Category Archives: Ethanol

Crude By Rail, Derailment, DOT-111, Ethanol, Federal Rail Administration

South Carolina ethanol train derailment raises concerns

Repost from Greenville Online
[Editor: Note that recent new DOT rules do NOT require rail carriers to notify state emergency agencies concerning movement of ethanol trains.  Significant quote: “Ethanol rail transportation increased 500 percent from 2003-2012, according to the Association of American Railroads, while rail transport of crude oil increased more than 4,000 percent since 2008, according to Department of Transportation figures.”  Details on the derailment here.  – RS]

Upstate derailment puts focus on potential dangers

Nathaniel Cary, The Greenville News, August 4, 2014

Several times a week trains hauling millions of gallons of ethanol lumber along tracks through the heart of Upstate cities and towns, carrying the flammable gas toward a plant in Belton, where it’s then delivered to gas stations across the Southeast.

But in the dead of night on a recent Friday, something went wrong on the train’s journey.

It happened at 1:30 a.m. July 25 while the city of Spartanburg slept. A train, operated by CSX, went off the track. Before it could stop, an engine, a hopper car filled with sand and three tank cars filled with ethanol ended up in a ditch.

The ethanol-filled tankers landed upside down, and there they sat, within sight of houses and a few hundred yards across a field overgrown with kudzu from the city’s railroad museum and AMTRAK station.

The train was pulling 90 black tank cars filled with about two million gallons of ethanol, more than enough to fill three Olympic-sized swimming pools.

Fortunately, the train was moving very slowly around a curve and none of the cars punctured. No liquid spilled, no fire ignited, said Spartanburg Fire Chief Marion Blackwell.

Investigators with the Federal Railroad Administration are still trying to determine what caused the engine to leave the track, but the wreck highlighted a safety debate that’s arisen as the amount of crude oil and ethanol the nation transports by rail has increased exponentially with the country’s energy boom.

The Department of Transportation has proposed new rules to improve oil and ethanol train safety in the wake of derailments in recent years that have killed dozens, caused evacuations and spilled millions of gallons of oil and ethanol.

Transportation safety officials say trains are transporting higher amounts of crude oil and ethanol on trains that can stretch a mile long. Tank cars aren’t built thick enough to prevent punctures and spills when they are involved in accidents, and trains are driving too fast through urban areas, officials say.

Last July, a train operator didn’t brake sufficiently when a 72-car oil train went around a curve in the Quebec city of Lac Megantic. The train derailed and cars exploded, killing 47 people. Fires burned for days and destroyed the village center.

One woman died and two others were seriously injured in June 2009 while they waited at a train crossing in Cherry Hill, Illinois, when an ethanol train derailed and caught fire. An ethanol train that derailed in Pennsylvania in 2006 spilled 485,000 gallons and caused a two-day evacuation in parts of the city of New Brighton.

In South Carolina, there have been 145 incidents involving transportation of Class 3 flammable liquids — which includes crude oil and ethanol — by rail since 1972, when the Pipeline and Hazardous Materials Safety Administration began keeping track of data.

No lives were lost in those incidents, but they caused $2.8 million in damages, according to PHMSA data.

The most devastating train accident in South Carolina since 1972 took place in Graniteville in 2005 when a Norfolk Southern train carrying chlorine — a Class 2 gas — crashed into an idle train.

One of the tank cars holding chlorine breached and released the gas into the air. The train engineer and eight others died and 554 people were checked at hospitals for breathing difficulty, according to an investigation by the National Transportation Safety Board.

“I thought the wake-up call here would have been the chlorine gas spill,” said Susan Corbett, president of the 5,400-member South Carolina chapter of the Sierra Club.

The Sierra Club has come out in support of the proposed safety rules, though the club’s stance is that it’s taken too long to draft the rules and will take too long to implement the changes over the next three years.

“Anytime you’re moving this stuff around, either by rail or by truck, there’s always a risk,” Corbett said. “It definitely is something that should be of concern for all of us because of the health risks and disasters.”

Local routes

Trains carrying large quantities of ethanol travel through cities and towns in the Upstate more than 150 times every year. The routes run through the heart of Spartanburg and Greenville and through smaller towns like Williamston and Pelzer.

Most of the trains originate in Illinois and normally stretch 82 cars long, said Steven Hawkins, who as president and CEO of the Greenville & Western Railway Co., which owns and operates 13 miles of rail line from Pelzer to Belton in Anderson County, hauls the trains for the final leg of their trip.

The trains hold 80 cars of ethanol and two hopper cars, one at each end, filled with sand or gluten to act as a buffer between the “ignition source” engine and the hazardous materials cars, Hawkins said.

CSX runs the route from Illinois to Pelzer, where Hawkins’ Greenville & Western takes over, driving the final six miles to an ethanol plant in Belton owned by Lincoln Energy Solutions, a Greenville-based biofuel delivery company, he said.

That’s the route the train was following when it derailed in Spartanburg, CSX officials have said.

Greenville & Western runs about 150 routes each year with the hazardous material cars, he said.

The transportation safety board says the surge in ethanol production has altered the way ethanol is transported by rail. It used to be carried in smaller quantities, but now entire trains carry nothing but the flammable gas additive.

Ethanol rail transportation increased 500 percent from 2003-2012, according to the Association of American Railroads, while rail transport of crude oil increased more than 4,000 percent since 2008, according to Department of Transportation figures.

“While the soaring volumes of crude oil and ethanol traveling by rail has been good for business, there is a corresponding obligation to protect our communities and our environment,” said NTSB Chairman Deborah Hersman.

CSX participated in the Department of Transportation review and analysis of the current transportation practices and tank car standards and works closely with first responders, communities, oil producers, tank car owners and other railroads “to make the safe transportation of these important products ever safer,” CSX spokeswoman Carla Groleau said.

In May, Transportation Secretary Anthony Foxx issued an emergency order for rail carriers to notify state emergency agencies when trains pass through their states carrying more than 20 cars of volatile crude oil harvested from the Bakken shale region in North Dakota.

The South Carolina Emergency Management Division received notice from both of the state’s major rail carriers, CSX and Norfolk Southern, that they don’t transport Bakken crude oil through South Carolina in those amounts, spokesman Joe Farmer told The Greenville News.

No such notification is required for trains carrying ethanol.

Safety proposal

The Department of Transportation wants to phase out outdated tank cars — called DOT-111s — it calls vulnerable to puncture and explosion in a derailment.

Trains with any of the older cars would face speed limits of 40 miles per hour.

Tank car owners could retrofit the cars with a safer shell and better braking rather than switch to a new tank style. Trains that meet all standards could travel 50 mph outside of 100,000-population cities. Trains that don’t upgrade to enhanced braking systems would face a 30 mph limit.

The Department of Transportation would also require a risk assessment of rail routes and railroad conditions that high-hazard flammable trains use.

National ethanol groups balked at the safety proposals announced by the Department of Transportation, saying ethanol isn’t as volatile as Bakken crude oil and that the rules may paint with too broad a brush by classifying oil and ethanol together.

“Ethanol is a low volatility, consistent commercial product with a 99.997 percent rail safety record,” said Bob Dinneen, president and CEO of the Renewable Fuels Association. “Unlike oil from fracking, ethanol is not a highly volatile feedstock of unknown and differing quality and characteristics being shipped to a refinery for commercial use.”

But ethanol and oil trains both use the DOT-111s that the NTSB called inadequate in the aftermath of the Cherry Hill ethanol disaster.

Only 14,000 tank cars of the 92,000 in the North American fleet are built to the latest industry standards, according to the Association of American Railroads.

The rules won’t change operations for the Greenville & Western because its train only travels 25 miles per hour and it doesn’t own any of the tank cars it transports, Hawkins said.

Tank car safety changes will be up to the shippers since they own most tank cars, he said.

Hawkins, who bought the short-rail line in 2006 after a 20-year-career in rail service, said he’s got a spotless safety record.

“We’re already at such a low speed anyway, not that we ever want to have that type of incident as has occurred, but at the slow speed that we operate, it would be a non-event,” Hawkins said.

CPC-1232 standard, DOT-111, Ethanol, Federal Regulation (U.S.), Tank car retrofit, Train speed

Ethanol dependent on old-style tank cars

Repost from Argus

Railway Supply Institute: Ethanol dependent on old-style tank cars

1 Aug 2014

Houston  — The US ethanol industry is particularly vulnerable to pending regulatory changes that will require retrofitting or retiring a type of railcar that carries 98pc of ethanol production.

In comments to the US Department of Transportation’s (DOT) planned changes to tank car design released last week, the Railway Supply Institute (RSI) said about 29,200 of the approximately 29,780 tank cars moving ethanol as of June were doing so in unjacketed old-style DOT-111 tank cars. Those cars must be retrofitted or retired under the proposed rules.

Jackets add another layer of steel to the tank, increasing overall protection. They are an option to retrofit DOT-111s to make them safer.

DOT-111 cars have been under renewed scrutiny since several exploded into flames in a July 2013 derailment at Lac-Megantic, Quebec, killing 47 people. Four more fiery crude-by-rail accidents since then spun regulators in both the US and Canada into action on car design.

But it was an ethanol train derailment in June 2009 that spurred the first wave of action. The Cherry Valley, Illinois, accident killed one person and prompted industry to voluntarily strengthen car design in 2011, creating the current industry standard known as CPC-1232.

But despite the reliance on older DOT-111s to move ethanol, documentation from the Surface Transportation Board and the Pipeline and Hazardous Material Safety Administration shows there was only one ethanol-by-rail accident last year — with no release or fire — compared with five crude-by-rail accidents.

The last reported US ethanol-by-rail accident involving a fire was in August 2012 at Plevna, Montana, when 17 cars derailed and 12 spilled more than 245,000 USG.

According to RSI’s comments to the DOT, which were released last week along with a series of proposals on new speed limits and tank car design for flammable liquids, 580 tank cars either of the newer CPC-1232 model or jacketed DOT-111s were moving ethanol in June, making up 2pc of the fleet.

Meanwhile, of the 42,550 tank cars moving crude in June, 19,750 either were newer-model CPC-1232 or DOT-111 with jacketing, accounting for 46pc.

“Our industry’s rapid expansion occurred in 2005-2006-2007, and the only cars made available were the [DOT-111] cars, which were purchased or leased with the expectation of a 40- or 50-year lifespan,” Bob Dinneen, chief executive of the Renewable Fuels Association, told Argus. “When you started to see a lot more crude oil moving from the Bakken, by then the [CPC-1232] cars were being made available, so they were lucky to get those cars.”

DOT last week suggested that DOT-111 tank cars be retired after two years, to be replaced either by a more stringent design it has proposed, another proposed by the Association of American Railroads that is largely similar except that it lacks electronically controlled pneumatic brakes, or continuation of the current CPC-1232 design.

The initial regulatory push is too broad-brush and should be more focused on crude, Dinneen said.

“They ought to be prioritizing by the commodity about which, by their own admission, they are most concerned,” Dinneen said, referring to light crude. Conversely, the American Petroleum Institute chastised the government for singling out Bakken crude, which it said is no more volatile than other grades.

Yesterday, railcar lessor GATX also called for a more commodity-based approach to the DOT-111 phase-out, saying it is not currently clear what markets DOT-111s might serve once they are banned from crude or ethanol use.

Brent crude oil, Ethanol, Light sweet crude, North American light crude oils, Rail industry, Valero Energy Corporation

Valero Energy reports second quarter 2014 results

Repost from Energy Global
[Editor: This article refers to “Brent crude oil.”   Wikipedia: “Brent Crude is a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide. Brent Crude is extracted from the North Sea, and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation)….Brent is the leading global price benchmark for Atlantic basin crude oils. It is used to price two thirds of the world’s internationally traded crude oil supplies.”  – RS]

Valero Energy reports second quarter 2014 results

31/07/2014

Energy Global special reports

Valero Energy Corporation has reported financial results for the second quarter of 2014 (Q2). Net income from continuing operations attributable to Valero stockholders was US$ 651 million, US$ 1.22/share, compared to US$ 463 million, US$ 0.84/share, for the second quarter of last year.

Operating income for Q2 was approximately US$ 1.1 billion compared to US$ 805 million in the second quarter of 2013. The US$ 280 million increase in operating income was due primarily to higher refining throughput volumes and wider discounts relative to Brent crude oil for sour and certain North American light crude oils. These positive drivers were partially offset by weaker gasoline and distillate margins relative to Brent crude oil in most regions and higher natural gas costs in the second quarter of 2014 versus the second quarter of 2013.

Valero CEO and President Joe Gorder commented: “Valero delivered solid financial results for the quarter despite generally weaker product margins relative to Brent crude oil. We continued to execute our strategy to reduce feedstock costs by processing additional volumes of cost advantaged North American crude oil and investing in logistics assets to deliver those feedstocks to our refineries”.

Refining throughput volumes averaged 2.7 million bpd for Q2, an increase of 115 000 bpd from the second quarter of 2013. According to Valero, the increase in volumes was due primarily to less turnaround activity and higher utilisation rates spurred by the availability of discounted North American light crude oil on the US Gulf Coast.

“We increased North American crude oil consumption at our Quebec City refinery to 83% in the second quarter of 2014 from 8% in the second quarter of 2013, so we are progressing well toward our previously stated goal of reaching 100% by year-end. We also began processing Canadian bitumen through our new crude-by-rail unloading facility at our St Charles refinery”, Gorder said.

Ethanol operating income for Q2 was US$ 187 million compared to US$ 95 million in the second quarter of 2013. The US$ 92 million increase in operating income was mainly due to higher gross margin per gallon driven by lower corn costs as a result of abundant corn crop and lower industry ethanol inventories at the start of the quarter.

Gorder said: “Our ethanol investments have continued to be strong performers, delivering a total of US$ 430 million in operating income for the first half of 2014. We expect our eleventh ethanol plant, the Mount Vernon facility acquired in March of this year, to begin operating and contributing to the segment’s earnings in the third quarter”.

Capital expenditures for Q2 were US$ 806 million, of which US$ 240 million was for turnarounds and catalyst. Valero paid US$ 133 million in dividends on its common stock and US$ 228 million to purchase 4.0 million shares of its common stock. The company repaid US$ 200 million of debt that matured in April and ended the quarter with US$ 6.4 billion in total debt and US$ 3.5 billion of cash and temporary cash investments, of which US$ 382 million was held by Valero Energy Partners LP.

Valero expects 2014 capital expenditures, including turnaround and catalyst, to be US$ 3 billion, including approximately US$ 870 million allocated to logistics investments, most of which are expected to be eligible for drop-down into Valero Energy Partners LP in the future.

“Given the strong North American crude oil production growth, we continue to focus the majority of our strategic capital on light crude oil processing capability and logistics”, Gorder said. “We expect our refineries to benefit from access to lower cost crude oil and higher netback product export markets.”

Adapted from a press release by Emma McAleavey.
Bakken Crude, CPC-1232 standard, Crude Oil, DOT-111, Ethanol, Federal Regulation (U.S.), Massive increase in crude-by-rail, Rail routing, Tank car design, Train braking systems, Train speed

Stopping deadly oil train fires: New rules planned

Repost from The Sacramento Bee (Wire Business News, AP)

Stopping deadly oil train fires: New rules planned

The Associated Press, Jul. 23, 2014
Oil Train Fires
FILE – This Nov. 6, 2013, file photo shows a BNSF Railway train hauling crude oil near Wolf Point, Mont. Thousands of older rail tank cars that carry crude oil would be phased out within two years under regulations proposed in response to a series of fiery train crashes over the past year. Transportation Secretary Anthony Foxx said the government’s testing of crude oil from the Bakken region of North Dakota and Montana shows the oil is on the high end of a range of volatility compared with other crude oils, meaning it’s more likely to ignite if spilled. Matthew Brown, File / AP Photo

WASHINGTON — Responding to a series of fiery train crashes, the government proposed rules Wednesday that would phase out tens of thousands of older tank cars that carry increasing quantities of crude oil and other highly flammable liquids through America’s towns and cities.

But many details were put off until later as regulators struggle to balance safety against the economic benefits of a fracking boom that has sharply increased U.S. oil production. Among the issues: What type of tank cars will replace those being phased out, how fast will they be allowed to travel and what kind of braking systems will they need?

Accident investigators have complained for decades that older tank cars, known as DOT-111s, are too easily punctured or ruptured, spilling their contents when derailed. Since 2008, there have been 10 significant derailments in the U.S. and Canada in which crude oil has spilled from ruptured tank cars, often igniting and resulting in huge fireballs. The worst was a runaway oil train that exploded in the Quebec town of Lac-Megantic a year ago, killing 47 people.

Transportation Secretary Anthony Foxx said he said he expects his department to complete final regulations before the end of the year. First, the public and affected industries will have an opportunity to comment on the proposal.

“We are at the dawn of a promising time for energy production in this country,” Foxx said. “This is a positive development for our economy and for energy independence, but the responsibilities attached to this production are very serious.”

In a report released along with the rules, the Department of Transportation concluded that oil from the Bakken region of North Dakota and Montana, where fracking methods have created an oil boom, is more volatile than is typical for light, sweet crudes.

The oil industry immediately challenged that conclusion. “The best science and data do not support recent speculation that crude oil from the Bakken presents greater than normal transportation risks,” said American Petroleum Institute President and CEO Jack Gerard. “DOT needs to get this right and make sure that its regulations are grounded in facts and sound science, not speculation.”

Rail shipments of crude have skyrocketed from a few thousand carloads a decade ago to 434,000 carloads last year. The Bakken now produces over 1 million barrels per day, and production is increasing.

The phase-in period for replacing or retrofitting older tank cars that transport the most volatile types of liquids is shorter than the Canadian government’s three-year phased plan. Congress, fearing another Lac-Megantic, has been pressuring regulators to put new safety rules in place as quickly as possible.

The proposal also includes ethanol, which is transported in the same kind of tank cars. From 2006 to 2012, there were seven train derailments in which tank cars carrying ethanol ruptured. Several crashes caused spectacular fires that emergency responders were powerless to put out.

The proposed regulations apply only to trains of 20 or more cars. Crude oil trains from the Bakken are typically 100 cars or more.

The department is weighing three options for replacements. One would be to make cars known as “1232s” the new standard for transporting hazardous liquids. Those cars are a stronger design voluntarily agreed to by the railroad, oil and ethanol industries in 2011. But those cars, which have been in use for several years, have also ruptured in several accidents.

The oil and ethanol industries have been urging White House and transportation officials to retain the 1232 design for new cars. The industries have billions of dollars invested in tens of thousands of tank cars that officials say were purchased with the expectation they would last for decades.

Another option is a design proposed by Association of American Railroads that has a thicker shell, an outer layer to protect from heat exposure, a “jacket” on top of that, and a better venting valve, among other changes. A third design proposed by the department is nearly identical to the one proposed by railroads, but it also has stronger fittings on the top of the car to prevent spillage during a rollover accident at a speed of 9 mph.

Regulators also are weighing whether to limit crude and ethanol trains to a maximum of 40 mph throughout the country, or just in “high-threat” urban areas or areas with populations greater than 100,000 people. A high-threat urban area is usually one or more cities surrounded by a 10-mile buffer zone.

Railroads had already voluntarily agreed to reduce oil train speeds to 40 mph in urban areas beginning July 1. Tank cars — including the newer ones built to a tougher safety standard — have ruptured in several accidents at speeds below 30 mph. Regulators said they’re considering lowering the speed limit to 30 mph for trains that aren’t equipped with advanced braking systems.

The freight railroad industry had met privately with department and White House officials to lobby for keeping the speed limit at 40 mph in urban areas rather than lowering it. Railroad officials say a 30 mph limit would tie up traffic across the country because other freight wouldn’t be able to get past slower oil and ethanol trains.

The department said it is considering three types of braking systems for oil and ethanol trains, but a final decision will depend on what type of tank car design is eventually adopted.

Whatever option regulators settle on, the proposal calls for newly manufactured cars to meet that standard beginning Oct. 1, 2015.

The proposal continues a requirement that railroads transporting at least 1 million gallons of Bakken crude oil notify emergency response commissions ahead of time in states they pass through. Communities from upstate New York to the coast of Washington have complained they’re in the dark about when trains pass through and how much oil and ethanol they’re transporting.