also want to impose fees on oil trains to pay for firefighting equipment and training to deal with derailments and explosions. And community and environmental activists have been waging war on oil trains. The dangers of carrying hazardous materials by rail were underscored Tuesday when a train carrying petroleum derailed in Canada.

But energy companies recently won two hard-fought victories that will pave the way for California to get more crude by rail.

Kern County officials last month gave Alon USA Energy Inc. permission to build the state’s biggest oil-train terminal. That project, which the company hopes to finish next year, is designed to receive 150,000 barrels of oil a day in Bakersfield, Calif., 110 miles north of Los Angeles.

The site was home to an asphalt refinery until 2012 when Alon shut it down because it struggled to turn a profit. Alon plans to reconfigure and restart the plant, but much of the oil transported there by train will move by pipeline to other companies’ refineries in California.

Plains All American Pipeline LP says it plans to open a 70,000-barrel-a-day oil-train terminal in Bakersfield this month.

And in northern California, a judge last month dismissed a lawsuit brought by environmental groups that challenged Kinder Morgan Inc.’s rail permits. The company is now receiving oil trains at a Richmond, Calif., terminal near San Francisco that was built to handle ethanol.

Opposition over safety has drawn out the permitting process in some cases, making some companies rethink their strategies. Valero Energy Corp. in March canceled plans to build an oil-train terminal near its Los Angeles refinery. But Valero still hopes to add a terminal to the company’s Benicia, Calif., plant, 35 miles northeast of San Francisco.

“Every day that goes by that we’re not able to bring in lower cost North American oil, is another day that the Benicia refinery suffers competitively,” says spokesman Bill Day. The state last month asked Benicia for another safety review to better forecast the potential for derailments and other accidents.

Several oil-train explosions in the last 15 months—including last year’s blast in Lac-Mégantic, Quebec, that killed 47 people—have struck fear in many residents along rail corridors.

“These railcars are not safe at any speed,” says Andrés Soto, a musician from Benicia who has helped organize campaigns against several oil-train projects. “We don’t see that there’s any way that they can actually make these projects fail-safe.”

Environmental-impact challenges have been one means that groups have used to delay oil trains.

Pittsburg, Calif., officials say WesPac Midstream LLC’s proposed oil-train terminal is on hold after the state attorney general asked for an expanded environmental review. The company is gathering answers for regulators and hopes to gain approval and start accepting oil trains at the site by late 2016, 40 miles east of San Francisco, a WesPac spokesman says.

Even if oil trains are kept off California tracks, more fracked crude still could flow to California. A 360,000-barrel-a-day oil-train terminal in Vancouver, Wash., aims to transfer North Dakota crude from tanker cars to barges that will sail the Columbia River about 100 miles northwest to the Pacific Ocean. From there, it is a quick trip down the coast to California ports.

That project also has faced stiff headwinds. Refiner Tesoro Corp. and transportation provider Savage Cos. were forced to postpone the start for the Vancouver terminal because of approval delays. While the governor hasn’t approved the project, the companies say they expect to be up and running next year.

Argon, Canadian regulation, Crude By Rail, Derailment, Explosion, Federal Regulation (U.S.), Fire, Rail accidents, Railroad crossings, Saskatchewan Canada, Tank car design, Toxic smoke

Rachel Maddow: Train explosion, collision (DRAMATIC VIDEO)

Repost from MSNBC, Rachel Maddow Show
[Editor: Incredible video footage of two early October train crashes, and excellent Rachel Maddow commentary.  (Live video of the train crash at minute 2:10.)  Apologies for the 20-second commercial ad that precedes the video.  – RS]

Train explosion, collision demonstrate oil shipping dangers

Rachel Maddow, 10/07/14


Rachel Maddow reports on a train derailment and subsequent fire in Canada, which follows on the heels of a dramatic train crash in Louisiana as the oil and rail industries try to push back the deadline for new federal safetly requirements.

Crude By Rail, Derailment, Explosion, Fire, Saskatchewan Canada, Toxic smoke

LATEST DERAILMENT: Train derails in Canada; oil spill, explosion; village evacuated

Repost from The Canadian Press
[Editor: Every source I can find uses the phrase “petroleum distillates,” but no source further identifies the substance that caught fire and exploded.  Is this a “news blackout”?  …OCTOBER 8 UPDATE (CBC News) “According to the provincial government, of the six cars carrying hazardous materials, two had sodium hydroxide and two had hydrochloric acid. The other two had petroleum distillates, which included a Varsol-type substance.” …Still pretty sketchy. 

Later follow-up reports:

Saskatchewan derailment cars same as Lac Megantic MetroNews Canada–Oct 9, 2014  WADENA, Sask. – CN Rail says the tanker cars that derailed and caught fire this week near a small community in Saskatchewan are the same type as those …

Saskatchewan derailment reveals Canada’s broken-rail problems CBC.ca–Oct 10, 2014  Saskatchewan derailment reveals Canada’s broken-rail problems … looking at state of tracks, equipment · Major train derailment and fire near Wadena, Sask.

– RS]

Train derails in central Saskatchewan; village evacuated

By Clare Clancy, October 7, 2014
Saskatchewan train derailment
A CN freight train carrying dangerous goods derailed in central Saskatchewan, near the town of Wadena, on Tuesday, Oct. 7, 2014. (The Canadian Press/Liam Richards)

WADENA, Sask. — A CN freight train carrying dangerous goods derailed in central Saskatchewan Tuesday sending plumes of thick black smoke into the air and displacing residents of a tiny nearby hamlet.

The derailment happened near the community of Clair, which has a population of about 50. Police told those people to leave their homes and also evacuated farms near the scene.

CN spokesman Jim Feeny said the train was made up of three locomotives pulling 100 rail cars and that 26 of them derailed.

He said the fire came from petroleum distillates, which spilled from two of the derailed cars.

The fire had “diminished” as of Tuesday evening, Feeny said, but was still burning.

Clair is about 190 kilometres east of Saskatoon near the community of Wadena.

Alison Squires, who is the publisher of the Wadena News, went to the fire and said she has never seen anything like it in the 13 years she has lived in the area.

“I’ve seen derailments, but this is a pretty bad one,” she said. “You could see … this huge plume of black smoke. When I got there, there was a small explosion. The smoke is too thick to see what cars are involved.”

She added that there was a detour going north to pass the derailment, but not one going south.

“They are assuming the smoke is toxic,” she said.

A witness told radio station CKOM that the flames were at least 30 meters high at one point.

“The smoke is blowing from west to east and there is quite a bit of it,” Peter Baran told the station as he watched the fire from a highway.

Pictures from the scene suggested the derailment took place in a sparsely populated area. They showed the smoke billowing high into the sky.

The Transportation Safety Board said it was deploying a team of investigators to the site. CN sent in a hazardous materials team to clean up the area.

The railway industry has been under increased scrutiny since July 2013, when 47 people died after a train carrying oil derailed and exploded in downtown Lac-Megantic, Que.

Adam Scott, a spokesman for the advocacy group Environmental Defence, said Canada is experiencing a boom in the use of railways to transport petroleum products.

“The freight rail lines actually go right through the centre of almost every major urban centre in the entire country including small towns, communities across the country, so the risk of accidents is significant,” he said.

“The government has introduced measures, but they don’t go nearly far enough in terms of safety.”

He said rail companies are not required to publicly disclose the types of hazardous materials being transported on trains.

“It’s unacceptable,” he said. “The municipalities themselves, the communities have no power, no control, and in this case no information even over what’s being run through the rail lines.”

In August, the Transportation Safety Board issued a report into the Lac-Megantic tragedy that called for improved safety measures and cited inadequate oversight by Transport Canada. One of the criticisms brought forward was a lack of inspections.

Harry Gow, president of advocacy group Transport Action Canada, said the derailment in Saskatchewan shows the need for more inspectors.

“I would say that if one wants to ensure safety in moving hazardous goods, one has to have inspectors who are empowered to do the work, that are trained to do more than just check the company’s paperwork, and are sufficiently numerous and well-resourced to get out on the ground and see what’s going on,” he said.

“The incident in Saskatchewan today is fortunately not occurring in a large town,” he said. “But that doesn’t excuse the lack of oversight by Transport Canada.”

 

Bridge safety, Crude By Rail, Rail inspection

California to inspect railroad bridges for first time – will take 50 years to inspect all at this rate

Repost from The Sacramento Bee

Concerned about safety, California to inspect railroad bridges for first time

By Tony Bizjak, Oct. 6, 2014
GP134SVOC.3Staff Photojournalist
Support beams are rusted underneath the Muir Trestle Bridge at Alhambra. Jose Carlos Fajardo / Bay Area News Group

For more than a century, California has relied on assurances from railroad companies that thousands of rail bridges across the state, from spindly trestles in remote canyons to iron workhorses in urban areas, are safe and well-maintained to handle heavy freight traffic.

That era of trust is over. Concerned about the growing number of trains traversing the state filled with crude oil and other hazardous materials, the California Public Utilities Commission is launching its first railroad bridge inspection program this fall. Federal officials say it will be the first state-run review of privately owned rail bridges in the country.

The goal, the PUC says, is to end what a recent report called the “dearth of information on the structural integrity of California’s railroad bridges.” Almost all train bridges in the state are owned and maintained by private railroads. Federal rules require railroads to inspect those bridges annually.

One of those private bridges, the 103-year-old I Street Bridge in downtown Sacramento, sits in the heart of a heavily populated area, straddles an important public waterway, and also carries thousands of cars daily. Another, the dramatic Clear Creek Trestle in the Feather River Canyon, carries trains through remote, rugged terrain where the risk of derailment is relatively high. Both bridges are expected to be conduits for increased hazardous material shipments.

“I don’t mean to criticize the railroads’ programs, but for the public to have the confidence that bridges are in good shape, our role is to offer oversight,” said PUC Rail Safety Deputy Director Paul King. “Given the heightened risk of one of these crude oil trains derailing and given the projections of a significant increase in tonnage across these bridges, we need to fulfill this role.”

It will be a limited program, however. The PUC, which is responsible for assuring safe rail systems in California, is hiring two bridge inspectors this fall for the massive task of verifying the integrity of an estimated 5,000 bridges statewide. Those inspectors are expected to conduct visual inspections at bridges and to audit railroad companies’ inspection and maintenance programs.

They are among seven new rail safety division inspectors being hired from funds allocated this summer by Gov. Jerry Brown’s administration and state legislators. The funding is a direct result of growing fears at the state Capitol and in cities along the rail lines about the potential for derailments and explosions as more crude oil trains begin rolling through the state. A crude oil train explosion last year in Canada killed 47 people.

The other new hires will be used to bolster existing utilities commission teams of track, equipment and train inspectors. Track and rail car inspections are one of the few regulatory functions states are allowed in dealing with railroads, working in conjunction with the Federal Railroad Administration, which maintains regulatory control over rail operations nationally.

The launch of a bridge inspection program comes amid ongoing criticism of the PUC after a catastrophic 2010 gas line explosion in San Bruno in which eight people were killed and 38 homes destroyed. Critics say the PUC wasn’t adequately overseeing Pacific Gas and Electric Co.’s pipeline maintenance and inspection efforts. The National Transportation Safety Board cited “CPUC’s failure to detect the inadequacies of PG&E’s pipeline integrity management program.”

Mindy Spatt of The Utility Reform Network, a consumer advocacy group and PUC watchdog, said she is not familiar with the rail bridge inspection program, but that the commission needs to be proactive and independent to protect the public.

“We would hope one thing the PUC has learned is its job is not to trust utility companies, but to oversee them,” Spatt said. “When the PUC doesn’t do its job, there can be really disastrous results.”

Bridge failures are rare, safety officials say, but consequences are potentially huge. The largest chemical spill in California history, in Dunsmuir in 1991, involved a train derailment on the curving Cantara Loop bridge that poisoned more than 40 miles of the Sacramento River. The bridge structure did not fail, but it has since undergone major modifications to reduce chances of another derailment.

The PUC bridge inspection program faces a notable upfront challenge. The commission does not yet have a comprehensive list of railroad bridges in the state, and may struggle to come up with one that includes detailed design specifications and load capacities on all bridges. PUC officials are negotiating with Union Pacific and BNSF railroads to gain access to their in-house bridge inventories.

To help fill out its inventory, the PUC said it may resort to Google searches, including tapping an amateur bridge fan website, www.bridgehunter.com.

The two bridge inspectors likely will work as a team. PUC officials calculate that the two of them can view two bridges a day, two days a week. The other three days will be for travel and report writing. “At a rate of 98 bridges per year, it would take approximately 50 years to complete inspections,” the PUC said in a report last month on its bridge review plans.

Those numbers are “intimidating,” but the job is not as improbable as it seems, King said. The PUC inspectors, like federal bridge inspectors, will serve largely in a safety review role, making sure the railroad companies are doing their jobs. Although they will visit bridges and look them over, they will not have the time or equipment to conduct full, detailed inspections.

“This is an oversight situation,” King said. “We are looking at the railroads’ inspection program, trying to verify it. Our inspectors’ role is to do spot checks. We may find that we need more inspectors. It is hard to tell at this point. We are plowing new ground.”

For their part, Union Pacific and BNSF, the state’s two major railroads, say they spend substantial time and money making sure bridges are in good shape. Union Pacific said it has six full-time, two-person crews supported by more than 50 bridge maintenance employees in California.

“Safety is just as important to Union Pacific as it is to anyone,” the railroad said in an email. “Our hope is that the CPUC continues to recognize and support this important element of our safe and efficient freight transportation efforts.”

BNSF officials say they inspect their 1,100 railway bridges in California two or three times a year, more than required by the Federal Railroad Administration, as well as after major events such as earthquakes and storms.

“BNSF is committed to ensuring that we operate on a safe and reliable rail network and therefore invests millions of operating and capital dollars annually into routine and major rehabilitation, repair, and upgrading of railway bridges and structures in California,” BNSF spokeswoman Lena Kent said in an email.

The PUC plans to come up with a priority list by year’s end of 30 key bridges for initial visits next year. This list will include bridges that have the highest probability of failure based on age, materials, design, traffic and other risk factors, such as proximity to an earthquake fault. The PUC will merge that list with an analysis of which bridges have the highest potential for negative outcomes if they fail. Those may include bridges used frequently by trains carrying hazardous materials, as well as bridges near schools, hospitals and population centers.

The calculation also will include bridges that cross sensitive waterways, such as the Feather, American and Sacramento rivers that carry drinking water for Northern California.

PUC officials say they hope to have inspectors looking at the first 10 to 15 bridges in the first half of 2015. The rest in the priority group would be inspected by the end of 2015.

A Federal Railroad Administration official said his agency welcomes California’s decision to inspect bridges.

“California already has the largest involvement in our safety program and we welcome the addition of more state assistance,” said spokesman Michael Booth. “It’s what we call a force multiplier.”