Category Archives: Crude By Rail

Crude By Rail, Federal Regulation (U.S.), Local Regulation, State regulation

Publicity-stunt sit-ins, council resolutions won’t stop oil trains

Repost from Seattle PI.com
[Editor: This is a challenging think-piece for opponents of crude by rail.  Personally, I believe that sit-ins, songs and resolutions have a place in a multi-faceted approach to organizing against big oil and rail.  But Connelly has a point – we need to think hard and long on serious strategies for success.  – RS]

Publicity-stunt sit-ins, council resolutions won’t stop oil trains

Posted on August 1, 2014 | By Joel Connelly
A sight that won't be stopped by sit-ins and City Council resolutions: A coal train passes an oil train after tanker cars derailed in Magnolia this morning. Oil and coal could become the Northwest's "supreme shipping commodities" crowding our trade dependent economy..
A sight that won’t be stopped by sit-ins and City Council resolutions: A coal train passes an oil train after tanker cars derailed in Magnolia this morning. Oil and coal could become the Northwest’s “supreme shipping commodities” crowding our trade dependent economy.

In watching the Seattle City Council’s ritual of passing whereas-heavy, symbolic resolutions over the years, an observer can come way believing the council’s prime purpose in life is to send demonstrators home happy.

The response to oil trains, arriving in every greater numbers, is the latest example of Seattle’s insular, echo chamber politics.  Its product is meaningless symbolism.

Councilman Mike O’Brien gins up an oil train resolution, much as he did on Occupy Seattle.  Council member Kshama Sawant shows up at the BNSF tracks for her demonstration of the day.  A Sawant mini-me running for the Legislature gets arrested.  The news is telephoned to a Stranger reporter who is supporting the candidate.

Will any of this impact the Burlington Northern-Santa Fe Railroad?  Will it influence the business of giant refiners like BP and Tesoro, increasingly dependent on rail shipments of Bakken crude oil from North Dakota?

Of course not.  The carbon economy has the Interstate Commerce Act on its side.  The U.S. Department of Transportation seems intent on accommodating shippers in its rule-making. Refineries support 2,000-plus jobs in northern Puget Sound.

For instance, the USDOT’s proposed safety rules tout a “two year” required phase out of old, explosion-prone tanker cars.  When you read the fine print, phase out period begins in September 2015.

Seattle_City_Hall_2014-02-21
Concerned citizens rally for the need of a statewide moratorium on potentially dangerous oil-by-rail projects Friday, Feb. 21, 2014, at City Hall in Seattle. Oil trains have exploded in different regions in the U.S., causing death and property damages. (Jordan Stead, seattlepi.com)

Here is how critics can effectively put the heat on, and deal their way into the safety debate. The recent and ongoing coal port/coal train battle is a model for dealing with obtuse agencies and potentially more lethal cargoes:

– Mass support, not just driblets:  Somewhere in Seattle, somebody (usually Kshama Sawant) is demonstrating every day.  Protests pant after a moment on the evening TV news.  Often, they leave as much impression as footprints in the snow.

By contrast, a well-planned event can signal (to politicians) that a movement has staying power.  It registered when 395 people packed a Bellingham City Club meeting for a debate on the proposed Gateway Pacific Terminal.  Sponsors had appears to have it greased.  A bigger impression was made 2,500 people who showed up for a federal-state “scoping” hearing in Seattle.

In this image made available by the City of Lynchburg, several CSX tanker cars carrying crude oil in flames after derailing in downtown Lynchburg, Va., Wednesday, April 30, 2014. (AP Photo/City of Lynchburg, LuAnn Hunt)

– An agenda, not 1960′s slogans:  Coalport/coal train port critics asked  for an independent, comprehensive look  at impacts trains will have across Washington.  They wanted environmental studies to look at climate consequences of providing economical fuel to keep aging Chinese power plants in operation.

It is absurd, for instance, for the Army Corps of Engineers to limit “transportation” to the seven-mile spur line from Custer to Cherry Point in Whatcom County.  Big coal, railroads and construction unions were flummoxed by a reasonable demand.

– A real coalition, not just a paper list:  Seattle “coalitions” are populated by the usual suspects.  A real movement gets a cross-section of recruits.  Montana ranchers are not keen to see their land torn up.  Firefighters worry that long trains will block waterfront access, and (with oil) that they’ll be left holding the bag when a 1960′s-vintage tanker car blows up.

The proposed Pebble Mine, near Alaska’s Bristol Bay, shows REAL reach-out.  Opposition began with greens, quickly embraced Alaska’s commercial and sport fisheries, gained backing from the powerful Bristol Bay Native Corp., expanded to Washington fishermen, and found roles for restaurant chefs and major jewelry companies.

– Political work horses, not show horses:  Behind all the posturing on coal ports, state Rep. Reuven Carlyle, D-Seattle, put together letters to the feds and state laying out — precisely — potential impacts that must be known.  The letters helped shape the charge given by Gov. Jay Inslee to the Department of Ecology.

Security vehicles are shown at a gate to a Tesoro Corp. refinery , Friday, April 2, 2010, in Anacortes, Wash. An overnight fire and explosion at the refinery killed at least three people working at the plant. (AP Photo/Ted S. Warren)

With oil trains, Sen. Maria Cantwell, D-Wash., recently cornered — and treed — USDOT Secretary Anthony Foxx at a recent hearing.  She delivered a message that MUST be driven home.  Faux safety measures won’t cut it.  Cantwell and Carlyle don’t go for whereas clauses.

– Fact and evidence, not just hyperbole:  Exaggeration is a basic activist weapon, broadly deployed.  It gets people riled, but has limited staying power.  What’s needed are activist-experts who learn the stuff, and steep themselves in places to be impacted.

A lighter touch should be put on heavy handed manipulation of the media.  Certain web sites and outlets can be counted on to spout the party line.  Others aren’t content to simply be fed.

The carbon economy is coming our way — big time — with proposed coal export terminals, a big terminal to receive oil trains (in Vancouver, Wash.), coal and oil trains taking over the rails, plus pipeline terminals and oil export ports in British Columbia.

It’s not going to be turned back by sit-ins or Council resolutions in a city with less than 10 percent of Washington’s population.

Seattle politics is sandlot.  What we’re facing, and trying to influence, is a big-league challenge.

 

 

Bakken Shale, Crude By Rail, Marine transport, Pipeline transport

REUTERS FACTBOX – California crude sources and oil-by-rail projects

Repost from Reuters

FACTBOX-California crude sources and oil-by-rail projects

Mon Jul 21, 2014

HOUSTON, July 21 (Reuters) – California refiners remain far behind peers elsewhere in the country in replacing expensive imports with cheaper North American crudes from a new production boom.

No major crude pipelines cross the Rocky Mountains, leaving the isolated region dependent on rail to tap the burgeoning bounty in Texas, North Dakota and other growing oilfields.

More than half of the 1.7 million barrels of crude processed by California refineries each day is imported, largely from Saudi Arabia, Ecuador, Iraq and Colombia. The rest comes from California and Alaska, where output is declining.

Several refiners and logistics or pipeline companies are trying to tap U.S. and Canadian crude via rail, but California’s tough regulatory environment and growing opposition in light of fiery crude train crashes elsewhere could halt current projects and stop new ones from starting up.

Tesoro Corp and Savage Companies are proposing a 360,000 barrels per day railport at the Port of Vancouver in Washington that, if approved, could potentially replace more than 40 percent of California’s imported crude. Once railed to Vancouver, crude would be loaded onto barges or ships bound for West Coast refineries.

Here is a rundown of California’s crude slate and existing and pending oil-by-rail projects:

CALIFORNIA CRUDE
California’s 1.7 million barrels per day (bpd) of crude processed in 2013 came from these three main sources:
* Imports: 875,564 bpd, 51 percent of the total
* California, 631,441 bpd, 37 percent
* Alaska, 201,720 bpd, 12 percent
The non-California supply arrives via ships or barges except negligible oil-by-rail shipments, which reached 15,715 bpd in the first quarter of 2014.
That is less than 2 percent of the overall 873,967 bpd that originated on top U.S. railroads throughout the United States in the same period.
By comparison, in 2003 a little more than one-third of the 1.8 million bpd of crude processed in California came from imports:
* Imports, 636,923 bpd, 34 percent
* California, 792,920 bpd, 42.5 percent
* Alaska, 438,805 bpd, 23.5 percent
Source: California Energy Commission
CaliforniaCBR

(Reporting By Kristen Hays, editing by Peter Henderson)

Bakken Crude, Bridge safety, Crude By Rail, Federal Regulation (U.S.), Massive increase in crude-by-rail, Rail inspection

Bridge wake-up call

Repost from Philipstown.info, Philipstown, NY
[Editor: This story out of New York is a wake-up call for us all.  Bridge safety in Northern California is a serious issue, and  we have heard little discussion on the subject as Valero  proposes to bring oil trains over the Sierra, through the Sacramento River Valley and  across the protected Yolo  Basin and Suisun Marsh.  Another refinery proposes to send these trains over the 85-year old Benicia Bridge, then alongside our beautiful Carquinez Strait and down through the heavily populated communities on the east shore of the San Francisco Bay.  – RS]

CSX Says Bridge Safe

Crude oil trains make daily crossings

By Michael Turton, August 1, 2014

A railway bridge located on the Hudson River across from Cold Spring has visibly deteriorated however its owner says it remains fit for daily use by freight trains. The bridge is located at milepost 51 on the River Line, a 132-mile stretch of track that runs from northern New Jersey to Selkirk, New York, just south of Albany. The bridge and the tracks are owned by the Florida-based CSX Corporation. At the bridge, the tracks are located just a few feet from the riverbank.

Concrete has crumbled beneath one of the bridge's vertical supports.

The span in question, along with a second bridge a few hundred yards to the south, crosses over a pair of narrow channels that enable waters from a wetland located west of the tracks to flow in and out freely as river levels change due to tides, wind and rain. Concrete that forms a part of the bridge’s structure has crumbled beneath a vertical support directly under the tracks.

In an email to The Paper, CSX Spokesperson Kristin Seay, said that the bridge is “current” with regard to its annual inspection. “It was last inspected on Feb. 6, 2014, and was determined to be safe for railroad operations.” Seay said that all CSX bridges are inspected annually.

The bridge to the south also shows signs of deterioration but to a lesser extent. On that structure, concrete has fallen away, exposing the reinforcing metal bar.

Oil transport by rail on the rise

The condition of tracks and bridges along the Hudson River has become more significant locally as part of a national trend which has seen an exponential increase in the transport of crude oil and other hazardous materials by rail in recent years. On July 23, 2014, USA Today reported that “The number of oil-carrying cars run by seven major U.S. railroads jumped from 9,500 in 2008 to 407,761 in 2013…” Closer to home, Seay told The Paper that “CSX operates an average of two to three loaded crude oil trains per day over (the River Line) route…” That adds up to between 700 and 1,000 crude-oil trains that pass directly across from Philipstown each year.

An average of two or three trains carrying crude oil cross over the bridge daily.

Two high profile, rail-related tragedies that occurred in recent months no doubt add to local concern. Last July, in Lac-Megantic, Quebec, a train loaded with oil exploded, killing 47 people. Local insurance claims were estimated at $50 million. And in May of this year, a train derailed in Lynchburg, Virginia, dumping some 50,000 gallons of crude oil into the James River.

A July 23 editorial in the Albany Times Union underscored what it called “failure of government to adequately ensure rail safety” as evidenced by such accidents.

Federally regulated

Freight rail lines in the U.S. are regulated almost entirely at the federal level by the Federal Railroad Administration (FRA). Federal law requires that all railroad companies inspect their own bridges on an annual basis — regardless of the size of the bridge. Companies must determine the load capacity of each bridge, certifying to the state where it is located that it is capable of bearing the daily load it must handle.

On July 23, the Federal Department of Transportation proposed comprehensive rules to improve crude oil transportation safety. Recommendations include an immediate phasing out of older tank cars, new standards for tanker cars that carry highly hazardous materials, reduced operating speeds, and required notification of first responders.

At the state level, the New York State Department of Transportation’s (DOT) Rail Safety Inspection Section participates in FRA safety programs — mainly for staff training and certification. Beau Duffy, DOT Director of Communications, told The Paper that the agency also conducts random inspections or “blitzes” of rail facilities, focusing on track conditions and mechanical equipment such as brakes and wheels. He said that DOT does not however inspect bridges.

National issue … local focus

The deteriorating bridge across from Cold Spring brings what has become a significant national issue into very local focus.

Commenting on the CSX bridge, a Federal Railroad Administration official told The Paper that the FRA would work with CSX to ensure it is in compliance with all federal safety standards noting that FRA inspectors regularly evaluate railroad companies’ bridge safety practices to identify potential weaknesses.

Local senior-elected officials also commented on the River Line bridge. “Like many of my neighbors, I’m extremely concerned about the integrity of this bridge,” said Rep. Sean Patrick Maloney (D-18th District, NY), when notified of the issue by The Paper. “I immediately brought this to the … attention of CSX, and I’ll work closely with officials to ensure inspections are conducted and any necessary repairs are done promptly. With billions of gallons of oil barreling down the Hudson, we must be vigilant that issues like this are addressed quickly — the safety of our neighbors, environment and communities is far too important.”

Maloney is a member of the House Transportation and Infrastructure Committee, and has been working with the chairman of that committee to examine the environmental and economic impact of shipments of crude oil along the Hudson River.

New York State Sen. Terry Gipson (D-Dutchess, Putnam) also commented. “The impact of an oil train incident along the shore of the Hudson River would be devastating to our communities who rely on the river for their drinking water and our local economy,” Gipson said via email. “That is why I … have expressed strong concerns to our federal government about the need for safety improvements relating to the interstate transportation of crude oil along the Hudson River. This effort includes ensuring necessary track maintenance and infrastructure investments that will allow businesses to operate more effectively and safely.”

Photos by M. Turton

Bakken Crude, Crude By Rail, Massive increase in crude-by-rail

Recent history: the rise of Bakken crude by rail

Repost from Bloomberg
[Editor: Significant quote: “‘The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline….The next challenge is exports.'”  – RS]

Bakken Rail Bet on a Feeling Pays Off for Global’s Slifka

By Lynn Doan Aug 1, 2014

When Eric Slifka landed in North Dakota’s Bakken shale field three years ago, he says he was overcome by “this feeling of a lot of growth. You could feel the pressure.”

The fervor was so strong that Slifka, chief executive officer of Global Partners LP (GLP) in Waltham, Massachusetts, decided in that single trip to carry Bakken crude on railcars that his company had been using to haul ethanol to New York. His first full trains started a wave of deliveries that rescued East Coast refiners from the brink of closing amid the rising cost of oil imported from Africa and the North Sea.

Shipments of U.S. oil by rail have since doubled to more than 1 million barrels a day, sparking a national debate over safety, and volumes may mount if the government allows more exports of crude, easing a four-decade ban. Global and other midstream carriers are preparing themselves for a chance to serve that market.

“The East Coast was left on a figurative island when everyone in the middle of the country got access to low-priced crude coming out of the Bakken, and oil by rail was its lifeline,” Bradley Olsen, managing director at energy investment bank Tudor, Pickering, Holt & Co., said by phone from Houston. “The next challenge is exports.”

Shale Boom
Global Partners, a tax-exempt master limited partnership with a $1.19 billion market value, was worth half that when Slifka flew into the Bakken in 2011 to meet a local entrepreneur who owned a rail facility along the Canadian Pacific (CP) line. North Dakota’s oil production had surged by a record 42 percent to 310,000 barrels a day. It would go on to surpass 1 million this April, helping turn the U.S. into the world’s largest oil producer.

The flood of domestic crude has put pressure on the federal government to lift a ban on U.S. exports imposed by Congress in 1975 in response to the Arab oil crisis. Crude-by-rail companies will have to compete with pipelines to bring supplies to the coast if the prohibition is lifted, Olsen said.

“Once you’re trying to export, you’re just trying to reach the water, and you don’t care about going to a specific refinery,” he said. “So you’re just as likely to ship it on a pipeline to get it to a dock.”

New Rules
The boom has also ignited regulatory battles from coast to coast. The derailment and explosion of an oil train in Lac-Megantic, Quebec, in July 2013 that killed 47 people thrust rail operations into the limelight.

In New York, Global is facing a ban on expanding its Albany operations to include tar sands. In Oregon, state regulators said in March that Global unloaded more oil than permitted at its Clatskanie terminal that sends Bakken crude along the Columbia River by barge.

Global said the Oregon complex is “in full compliance” with regulations in a March 5 e-mail. It sent a letter to Albany County on March 14 describing the county prohibition as “arbitrary and capricious.”

The U.S. Department of Transportation laid out a plan last week to phase out a generation of tank cars for crude shipments and impose speed limits, braking requirements and route stipulations.

While the industry is working with regulators to determine the safest way to ship oil, Slifka, now 49, said at an energy conference in Washington July 14 that “rail may actually be the safest mode of transportation for crude.”

Refinery Squeeze
On his first visit three years ago, so many companies were racing into the region to squeeze out oil from the Bakken that Slifka couldn’t find a hotel room. He said he stayed in Estevan, Saskatchewan, and drove 30 miles across the Canada-U.S. border to meet Don Bottrell, who owned a women’s clothing business, oil and gas wells and a trans-loading site in the area.

The biggest wave of refinery closings had meanwhile struck the East Coast as the price of North Sea Brent crude, the international benchmark, climbed. Sunoco Inc. was threatening to shut its Philadelphia refinery if it didn’t find a buyer, and it idled the Marcus Hook plant in Pennsylvania. ConocoPhillips halted output from its Trainer complex, and Hovensa LLC closed a plant in the U.S. Virgin Islands that supplied the region.

The North Sea grade cost as much as $8.52 a barrel more than West Texas Intermediate today, the highest premium since June 24. WTI was at $97.21 at about 11:16 a.m. in London and has traded below the international benchmark since the end of 2010.

Crude Champagne
“East Coast plants had the highest costs because they ran the champagne of oils, very light, very low-sulfur crudes predominantly from West Africa,” Kevin Waguespack, senior vice president of energy consulting firm Baker & O’Brien Inc., said by telephone from Houston July 28. “The Bakken reset their feedstock costs by several dollars a barrel. They’ve gone from losing to winning.”

EOG Resources Inc. (EOG), at the time the second-largest oil producer in the formation, moved its first trainload on BNSF Railway Co.’s tracks to Stroud, Oklahoma, on Dec. 31, 2009.

The first dedicated train of Bakken crude arrived at Global’s fuel terminal in Albany, which had handled ethanol and refined fuels such as gasoline, on Oct. 25, 2011.

Others followed. Enbridge Inc. (ENB)’s 80,000-barrel-a-day Eddystone rail complex outside Philadelphia received its first train in May. The Carlyle Group (CG) and Sunoco formed a joint venture to keep the Philadelphia refinery open and are adding a rail track that will take as many as 14 unit trains of Bakken oil a week. Delta Air Lines Inc. (DAL) bought Conoco’s Trainer plant and on July 21 signed a contract for 65,000 barrels a day, more than a third of the plant’s capacity, that will initially arrive by rail.

Global Expansion
Global bought a majority interest in two Bakken terminals after that first delivery to the East Coast, expanded its complex in Albany so it could send barges of oil down the coast, and secured a five-year contract to supply Phillips 66 (PSX)’s 238,000-barrel-a-day Bayway refinery in New Jersey in 2013.

The company bought the complex in Clatskanie, near Portland, the same year. On July 8 Global said it was building its first Gulf Coast oil-by-rail terminal in Port Arthur, Texas, as a destination for heavy crude from western Canada.

“If you look back historically on where oil is coming from and how it was transported, it has completely changed,” Slifka told an oil industry conference in Washington July 14. “You might as well take a pipeline map and turn it upside down.”

With the Port Arthur terminal, Global is positioned for the flood of petroleum that may soon be leaving the nation’s shores should federal policy makers relax the decades-old export ban. In June, the Commerce Department granted Enterprise Products Partners LP (EPD) and Pioneer Natural Resources Co. (PXD) permission to export ultra-light oil known as condensate.

“Nobody can be sure where the market is going or what we will be carrying, but we are sure that we have positioned ourselves to carry whatever it demands,” Slifka said at the meeting in Washington.

Reporter on this story: Lynn Doan in San Francisco.  Editors responsible for this story: Dan Stets and David Marino at Bloomdale, and Alaric Nightingale, Rachel Graham.