Category Archives: Oil Industry

Bakken Crude, Benicia CA, Bridge safety, California, Crude By Rail, Derailment, Emergency Readiness & Response, Explosion, Fire, Hazmat notification, Massive increase in crude-by-rail, Oil Industry, Oil prices, Rail inspection, Valero Benicia Refinery, Valero Crude By Rail, Volatility

Crude oil train shipments dwindle in California, for now

Repost from The Sacramento Bee

Crude oil train shipments dwindle in California, for now

By Tony Bizjak, 03/11/2015 9:47 PM
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June.
A BNSF train carries Bakken crude oil in the hills outside the Feather River Canyon last June. Jake Miille / Special to The Bee

A year ago, California officials nervously braced for an influx of milelong trains carrying volatile crude oil to refineries in the Valley and on the coast – trains similar to the one that exploded two years ago in Canada, killing 47 people.

The trains never arrived. Although tank cars full of oil now roll daily through cities in the Midwest and East, provoking fears of crashes and fires, the number of oil trains entering California has remained surprisingly low, state safety regulators say, no more than a handful a month. In recent weeks, they appear to have dwindled to almost nothing.

The reasons appear to be mainly economic.

“Crude oil shipments from out of state have virtually stopped,” said Paul King, rail safety chief at the California Public Utilities Commission. “Our information is that no crude oil trains are expected for the rest of this month.”

Most notably, the BNSF Railway recently stopped running a 100-car train of volatile oil from the Bakken region of North Dakota through the Feather River Canyon and midtown Sacramento to the Bay Area. The trains, several a month, carried an estimated 3 million gallons of fuel each.

Bakken oil, a lighter type of crude, similar to gasoline, has gained a fearsome reputation since it entered the national scene a few years ago. A string of Bakken train explosions around the country prompted the federal government to issue a warning last year about the oil’s unusual volatility and launch efforts to write stiffer regulations on rail transport, including a proposal to require sturdier tank cars for oil.

Two more Bakken train derailments and explosive fires recently in West Virginia and Illinois triggered a new round of complaints that the federal government is dragging its heels in finalizing those regulations.

The BNSF train through Sacramento was believed to be the only train in California carrying 100 cars of Bakken oil. PUC rail safety deputy director King said his commission’s rail monitors have been told by owners of a Richmond oil transfer station in the Bay Area that refiners stopped the shipments in November as global oil prices dropped.

California Energy Commission fuels specialist Gordon Schremp said lower prices for other types of oil have made Bakken marginally less marketable in California, although that could easily change in the future.

Other projects, like a Valero Refining Co. plan to run two 50-car oil trains daily through Sacramento beginning this spring to its Benicia plant, have not yet gotten off the ground, in part because of political opposition. Under pressure from state officials, including Attorney General Kamala Harris, Benicia recently announced it is redoing part of its environmental and risk analysis of the Valero rail project. Valero has said it intends to ship lighter fuels, but has declined to say whether those will be Bakken.

State safety officials said the slowdown provides a bit more time to provide hazardous-materials training for more firefighters, as well as to put together a state rail-bridge inspection program and to upgrade disaster and waterway spill preparedness. But state officials said they still feel like they’re playing catch-up as they prepare for existing and future potential rail hazards.

“This apparent reprieve may seem helpful, but we still have substantial amounts of … hazardous materials traveling across California’s rail lines,” said Kelly Huston, deputy director of the state Office of Emergency Services. “It only takes one train to create a major disaster.”

Oil prices have begun rising again, and state officials say they expect Bakken shipments to Richmond and potentially elsewhere to be back on track at some point. “We don’t have any concrete info about when it will resume,” the PUC’s King said. “When prices come up, it is likely to resume, and that could be in months.”

Federal emergency rules require railroads to report to states when they run trains carrying more than 1 million gallons of Bakken crude, and then again when that amount changes by 25 percent or more. BNSF sent the state Office of Emergency Services a brief notice on Wednesday acknowledging it had not shipped more than 1 million gallons of Bakken on any train in the last week. The notice does not say how long ago the shipments stopped or when they may resume.

BNSF officials have contended in letters to the state that shipping information is proprietary and should be kept secret. A BNSF spokeswoman declined this week to discuss shipments with The Sacramento Bee, writing in an email, “Information regarding hazardous material shipments is only provided to emergency responders.”

King of the PUC said his monitors estimate that eight or more non-Bakken crude oil trains had been entering the state monthly from Canadian and Colorado oil fields recently, headed to refineries or transfer stations. The Canadian oil, called tar sands, is not considered as explosive as Bakken, but two tar-sands trains derailed and exploded in recent weeks in Ontario, creating fires that lasted several days.

The national concern about crude oil rail shipments follows a boom in domestic oil production, notably in North Dakota, where hydraulic-fracturing advances have freed up immense deposits of shale oil. Lacking pipeline access, North Dakota companies have turned to trains to ship the oil mainly to East and Gulf Coast refineries and to Washington state. Crude by rail shipments in the United States skyrocketed from 9,500 carloads in 2008 to 436,000 in 2013, according to congressional data.

California continues to produce a sizable amount of its own oil in Kern County and receives marine shipments from Alaska and foreign sources. Still, a recent state energy-needs analysis estimates the state could receive as much as 23 percent of its oil via train or barge from continental sources, including North Dakota, Canada, Texas and other Western states, in the coming years. That estimate is based on plans by refineries in Benicia, San Luis Obispo and Kern County to build rail facilities that can accommodate large crude transports.

Oil Industry, Oil prices, Oil producers, Tar sands crude

Tar Sands Going the Way of the Dodo? – Energy companies canceling tar sands projects

Repost from OneEarth.org

Are Tar Sands Going the Way of the Dodo?

Energy companies are canceling their tar sands projects.

By Brian Palmer | March 6, 2015
Photo: O.F.E.

Shell withdrew its application to extract tar sands from Canada’s Pierre River mine last week. The cancellation is news in itself, but the oil company’s decision to walk away from a massive seven-year project says a great deal about the viability of tar sands generally. Last year, the Canadian Association of Petroleum Producers cut its 2030 tar sands production forecast by 400,000 barrels per day. Last week, the energy consultancy Wood Mackenzie predicted that cash flows from tar sands would drop $21 billion in the next two years. The industry is undeniably shrinking.

Tar sands won’t disappear tomorrow, of course—most of the expense comes in opening the mine, so producers will keep operating their existing mines for several decades. New mines, however, are economically unfeasible. It’s difficult to break even in the tar sands business at current low oil prices. Over the medium term, the lack of pipeline access challenges any prospects for profitability. (That’s why the industry is so desperate for the Keystone XL and Energy East pipelines.) Looking deeper into the future, the specter of carbon taxation is enough to scare energy executives away.

All this is good news for the climate. Tar sands are the most carbon-intensive form of energy on the planet, emitting three or four times more greenhouse gas than conventional crude oil (which isn’t exactly good for the environment either). Here’s a brief rundown of all the canceled or deferred Canadian tar sands projects in recent months, and how much carbon they could have pumped into the atmosphere.

Pierre River Mine
Company: Shell
Stated reason for withdrawal: “Our current focus is on making our heavy oil business as economically and environmentally competitive as possible.”
Projected barrels per day: 225,000
Carbon saved from the atmosphere each day, in tons: 21,000

Corner Oil Sands Project
Company: Statoil
Stated reason for withdrawal: “Costs for labor and materials have continued to rise in recent years…Market access issues also play a role, including limited pipeline access.”
Projected barrels per day: 40,000
Carbon saved from the atmosphere each day, in tons: 3,700

Christina Lake Expansion
Company: MEG Energy
Stated reason for withdrawal: None given
Projected barrels per day: 150,000
Carbon saved from the atmosphere each day, in tons: 14,000

Narrows Lake
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 130,000
Carbon saved from the atmosphere each day, in tons: 12,200

Grand Rapids
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 180,000
Carbon saved from the atmosphere each day, in tons: 16,800

Telephone Lake
Company: Cenovus
Stated reason for withdrawal: None given
Projected barrels per day: 90,000
Carbon saved from the atmosphere each day, in tons: 8,400

MacKay River Expansion
Company: Suncor
Stated reason for withdrawal: “Cost management has been an ongoing focus…In today’s low crude price environment, it’s essential we accelerate this work.”
Projected barrels per day: 40,000
Carbon saved from the atmosphere each day, in tons: 3,700

Joslyn Mine
Company: Total
Stated reason for withdrawal: “Costs are continuing to inflate when the oil price and, specifically, the [net profit] for the oil sands are remaining stable at best—squeezing the margins.”
Projected barrels per day: 160,000
Carbon saved from the atmosphere each day, in tons: 15,000

* * *

Tally that up and these canceled or postponed projects represent nearly 95,000 tons of carbon dioxide staying in the ground rather than floating into the atmosphere. That’s the equivalent of taking 6.6 million cars off the road. Murmurs in the energy industry suggest that several other projects will soon be deferred or canceled, as oil prices show few signs of recovering. Stay tuned.

Bakken Crude, Crude By Rail, Derailment, Explosion, Fire, Oil Industry, Oil stabilization, Rail industry, Tank car design, Tar sands crude, Valero Benicia Refinery

EDITORIAL: Four explosive derailments in a month – how much longer?

By Roger Straw, Benicia Independent Editor, March 6, 2015

Yesterday afternoon, a multitude of news flashes broke out telling of yet another oil train derailment with fiery explosions, this time right alongside the Mississippi River outside Galena, Illinois.  The oil and rail industries escaped with another close call – no one was injured or killed this time and – so far – no reports of crude oil in the waters of the mighty Mississip.

The Galena accident is the fourth major derailment with hazmat fire in recent weeks!  (Dubuque, Iowa [2/4]; Gogama, Ontario [2/14]; Mount Carbon, West Virginia [2/16]; and Galena, Illinois [3/5]).  (LATER: now there have been five: a second derailment and explosion in  Gogama Ontario, [on 3/7], just 23 miles from the 2/14 fire.  – Editor)

There WILL be more.  The question everyone is asking: whose lives are at risk right now in schools and hospitals, commercial centers, apartment complexes and homes in the mile-wide evacuation zones along the rails that crisscross the country?  If Valero’s Benicia refinery is granted a permit and hires Union Pacific to run oil trains over the Sierra and across the state of California to Benicia, whose cozy little town uprail from here will be host to the next “Big One?”  Or if we’re “lucky,” what California wilderness will be the next to endure the foul spills and the consuming fires of an explosive oil train crash?

And who will pay for lives and property lost, for infrastructure repairs and the massive cleanup?

Oddly perhaps, my thoughts turned gently this morning to those refinery executives who have invested so much time and energy in planning for and implementing the rail transport of North American oil – Bakken crude and tar-sands (diluted bitumen).  I’m trying to imagine what it must be like for these decent career employees to eagerly wake up to a good cup of coffee and the morning news … only to be jolted once again as their tv shows video of yet another horrific oil train explosion.  It must be disheartening.  How, with every news outlet all across the U.S. paying attention to the need for safer tank cars with stabilized contents (and more) – how difficult for oil industry execs to begin to realize the folly of their plans.  It must be like learning there’s no Santa Claus.  Or like a nation having to decide to back out of a Vietnam war.  It can’t be easy.  But I dare to hope that some executive somewhere is going to make a decision soon: this has to stop.  He or she can swallow that cup of coffee, take a deep breath, and lead the way.  No more.  Not here.  Not me.  Not our company.

I wonder, too, about those who govern.  Why should our officials continue to allow the use of those old failing rails, aging bridges and dangerous tank cars to carry volatile chemicals today?  How much longer until our local, state and federal leaders call an end to this dangerous and polluting practice?  When will they stop trying to fix the system with minor safety upgrades and call a moratorium until the whole thing is worked out to protect the public’s health and safety?

What started out here in Benicia in early 2013 as a small, alert group of us who were concerned for the earth; an effort to take no part locally in the stripping of lands and environments in Alberta Canada and Montana and the Dakotas; and an understanding of the facts indicating the certain increase in toxic emissions affecting our air and water if Valero would move to crude by rail … these early concerns of ours were “blown away” (as it were), by the explosions, by the frightening and repeated demonstrations of the incredible risks of transporting volatile North American crude oil by rail and by the lack of adequate safeguards of a rail industry that cannot be controlled locally or regionally.

Our federal regulators MUST stand up to the industries and put an immediate stop to these bomb trains.  Until new regulations are in place to stabilize the oil before it is loaded, and until a totally new design for safer tank cars is approved and manufactured, and until the infrastructure that carries those new cars is upgraded, we should not have to live with the deadly risk.

Our resources would be better spent during a moratorium on crude by rail funding a massive increase in investment in clean energy.  Someone needs to put serious effort into planning a 5 or 10 year phase-out of fossil fuels.  Ok, 20.  It would be cataclysmic to just STOP the flow of oil and gasoline.  Even so, I think we’d survive it.  Someone should think it through carefully, and lay it out in steps that lead surely and safely away from crude oil … by rail or by any other means.

– Benicia Independent Editor, Roger Straw

California Regulation, Fracking, Oil Industry, Water quality

Hundreds of illicit oil wastewater pits found in Kern County

Repost from The Los Angeles Times
Editor: See also LA Times follow-up stories: 2/27/15, Who’s behind the chemical-laden water pits in Kern County? and 2/28/15 Jerry Brown must enforce California’s environmental laws.   

Hundreds of illicit oil wastewater pits found in Kern County

By Julie Cart,   2/26/15 10:10PM
Oil wells
Pits containing production water from oil wells in Kern County. (Brian van der Brug / Los Angeles Times)

Water officials in Kern County discovered that oil producers have been dumping chemical-laden wastewater into hundreds of unlined pits that are operating without proper permits.

Inspections completed this week by the Central Valley Regional Water Quality Control Board revealed the existence of more than 300 previously unidentified waste sites. The water board’s review found that more than one-third of the region’s active disposal pits are operating without permission.

The pits raise new water quality concerns in a region where agricultural fields sit side by side with oil fields and where California’s ongoing drought has made protecting groundwater supplies paramount.

Clay Rodgers, assistant executive officer of the water board’s Fresno office, called the unregulated pits a “significant problem” and said the agency expects to issue as many as 200 enforcement orders.

State regulators face federal scrutiny for what critics say has been decades of lax oversight of the oil and gas industry and fracking operations in particular. The Division of Oil, Gas and Geothermal Resources has admitted that for years it allowed companies to inject fracking wastewater into protected groundwater aquifers, a problem they attributed to a history of chaotic record-keeping.

“The state doesn’t seem to be willing to put the protection of groundwater and water quality ahead of the oil industry being able to do business as usual,” said Andrew Grinberg of the group Clean Water Action.

The pits — long, shallow troughs gouged out of dirt — hold water that is produced from fracking and other oil drilling operations. The water forced out of the ground during oil operations is heavily saline and often contains benzene and other naturally occurring but toxic compounds.

Regional water officials said they believe that none of the pits in the county have linings that would prevent chemicals from seeping into groundwater beneath them. Some of the pits also lack netting or covers to protect migrating birds or other wildlife.

Currently, linings for pits are not required, though officials said they will consider requiring them in the future. Covers are mandated in some instances.

The pits are a common site on the west side of Bakersfield’s oil patch. In some cases, waste facilities contain 40 or more pits, arranged in neat rows. Kern County accounts for at least 80% of California’s oil production.

The facilities are close to county roads but partially hidden behind earthen berms. At one pit this week, waves of heat rose from newly dumped water, and an acrid, petroleum smell hung in the air.

Rodgers said Thursday that the agency’s review found 933 pits, or sumps, in Kern County. Of those, 578 are active and 355 are not currently used.

Of the active pits, 370 have permits to operate and 208 do not. All of the pits have now been inspected, he said.

The possible existence of hundreds of unpermitted pits came to light when regional water officials compared their list of pit operators to a list compiled by the Division of Oil, Gas and Geothermal Resources. The oil regulator’s list contained at least 300 more waste pits than water officials had permitted, Rodgers said.

His staff began inspecting the wastewater sites in April. Initial testing of water wells has not revealed any tainted water, he said.

The pits are an inexpensive disposal method for an enormous volume of water that is forced out of the ground during drilling or other operations, such as fracking. Rodgers said that just one field, the McKittrick Oil Field, produces 110,000 barrels of wastewater a day. According to figures from 2013, oil operations in Kern County produce 80 billion gallons of such wastewater — an amount that if clean would supply nearly a half-million households for a year.

More than 2,000 pits have been dredged over decades of oil operations in Kern County, according to water board records. Oil field companies have not always properly disposed of water, Rodgers said. As recently as the 1980s, it was customary to dump wastewater into drainage canals that line the San Joaquin Valley’s agricultural fields.

But using unlined pits to dispose of wastewater is becoming less common. Some states ban the practice, and many in the oil and gas industry do not consider it effective.

The water board’s long-term plan to address the problem includes requiring remediation of some abandoned pits so that contaminants left behind don’t pollute the air, Rodgers said.

In pits located near clean water sources, Rodgers said, operators will be required to install monitor wells to test water quality. The companies will pay for the testing and provide the results to water officials.

The water board will publish a series of general orders that he said will more tightly control the operation of wastewater pits.

“Our goal is to protect water quality,” Rodgers said. “Our goal is not to shut anybody down, but by the same token, they do not own the waters beneath them. Those waters are for the public good.”