Category Archives: Oil Industry

Bakken Crude, CPC-1232, DOT-111, Oil Industry, Oil prices, Oil producers, Rail traffic, Refinery safety, Tank car retirement, Tank car retrofit

Wall Street Journal: Fewer Oil Trains Ply America’s Rails

Repost from The Wall Street Journal

Fewer Oil Trains Ply America’s Rails

Safety concerns, low crude prices depress train traffic

By Alison Sider, April 6, 2015 3:30 p.m. ET
In March, oil-train traffic was down 7% from a year earlier. The slowdown comes amid safety concerns. Photo: David Paul Morris/Bloomberg News

The growth in oil-train shipments fueled by the U.S. energy boom has stalled in recent months, dampened by safety problems and low crude prices.

The number of train cars carrying crude and other petroleum products peaked last fall, according to data from the Association of American Railroads, and began edging down. In March, oil-train traffic was down 7% on a year-over-year basis.

Railroads have been a major beneficiary of the U.S. energy boom, as oil companies turned to trains to move crude to refineries from remote oil fields in North Dakota and other areas not served by pipelines. Rail shipments of oil have expanded from 20 million barrels in 2010 to just under 374 million barrels last year, according to the U.S. Energy Information Administration.

About 1.38 million barrels a day of oil and fuels like gasoline rode the rails in March, versus an average of 1.5 million barrels a day in the same period a year ago, according to a Wall Street Journal analysis of the railroad association’s data.

Oil-train traffic declined 1% in the fourth quarter of 2014 as crude-oil prices started to tumble toward $50 a barrel. More recently, data from the U.S. Energy Department show oil-train movements out of the prolific Bakken Shale in North Dakota have leveled off as drillers there have begun to pump less, though oil-train shipments from the Rocky Mountain region have risen.

WSJ_Shipped-By-US_Rail_2014-15The slowdown comes as federal safety experts call for stronger tank cars. On Monday the National Transportation Safety Board recommended an aggressive five-year schedule for phasing out or upgrading older railcars used to haul crude-oil. A string of oil train accidents in recent months have resulted in spills, intense fires and community evacuations. The NTSB said railcars in use today rupture too quickly and aren’t fire-resistant enough.

A few incidents have involved more modern tank cars—the CPC-1232 model. The NTSB also said the new railcar’s design isn’t sturdy enough. “We can’t wait a decade for safer rail cars,” said NTSB Chairman Christopher A. Hart Monday in a letter to federal transportation regulators.

Opponents of a fast phaseout have said that if tougher standards are introduced too quickly it will create a railcar shortage and make some oil train operations unprofitable.

Many refiners, including Philadelphia Energy Solutions, say they are still committed to shipping oil on trains. Chief Executive Phil Rinaldi in December said he likes that railroads don’t require long-term contractual agreements the way pipelines do. That allows his plant managers to buy crude only when it’s needed.

With pipelines, “you have to pay for that transit whether it makes sense or not,” Mr. Rinaldi said. “With rail, that’s not the case.”

Railroad operators have warned investors that their outlook for transporting crude is slightly weaker than it was last year, said David Vernon, a rail analyst at Sanford C. Bernstein & Co.

BNSF Railway Co., which is responsible for about 70% of U.S. oil-train traffic, operated as many as 10 trains a day last year, but is averaging nine a day now, a spokesman said.

Crude By Rail, DOT-111, Ethanol, Federal Regulation (U.S.), National Transportation Safety Board, Oil Industry, Tank car retirement, Tank car retrofit

NTSB: Equip oil trains with fire protection within 5 years

Repost from McClatchyDC
[Editor:   Bloomberg adds coverage of NTSB comments on the inadequacies of the CPC-1232 tank cars.  – RS]

NTSB: Equip oil trains with fire protection within 5 years

By Curtis Tate, McClatchy Washington Bureau, April 6, 2015
US NEWS RAILSAFETY-CA 2 SA
A tanker truck is filled from railway cars containing crude oil on railroad tracks in McClellan Park in North Highlands on Wednesday, March 19, 2014. (Randall Benton/Sacramento Bee/MCT)

The National Transportation Safety Board on Monday called for the nation’s fleet of railroad tank cars hauling crude oil and ethanol to be equipped with fire protection within five years in an effort to eliminate the large explosions associated with recent accidents.

The NTSB cited the performance of tank cars in four recent oil train derailments, two in the U.S. and two in Canada, where fire exposure weakened the bare steel tanks and increased the pressure inside the cars beyond what they were designed to sustain.

The agency called on the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration to require tank cars carrying oil and ethanol to be equipped with a ceramic blanket and high-capacity pressure-relief devices.

The NTSB also for the first time endorsed a five-year timeline for retrofitting or replacing the tank cars, including the goal that 20 percent of the fleet be made compliant per year. Industry groups representing oil producers and refiners have pushed for a 10-year timeline.

“We can’t wait a decade for safer rail cars,” NTSB Chairman Christopher Hart said in a statement. “The industry needs to make this issue a priority and expedite the safety enhancements, otherwise, we continue to put our communities at risk.”

In January, the NTSB added tank cars to its “ Most Wanted” list of safety improvements. But at the time, Hart wouldn’t say what the NTSB considered an appropriate timeline for making the fixes.

The independent board, which has only advisory power, has been recommending upgrades to the nation’s workhorse tank car, called the DOT-111, for more than 20 years.

The car’s design became an issue after railroads across North America began hauling exponentially larger volumes of crude oil and ethanol. An oil train derailment that killed 47 people in Quebec in July 2013 galvanized a new effort on both sides of the border to improve the cars.

In February, the Transportation Department sent a package of proposed regulations to the White House Office of Management and Budget for review. They include requirements for thermal protection on the tank cars and are similar to a tank car design the Canadian government proposed last month. The final rule is scheduled for publication next month.

In the meantime, four trains carrying different types of crude oil derailed in the span of four weeks. The derailments, two in Ontario, and one each in West Virginia and Illinois, led to spills, fires and evacuations.

Oil industry groups have called for more attention to preventing derailments and less emphasis on the cars and what’s in them. But the tank car improvements have widespread support from lawmakers, regulators, mayors and governors, the rail industry and the NTSB.

In statements Monday, Sen. Ron Wyden and Rep. Peter DeFazio, both Oregon Democrats, praised the NTSB’s recommendations.

“I am very happy to see that they recommended thermal protection for cars carrying hazardous materials, an aggressive retrofit or replacement schedule, and a transparent, publicly available reporting mechanism to report tank car replacement,” DeFazio said.

“It is my hope that the next step from the administration will be a strong DOT rule that will get these cars upgraded quickly, or get them off the tracks completely,” Wyden said.

The railroad industry’s leading advocacy group in Washington echoed those calls.

“The freight rail industry supports an aggressive retrofit or replacement program and believes final regulations on new tank car standards will provide certainty and chart a new course in the safer movement of crude oil by rail,” said Ed Greenberg, a spokesman for the Association of American Railroads, in a statement.

Bakken Crude, Crude By Rail, Derailment, Explosion, Oil Industry, Oil stabilization, Rail Safety, Tank car design, Volatile gases

Oil industry perspective: Oil trains’ No. 1 safety threat is derailments

Repost from The Grand Forks Herald
[Editor:  Author Mark Green is employed by the American Petroleum Institute, which represents America’s oil and natural gas industry.  Read on for an interesting – and highly biased – insider perspective on crude by rail.  A letter defending the railroad industry, written by an AAR spokesperson appeared in the Herald on April 9.  – RS]

Oil trains’ No. 1 safety threat: Derailments

By Mark Green, Apr 5, 2015 at 4:45 a.m.

WASHINGTON — Amid the continuing public discussion over improving the safety of crude oil delivered by rail, it’s important that everyone — the energy industry, railroads, regulators, policymakers — stay focused on the facts and the science.

This is key to making meaningful improvements to freight rail transportation — which already delivers 99.998 percent of materials such as crude oil without incident. We say meaningful improvements because, as with everything we do, the oil and natural gas industry’s safety goal is zero incidents.

First, the science. A new Energy Department report found no data showing correlation between crude oil properties and the likelihood or severity of a fire caused by a train derailment. Also from the report:

“No single parameter defines the degree of flammability of a fuel; rather, multiple parameters are relevant. While a fuel with a lower flashpoint, wider range of flammability limits, lower auto-ignition temperature, lower minimum ignition energy and higher maximum burning velocity is generally considered more flammable, the energy generated from an accident has the potential to greatly exceed the flammability impact of these and any other crude oil property based criteria.”

That last point highlights the importance of preventing derailments in the first place — because, according to the report, the kinetic energy created by a derailment can play a bigger role in the size of a fire than the commodity the train is hauling.

The department’s findings on crude oil properties also are consistent with a Federal Railroad Administration report from last fall, which compared crude oil with denatured alcohol, another hazardous liquid transported by rail. The report cautioned against zeroing in on a single measurement in the quest for safety improvement:

“The data suggests that denatured alcohol may pose a greater risk of explosion than crude oil,” it declared.

“As such, using vapor pressure as a metric to identify potential hazards may not prove effective when considering real-world accident conditions involving tank cars loaded with flammable liquids.”

The facts on volatility are important because some believe that a single safety measure — a tank car design — will address rail transport safety. As then-PHMSA Administrator Cynthia Quarterman said last year, “Getting a new tank car is not a silver bullet; first we need to prevent derailments.”

The oil and natural gas industry has been leading the way for a comprehensive, holistic approach that includes three main thrusts: prevention, mitigation and response. On prevention, in addition to Quarterman, others agree — including the Brotherhood of Maintenance of Way Employees and the Railway Supply Institute, whose members build and own the majority of U.S. tank cars.

“The focus on accident prevention must forever remain the priority,” wrote Thomas Simpson, president of the Railway Supply Institute, in a Wall Street Journal letter to the editor:

“Forensic data from rail accidents shows that the forces involved are such that in many events, even the most aggressive of proposed new tank-car designs wouldn’t have totally eliminated the risk of a commodity release. Reductions in derailment frequency and severity are required to ensure that the billions of dollars to be spent on upgraded tank cars aren’t wasted. Shippers and rail-equipment suppliers don’t control the infrastructure or operating procedures used in transportation.

“An exclusive focus on tank-car design would represent a missed opportunity for real, fundamental safety improvements.

API President and CEO Jack Gerard underscored the need for a broad rail safety approach during a conference call with reporters that discussed a new first responders education course, developed jointly by the oil and natural gas and railroad industries:

“This is not a goal that can be reached through any single action or step,” he said. “Eliminating the last elements of risk requires a holistic and science-based approach to better prevent, mitigate and respond to derailments of trains carrying crude oil.”

First-responder training, which will be taught for the first time this weekend at a firefighters’ conference in Nebraska by instructors from BNSF and at the annual conference for short line railroads in Florida, is an example of industry advancing safety and preparedness, Gerard said. Industry has been and will remain engaged:

“I think our industry is very much engaged in this process,” he said.

“We’re leaders in improving in safety. We’re committed to safety, with zero incidents (as the goal).”

Air Quality, Bakken Crude, Clean energy, Crude By Rail, Derailment, Explosion, Fire, Oil Industry, Oil spill, Pipeline transport, Tar sands crude

Recent Grassroots Victories: Standing Against Big Oil’s Crude-by-Rail Push

Repost from NRDC Switchboard

Standing Against Big Oil’s Crude-by-Rail Push

By Franz Matzner, April 6, 2015

Franz MatznerOver the last few days, we’ve seen a series of grassroots victories that prove we’re not stuck with Big Oil’s plan to foist dangerous fossil fuel infrastructure on communities across the country.

Oil Train Fire.jpg
A March 5, 2015, oil train derailment on the banks of the Galena River in Illinois. (Environmental Protection Agency)

Just last week, TransCanada (of Keystone XL infamy) confirmed that it is dropping a marine crude oil export terminal in Quebec due to environmental concerns, a move that will delay the target opening date for the massive Energy East tar sands pipeline by at least two years.

Across the continent, Big Oil was also dealt two blows against its attempts to import extreme crudes into California by rail. In the face of strong community opposition, midstream oil company WesPac has abandoned its plan to build a rail terminal that would have brought dirty crude oil into the San Francisco Bay Area.

A few years ago, WesPac proposed a rail and marine terminal that would transport 242,000 barrels per day of crude oil–nearly a third of the capacity of Keystone XL–through Pittsburg, CA, a small community of 60,000 residents and then on to Bay Area refineries. The problems with WesPac’s proposal are myriad: it would expose Pittsburg’s population, largely communities of color and low-income communities, to the risks of exploding trains and increased air pollution, and it would require a massive investment in fossil fuel infrastructure at a time when we should be moving toward clean energy solutions.

The project was so ill-conceived that, following comments by NRDC and others, the California Attorney General wrote a letter finding “significant legal problems” with the project’s environmental review documents. Accordingly, the city decided to put the project on hold and revisit its environmental review process. That’s where things stood for over a year, until last week, when WesPac announced that it would drop the rail terminal aspect of the project altogether.

As community and environmental advocates have repeatedly pointed out, oil trains pose serious risks–risks that were highlighted by a series of fiery accidents over the last few weeks. (Notably, some recent accidents have involved Canadian tar sands crude, in addition to a bevy of dangerous mishaps involving North Dakota’s Bakken crude, which has long been known to be highly volatile and has been the culprit in most oil train disasters.)

This win in Pittsburg follows a recent decision by another Bay Area city, Benicia, to withdraw and revise its environmental review documents for a proposed crude-by-rail terminal at Valero’s Benicia refinery. As NRDC and others, including the California Attorney General, pointed out in legal comments, the terminal would pose serious safety and health threats to Benicia and to residents along the rail line. Momentum is also building against another crude-by-rail proposal up for consideration further south in San Luis Obispo County.

These victories show the power of local communities to stop Big Oil in its tracks.

The battle, however, is far from over: Valero is still trying to push forward with its rail terminal, and WesPac’s proposed marine terminal would have significant impacts on the fragile San Francisco Bay Delta and nearby residents. In fact, WesPac’s plans may still include the renovation of long-dormant storage tanks to stockpile large volumes of volatile crude oil, even though those tanks are literally a stone’s throw from homes, churches, and a school.

Train Map.jpg
The proposed WesPac project. (Draft Recirculated Environmental Impact Report, Figure 2-2)

Some critics have used the boom in crude oil trains as evidence that we should allow more pipelines. They offer the false choice of risk from pipelines or risk from oil trains. The truth is more sinister. Big Oil wants more of both. Pipelines and rail serve different geographic areas and often carry different types of oil. The problem is that both forms of transportation have risks, and both bring fossil fuels perilously close to our communities. Clean energy investments do the opposite: they eliminate the dangerous risks of spills and bomb trains, while cutting carbon pollution.

It’s time our elected leaders follow the example of communities across the country by saying “no” to Big Oil and “yes” to clean solutions that accelerate fuel efficiency, electric vehicles, clean fuels, and renewable energy such as solar and wind.

Franz A. Matzner is associate director of government affairs for the Natural Resources Defense Council. His policy background includes energy, climate, and forestry. He previously held the position of senior policy analyst for agriculture and the environment at Taxpayers for Common Sense (TCS). Matzner graduated Phi Beta Kappa from the University of Pennsylvania. He is co-author of the NRDC report “Safe At Home: Making the Federal Fire Safety Budget Work for Communities.”