Category Archives: Oil Industry

Bakken Crude, Crude By Rail, Oil Industry, Oil prices, Oil refineries

Does zero Bakken crude for Irving Oil indicate a trend?

Repost from Railway Age
[Reference:  see the 8/20/15 Wall Street Journal article, Canada’s Largest Refinery Shifts from Bakken Shale Oil to Brent Crudes.  – RS]

Does zero Bakken crude for Irving Oil indicate a trend?

By  William C. Vantuono, Editor-in-Chief, August 28, 2015
Irving Oil Ltd. Saint John, N.B. refinery
Irving Oil Ltd. Saint John, N.B. refinery

Irving Oil Ltd., operator of Canada’s largest crude oil refinery, has stopped importing crude oil sourced from the Bakken shale formation in North Dakota and shipped by rail in favor of cheaper crudes from such producers as OPEC, “reflecting a shift in crude costs affecting East Coast refiners during a global slump in oil prices,” the Wall Street Journal recently reported.

The 320,000-barrel-a-day refinery in Saint John, N.B., one of the biggest by volume in North America, had been receiving 100,000 barrels a day by rail, a high reached two years ago that was only temporarily affected by the Lac Mégantic disaster. (The Montreal, Maine & Atlantic crude oil train that derailed on July 6, 2013, claiming 47 lives, was bound for the refinery). Today, CBR shipments the refinery are zero, a move “that reflects shifting economics in the energy industry even as the price of oil—including Bakken crude—has slumped to six-year lows,” said the WSJ. “About 90% of the crude oil Irving currently buys is shipped by sea from such producers as Saudi Arabia and those in western Africa, with the remainder coming by rail from such western Canadian oil-sands operators as Syncrude Canada Ltd. and Royal Dutch Shell PLC. A year ago, Bakken crude made up about 25% of Irving’s feedstock and in 2013 it supplied nearly one-third of its procurement volume, or about 100,000 barrels a day. ‘The Bakken price has gone up’ relative to other crudes when CBR costs are factored in,’ [an Irving Oil executive] said.”

“A once-yawning gap, between the cost of oil produced in North America and overseas crudes priced at the Brent global benchmark, has narrowed since 2013,” the WSJ noted. “Refiners on North America’s east coast can now import crude shipped by sea for less than the cost of shipping it by rail from shale oil producers in North Dakota and elsewhere in the U.S.”

Production of U.S. shale oil, especially that from the Bakken, led to CBR shipments increasing exponentially due to a lack of pipelines. CBR is more expensive than by shipping by pipeline and even by ship, and fewer refiners are willing to pay a premium for CBR. <p< Whether Irving Oil’s decision to abandon Bakken crude for a single refinery reflects a broader trend that will affect CBR movements remains to be seen. Two other refiners have followed suit, but the situation may not be permanent.

“Refiners PBF Energy Inc. and Phillips 66 both said they increased procurement of overseas crudes at the expense of CBR in the second quarter, though they signaled it is unclear if that will continue throughout the rest of the year,” the WSJ reported. “‘Our ability to source sovereign waterborne crudes was far more economic to the East Coast facilities, and that’s what we did,’ PBF Energy CEO Tom Nimbley said in late July. Phillips 66 CEO and Chairman Greg Garland told investors last month, ‘We actually set [crude-by-rail] cars on the siding. We brought imported crudes in the system.’ But, he added, ‘I’d say given where our expectations are for the third quarter, I’d say cars are coming off the sidings, and we’re going to import less crude.’”

CBR traffic has dropped substantially compared to last year, “reflecting both the worsening economics of CBR and better pipeline access to refineries on the Gulf of Mexico,” the WSJ noted. According to Association of American Railroads figures, U.S. Class I railroads originated 111,068 carloads of crude oil in the second quarter of 2015, down 2,201 carloads from the first quarter and some 21,000 fewer carloads than the peak in 2014’s third quarter.

 

Oil Industry, Rail inspection, Rail Safety, Railroad workers, State regulation, Track maintenance

N.D. hires BNSF manager as inspector for state rail safety program

Repost from the Billings Gazette

N.D. hires BNSF manager as inspector for state rail safety program

By Mike Nowatzki, Forum News Service, August 10, 2015
Train derailment
Oil tank cars not damaged in a train derailment near Culbertson are removed from the area on July 17, 2015. Amy Dalrymple/Forum News Service

BISMARCK, N.D. – A manager for the railroad involved in two fiery oil train derailments in North Dakota during the past two years has been hired as the first track inspector for a new state-run rail safety program.

Karl Carson will go to work for the state Public Service Commission on Aug. 17, doing inspections to identify problems with track and worker safety.

A Minot native, Carson is a division engineer with BNSF Railway. He’s worked for the railroad since 1992, holding several positions including assistant director of maintenance production, in which he supervised maintenance and replacement of track and track components, according to the PSC. He’s worked in management for BNSF since 2004.

Commission chairwoman Julie Fedorchak said the PSC wanted an inspector with experience, and with only two major railroads operating in the state – BNSF and Canadian Pacific – hiring someone with connections to one of them was “just an unavoidable situation.”

She said she asked Carson during his interview “if he would have a hard time regulating his old friends, and he said, ‘Absolutely not.’”

“His experience helps him to understand where the strengths and the weaknesses are and will really help him engage directly with the railroad,” she said. “They know his experience and they know he knows what he’s talking about.”

North Dakota is the 31st state to partner with the Federal Railroad Administration on a state rail safety program. The FRA has primary responsibility for rail safety in every state.

The PSC began looking seriously at the need for a state program after the December 2013 derailment of a BNSF oil tanker train near Casselton, which caused a massive fireball and voluntary evacuation of the city. Six cars from a BNSF oil train derailed May 6 near Heimdal in east-central North Dakota. No one was hurt in either incident.

Carson’s new position is one of two approved by state lawmakers in April when they voted to spend $523,345 on the state rail safety program in 2015-17, with the intent of continuing the pilot program in 2017-19.

“We’re quite pleased with the caliber of the first inspector,” Fedorchak said. “He’s got more rail experience than I had hoped for, and I think in talking with other states, that was the key ingredient they emphasized.”

State Sen. Tyler Axness, D-Fargo, who first publicly suggested a state-run rail safety program in July 2014 during his unsuccessful campaign for the PSC, said he doesn’t necessarily disagree with Fedorchak that the pool of qualified applicants for the inspector job is probably limited in North Dakota, and he declined to make any judgments about the hire without seeing the pool of applicants.

But Axness and Wayde Schafer, conservation organizer for the Dacotah Chapter of the Sierra Club, both said it seems like the state has a pattern of hiring regulators with close ties to the industries they will oversee. Schafer said on such a contentious issue as rail safety, “it seems like they would want to hire somebody who was a little bit more neutral.”

“You’d think something this controversial, even the appearance of impropriety should be avoided whenever possible,” he said.

Don Morrison, executive director of the Dakota Resource Council, drew a comparison to the hiring of Lynn Helms, a former employee of Texaco and what is now Hess Corp. who now regulates and promotes the state’s oil and gas industry as director of the state Department of Mineral Resources.

“It certainly looks like business as usual, which is give the industry what they want,” he said. “Time will tell.”

Fedorchak said the PSC had 18 applicants for the job and interviewed the top five, with second interviews for the two finalists. She noted Carson was the “strong favorite” among the FRA inspectors on the interview panel.

Carson earned a certificate of completion in auto mechanics from Bismarck State College in 1990 and also served in the North Dakota Army National Guard from 1990 to 1994. He couldn’t immediately be reached for comment.

His annual salary with the PSC will be $90,000.

Carbon dioxide, Coal industry, Federal Regulation (U.S.), Natural gas, Oil Industry, Power plants

US carbon pollution from power plants hits 27-year low

Repost from the Associated Press
[Editor:  Significant quote: “A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions. The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.”  (Princeton University professor Michael Oppenheimer)  For background data, see U.S. Energy Information Administration report on April emissions.  – RS]

US carbon pollution from power plants hits 27-year low

By Seth Borenstein, Aug. 5, 2015 5:00 PM EDT

WASHINGTON (AP) — Heat-trapping pollution from U.S. power plants hit a 27-year low in April, the Department of Energy announced Wednesday.

A big factor was the long-term shift from coal to cleaner and cheaper natural gas, said Energy Department economist Allen McFarland. Outside experts also credit more renewable fuel use and energy efficiency.

Carbon dioxide — from the burning of coal, oil and gas — is the chief greenhouse gas responsible for man-made global warming.

“While good news for the environment, we certainly would not want to assume that this trend will continue and that we can simply relax,” said John Reilly, co-director of MIT’s Joint Program on the Science and Policy of Global Change.

Electric power plants spewed 141 million tons of carbon dioxide in April, the lowest for any month since April 1988, according to Energy Department figures. The power plants are responsible for about one-third of the country’s heat-trapping emissions.

April emissions peaked at 192 million tons in 2008 and dropped by 26 percent in seven years.

Carbon pollution from power plants hit their peak in August 2007 with 273 million tons; summer emissions are higher because air conditioning requires more power.

In past years, experts said the U.S. reduction in carbon dioxide pollution was more a function of a sluggish economy, but McFarland said that’s no longer the case.

“You don’t have a 27-year low because of an economic blip,” McFarland said. “There are more things happening than that.”

The price of natural gas has dropped 39 percent in the past year, he said. Federal analysts predict that this year the amount of electricity from natural gas will increase 3 percent compared to last year while the power from coal will go down 10 percent.

Those reductions were calculated before this week’s announcements of new power plant rules. The new rules aim to cut carbon pollution from electricity generators another 20 percent from current levels by 2030.

The pollution cuts in April are because efficiency has cut electricity demand and energy from non-hydropower renewable sources has more than doubled, said Princeton University professor Michael Oppenheimer.

“A factor behind all these trends is that the writing is on the wall about the future of coal and thus the future of U.S. carbon dioxide emissions,” Oppenheimer said in an email. “The regulatory noose is tightening and companies are anticipating a future with lower and lower dependence on fossil fuels and lower and lower carbon dioxide emissions.”

California Regulation, Climate Change, Climate change denial, Fracking, Global warming, Oil Industry, Oil producers, Vatican conference on climate change

As California pumps out oil, Gov. Brown says world must cut back

Repost from The San Francisco Chronicle (SFGate)
[Editor:  The San Francisco Chronicle ran three (!) stories on the Vatican Conference on climate change, including two rather stiff challenges to California Governor Jerry Brown.  See below for one.  See also: Editorial-A climate pilgrimage, …and Mayor touts city’s green vehicles at pope’s event.  – RS]

As California pumps out oil, Gov. Brown says world must cut back

By David R. Baker, July 21, 2015 4:02 pm
Gov. Jerry Brown delivers his speech during the conference at the Vatican. Photo: Gregorio Borgia, Associated Press
Gov. Jerry Brown delivers his speech during the conference at the Vatican. Photo: Gregorio Borgia, Associated Press (1st of 10 images – click for more).

One-third of the world’s oil must stay in the ground if humanity hopes to avoid the worst effects of global warming, Gov. Jerry Brown told a climate conference at the Vatican Tuesday.

“We are going to have to set a clear goal,” Brown told a crowd of mayors and public officials from around the world. “And that goal is almost unimaginable. One-third of the oil that we know exists as reserves can never be taken out of the ground. Fifty percent of the gas can never be used and over 90 percent of the coal. Now, that is a revolution.”

For an American politician of Brown’s stature, it was a rare statement. Even those who acknowledge the threat of climate change prefer not to address the idea that tapping all of the world’s known fossil fuel reserves would trigger catastrophic levels of warming, a notion widely embraced in the environmental movement.

But Brown’s comment was particularly noteworthy for another reason.

California, for all its efforts to fight climate change, remains America’s third-largest oil producing state, out-pumped only by Texas and North Dakota. And while Brown wants to cut California’s use of oil by 50 percent in the next 15 years, he has generally supported oil production within the state’s borders.

Brown has for years refused to ban hydraulic fracturing, preferring to regulate it instead. He has argued that finding a way to tap the oil trapped within California’s Monterey Shale formation could produce an economic boom for the state. His stance has infuriated many environmentalists, even as they laud his efforts to boost renewable power and reduce greenhouse gas emissions.

So Brown’s comments, at the Vatican global symposium on climate change and modern slavery, raised a few eyebrows back home.

“We agree, fossil fuels need to stay in the ground,” said Kassie Siegel of the Center for Biological Diversity, one of the environmental groups pushing for a fracking ban. “That’s why Gov. Brown can’t be a climate leader and expand fossil fuel production in his own state. Climate leaders do not frack.”

Brown urged the gathered mayors to push for climate action within their own countries, saying they needed to “light a fire” under their national leaders. And he took aim at opponents of such action, saying they were “bamboozling” the public with a well-financed disinformation campaign.

“We have very powerful opposition that, in at least my country, spends billions on trying to keep from office people such as yourselves and elect troglodytes and other deniers of the obvious science,” Brown said.