Category Archives: Oil prices

Crude By Rail, Empty tank cars, Federal Regulation (U.S.), Freedom of Information Act (FOIA), Hazardous cargo transparency, High Hazard Flammable Trains (HHFTs), North American light crude oils, Oil prices, Open-records request, Parked trains, Rail industry, Residue train

Held up in court for a year, Maryland oil train reports outdated

Repost from McClatchyDC

Held up in court for a year, Maryland oil train reports outdated

By Curtis Tate, September 12, 2015

HIGHLIGHTS
•  McClatchy received reports it asked for in 2014
•  Documents contained data previously revealed
•  Economics of crude by rail have shifted since

After more than a year, McClatchy finally got the oil train reports it had requested from Maryland.

And they were badly out of date.

Last year, McClatchy filed open-records requests in about 30 states for the documents, and was the first news organization to do so in Maryland, in June 2014.

Maryland was poised to release the records in July 2014, when two railroads, CSX and Norfolk Southern, sued the state Department of the Environment to block the disclosure.

Finally last month, a state judge ruled in the favor of the release, marking the first time a court had affirmed what many other states had already done without getting sued.

The documents McClatchy and other news organizations ultimately received were dated June 2014, not long after the U.S. Department of Transportation began requiring the railroads to notify state officials of shipments of 1 million gallons or more of Bakken crude oil.

After more than a year, however, the economics of shipping crude by rail had changed substantially.

Amid a slump in oil prices, refineries once receiving multiple trainloads of North American crude oil every day have switched, at least temporarily, to waterborne foreign imports.

The trend is reflected from the East Coast to the West Coast, where long strings of surplus tank cars have been parked on lightly used rail lines, generating rental income for small railroads but also the ire of nearby residents.

The documents released in Maryland show that in June 2014, Norfolk Southern was moving as many as 16 oil trains a week through Cecil County on its way to a refinery in Delaware.

But McClatchy has known that since August 2014, when it received a response to a Freedom of Information Act request from Amtrak.

The Delaware News Journal reported that the PBF Refinery in Delaware City, Del., now receives only about 40,000 barrels a day of crude by rail. That’s about 56 loaded tank cars, or half a unit train, nowhere close to the volume of mid-2014.

The June 2014 Maryland documents also show that CSX was moving as many as five oil trains a week on a route from western Maryland through downtown Baltimore toward refineries in Philadelphia.

But that had been clear since at least October 2014, when the Pennsylvania Emergency Management Agency released its oil train reports showing an identical number of CSX trains crossing from western Pennsylvania into Maryland, then back into southeast Pennsylvania.

CSX told the Baltimore Sun that it had not regularly moved a loaded oil train through Baltimore since the third quarter of 2014. The company had earlier told the newspaper that it moved empty oil trains through the city and state.

Federal regulators never required railroads to report empty oil train movements.

The vast majority of loaded CSX oil trains move to Philadelphia via Cleveland, Buffalo, Albany, N.Y., and northern New Jersey, according to records from Ohio, Pennsylvania and New York.

Bakken Crude, Crude By Rail, Derailment, Explosion, Federal Regulation (U.S.), Oil prices, Pipeline transport, Rail Safety

Bakken crude: Could pipelines replace the need for oil-by-rail?

Repost from Marcellus.com
[Editor: Significant quote by Rusty Braziel, analyst with RBN Energy: “By 2017 there should be enough pipelines to carry all North Dakota’s crude to market.”  See also “ND shipping only 47% of Bakken crude by train in June” – RS]

Bakken crude: Could pipelines replace the need for oil-by-rail?

By Zach Koppang, August 14, 2015
Image: Mary Schimke / Shale Plays Media
Image: Mary Schimke / Shale Plays Media

The transportation of Bakken crude is beginning to shift away from the railways and into pipelines as production levels off in the wake of last year’s price collapse and more oil and gas pipelines are brought online.

Rusty Braziel, analyst with RBN Energy, explained, “Since 2012 a combination of rail and pipeline has given Bakken producers ample crude takeaway capacity, but pipelines alone have not had sufficient capacity on their own.” Though, as production maintains a consistent rate, pipeline capacity is beginning to catch up. Braziel added, “By 2017 there should be enough pipelines to carry all North Dakota’s crude to market.”

Last week Continental Resources reported that it now ships over two-thirds of its Bakken crude by pipeline, reports Reuters. In the second quarter 2015, the company, North Dakota’s second-largest producer, pushed approximately 160,000 barrels of crude per day through Kinder Morgan owned pipelines. For comparison, it shipped nearly all of its oil by train in 2014. During a conference call, Continental CFO John Hart said, “Approximately 70 percent of our Bakken production is now delivered to market via pipeline.”

Director of RBN Energy Analytics Sandy Fielden said, “As soon as price differentials – especially between domestic benchmark West Texas Intermediate (WTI) and international benchmark Brent – narrowed, then barrels shifted back to pipelines to take advantage of their cheaper tariff rates. Yet significant crude volumes continued to be transported to market from North Dakota by rail because pipeline capacity could not handle the demand.” Recently, however, the planning and construction of new pipelines throughout the region has substantially increased overall shipping capacity, threatening the once booming business of BNSF Railway and others.

The trend is becoming more common as oil producing states, North Dakota included, begin to rely more heavily on pipelines rather than rail transport, which is vulnerable to weather, construction delays and bottlenecks. Transporting oil-by-rail has also become heavily scrutinized following a series of explosive, and sometimes deadly, oil train derailments. The most notable incident occurred in Lac-Megantic, Quebec, where a runaway oil train derailed and killed 47 people. The frequency and severity of derailments has led to increased scrutiny and regulation, much to the dismay of the rail industry.

As reported by Reuters, oil-by-rail shipments have decreased throughout the country by 13 percent in the past year, according to the latest American Association of Railroads data. Also indicative of the decreased interest in crude-by-rail shipments, and the far-reaching effects of the oil price decline, are the recent job cuts at one of the state’s largest rail transloading facilities.

However, Fielden explains, “Just because pipeline capacity is available doesn’t necessarily mean producers will prefer to use that capacity instead of rail.” Over 1 million barrels of oil per day continue to ride U.S. railways en route to refineries on the east and west coasts. Tesoro and BP, for example, opt to receive oil via rail due to the flexibility of the supply contracts when compared to pipeline shipments.

The RBN analysis reports that in theory, as new pipeline projects come online, all Bakken crude could be shipped to market via pipeline. Projects due to begin operating by the end of 2016 and throughout 2017 will expand takeaway capacity by 680,000 barrels per day. Fielden said, “The planning and buildout of a series of new pipelines out of North Dakota that (if they are all built) should increase capacity enough to provide space for all the barrels currently traveling to market from North Dakota by rail.”

Bakken Crude, Crude By Rail, Derailment, Federal Regulation (U.S.), Iranian oil, Oil exports, Oil imports, Oil prices

Iran agreement could spell end to limits on U.S. oil imports

Repost from Minuteman News, New Haven, CT

Iran agreement could spell end to limits on U.S. oil imports

By Emily Schwartz Greco,  July 29, 2015

What a relief. In exchange for Iran taking steps to guarantee that it can’t build nuclear weapons, the sanctions that have choked off its access to world markets will end without a single shot.

Instead of celebrating this diplomatic breakthrough, conservative lawmakers are plotting to scuttle the pact. And despite their opposition, some Republicans are milking this accord for a pet project: ending all limits on U.S. crude sales.

“Any deal that lifts sanctions on Iranian oil will disadvantage American companies unless we lift the antiquated ban on our own oil exports,” Alaska Senator Lisa Murkowski declared a few weeks back.

It’s an enticing argument. Why should Washington help Iran freely sell its oil while denying the U.S. industry the same liberty?

Well, the ban is already punctured. The United States, which imports 7 million barrels a day of crude, also exports half a million barrels of it every 24 hours.

And most of that oil goes straight to Canada by rail or gets hauled to ports by trains after getting extracted from North Dakota’s landlocked Bakken fields.

Remember that oil train that derailed two years ago in the Quebec town of Lac Megantic, unleashing an inferno that burned for four days and killed 47 people? It was ferrying exported Bakken crude.

Smaller accidents are happening too. Most recently, an oil train derailed near the tiny town of Culbertson, Montana, spilling thousands of gallons of oil from North Dakota.

Ramping up exports would only boost the chances of a major disaster, Oil Change International Executive Director Steve Kretzmann says.

That’s why the restrictions, imposed by Congress during Gerald Ford’s presidency to boost energy independence, should remain unless the government creates better safeguards.

Besides, Iranian oil sales won’t begin bouncing back until early next year at the soonest as diplomats must first verify compliance with nuclear obligations. But there’s no doubt that more crude will eventually gush from that Middle Eastern country.

Prior to the 1979 revolution that brought a theocratic government to power, Iran was exporting 6 million barrels a day — quadruple current levels. By 2008, amid lighter sanctions, it was only shipping 3 million barrels a day overseas. Seven years later, that figure has been halved again.

Iran’s got between 30 and 37 million barrels stored and ready to sell before it even re-starts wells that were shut down when sanctions tightened. As Iran sits atop some 158 billion barrels of oil, the world’s fourth-largest reserves, its potential is huge.

Will American companies, which can freely export value-added oil products like gasoline, lose out if they can’t ship more crude overseas? Not really.

Money spent beefing up infrastructure could be wasted if Iran dislodges new markets. Nixing export restrictions could boost production by half a million barrels daily, but many North American wells won’t make financial sense if the Iran gusher adds to the global glut responsible for slashing oil prices over the past 12 months.

Goldman Sachs analysts expect U.S. oil prices to hover around today’s $50-a-barrel mark for at least another year. If they’re right, many North Dakota and Texas fracking sites won’t be viable anyway.

And why are prices slumping? Domestic output has nearly doubled under President Barack Obama’s leadership to 9.7 million barrels a day. The United States now drills more oil than Saudi Arabia despite the White House’s calls for climate action.

While the leaky ban does chip away at U.S. prices, it’s not as if the Obama years have been a bust for oilmen.

And regardless of whether the industry gets the freedom Murkowski seeks, the United States, Iran, and the rest of the world must figure out how to get by on less oil.

Columnist Emily Schwartz Greco is the managing editor of OtherWords, a non-profit national editorial service run by the Institute for Policy Studies.
Agricultural waste, Biofuels, Federal Regulation (U.S.), Household trash, Jet fuel, Oil prices, Renewable diesel, Research and development

Why Airlines Keep Pushing Biofuels: They Have No Choice

Repost from The New York Times

Why Airlines Keep Pushing Biofuels: They Have No Choice

By  Jonathan Fahey & Scott Mayerowitz, AP Business, July 21, 2015, 12:52 P.M. E.D.T.
FILE - In this Jan. 30, 2009 file photo, a Japan Air Lines staffer checks the biofuel-loaded No. 3 engine of Japan Airlines Boeing 747-300 before a demo flight at Tokyo International Airport in Tokyo. Using blend of 50 percent biofuel and 50 percent traditional Jet-A jet (kerosene) fuel, JAL conducted an hour-long demonstration flight. Many in the industry believe that without a replacement for jet fuel, growth in air travel could be threatened by forthcoming rules that limit global aircraft emissions. Photo: Itsuo Inouye, AP / AP
FILE – In this Jan. 30, 2009 file photo, a Japan Air Lines staffer checks the biofuel-loaded No. 3 engine of Japan Airlines Boeing 747-300 before a demo flight at Tokyo International Airport in Tokyo. Using blend of 50 percent biofuel and 50 percent traditional Jet-A jet (kerosene) fuel, JAL conducted an hour-long demonstration flight. Many in the industry believe that without a replacement for jet fuel, growth in air travel could be threatened by forthcoming rules that limit global aircraft emissions. Photo: Itsuo Inouye, AP / AP

NEW YORK — The number of global fliers is expected to more than double in the next two decades. In order to carry all those extra passengers, airlines are turning to a technology very few can make work on a large scale: converting trash into fuel.

They have no other choice.

As people in countries such as China, India and Indonesia get wealthier they are increasingly turning to air travel for vacation or business, creating an enormous financial opportunity for the airlines. The number of passengers worldwide could more than double, to 7.3 billion a year, in the next two decades, according to the International Air Transport Association.

But many in the industry believe that without a replacement for jet fuel, that growth could be threatened by forthcoming rules that limit global aircraft emissions.

“It’s about retaining, as an industry, our license to grow,” says Julie Felgar, managing director for environmental strategy at plane maker Boeing, which is coordinating sustainable biofuel research programs in the U.S., Australia, China, Brazil, Japan and the United Arab Emirates.

Cars, trucks and trains can run on electricity, natural gas, or perhaps even hydrogen someday to meet emissions rules. But lifting a few hundred people, suitcases and cargo 35,000 feet into the sky and carrying them across a continent requires so much energy that only liquid fuels can do the trick. Fuel from corn, which is easy to make and supplies nearly 10 percent of U.S. auto fuel, doesn’t provide enough environmental benefit to help airlines meet emissions rules.

“Unlike the ground transport sector, they don’t have a lot of alternatives,” says Debbie Hammel, a bioenergy policy expert at the Natural Resources Defense Council.

That leaves so-called advanced biofuels made from agricultural waste, trash, or specialty crops that humans don’t eat. United Airlines last month announced a $30 million stake in Fulcrum Bioenergy, the biggest investment yet by a U.S. airline in alternative fuels. Fulcrum hopes to build facilities that turn household trash into diesel and jet fuel.

FedEx, which burns 1.1 billion gallons of jet fuel a year, promised Tuesday to buy 3 million gallons per year of fuel that a company called Red Rock Biofuels hopes to make out of wood waste in Oregon. Southwest Airlines had already agreed to also buy some of Red Rock’s planned output.

These efforts are tiny next to airlines’ enormous fuel consumption. U.S. airlines burn through 45 million gallons every day. But airlines have little choice but to push biofuels because the industry is already in danger of missing its own emissions goals, and that’s before any regulations now being considered by the U.S. Environmental Protection Agency and international agencies.

The industry’s international trade group has pledged to stop increasing emissions by 2020 even as the number of flights balloons. By 2050, it wants carbon dioxide emissions to be half of what they were in 2005.

Like airlines, the U.S. military is also supporting development of these fuels for strategic and financial reasons. For biofuels makers, it is a potentially enormous customer: The military is the biggest single energy consumer in the country.

Making biofuels at large, commercial scale is difficult and dozens of companies have gone belly up trying. The logistics of securing a steady, cheap supply of whatever the fuel is to be made from can take years. Financing a plant is expensive because lenders know the risks and demand generous terms. A sharp drop in the price of crude oil has made competing with traditional fuels on price more difficult.

The airlines are now seeing some of these difficulties up close. A United program to power regular flights between Los Angeles and San Francisco with fuels made from agricultural waste was delayed when the fuel producer, AltAir, had trouble retrofitting the existing refinery. The companies now say the flights should begin in August. Red Rock’s planned deliveries to Southwest have also been pushed back, to 2017 from 2016, and construction of the plant has not yet started.

But many in the industry say they are not surprised, or daunted, by the time and effort it will take to bring large amounts of biofuels, at competitive prices, to market.

“We really are trying to create a brand new fuel industry,” says Boeing’s Felgar. “We’ve always known this is a long term play, and our industry is long term.”

And if any industry is going to crack fuel from waste on a big scale, the airline industry might be the best bet.

Instead of having to build the infrastructure to distribute and sell these fuels at hundreds of thousands of gas stations, jet fuel only has to be delivered to a small number of major airports. For example, nearly half of United’s passengers fly through its five hubs in Houston, Chicago, Newark, San Francisco and Denver.

Still, after the many disappointments that have plagued biofuel development, few want to promise an imminent biofuel revolution. “I’m not Pollyannaish about this,” says Felgar. “I’m not optimistic, I’m not pessimistic, but I’m determined.”