Category Archives: Heavy crude

Derailment, Heavy crude, Liquid propane gas, Oil spill

Feds: Broken spike caused Vandergrift derailment, oil spill

Repost from The Pittsburgh Tribune-Review

Feds: Broken spike caused Vandergrift derailment, oil spill

By Mary Ann Thomas, June 20, 2014
Jason Bridge | Valley News Dispatch | A Norfolk Southern worker walks past damage from a derailed train next to the MSI Corporation building along First Avenue in Vandergrift on Thursday, on Feb. 13, 2014.

A broken railroad spike likely caused a Feb. 13 train derailment and crude oil spill in Vandergrift.

Federal investigators said the broken spike allowed the track to spread, becoming too wide for the Norfolk Southern train to pass safely.

Mike England, a spokesman for the Department of Transportation’s Federal Railroad Administration, confirmed the cause.

The investigation of the Vandergrift derailment was completed recently by the railroad agency and its report was obtained by the Valley News Dispatch through a Freedom of Information Act request.

Broken spikes do cause train derailments on occasion, England said.

No violations were reported during the federal review, and the investigation is closed, he said.

“Just because there is an accident, it doesn’t mean that the railroad did anything wrong,” England said

Dave Pidgeon, a spokesman for Norfolk Southern, said he had nothing to add to the investigators’ report.

U.S. Sen. Bob Casey said the nation and industry must learn from rail accidents.

“The derailment in Vander-grift and others across the state should serve as a wake-up call that we need to improve rail safety,” he said in a statement on Friday.

“Dependable rail travel is vitally important to Pennsylvania’s economy and critical to the safety of the millions of Americans who live near rail lines. I will continue to push for improvements to prevent future derailments,” Casey said.

“Among other measures, it is imperative that the Federal Railroad Administration has the resources it needs to hire rail inspectors to prevent this from happening again,” he said.

Report details

According to the report, two trains used the Vandergrift track hours before the derailment without incident.

No injuries were reported among the engineer, locomotive engineer trainee and conductor on board the derailed train. Three MSI Corp. employees were evacuated when one of the rail cars went through the wall of a company building near the tracks.

The first car to derail was the 67th car in the train of 112 loaded cars and seven empty cars. The 67th through 88th cars derailed, including 19 loaded with crude oil and two with liquid propane gas.

The train originated in Conway, Pa., and was on its way to Harrisburg and points east.

After the derailment, the railroad “did a fair amount” of work on tracks in the accident area, where train traffic has resumed, Pidgeon said.

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration this year determined the Vandergrift derailment to be the 14th most significant involving crude oil or ethanol in the past eight years. That report stated that 10,000 gallons of oil spilled in the Vandergrift derailment.

In contrast, the Federal Railroad Administration report states that only 4,310 gallons of heavy crude oil was released.

Damage to equipment in the accident is estimated at $1.76 million, according to the report.

In addition, about $240,000 in damage was caused to the track and $30,000 to a signal.

Bakken Crude, Bay Area Refineries, California Air Resources Board (CARB), California Environmental Quality Act (CEQA), Greenhouse gas emissions, Heavy crude, Light sweet crude, Shell Oil

Contra Costa Times editorial: Shell’s new plan may serve to blaze new trail

Repost from The Contra Costa Times
[This editorial also appeared on May 24, 2014 in the print edition of the Vallejo Times Herald.]

Contra Costa Times editorial: Shell’s new plan may serve to blaze new trail

05/22/2014
The Shell Refinery is seen in Martinez, Calif. on Monday, May 6, 2013. The Bay Area's five refineries have moved toward acquiring controversial Canadian tar sands crude through rail delivery. (Kristopher Skinner/Bay Area News Group)
The Shell Refinery is seen in Martinez, Calif. on Monday, May 6, 2013. The Bay Area’s five refineries have moved toward acquiring controversial Canadian tar sands crude through rail delivery. (Kristopher Skinner/Bay Area News Group)

Discussions about reducing California’s greenhouse gas emissions often become both heated and hyperbolic. But a plan being advanced by one of the East Bay leading refineries should be neither.

The management of Shell Oil’s Martinez refinery has decided that it can operate effectively at current levels without using heavy crude oil as a base in some of its operations. Heavy crude requires much more energy, water and heat to process than the lighter crude.

We were thrilled to learn that Shell has filed paperwork with the county regarding its intent to shut down its coker operation, one of its dirtiest processes. Shell plans to replace it with processes that handle lighter crude, but not the more volatile bakken crude.

That is, indeed, good news for Shell’s neighbors in Martinez, but it is even better news for the environment.

Shell General manager Paul Gabbard told our editorial board that the process change will cut the refinery’s greenhouse gas emissions by 700,000 metric tons a year, which he said is equivalent to taking 100,000 cars off the roads.

It is not insignificant, especially during a drought, that this process change also will cut Shell’s water use by an estimated 15 percent. That works out to a savings of about 1,000 gallons of water per minute.

There also will be about 300 temporary construction jobs for local workers as the conversion is made.

But the biggest news is that Shell officials think this change, which they hope to have completed by 2018, will allow the refinery to meet the state’s stringent standards for greenhouse gas reduction before the 2020 deadline.

In 2006 the Legislature passed AB32, California’s landmark effort to decrease greenhouse gas emissions. Most oil refiners in the state were not happy about the law.

After all, the legislation was designed to dramatically reduce the levels of six different emissions that are quite often associated with the manufacture of petroleum products.

Not only did it seek to reduce the levels of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons emitted, it sought to do so by a whopping 25 percent statewide by 2020.

Many companies moaned that its target emissions were impossible to meet. The bill implicitly acknowledged that the goals were ambitious because it instructed the California Air Resources Board to develop regulations and “market mechanisms” that could allow for industrial operations that couldn’t meet the standards to purchase pollution credits through an auction from operations that had excess credits.

But if Shell’s reckoning is correct, and we think it is, it won’t need to do that — and this action could blaze a dramatic new trail that others in the industry should consider following.

Global Warming Solutions Act of 2006 (AB 32), Heavy crude, Light sweet crude, Martinez CA, Shell Oil

Shell Martinez moves to clean up its act; will NOT receive crude by rail

Repost from The Martinez News Gazette
[Editor: Unconfirmed reports suggest that the light, sweet crude delivered to Shell by ship will first be transported across Canada by rail.  – RS]

Shell Martinez to shut down flexicoker, reduce green house gas emissions

Rick Jones | May 18, 2014

MARTINEZ, Calif. – In a major undertaking billed as the “Greenhouse Gas Reduction Project,” Shell is proposing to upgrade and modernize its Martinez refinery to significantly reduce greenhouse gas emissions, save water, improve efficiency, and stay relevant in the changing energy landscape, Shell representatives said Tuesday.

In a presentation to the News-Gazette staff, Shell Martinez Refinery General Manager Paul Gabbard stated the renovated refinery will become “cleaner, safer and more efficient – with less impact on the environment and our community.”

Also in attendance at the presentation was Steve Lesher, manager of communications and sustainable development; Teresa Makarewicz, health and safety director and Erin Hallissy, public affairs representative and communications.

The $450 million upgrade project will allow Shell to refine more light, sweet crude oil. With current production and transportation methods, heavy crudes have a more severe environmental impact than light ones, the representatives said. Heavy crude refining techniques require more energy input than light crude.

“In my view, in my career it’s rare when a project makes so much business sense and it makes environmental and community sense at the same time,” Gabbard said. “It’s a very nice marriage of what the world wants us to do and what we think we have to do anyway.”

The Global Warming Solutions Act of 2006 (AB 32) requires businesses to reduce greenhouse gas emissions to 1990 levels by the year 2020. Gabbard said this project gets the Shell Martinez Refinery on track for that goal.

According to Shell, the project will cut greenhouse gas emissions at the refinery by 700,000 metric tons a year – the equivalent of taking 100,000 cars off the road.

Water use at the refinery will be reduced by 15 percent, saving 1,000 gallons a minute.

A significant environmental impact of heavy crude is carbon dioxide output, which can be as much as three times that of light crude of the same quantity.

“The climate change, AB 32, required us to go more carbon friendly,” Gabbard explained. “It changes our business model. We’ve had this business model for 30 years and now we are going to change it up. What are we going to do for the next 50 years? It dovetails, in our view, to exactly what the world, state and community wants us to do.”

The project will create over 300 temporary construction jobs for local workers represented by local trade unions, reps said.

Major events conducted at the refinery where 1,500 workers are brought in for maintenance will go from four per year down to three per year, Gabbard pointed out.

The refinery, which will mark its 100th year in Martinez in 2015, receives heavy crude which requires refinement that is heavy in carbon emissions.

Gabbard said the plant will shut down the flexicoker, built in 1983, one of the major operating units in the facility. The ever-present blue flare from the coker’s column will no longer be seen.

The modernization will cut sulfur dioxide emissions by up to 25 percent, with no increase in NOx (nitrogen oxide). Electricity use will decline, and the upgrade does not expand the refinery nor increase the amount of oil processed.

“The amount of crude we bring in, the amount of product we send out, won’t change,” Gabbard said.

What will change is the amount of crude being brought in by tankers. The pipeline from the Central Valley of California brings the heavy crude type; Shell has been receiving less and less from that source as the oil fields dry up. With the change to a lighter crude, the amount of crude coming to Martinez via pipeline will drop further.

With the transport of crude by rail a significant issue in the East Bay, Gabbard was quick to say that Shell does not and will not receive crude by railway.

“We are not going to [receive] rail crude, we are not building rail crude facilities,” Gabbard said. “There will be no crude rail unloading for Shell in Martinez.”

The refinery’s physical footprint will decrease by eliminating a major processing unit. Due to higher assessed value, Shell’s property taxes will increase.

The proposed project will go through full county review, including an Environmental Impact Review (EIR). On June 3, Shell will meet with the Contra Costa County Board of Supervisors to seek approval of the EIR consultant. Preliminary paperwork has already been submitted to the county. The hope is to conclude the permit process by May 2015.

Construction could start mid-2016, with the project being completed by 2018.

Shell anticipates using local labor for the project by mid-2015.

Bakken Crude, Heavy crude, Martinez CA, Shell Oil

Martinez Shell Refinery to refine more light Bakken crude

Repost from Bloomberg

Shell Considers Retiring California Coker Amid Shale Boom

By Lynn Doan May 19, 2014

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, is considering retiring one of two coking units at its only refinery in California as the company seeks to run lighter crude at the plant.

The company has applied to county regulators for a permit to shut the flexicoker at the 156,400-barrel-a-day Martinez refinery northeast of San Francisco, a move that would shrink the plant’s reliance on heavy oils and cut its greenhouse-gas emissions by 15 percent, Destin Singleton, a Shell spokeswoman, said May 16. The unit helps convert the denser crude into more valuable products such as diesel and gasoline.

Shell is considering the shutdown as hydraulic fracturing and horizontal drilling unleash record volumes of light oil from shale formations across the middle of the U.S. California’s refiners, lacking pipeline access to the growing crude supplies, are bringing in the most ever by rail as they work to counter shrinking production within the state and from Alaska.

“The reality is that we are looking at each individual refinery and making economic decisions as to what is the most optimal feedstock,” John Abbott, downstream director for The Hague-based Shell, said in an interview at Bloomberg’s headquarters in New York May 16. “This is one of the most competitive assets on the West Coast of the U.S. and in California.”

Industry refining margins on the U.S. West Coast, a rough indicator of profitability, averaged $7.62 a barrel in the first quarter, almost twice the $4.07-a-barrel coking margin on the Gulf Coast, Shell said in a statement April 30.

Train Deliveries

While the Martinez refinery doesn’t have the equipment to unload oil from rail cars, it receives crude by pipeline from a complex in Bakersfield, California, that takes train deliveries, Singleton, based in Houston, said by e-mail. The refinery would continue to receive oil by pipeline and vessel using existing infrastructure once the coker is shut, she said.

Heavy crude pumped from California’s San Joaquin Valley dropped 35 cents to $95.20 a barrel, data compiled by Bloomberg at 2:01 p.m. New York time show. Light crude from North Dakota’s Bakken formation gained 82 cents to $98.59 a barrel.

Crude Mix

“Overall, heavy crudes are a big part of our current mix,” Singleton said. “We’ll be processing the same crudes we refine today, but the mix will be lighter — meaning significant reductions in greenhouse gas emissions, less electricity use, and more efficient operations.”

A delayed coker, which was installed at the refinery in the 1990s, based on air regulatory filings, will remain in service, she said.

Refiners from Tesoro Corp. (TSO) to Valero Energy Corp. (VLO) are working to bring more shale oil to their plants on the U.S. West Coast by rail. Trains delivered 395,053 barrels of oil to California in March, a record volume for that month, the most recent data available from the state Energy Commission show.

Shell is seeking permits to build a rail complex at its Anacortes refinery in Washington state that would allow the plant to unload oil from as many as six trains a week, regulatory filings show. The company has also said that it’s carrying upgraded crude to the West Coast from its Scotford oil-sands upgrader in Canada.

Crude Imports

Martinez imported 903,000 barrels of medium-to-heavy crude in February from Canada, the most recent data available from the Energy Information Administration show. The complex already processes some lighter crudes, like Bakken oil, along with heavier feedstock from California’s Central Valley, Singleton said.

Contra Costa County regulators are expected to prepare a report on the environmental impacts of the coker retirement, and the public will have a chance to comment on the plan during that process, she said.

Chevron Corp. (CVX)’s Richmond refinery, west of Martinez, is also applying to local regulators for a project that would change its crude slate. The plan would replace a hydrogen plant and increase capacity at the fluid catalytic cracker’s hydrotreater and sulfur-recovery system to run higher-sulfur oils.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net David Marino, Richard Stubbe