Category Archives: Keep it in the ground

BNSF Railway, Business risk assessment, Climate Change, Coal industry, Diluted bitumen (Dilbit), Fossil fuel divestment, Fossil fuels, Keep it in the ground, Oil prices, Phillips 66, Santa Maria Refinery, Solar energy, Stranded assets, Tar sands crude

Would Saving A Livable Climate Destroy Buffett’s Fossil Fuel Empire?

Repost from Think Progress – Climate Progress

Would Saving A Livable Climate Destroy Buffett’s Fossil Fuel Empire?

By Joe Romm, March 11, 2016 8:00 AM
BNSF oil train derailment in 2013. CREDIT: BRUCE CRUMMY, AP

Billionaire Warren Buffett has bet the future of his company Berkshire Hathaway on dirty energy. In recent years he has been building a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and burns the most climate-destroying fuels.

The final part of this series on Buffett looks at how BNSF Railways is the engine of his carbon-intensive conglomerate, creating a massive risk for shareholders in this increasingly carbon-constrained world — a risk the “Oracle of Omaha” needs to be far more upfront about.

Is Warren Buffett “The Profiteer” of “Climate Killers”?

When Rolling Stone named Warren Buffett one of its 17 “Climate Killers” in 2010, they called him “The Profiteer.” They zeroed in on his recent purchase of “Burlington Northern Santa Fe railroad for $26 billion — the largest acquisition of Buffett’s sto­ried career.”

Why? BNSF is “the nation’s top haul­er of coal, shipping some 300 million tons a year.” That is especially convenient for Buffett because, as noted in Part 2, Berkshire Hathaway Energy has four major utilities that still rely on coal for over half their electricity generation.

CoalValueImage
CREDIT: BNSF

But BNSF is so much more than just the top hauler of coal. As their website proudly attests “BNSF is the largest transporter of crude oil in North America” — and we all know how well the whole crude-by-rail thing has been going.

2015 “has already been the costliest by far for crude train explosions,” BloombergBusiness reported in December. A “BNSF train that derailed and exploded in Illinois” last March “carrying highly explosive crude from North Dakota” created some $5.5 million in damage.

From 2010 through mid-2014, oil shipped by rail in the United States increased from about one million barrels of oil every month to 25 million! At the same time, Canadian imports increased 50-fold, as we’ve reported. BNSF was a driving force behind that explosion.

oil-overtime
CREDIT: EIA DATA

Also, last October we learned about “what is believed to be the largest frac sand unit train to date in North America.” You guessed it: “The 150-car unit train, operated by BNSF, carried 16,500 tons of frac sand used in hydraulic fracturing.”

Warren Buffett Bets Big On The Tar Sands

But wait, there’s more. You may recall from Part 1 that last year, the billionaire spent $240 million buying another chunk of Canadian tar sands giant Suncor, upping his overall bet on the climate-destroying liquid fuel to $1.1 billion — a fact Buffett does not share with shareholders in his list of Berkshire Hathaway’s climate risks.

On top of that, as BNSF’s website also proudly attests, the railroad “is positioned to act as a gateway to the Canadian oil sands.” Seriously.

Indeed several years ago, a BNSF employee magazine explained how invested the railway was in all aspects of tar sands (aka bitumen) development. The key point is that “Before bitumen can move through a pipeline to its destination, it must be blended with diluents (diluting agents),” lighter weight hydrocarbons like natural gasoline or butane:

BNSF has been moving single carloads of diluents from U.S. refineries to the Canadian border…. The inbounds are then interchanged with Canadian railroads, then moved to Edmonton, with the final move to the oil sands’ processing center via pipeline.

Last year, BNSF moved about 9,000 carloads of diluents for the project, with the majority of loads originating from the Gulf Coast, California, and Kansas. This year, about 12,000 carloads are anticipated to move.

There’s more: Beyond shipping diluents, “BNSF has also transported turbines, other large machinery and pipes for use at the drilling sites.”

There’s still more to this empire. In 2015, Buffett “nearly doubled Berkshire’s position in Phillips 66,” one of the country’s leading oil (and gas) refiners and processors. The company has 15 refineries which can refine a total of 2.2 million barrels of crude per day.

In January of this year alone, Buffett spent a staggering $832 million to buy yet more Phillips 66 stock. At more than $5 billion, it is his sixth-largest holding. He now owns 14 percent of the “Number 7” company on the Fortune 500 list.

Phillips 66 is a major co-owner of the Wood River Refinery in Illinois, which in recent years made investments “to expand the capacity to handle the bitumen from the Alberta oil sands by nearly 700%.” Also not coincidentally, for the last year, Phillips 66 has been trying to get California planning commissioners to let it build a 1.3-mile rail spur to its Santa Maria refinery. Why? As the Sierra Club explained last month, “The oil giant seeks to transport tar sands crude from Canada in mile-long trains — each laden with over 2 million gallons of dirty crude.”

Both A Livable Climate And Buffett’s Empire Cannot Thrive

Yes, the Oracle of Omaha has a thing for the Canadian tar sands. But more than that, over the last several years he has built a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and even burns the most carbon-intensive fossil fuels. It would be a brilliant strategy except for two small details.

First, climate science makes clear we have to leave most fossil fuels — and virtually all of the most carbon-intensive — in the ground to avoid global catastrophic warming. Second, over the past 18 months, the leading nations of the world unanimously agreed on a plan whose goal is to do just that, and the overwhelming majority of them made detailed pledges to slow or reverse carbon-intensive growth and replace it with carbon-free growth.

The domestic and international coal market has already collapsed as a result of growing environmental concerns and low-cost alternatives including renewables. If the world follows through on its plans to keep total warming below 2°C — a big “if,” for sure — then coal is going to continue to be squeezed out of the market in the coming decades and oil will almost certainly follow the same fate, peaking in demand by 2030, as I discussed last month.

Now whether or not you believe the world is going to achieve the plan it unanimously embraced in Paris in December, surely Buffett ought to at least mention to his shareholders the risks to Berkshire Hathaway if the world does. Yet, his latest annual letter to shareholders dismisses the risk of climate change.

Here is all Buffett says about the coal risk: “To begin with an obvious threat, BNSF, along with other railroads, is certain to lose significant coal volume over the next decade.” But he quickly dismisses this as a problem that is not “crucial to Berkshire’s long-term well-being.”

Last summer, BNSF executive chairman Matthew K. Rose noted the decline in U.S. coal transport and consumption. He said of his company’s major investment to upgrade its rail service to and from the coal-rich Powder River Basin, “That leaves us with millions of dollars in investment in what will eventually be stranded assets.”

Certainly, from a short-term business perspective, investing in oil-by-rail and tar-sands-by-rail to replace coal-by-rail appears to make sense. But what are the risks those investments will eventually become stranded assets, too? Low oil prices aren’t good for crude-by-rail, as BloombergBusiness explained in December. And aggressive climate action, which could well give us peak demand within 15 years, is not bullish for oil prices.

BNEFoilpeak1-16
CREDIT: BLOOMBERG

Rather than informing shareholders about any of these risks, Buffett asserts the reverse: “Both BHE [Berkshire Hathaway energy] and BNSF have been leaders in pursuing planet-friendly technology.” Seriously?

I discussed in Part 2 how, despite BHE’s own investments in renewables, BHE is working to crush solar energy in Nevada and around the western United States. And it remains a huge user of coal. And as we’ve seen BNSF is a major deliverer of coal….

But here is how Buffett defends the fairly ludicrous claim that BNSF is somehow one of the “leaders in pursuing planet-friendly technology”:

BNSF, like other Class I railroads, uses only a single gallon of diesel fuel to move a ton of freight almost 500 miles. That makes the railroads four times as fuel-efficient as trucks!

Yes, BNSF is a very fuel-efficient way of delivering vast amounts of climate-destroying fuels to market.

Finally, is it only a coincidence that after outperforming the market for decades, the stock of Berkshire Hathaway has actually underperformed the S&P 500 over the last five years?

Again, if serious global climate action ultimately keeps oil prices low and renders much of the tar sands uneconomic, then Buffett’s carefully constructed fossil fuel empire is going to keep suffering — and deservedly so. After all, leading climate activists have been urging major investors to disinvest in fossil fuels for years. Buffett is doing the exact reverse!

BOTTOM LINE: Between Berkshire Hathaway and a livable climate, only one can thrive. That’s not a tough choice, is it?

Bakken Crude, Ban oil trains, Bomb Trains, CPC-1232, Crude By Rail, Derailment, Explosion, Federal Regulation (U.S.), Fire, Hazmat notification, Keep it in the ground, Rail infrastructure, Spill prevention and response, Tank car design, Tank car retirement, Tank car retrofit, Tar sands crude, Train length, Train speed, Train weight

New Oil Train Safety Regs Focus on Accident Response, Not Prevention

Repost from Center for Biological Diversity

CenterForBiolDiv_logoNew Oil Train Safety Regs Focus on Accident Response, Not Prevention

Long Phase-out of Hazardous Cars, Inadequate Speed Limits Leave Communities at Risk of Explosive Derailments

For Immediate Release, December 7, 2015
Contact: Jared Margolis, (802) 310-4054

WASHINGTON— A new transportation bill signed by President Obama includes provisions intended to improve the safety of oil trains, but leaves puncture-prone tank cars in service for years and fails to address the speed, length and weight of trains that experts point to as the leading causes of explosive derailments. The bill upgrades safety features on oil train tank cars and requires railroads to provide emergency responders with real-time information about when and where dangerous oil cargoes are being transported but doesn’t do enough to prevent oil train accidents, which have risen sharply in recent years.

“While these regulations improve our ability to prepare for oil train disasters they do virtually nothing to prevent them from ever occurring in the first place,” said Jared Margolis, an attorney with the Center for Biological Diversity who focuses on the impacts of energy development on endangered species. “Until we dramatically reduce the speed and length of these bomb trains it’s only a matter of time before the next explosive derailment sends fireballs rolling through one of our communities.”

The new regulations will require all oil train tank cars to include fire-resistant ceramic coatings and protections for protruding top fittings. The final rule issued by federal regulators in May only required oil trains with 35 loaded oil tank cars or 20-car blocks of oil tank cars to implement the new standards, and would not have required the ceramic blankets or top fitting protections for all retrofitted cars.

But experts say even the protective measures included in the new transportation regulations signed into law on Friday will do little to prevent a spill if a train derails at speeds faster than 18 mph, and oil trains are permitted to travel at 40 mph to 50 mph. And the new regulations do not require the phase-out of dangerous puncture-prone tank cars to begin until 2018, and allows them to remain in service until 2029.

“It’s irresponsible to continue to allow these bomb trains to roll through the middle of our communities and across some our most pristine landscapes,” said Margolis. “We need to quit pretending we can make these dangerous trains safe and simply ban them altogether.”

Congress has directed the U.S. Department of Transportation to continue requiring notifications to states of train routes and frequencies so communities can better prepare to respond to train derailments, explosions and oil spills. However, the new regulations do nothing to remedy the track infrastructure problems, or the excessive length and weight of oil trains, cited as leading causes of derailments. Further, it remains unclear whether the public will have access to information about these hazards.

“Keeping information on oil trains from public scrutiny is outrageous, and only serves to protect the corporate interests that care little about the risk to the homes, schools and wild areas that these trains threaten,” said Margolis. “We need to keep these trains off the tracks and keep these dangerous fossil fuels in the ground, rather than keeping the public in the dark.”

Background 

The National Transportation Safety Board has repeatedly found that current tank cars are prone to puncture on impact, spilling oil and often triggering destructive fires and explosions. But federal regulators have ignored the safety board’s official recommendation to stop shipping crude oil in the hazardous tank cars. Recent derailments and explosions have made clear that even the newer tank cars, known as CPC-1232s, are not significantly safer, often puncturing at low speeds.

The recent surge in U.S. and Canadian oil production, much of it from Bakken shale and Alberta tar sands, has led to a more than 4,000 percent increase in crude oil shipped by rail since 2005, primarily in trains with as many as 120 oil cars that are more than 1.5 miles long. The result has been oil spills, destructive fires, and explosions when oil trains have derailed. More oil spilled in train accidents just in 2013 than in the 38 years from 1975 to 2012 combined.

The Center for Biological Diversity is a national, nonprofit conservation organization with more than 900,000 members and online activists dedicated to the protection of endangered species and wild places.
Alberta Canada, Carbon pricing systems, Carbon taxes, Climate Change, Coal, Jobs, Keep it in the ground, Oil industry lobby, Pipeline transport, Public transit, Renewable energy, Tar sands crude

Alberta Canada: Don’t cheer the new premier yet. Demand she break the oil barons’ vice-grip

Repost from The Guardian
[Editor:  Significant quote: “…investment in oil and gas creates fewer jobs than practically any other industry. Investment in the clean energy sector, on the other hand, creates 7 to 8 times more work. The oil barons aren’t essential “job creators”; they’re economic suppressers.”  – RS

Don’t cheer Alberta’s premier yet. Demand she break the oil barons’ vice-grip

Alberta’s climate plan falls far short of what’s possible: unleashing a green economy that creates hundreds of thousands of jobs and transitions off the tar sands

By Martin Lukacs, 24 November 2015 14.12 EST, updated 25 November 2015 10.28 EST
The Syncrude Oil Sands site near to Fort McMurray in Northern Alberta. Photograph: David Levene for the Guardian

Alberta’s new climate plan is drawing praise from sources that have rarely got on with the oil-exporter – Al Gore, labour unions and some of North America’s biggest green groups. At first glance, it’s not hard to see why: Alberta is promising an accelerated phase-out of coal, increased funds for renewable energy and impacted workers, and a price on carbon. It’s a major step hard to imagine scarcely a year ago, when the province was still under a multi-decade Conservative reign.

So why then are the oil barons celebrating? Beaming with pride, the heads of Canada’s biggest tar sands companies flanked Premier Rachel Notley during Sunday’s announcement.

Their hope: that Alberta’s globally tarred reputation will suddenly be scrubbed clean. Despite the lofty rhetoric, the government has committed only to bringing emissions below today’s levels by 2030 – making it even less ambitious than what Stephen Harper’s federal petro-state offered. This might be what the Premier meant when she promised that new pipelines – which companies desperately need to export tar sands – would soon benefit from “creative lobbying and advocacy efforts.”

The tar sands now has a glossy new sheen. Alberta’s plan sets a cap on their emissions – an acknowledgement that tar sands will no longer grow infinitely. Except it’s so high as to allow a staggering forty percent increase over the next fifteen years. And if a Conservative government returns to power, could it abandon the policy and ensure nothing is accomplished? In other words, this is a cap big enough to drive a three-story tar sands truck through.

Here’s the other reason the oil barons are cheering: they know they could be getting squeezed a hell of a lot more. After all, Alberta’s New Democratic Party got elected with a mandate for bold change. Albertans were tired of oil-soaked politicians who let companies vacuum up billions in profit amidst skyrocketing inequality and deteriorating public services. And the oil price crash made clearer than ever before the cost of a boom-and-bust economy built on a single volatile commodity.

Climate science backs that mandate for rapidly transforming our economy: it tells us that since we’ve delayed for so long, small reforms will no longer suffice. And Albertans understand the scientific reports that the vast majority of fossil fuels need to stay in the ground to avert dangerous climate change – the impacts of which they’ve already experienced in flooded Calgary and a drought-parched countryside. But while good times fueled denial, the ecologically suicidal politics of the establishment could be ignored. When the oil shock hit, they also started looking economically reckless.

As the oil barons thrash about in a self-induced crisis, this should be the time to part ways with them. Exxon is being investigated in the United States for having discovered the lethal consequences of climate change in the 1970s, then lied about it for decades while doing everything to make this catastrophe a reality. Low oil prices – which don’t look to be going away – have already forced the cancellation of extraction projects and created a thaw in investment throughout Alberta’s oil patch. The cost of renewable energy has dropped at incredible and unexpected speed. And just weeks ago, President Obama rejected the Keystone XL pipeline. It was not, as Premier Notley put it, a “kick in [Alberta’s] teeth.” But you couldn’t pick a better moment to kick the oil barons to the curb.

None other than the Economist – not exactly a radical menace to big business – has argued that the oil price collapse offers a “once-in-a-lifetime opportunity” to transform a dysfunctional energy system.

The Alberta government could start by vanquishing the myth that the oil barons are economically indispensable. As the oil industry has thrown almost forty thousand people out of work, they have proved their interests never aligned with Albertans. The facts always told a different story: investment in oil and gas creates fewer jobs than practically any other industry. Investment in the clean energy sector, on the other hand, creates 7 to 8 times more work. The oil barons aren’t essential “job creators”; they’re economic suppressers.

So why – and this applies equally to Prime Minister Trudeau – fixate on building cross-country pipelines, when you could create more jobs in clean energy? Tackling climate change could be not just a public relations strategy to finesse the exporting of Alberta’s bitumen. It could be a chance to massively boost and transform the economy – making it more healthy, just and humane.

Look at what Germany – a similar, industrialized nation – has accomplished. In just over a decade, Germany has generated 30 percent of their electricity through renewables and created 400,000 good jobs in clean energy, much of it community-controlled and run by energy cooperatives. Using the right policies, Alberta could make this transition happen even more quickly, with greater benefits for First Nations, workers, and those getting the worst deal in the current economy.

It’s not too late to seize the historic opportunity. The NDP could still put forward a plan to create 200,000 good, green jobs over the next several years. Reports have laid out how this could happen with targeted investment: in accessible public transit, in energy-saving housing retrofits, in eco-system restoration, and by taking advantage of Alberta’s incredible potential for renewable energy. Nature didn’t make Alberta an oil province. Erect new signs: welcome to solar, wind and geothermal country.

How should Alberta pay for this transition? By putting their hands on the enormous profits of the industry that created the crisis in the first place. The new carbon tax – and the royalty hike the government must vigorously pursue – should be raised to send a stronger message to the market to jump-start a transition off oil.

Economists have shown a fair and effective tax would look more like $200 a tonne. $20 or $30 a tonne will not cut it – especially when half of the revenue generated will return as subsidies to oil and gas companies and dirty electricity generators. At this rate, most oil companies will be spending barely $1 more per barrel of oil. Polluters should be paying, not being paid off. The only message this will send the market is to “dig, baby, dig.”

Rolling out a plan to create a new, cleaner economy that’s more just and prosperous would convince voters there is an alternative to the oil economy. At that point the NDP could initiate a debate on a moratorium on tar sands development that has been called for by a hundred of North America’s top scientists. Scientific studies show we could get all of our electricity from renewables by 2030, not just 30 percent as Alberta now promises; and an economy entirely run by renewables by 2050. When popular movements can build pressure for such a transition, one thing will be sure: oil barons won’t be hand-clasping on the stage – they’ll be howling from the sidelines.

These movements, with Indigenous communities leading the way, have pushed the Alberta government this far. Now they must push them farther, and faster. It’s not time yet to cheer Alberta’s premier. Demand instead she break the oil barons’ vice-grip on our future.

Bakken Crude, Crude By Rail, Derailment, DOT-111, Emergency Readiness & Response, Ethanol, Explosion, Fire, Keep it in the ground, Massive increase in crude-by-rail, Pipeline transport, Spill, Tar sands crude

Three derailments are three too many

Repost from the Winona Post

Three derailments are three too many

By Kat Eng, Honor the Earth volunteer, 11/23/2015
Train derailment, Alma, Wisconsin << CBS Minnesota

It’s hard to believe Andy Cummings, spokesperson for Canadian Pacific Railway, when he says CP Rail feels it is “absolutely” safe to resume the transportation of oil in the wake of the three derailments last week in Wisconsin.

The first derailed (BNSF) train hurled 32 cars off the tracks outside of Alma, Wis., pouring more than 18,000 gallons of ethanol into the Mississippi River upstream of Winona. The Environmental Protection Agency (EPA) report notes that ethanol (denatured alcohol) is flammable and toxic to aquatic organisms and human life — and it’s water soluble. Though the EPA and Wisconsin DNR admitted they could not remove the toxic product from the water; site coordinator Andy Maguire claims that since they cannot detect concentrated areas of ethanol, it is not negatively impacting the surrounding aquatic life. This was the third derailment on the Upper Mississippi River Wildlife Refuge in the last nine months, according to the community advocacy group Citizens Acting for Rail Safety (CARS).

The next day, 13 DOT-111 tankers with upgraded safety features derailed in Watertown, Wis., spilling crude oil and forcing residents to evacuate from properties along the CP tracks. Four days later, another train derailed a mere 400 feet from that spill site.

Train derailment, Watertown, Wisconsin << fox6now.com

How can we possibly feel safe with ever-greater amounts of toxic products hurtling down inadequately maintained infrastructure every single day? A report released last week by the Waterkeeper Alliance found that “[s]ince 2008, oil train traffic has increased over 5,000 percent along rail routes … There has also been a surge in the number of oil train derailments, spills, fires, and explosions. More oil was spilled from trains in 2013 than in the previous 40 years combined.”

Emergency management has become routine rather than remedial. Teams show up, “contain” the spills, replace some track, and the trains roll on. With forecasts that Canadian oil production will expand by 60,000 barrels per day this year, and an additional 90,000 barrels per day in 2016, toxic rail traffic shows no signs of decreasing.

Energy giant Enbridge has taken this as its cue to size up northern Minnesota and plot pipeline (through Ojibwe tribal lands and the largest wild rice bed in the world) between the North Dakota Bakken oil fields and refineries in Wisconsin and Illinois. Its momentum depends on us puzzling over the false dichotomy of choosing to move oil by pipeline or by rail. At the June 3 Public Utilities Commission hearing, it admitted the proposed Sandpiper/Line 3 pipeline corridor will not alleviate railway congestion but rather potentially reduce “future traffic.” It uses this assumption of unregulated growth to make people today think they have no choice but to sell out the generations of tomorrow.

Proponents of the line want us to choose our poison: will it be more explosive trains or more explosive trains and leaky pipelines? What if an oil tanker derailed on Huff Street in the middle of rush-hour traffic and we became the next Lac-Mégantic (where an oil train exploded downtown killing 47 people)? What if a hard-to-access pipeline spewed fracked crude oil into the headwaters of the Mississippi River?

The real harm is in the delusion that we should accept and live with these risks. It is delusional that despite repeated derailments and toxic spills, business should continue as usual. It is delusional to think the oil and rail industry have our communities’ best interests at heart.

We have the vision, the intelligence, and the technology to choose a way forward that does not compromise our resources for the generations to come. As Winona Laduke says, “I want an elegant transition. I want to walk out of my tepee, an elegant indigenous design, into a Tesla, into an electric car, an elegant western design.” Fossil fuels are history. We need to keep them in the ground and pursue sustainable energy alternatives or risk destroying the water and habitat on which all our lives depend.