Category Archives: Federal Regulation (U.S.)

Crude By Rail, Derailment, Federal Regulation (U.S.), Pipeline and Hazardous Materials Safety Administration (PHMSA), US Department of Transportation

Federal regulator for U.S. oil trains to step down

Repost from Reuters
[Editor: Watch industry lobbying efforts as the scramble for power ensues.  For instance … note the posturing in this article by  Lynn Helms, director of the North Dakota Department of Mineral Resources, who reportedly said “dealings with Quarterman have improved in recent months as oil train hysteria has subsided.”  Nice  to know that our concern for safety and clean air is so easily dismissed as hysteria.  – RS]

Quarterman, regulator for U.S. oil trains, to step down: sources

By Patrick Rucker, WASHINGTON, Sep 24, 2014
Top Oil Train Regulator Is Stepping Down
PHMSA Administrator Cynthia Quarterman, left, during House testimony (Photo by Scott J. Ferrell/Congressional Quarterly)

(Reuters) – Cynthia Quarterman, the federal regulator who oversaw expansion of the U.S. oil train sector and the fallout from several fiery derailments, will step down, two sources familiar with her intentions said on Wednesday.

As administrator of the Pipeline and Hazardous Materials Safety Administration (PHMSA) since November 2009, Quarterman has been a leading safety official as oil train deliveries from North Dakota neared 750,000 barrels a day and spectacular derailments in the United States and Canada raised concerns about such shipments.

PHMSA, an agency within the U.S. Department of Transportation, has been under scrutiny for more than a year as officials have tried to respond to the hazards posed by oil train cargoes, which have grown in volume along with a rise in domestic crude production.

PHMSA did not confirm Quarterman’s departure, which reportedly will come next week.

Quarterman, previously an attorney whose practice focused on the transportation and energy industries, was often the face of federal policy, defending government actions to lawmakers, industry and safety advocates.

“If you have upset everyone a little, you’re probably doing a good job,” said Brigham McCown, a former PHMSA head.

“The prevailing view is she’s done a good job in challenging times,” McCown said.

Among other things PHMSA has been tasked with writing new safety standards for oil trains and other hazardous cargo. Tuesday marks a deadline for public comment on the proposed safety rules.

Quarterman and other regulators have often been caught between energy interests who argue oil-by-rail safety concerns are inflated and political leaders who represent communities along the tracks.

Lynn Helms, director of the North Dakota Department of Mineral Resources, said dealings with Quarterman have improved in recent months as oil train hysteria has subsided.

“As we moved to more of a science-based approach, things smoothed out,” he said. “Our more recent work with Quarterman and (U.S. Transportation Secretary Anthony) Foxx has been very, very positive.”

Another major incident on Quarterman’s watch was the pipeline rupture in Mayflower, Arkansas, in March 2013. About 5,000 barrels of crude oil spilled from a line that is part of Exxon Mobil’s Pegasus pipeline from Illinois to Texas.

(Reporting by Patrick Rucker; additional reporting by Ernest Scheyder in North Dakota; Editing by Ros Krasny and Sandra Maler)
Crude By Rail, Federal Regulation (U.S.), Fracking, Lac-Mégantic, Natural gas, Tank car design, US Department of Transportation, US Government Accountability Office

Fed GAO report critical of Department of Transportation, warns of more accidents

Repost from NBC News

More Fiery Oil Train, Pipeline Accidents Unless Government Acts: Report

September 22, 2014

If the U.S. doesn’t quickly address the safe transportation of oil and gas, Americans could pay the price with more fiery train and pipeline accidents, according to a report released Monday by the Government Accountability Office.

“Without timely action to address safety risks posed by increased transport of oil and gas by pipeline and rail, additional accidents that could have been prevented or mitigated may endanger the public and call into question the readiness of transportation networks in the new oil and gas environment,” found the report.

The GAO report focused on the safety of moving crude oil by train and the growing network of “gathering lines,” largely unregulated natural gas pipelines. Both have been subjects of recent investigations by NBC News. The GAO determined that the Department of Transportation had “not kept pace with the changing oil and gas transportation environment.”

Oil and gas production in the U.S. increased more than fivefold between 2007 and 2012, a boom brought on by technological advances in drilling and hydraulic fracturing, or “fracking.” Vast volumes of oil and gas production soon outstripped the pipeline infrastructure in place to move them.

Crude producers began to load their oil on trains. More than 400,000 carloads of crude ran over North American rails in 2013, up from just 9,500 in 2008. But a series of explosive wrecks have raised concern about the safety of oil trains — the worst, a 2013 derailment outside a small Quebec town, killed nearly 50 people.

A 2013 NBC News investigation found regulators had long known that the tank cars used to ship oil were vulnerable to rupture in an accident.

The DOT has since issued proposed rules to improve the train cars that carry oil. In its report, the GAO applauded the move, but emphasized safety improvements must go beyond the cars, including testing the makeup of the oil, which the DOT has said is particularly flammable.

The GAO also warned better oversight was needed over the growing network of “gathering pipelines” that move natural gas from the well. In August, an investigation by NBC News found that 250,000 miles of these lines are in rural areas and subject to little or no federal or state safety oversight, despite sometimes running beside homes.

Bakken Crude, Bridge safety, California Public Utilities Commission, Crude By Rail, Federal Regulation (U.S.)

Dangerous Oil-by-Rail Is Here, but Railroad Bridge Inspectors Are Not

Repost from ALLGOV.com

Dangerous Oil-by-Rail Is Here, but Railroad Bridge Inspectors Are Not

By Ken Broder, September 18, 2014

The California Public Utilities Commission (CPUC) estimates there are about 5,000 railroad bridges in California, but doesn’t really know for sure. They are privately owned and inspected and were off the public radar until oil companies started shipping dangerous crude by rail to California refineries in increasingly large quantities.

Governments are not ready to have volatile loads of cargo rolling through sensitive habitats across the state, much less through heavily-populated metropolitan areas. But help is on the way. In March, the CPUC requested funding (pdf) for seven inspectors to specifically handle oil-by-rail, and two of them would focus on bridges.

The Contra Costa Times reported last week that the two inspectors have not yet been hired, but when they are, they will be the only two inspectors checking out the bridges. They will be assisted in their task by the sole federal inspector assigned to the area―an area that includes 11 states.

One of their first jobs will be to find the bridges. There is no comprehensive list. Judging by some industry comments, there may be some reluctance on the part of rail owners to provide all the information the government might ask. Bridge consultant and former American Society of Civil Engineers President Andy Hermann told the Times that the companies kept bridge data secret for competitive reasons.

But not to worry. The owners already do a good job of maintaining the bridges because, in Hermann’s words, “There’s a very strong profit motive to keep the bridges open. Detours will cost them a fortune.” In other words, this would be a situation where a company does not make a risky decision based on short-term, bottom-line considerations that could adversely affect the well-being of people and the environment.

In a report (pdf) to lawmakers on rail safety last December, the CPUC called California’s rail bridges “a potential significant safety risk.” It said most of them “are old steel and timber structures, some over a hundred years old.” Big rail companies tout their safety programs but the report points out often these bridges are owned by small short line railroads “that may not be willing or able to acquire the amount of capital needed to repair or replace degrading bridges.”

That’s bad, but not AS bad when the rail shipments aren’t volatile oil fracked from North Dakota’s Bakken formation, loaded on old rail cars ill-equipped to handle their modern cargo. Federal regulations to upgrade the unsafe cars will probably take at least a few years to complete.

When safety advocates talk about the dangers of crude-by-rail, they invariably cite the derailment last July in Quebec that killed 47 people, burned down 50 buildings and unleashed a “river of burning oil” through sewers and basements. But the Times reached back to 1991 for arguably California’s worst train derailment, albeit sans crude oil.

A train in Dunsmuir, Siskiyou County, fell off a bridge and dumped 19,000 gallons of a concentrated herbicide into the Sacramento River. Fish and vegetation died 45 miles away. Some invertebrate species went extinct. Hundreds of people required medical treatment from exposure to the contamination.

Railroads are carrying 25 times more crude oil nationally than they were five years ago. Most oil in California is moved via pipeline or ship. In 2012, only 0.2% of the 598 million barrels of oil arrived by rail in California. But the California Energy Commission (CEC) has said it expects rail to account for a quarter of imports by 2016.

Earthjustice, an environmental advocacy group, does not want safety measures to amble down the track years after the crude roars through. Its lawyers joined with the Sierra Club and ForestEthics to file a lawsuit in federal court last week to force a U.S. Department of Transportation (DOT) response to a July legal petition seeking a ban on the type of rail cars that derailed and exploded in Quebec.

A week ago, a San Francisco County Superior Court judge told Earthjustice and other environmental groups they couldn’t sue to halt deliveries of crude oil to a rail terminal in Richmond because the deliveries had been legally permitted by the state―without public notification―and the 180-day deadline to appeal had quietly passed.

Bakken Crude, DOT-111, Federal Regulation (U.S.), Oil Industry, Oil stabilization

North Dakota perspective on Bakken: ‘Getting it right’

From The Bismarck Tribune, Bakken Breakout
[An interesting analysis of the future of Bakken crude extraction from the perspective of an apparent oil industry advocate.  They’re listening!  – RS]

Getting it right

By Brian Kroshus, Publisher, September 17, 2014

Domestic oil production levels in the United States continue to rise – largely the result of the boom in shale oil drilling across the country. Notable plays like the Bakken shale in North Dakota and Permian and Eagle Ford shale in Texas, have been leading the way with more promising formations in different geographies, targeted for exploration and drilling in the years ahead.

Plays like the Bakken, Permian and Eagle Ford were actually in decline until only recently, having peaked decades ago when conventional, vertical wells were the only economically viable means of extracting crude. Now, those same plays are part of a drilling renaissance in key parts of the country. Geologists have known for years that more oil was present, trapped in source stone within the formations, but developing technology to profitably extract shale oil hasn’t come easy.

Today, oil production in the United States is surging thanks to advances in horizontal drilling and hydraulic fracturing techniques. Drillers are not only better understanding the geology of shale formations, but technology necessary to economically drill and produce oil. Increasingly, they’re becoming more efficient. Still, only a small percentage resource is making its way to the surface presently. Undoubtedly, more will continue to be learned in the years ahead, ultimately leading to higher extraction percentage and proven reserves.

From an energy independence standpoint, the outlook for the United States is certainly promising. In October 2013, for the first time in nearly two decades, the United States produced more oil than it imported. Predictably, while there are those including the current administration attempting to take partial credit, rising output has been the result of drilling on state and private lands. On federal lands, production has actually declined during Pres. Barack Obama’s time in office according to the American Petroleum Institute.

Despite declines on federal ground, experts still predict that the United States could be fully energy independent by the end of this decade. According the EIA, U.S. oil production will rise to 11.6 million barrels per day in 2020, from 9.2 million in 2012, overtaking Saudi Arabia and Russia and becoming the world’s largest oil producer. Over the same period, Saudi Arabia production levels are expected to decline from 11.7 million barrels to 10.6 million. Russia will also product less oil, falling from 10.7 million to 10.4 million barrels per day.

With a shale revolution and energy renaissance underway in the United States, there’s reason to be optimistic. Achieving energy independence appears to be within our grasp. Still, despite the prospect of becoming an energy independent nation, potential roadblocks loom.

In May, at the 2014 Williston Basin Petroleum Conference, Harold Hamm, CEO of Continental Resources told convention attendees that “we can’t have any more issues.” He also said “It has to be done in an absolute, safe manner. It’s going to take all of us.” He was referring to recent problems related to Bakken crude including pipeline ruptures and the fiery train derailment near Casselton, North Dakota this past December.

There’s a lot at stake. Companies like Continental Resources and others, are expected to invest billions in the years ahead to fully develop plays like the Bakken. Drillers are keenly aware that it’s their game to lose. Hamm stressed, “If we have anything, they’re going to shut us down. So many people want to stop fossil fuel use and production.”

Despite the positive macroeconomic effects rising domestic oil production and decreased imports have on the U.S. economy, job creation and economic growth alone won’t guarantee that shale oil production will continue, unless it is deemed safe and not a threat to public safety during transportation of Bakken crude in particular.

Volatility levels of Bakken crude and implication on public safety, continues to be heavily debated. The Lac-Megantic, Quebec, rail tragedy, where 47 people lost their lives when a runaway train carrying tanker cars filled with Bakken formation crude, derailed and exploded in the heart of town has been at the center of that debate. The explosions were so intense, that approximately one-half of the downtown area was destroyed.

Understandably, safely transporting Bakken crude by rail throughout North America, knowing freight rail routes frequently pass through residential areas on their way to final destinations, is a top industry priority. Much of the focus has been and remains on the DOT-111 tank car. On July 23 the U.S. Department of Transportation announced comprehensive proposed rulemaking for the safe transportation of crude oil and flammable materials, with Bakken crude being mentioned – in the form of a Notice of Proposed Rulemaking (NPRM) and a companion Advanced Notice of Proposed Rulemaking (ANPRM).

The NPRM language includes “enhanced tank car standards, a classification and testing program for mined gases and liquids and new operational requirements for high-hazard flammable trains that includes braking controls and speed restrictions.” Within two years, it proposes to “phase out of the older DOT-111 tank cars for the shipment of flammable liquids including Bakken crude oil, unless the tank cars are retrofitted to comply with new tank car design standards.” It also seeks “Better classification and characterization of mined gases and liquids.”

The North Dakota Public Service Commission has set a special hearing for September 23rd, as a part of the discussion on the volatility of Bakken crude and potential oil conditioning requirements necessary to safely transport oil from the Williston Basin. Reducing the light hydrocarbons present in Bakken crude would not only provide greater safety, but the standardization of Bakken crude into a class of oil much like West Texas Intermediate, possibly creating premium pricing opportunities.

NDPSC involvement and recommendations in addition to oil conditioning include heightened rail inspection efforts at the state level in addition to the Federal Pipeline and Hazardous Materials Administration, and emergency response training. Working closely with federal officials and a heightened inspection process, will require additional resources moving forward.

Expanding pipeline capacity and reducing reliance on rail to transport Bakken crude will continue to be a growing need, playing a role in addressing public safety concerns. The North Dakota pipeline authority anticipates two new pipelines coming online before the end of 2016, with capacity for 545,000 barrels a day. Another third proposed pipeline, capable of handling an additional 200,000 barrels, could potentially be in operation by late 2016 or early 2017.

With daily production expected to reach 1.5 million barrels in 2017, and 1.7 million barrels in early 2020, diversifying how Bakken crude is moved to market will be necessary not only from a public safety standpoint, but in order to address logistically challenges that continue to surface as production levels increase.

Extracting domestic oil and gas, moving it to market and properly disposing of or using byproducts created during the production process in a safe and efficient manner will be necessary in order for plays like the Bakken to be fully capitalized on. Those opposed to fossil fuel production will continue to watch and patiently wait for any opportunity to pressure elected officials and sway public opinion.

Ensuring both public and environmental safety to ensure the future of domestic oil production – will require a cooperative effort on the part of both industry and the state. As Harold Hamm alludes to, it truly is industries game to lose.