Category Archives: Oil storage

Bakken Crude, Crude Oil, Keeping Watch on Earth News, Local land use authority, Local Regulation, Local vigilance, Oil storage, Oil terminal location, Oil trains, Tar sands crude

Washington Agency Votes to Reject Massive Oil-by-Rail Terminal

Repost from DeSmogBlog

Washington Agency Votes to Reject Vancouver Energy’s Massive Oil-by-Rail Terminal

By Justin Mikulka • Wednesday, November 29, 2017 – 10:29
Portland, Oregon, bridge with banner reading 'Coal oil gas none shall pass'
Portland, Oregon, bridge with banner reading ‘Coal oil gas none shall pass’

In another major blow to the West Coast oil-by-rail industry, a Washington state agency voted unanimously to recommend Governor Jay Inslee reject the Vancouver Energy oil terminal. Proposed for construction in Vancouver, Washington, along the Columbia River, it would be the largest oil-by-rail facility in the country.

Washington State’s Energy Facility Site Evaluation Council (EFSEC) has been reviewing the project since 2013 — reportedly the longest review period ever for the council. However, its November 28 meeting and vote on the final recommendation for the Tesoro Savage–backed project only took 10 minutes.

“Given the reality of climate change, there is simply no reason to build new fossil fuel infrastructure, especially for the export of extreme oil,” said Matt Krogh of activist group Stand, one of many groups opposing the Vancouver Energy project. “The entire reason behind this proposal was to move crude oil from the middle of North America to overseas markets. Simply put, this oil is not for us — and the proposal would leave every single community along the rail lines with all of the risk and none of the reward.”

Vancouver Energy told Oregon Public Broadcasting that the council has “set an impossible standard” for new energy facilities in Washington.

Proposed by Tesoro Savage Petroleum Terminal LLC (also known as Vancouver Energy), the facility is designed to handle 360,000 barrels of oil per day. Expectations are that the facility would receive both the highly volatile light Bakken oil as well as Canadian tar sands oil, with much of it traveling through the Columbia River Gorge. In 2016 an oil train derailed and caught fire in Mosier, Oregon, with some of the oil ending up in the Columbia River, which has already been suffering major declines of its once-historic salmon populations.

Map of proposed Vancouver Energy oil by rail terminal on the Columbia River
A map of the proposed facility from its Final Environmental Impact Statement. Credit: Tesoro Savage Vancouver Energy Distribution Terminal Facility

Despite lower oil prices, U.S. imports of Canadian tar sands oil reached record levels in 2017 and are currently at 3.3 million barrels per day. More of that oil has been moving by rail recently, and as overall tar sands production continues to rise, industry observers predict large potential increases in shipping more of it by rail over the next several years.

Rich Kruger, CEO of tar sands producer Imperial (the Canadian affiliate of ExxonMobil), recently commented on how rail was becoming more attractive as a way to get oil to America.

“Rail is increasingly competitive,” Kruger told Bloomberg. “There are times when we look at the pipeline alternative, [but] the variable cost aspect of rail is a more attractive means for us to get to the mid-Western or Gulf coast markets.”

West Coast Oil-by-Rail Plans

Should Washington Governor Inslee, who has 60 days to make a final decision, follow the recommendation to reject the Vancouver Energy oil terminal, it would throw a major wrench in oil industry plans for Canadian tar sands and Bakken oil in the West. As DeSmog reported in June, oil-by-rail remains part of the industry’s long-term plans to get oil to West Coast refineries.

If Governor Inslee stops this project, it will join the growing list of oil terminals in the West rejected after intense local opposition. Earlier this month a California court ruled that an oil refinery and rail project in Bakersfield could not proceed because its environmental review was inadequate.

Earlier this year the Washington Supreme Court voted unanimously to deny an oil-by-rail project in Grays Harbor because that project lacked a comprehensive environmental review that considered the Ocean Resources Management Act.

Also in 2017, a proposed Phillips 66 oil-by-rail project in California was voted down by the San Luis Obispo County planning commission. In 2016 the city council in Benicia, California, voted unanimously to reject Valero’s proposed oil-by-rail project.

Growing awareness of the risks of oil train terminals has led many communities where they are proposed to back away from such projects.

Local Election Was Proxy Vote on Vancouver Oil Terminal

Because Vancouver Energy’s proposed oil-by-rail facility is sited in the Port of Vancouver, a recent electoral race for one of the port commission’s three seats became a proxy fight over the oil terminal.

The race was between Don Orange, owner of a local auto repair shop and opponent of the oil-by-rail project, and Kris Greene, an insurance agent who was backed by large amounts of money from oil and rail corporations. Oregon Public Broadcasting reported Greene raised “nearly $600,000, with 87 percent coming from Vancouver Energy and backers of the project” and also received support from a PAC, funded in part by rail company BNSF and Tesoro, which spent $160,000.

However, Orange also raised close to $400,000, with considerable support coming from the Washington Conservation Voters Action Fund.

Orange thought there was little question why so much money was pouring into a local election for a seat on a commission that pays around $10,000 a year.

“This is a choice of what our economy should look like,” said Orange. “It is a choice of having a vibrant small business economy or becoming a big oil town.”

The election’s results showed how the majority of the community felt about the oil-by-rail project: despite being outspent by Greene, Orange won over 64 percent of the vote.

Current port commissioner Eric LaBrant was shocked by the results, saying, “I’ve never seen anything like this in local politics … This election shows where the community wants to go and what kind of business the community wants to have there at the port.”

Still, the final decision on the oil terminal lies with the governor, and even then, the door remains open for either side to take legal action.

Main image: People’s Climate March PDX Credit: David Sierralupe, CC BY 2.0

 

Crude By Rail, Marine transport, Oil storage

GRAYS HARBOR WA: Beware Westway’s oil terminal ambitions

Repost from Sightline Institute

GRAYS HARBOR SHOULD BEWARE WESTWAY’S OIL TERMINAL AMBITIONS

A new Sightline report exposes the company’s troubled history.

By Eric de Place, May 24, 2016 at 6:30 am
Oil train, by Russ Allison Loar, cc.
Oil train, by Russ Allison Loar, cc.

A little-known company called Westway has big aspirations in the Pacific Northwest. If the firm gets its way, it will build and operate an oil terminal on the shores of Grays Harbor, Washington, that will bring in large quantities of crude oil by rail, store it in tanks on the shoreline, and ship it out of the bay in tanker vessels. Although Westway’s proposal has generated enormous controversy in the region, the company’s track record and financial underpinnings have gone largely unstudied.

A new report by Sightline Institute, The Facts about Westway, offers an overview of the company and its plans in the Northwest.

The Louisiana-based company has much to prove to the community. Many Grays Harbor residents, including the Quinault Indian Nation, worry about the risk of an explosive oil train derailment or a crude oil spill. It’s a reasonable concern, given Westway’s litany of safety violations, including failing to report a hazardous spill at an Illinois facility. These incidents raise serious questions about whether the company can be trusted to safely operate a large crude oil terminal in the Northwest. The company has made matters worse by attempting to short-circuit Washington’s legal permitting and review processes. Sightline’s research also shows that the project rests on shaky finances: Westway has a “junk” bond rating in part owing to the company’s missteps at Grays Harbor.

What happens with Westway’s oil terminal may have lasting effects on Grays Harbor. If the project goes ahead, the community would live for decades with large quantities of crude oil—brought in by train, stored on the shoreline, and moved out of the bay in tanker vessels—that could jeopardize the region’s economic and ecological health. Before proceeding, the public would be wise to scrutinize the company carefully.

Read Sightline’s full report, The Facts about Westway.

Alberta Canada, Bitumen, Emergency Readiness & Response, Oil Industry, Oil producers, Oil storage, Pipeline infrastructure, Tar sands crude, Wildfire

BLOOMBERG: Alberta Wildfire Risk Seen Biggest for Storage Tanks, Equipment (map)

Repost from Bloomberg

Alberta Wildfire Risk Seen Biggest for Storage Tanks, Equipment

Alex Nussbaum, May 6, 2016 — 2:25 PM PDT
  • Blaze reaches gates of Cnooc’s Long Lake, official says
  • Oil sands unlikely to burn but equipment, chemicals at risk

“It seals itself off,” he said in a telephone interview. “You can find records of natural wildfires in these deposits for centuries and none of them have produced a situation where you have an extended fire.”

Royal Bank of Canada estimated that as much as 1 million barrels a day of production was shut because of the blaze, or about 40 percent of oil sands output, as companies including Suncor Energy Inc., Cnooc’s Nexen, Royal Dutch Shell Plc, and ConocoPhillips reduce production and open work camps to residents escaping blazes in Alberta’s biggest-ever evacuation. Inter Pipeline Ltd. shut part of its system in the province. The disruptions pushed up the price of oil sands crude.

“Eighty percent of the oil sands are located deep underground and can only be extracted through an in-situ drilling process,” Chelsie Klassen, a spokeswoman for the Canadian Association of Petroleum Producers, said in an e-mail on Thursday. “The remaining 20 percent is mineable from the surface and predominantly located north of Fort McMurray. Hydrocarbons can burn under the right conditions, however oil sands would burn at a much slower pace considering its composition with sand.”

"Rolling storage", Crude By Rail, Fracking, Insurance and liability, North American light crude oils, Oil storage, Rail Safety, Rail tank cars, Shale oil

WALL STREET JOURNAL: The New Oil-Storage Space: Railcars

Repost from the Wall Street Journal

The New Oil-Storage Space: Railcars

U.S. market is so oversupplied with oil that traders are experimenting with a new place for storing excess crude
By Nicole Friedman and Bob Tita, Feb. 28, 2016 9:09 p.m. ET
Rail tanker cars sat on tracks at the Red River Supply Inc. rail yard in Williston, N.D., in February 2015.
Rail tanker cars sat on tracks at the Red River Supply Inc. rail yard in Williston, N.D., in February 2015. PHOTO: DANIEL ACKER/BLOOMBERG NEWS

The U.S. is so awash in crude oil that traders are experimenting with new places to store it: empty railcars.

Thousands of railcars ordered up to transport oil are now sitting idle because current ultralow crude prices have made shipping by train unprofitable. Meanwhile, traditional storage tanks are running out of room as U.S. oil inventories swell to their highest level since the 1930s.

Some industry participants are calling the new practice “rolling storage”—a landlocked spin on the “floating storage” producers use to hold crude on giant oil tankers when inventories run high.

The combination of cheap oil and surplus railcars has created a budding new side business for traders. J.P. Fjeld-Hansen, a managing director for trading company Musket Corp., tested using railcars for storage last year and found he could profit by putting the oil aside while locking in a higher price to deliver it in a later month.

The company built a rail terminal in Windsor, Colo., in 2012 to load oil shipments during a boom in U.S. oil production. Now, Mr. Fjeld-Hansen says, “The focus has shifted from a loading terminal to an oil-storage and railcar-storage business.”

Energy Midstream, a trading company based in The Woodlands, Texas, stored an ultralight oil known as condensate on Ohio railcars last month for about 15 days before shipping it to a buyer in Canada.

Dennis Hoskins, a managing partner at Energy Midstream, says there are so many unused tank cars that he is constantly hearing from railcar owners hoping to put them to use. “We get offers everyday for railcars,” he said.

The use of railcars for storage could be limited by the cost of track space and safety and liability concerns that have followed a string of high-profile transport accidents. Issues range from leaky cars to the risk of collisions and fires.

Federal regulations require railroads that store cars loaded with hazardous materials like oil to comply with strict storage and security measures to keep the cars away from daily rail traffic. Railroads and users face responsibility for leaks, collisions or other mishaps.

“I don’t want the liability,” said Judy Petry, president of Oklahoma rail operator Farmrail System Inc. “We prefer not to hold a loaded car.”

Still, the oil has to go somewhere. The surge in shale-oil production has created a massive glut that the industry is struggling to absorb. BP PLC Chief Executive Bob Dudley joked in a speech this month that by midyear, “every storage tank and swimming pool in the world will be filled with oil.”

Khory Ramage, president of Ironhorse Permian Basin LLC, which operates a rail terminal in Artesia, N.M., said he hears regularly from traders looking to store crude in his railcars.

Crude-storage costs “have been accelerating, just due to the demand for it and less room,” he said. “You’ll probably start seeing this kick up more and more.”

U.S. crude inventories rose above 500 million barrels in late January for the first time since 1930, according to the Energy Information Administration.

The cheapest form of storage—underground salt caverns—can cost 25 cents a barrel each month, while storing crude on railcars costs about 50 cents a barrel and floating storage can cost 75 cents or more. The cost estimates don’t include loading and transportation.

Railcars hold between 500 and 700 barrels of oil, less than a cavern, tank or ship can store.

The use of U.S. railcars to transport large volumes of oil picked up steam a few years ago as a byproduct of the fracking boom. Fields sprung up faster than pipelines could be laid, so producers improvised and shipped their output to market by rail. Companies soon realized railroads offered greater flexibility to transfer oil to whomever offered the best price. Some pipeline companies even joined the rail business, building terminals to load and unload oil. U.S. oil settled Friday at $32.78 a barrel, down nearly 70% from mid-2014.

The plunge in oil prices brought that activity to a halt. Analysts estimate there are now as many as 20,000 tank cars—about one-third of the North American fleet for hauling oil—parked out of the way in storage yards or along unused stretches of tracks in rural areas.

Producers and shippers who signed long-term leases for the cars during the boom are stuck paying monthly rates that typically run $1,500 to $1,700 per car. Traders can pay those prices and still profit. Oil bought at the April price and sold through the futures market for delivery a year later could net a trader $8.07 a barrel, not including storage or transportation costs.

As central storage hubs fill up, oil companies are more willing to pay for expensive and remote types of storage, said Ernie Barsamian, principal of the Tank Tiger, which keeps a database of companies looking to buy and sell oil storage space.

The Tank Tiger posted an inquiry Wednesday on behalf of a client seeking 75,000 barrels of crude-oil storage or space to park 100 to 120 railcars loaded with crude.

Mr. Barsamian likened the disappearance of available storage to a coloring book where nearly all the white space has been filled in.

“You’re getting closer to the edges,” he said.

For safe and healthy communities…