Category Archives: Pipeline transport

Dakota Access pipeline to upend oil delivery in U.S. – Losers to include struggling oil-by-rail industry

Repost from Reuters

Big Dakota pipeline to upend oil delivery in U.S.

By Catherine Ngai and Liz Hampton | NEW YORK/HOUSTON, Aug 12, 2016 12:46pm EDT
Dead sunflowers stand in a field near dormant oil drilling rigs which have been stacked in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen
Dead sunflowers stand in a field near dormant oil drilling rigs which have been stacked in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

It may seem odd that the opening of one pipeline crossing through four U.S. Midwest states could upend the movement of oil throughout the country, but the Dakota Access line may do just that.

At the moment, crude oil moving out of North Dakota’s prolific Bakken shale to “refinery row” in the U.S. Gulf must travel a circuitous route through the Rocky Mountains or the Midwest and into Oklahoma, before heading south to the Gulf of Mexico.

The 450,000 barrel-per-day Dakota Access line, when it opens in the fourth quarter, will change that by providing U.S. Gulf refiners another option for crude supply.

Gulf Coast refiners and North Dakota oil producers will reap the benefits. Losers will include the struggling oil-by-rail industry which now brings crude to the coasts.

The pipeline also will create headaches for East and West Coast refiners, which serve the most heavily populated parts of the United States and consume a combined 4.1 million barrels of crude daily. They will have to rely more on foreign imports.

The pipeline, currently under construction, will connect western North Dakota to the Energy Transfer Crude Oil Pipeline Project (ETCOP) in Patoka, Illinois. From there, it will connect to the Nederland and Port Arthur, Texas, area, where refiners including Valero Energy, Total and Motiva Enterprises operate some of the largest U.S. refining facilities.

“That’s a better and cheaper path than going out West and down through the Rockies,” said Bernadette Johnson, managing partner at Ponderosa Advisors LLC, an energy advisory based in Denver.

CHEAPER THAN RAIL

Moving crude by pipeline is generally cheaper than using railcars. The flagging U.S. crude-by-rail industry already is moving only half as much oil as it did two years ago: volumes peaked at 944,000 bpd in October 2014, but were around just 400,000 bpd in May, according to the U.S. Energy Department.

Rail transport has become less economical for East and West Coast refiners when compared with importing Brent crude, the foreign benchmark, because declining supply out of North Dakota made that grade of oil less affordable.

“If you look at the Brent to Bakken arb, it’s tight,” said Afolabi Ogunnaike, a senior refining analyst at Wood Mackenzie in Houston. “If you look at the spot rate, it’s uneconomical to move crude by rail right now.”

Ponderosa Advisors estimated that the start-up of the pipeline could reroute an additional 150,000 to 200,000 bpd currently carried by rail to the U.S. East Coast and Gulf Coast.

Crude imports into the East Coast are now on the rise, averaging 788,000 bpd this year, with nearly 960,000 bpd in July, the highest level in three years, according to Thomson Reuters data.

On the West Coast, refiners like Shell, Tesoro and BP may have to commit to some railed volumes for longer because of shipping constraints, although it will largely depend on rail economics. They also face declining output from California and Alaska.

Tesoro’s top executive Gregory Goff told analysts and investors last week he expects rail costs to drop as much as 40 percent from the current $9-to-$10 barrel cost to compete with pipelines, in order to move Bakken to its Anacortes, Washington, refinery.

CHANGING TIDES

Rail companies have been trying to adapt. CSX Corp, which runs a network of lines in the eastern part of the country, said it was evaluating potential impacts of the pipeline. BNSF Railway declined to discuss future freight movements, but said that at its peak, it transported as many as 12 trains daily filled with crude, primarily from the Bakken. Today, it is moving less than half of that.

In a recent earnings call, midstream player Crestwood Equity Partners said it was working to capitalize on the pipeline and not be dependent on loading crude barrels onto trains. That includes building an interconnection to its 160,000 barrel-per-day COLT crude rail facility in North Dakota.

As refiners bring in more barrels from overseas, Brent’s premium over U.S. crude will eventually widen. On Thursday, December Brent futures settled at a 97-cent premium to U.S. crude, one of its widest premiums this year.

Separately, Bakken crude, a light barrel, could rise further due to the additional competition, especially as production is still falling. Bakken differentials hit a six-month low earlier this week of $2.65 a barrel below WTI, according to Reuters data, but rose to a $1.80 a barrel discount by Thursday.

(Reporting by Catherine Ngai in New York and Liz Hampton in Houston; Editing by David Gregorio)

KQED: Pipeline at Center of Altamont Pass Oil Spill Also Ruptured Last September

Repost from KQED
[Editor: A colleague reports that “The Altomont Pass pipeline brings heavy crude oil from southern San Joaquin Valley oilfields to some of our Bay Area refineries.”  – RS]

Pipeline at Center of Altamont Pass Oil Spill Also Ruptured Last September

By Ted Goldberg, May 24, 2016

California’s fire marshal has launched an investigation into an oil pipeline rupture that spilled at least 20,000 gallons of crude near Tracy over the weekend — eight months after the same pipeline had a break in a similar location.

Shell Pipeline crews are still cleaning up from the most recent spill near Interstate 580 and the border between Alameda and San Joaquin counties four days after the 24-inch diameter line broke.

Crews with the oil giant were able to complete repairs on the pipe on Monday, according to a Shell official.

The pipeline stretches from Coalinga in Fresno County to Martinez.

The rupture on the line was first reported at 3 a.m. on Friday, said Lisa Medina, an environmental specialist at the San Joaquin County Environmental Health Department.

Shell discovered a loss of pressure in the pipeline, filed a report with the Governor’s Office of Emergency Services and then shut the line down.

San Joaquin County officials believe the spill covered an area 250 feet long by 40 feet wide, Medina said in an interview.

A preliminary test of the pipeline found a split of approximately 18 to 20 inches in length, said company spokesman Ray Fisher in an email.

Fisher also confirmed that the same pipeline ruptured and caused an oil spill in the same vicinity, near West Patterson Pass Road, last Sept. 17.

Here’s a link to Shell’s report on that incident that found the rupture spilled 21,000 gallons of oil, about the same amount as Friday’s break.

Fisher said Shell inspects its pipelines every three years, and the company conducted an inspection of the line after the September incident.

He added that the line has no history of corrosion problems.

It’s unclear what caused the most recent spill.

On Tuesday, state fire officials confirmed that the Office of the State Fire Marshal had opened a probe into the pipeline rupture.

Federal regulators are not investigating the break, but are providing technical support to the state, said an official with the Pipeline and Hazardous Materials Safety Administration.

The spill prompted concerns from environmentalists.

Sierra Club representatives pointed out that the spill near the Altamont Pass came weeks after Shell spilled about 90,000 gallons of oil into the Gulf of Mexico and a year after a major spill involving another company’s pipeline on the Santa Barbara County coast.

“Sadly, it’s become undeniable that oil spills will remain the status quo if we continue our dependence on dirty fuels,” said the Sierra Club’s Lena Moffitt in a statement. “This is just Shell’s latest disaster and the company has done nothing to assuage fears that it can stop its reckless actions.”

“The environmental impacts could be very serious,” Patrick Sullivan, a spokesman for the Center for Biological Diversity, said in an interview. Sullivan said the spill could hurt birds and other animals in the area and could contaminate nearby groundwater.

State water regulators, though, say they’re not concerned the spill could affect water in the area.

“Given the location and the relatively limited extent of the spill, it is highly unlikely that the spill would affect underlying  groundwater and even more unlikely that it would impact any drinking water supplies,” said Miryam Baras, a spokeswoman for the State Water Resources Control Board, in an email.

Sullivan also questioned whether Shell’s statements on the size of the oil spill were correct.

“We don’t know how much oil has been spilled,” Sullivan said. “With previous pipeline spills the initial estimates have sometimes turned out to be wrong. They’ve turned out to be under-estimates.”

Fisher, the Shell spokesman, said the company had not revised its estimates.

The Canadian Government is Blowing Up Bomb Trains for Practice

Repost from Vice News

ViceNews header 2016-03-18
Photo via the Defence Research and Development Canada – Centre for Security Science

The Canadian Government is Blowing Up Bomb Trains for Practice

By Hilary Beaumont, March 18, 2016 | 9:51 am

Two and a half years after a train carrying crude oil ran off the tracks in Lac-Mégantic, Quebec and exploded, killing 47 people, the Canadian government set a tanker on fire and pretended to run a train off its tracks as practice in case it happens again.

On July 6, 2013, an unmanned train carrying ultra-flammable western crude plummeted into the downtown of 6,000-resident Lac-Mégantic, where it erupted in flames and flattened everything in its path. The Lac-Mégantic tragedy spurred a debate in Canada and the US about the safety of so-called “bomb trains”, and reinvigorated the discussion about shipping oil across Canada.

Exercise Vulcan. Photo via the Defence Research and Development Canada – Centre for Security Science

The debate has become a heated one, and largely comes down to whether to build large pipeline projects amid an uptick in the amount of volatile crude oil moved by rail. Both pipeline and oil by rail proponents argue their methods of transport are safe. Meanwhile, environmental groups argue both methods inevitably lead to spills or explosions, and that the oil should stay in the ground, while Canada should beef up its focus on renewable energy.

According to Transport Canada’s own data, crude oil moved by rail has increased dramatically in Canada over the past decade, from only four carloads in 2005 to 174,000 carloads in 2014.

In the case of Lac Megantic, an investigation showed a complex series of errors allowed the disaster to happen.

The goal of the recent train simulation, which used flammable liquid common in firefighter training rather than actual crude, was to improve emergency preparedness and public trust around the movement of crude and other dangerous goods by rail.

Exercise Vulcan. Photo via the Defence Research and Development Canada – Centre for Security Science

Firefighters arrived on the scene of 11 smoking tanks that had derailed. They were taught to identify the contents of the tanks and decide when it was better not to intervene, as that could make the situation worse. If tackling the fire directly, the firefighters were told to apply foam and water spray to extinguish the flames.

It’s taken two-and-a-half years to start upgrading the procedures around emergency response to train derailments involving crude, and they’re not done yet. Exercise Vulcan, as the simulation was dubbed, was a test run of those new procedures, and Transport Canada hopes to use the training in other parts of the country in the future.

“Better late than never,” one industry expert told VICE News in reaction to Transport Canada running the train derailment simulation last weekend.

It’s too soon to tell whether Lac-Mégantic has sparked real safety upgrades in the rail industry, transportation industry consultant Ian Naish said. “They’re replacing tank cars, [but] they’re doing it slowly.

“Speed of the oil trains is a big issue to me,” he continued. “I’d recommend they take another look at the maximum speed at which a train should operate because the two that went off the rails in Gogama last year were operating at around 40 miles per hour, which is 60 or 70 kilometres an hour, and since all the tank cars failed, that obviously was too fast.”

A photo of the aftermath of the Gogama derailment. Photo via the Transportation Safety Board of Canada.

Just over a year ago, a crude oil train exploded in a fireball and derailed near the town of Gogama in northern Ontario. No injuries or deaths were reported in the March 7, 2015 explosion. It took three days to extinguish the flames.

At the time, it was the second CN train to derail near Gogama in a three-week period. Both incidents resulted in spilled crude oil.

The tankers that derailed in both Gogama accidents were the same type of Class 111 tanks that ruptured in Lac Megantic. The Transportation Safety Board, an independent agency tasked with investigating transportation disasters in Canada, has warned for years that Class 111 tanks are unsafe because they aren’t reinforced and tend to break open when they crash.

“It will be very silly for everybody, not only Quebec — any province, and any state in the United States — not to learn from what happened in Lac-Mégantic. What happened showed so many voids in the system, and so much lack of important information.”

But it won’t be until after May 1, 2017 that the notorious Class 111 tank cars — which are most susceptible to damage when they crash — will no longer be able to carry crude. Phasing in more crash-resistant tank cars will mean the Class 111s will be off the rails “as soon as practically possible,” Transport Canada spokesperson Natasha Gauthier told VICE News.

After the disaster in Lac-Mégantic, Transport Canada says it introduced strict new rules, including a two-person minimum for crews on trains carrying dangerous goods, a requirement for railway companies on federally-regulated tracks to hold valid certificates, new speed limits for trains carrying dangerous goods.

In the US, though, there’s been pushback from the railroad industry, with one representative saying there is “simply no safety case” for two-person crews.

Exercise Vulcan. Photo via the Defence Research and Development Canada – Centre for Security Science

Transport Canada also introduced more frequent audits, better sharing of information with municipalities, and increased track inspections. Plus, the agency amended the Railway Safety Act, researched crude for a better understanding of the volatile oil, and made it mandatory for some railways to submit training plans to the agency.

Since Lac-Mégantic, one improvement is that local first responders are now more aware of what dangerous goods, including crude, are travelling through their communities, Naish added.

And according to an engineering professor who witnessed first-hand the scene after the Lac-Mégantic explosion, while the railway industry is ramping up safety measures, the risk of increased shipments of oil by rail could balance those out, meaning it may not actually be any safer since Lac-Mégantic.

“Is it enough?” Rosa Galvez-Cloutier told VICE News when asked about the improved safety measures. “That’s hard to say. Zero risk doesn’t exist.”

Another major concern for Galvez-Cloutier is that when government and industry look at risk and safety, they tend do so project by project.

“Who is evaluating the big picture? Who is evaluating the whole thing?” She asked. “Government needs to put more interest and focus on the cumulative impacts of transporting dangerous goods.”

Exercise Vulcan. Photo via the Defence Research and Development Canada – Centre for Security Science

That debate is especially hot in Quebec, where the Lac-Mégantic explosion occurred. A recent poll of Quebec residents found they aren’t as likely as the rest of Canada to trust either pipelines or oil by rail.

According to a study by the Fraser Institute published last August, pipelines are 4.5 times safer than rail for moving oil — the rate of incidents for pipelines is 0.049 incidents per million barrels of oil moved, while that rate is 0.227 per million barrels of oil for trains.

“It will be very silly for everybody, not only Quebec — any province, and any state in the United States — not to learn from what happened in Lac-Mégantic. What happened showed so many voids in the system, and so much lack of important information,” Galvez-Cloutier said.

When asked if he would rather have a pipeline or a train carrying crude through his backyard, Naish laughed and said “Well I’d rather not live in the neighborhood, personally.”

“In the ideal world, the rail lines and the pipelines would avoid all populated areas all the time.”

Exercise Vulcan. Photo via the Defence Research and Development Canada – Centre for Security Science

Pittsburg Defeats WesPac: Biggest California Crude Oil Project Stopped in its Tracks

Repost from ForestEthics, Ethan Buckner’s blog
[Editor:  Also check out ForestEthics’ blog post by Eddie Scher, “Bay Area activists celebrate WesPac withdrawal of oil terminal proposal.” – RS]

Pittsburg Defeats WesPac: Biggest California Crude Oil Project Stopped in its Tracks

By Ethan Buckner, Dec 11, 2015

In the final days of 2015 the victories for the climate justice movement are coming fast and furious — fracking bans to pipeline wins to breakthrough climate policies. This week, after years of a hard-fought community-led campaign, we learned that the oil services company WesPac has withdrawn their permit applications to build the biggest oil terminal on the West Coast in Pittsburg, CA!

That means 242,000 barrels a day of toxic and explosive extreme crude oil from the tar sands and the Bakken will stay in the ground, and off the tankers, oil trains, and pipelines WesPac would have built to bring this dangerous crude to Bay Area refineries.

This is an extraordinary victory, and one that demonstrates that grassroots organizing can overcome the power of big oil. I remember two years ago hearing that “no one can organize in this town,” because for so long Pittsburg had been dominated by heavy industry after heavy industry, from petrochemical plants and waste dumps to power stations and oil facilities.

The campaign started out small, led by two courageous neighbors Kalli Graham and Lyana Monterrey, who started knocking on doors and enrolling more and more community members to the fight. I remember my first day canvassing outside the Pittsburg seafood festival in August 2013, thinking to myself, how the hell are we ever going to win this thing?

But as these brilliant and resilient grassroots leaders kept organizing, and it started working. Within months our volunteer base jumped from a handful to dozens, and then to hundreds. Petition signatures jumped from dozens to hundreds to thousands. At nearly every door I knocked on I met another community member sick of Pittsburg’s reputation as an industrial wasteland, tired industry control. I don’t think I’ve ever been anywhere where opposition to industry was so strong. When WesPac brought a company man to town to host a three hour informational meeting, community members showed up en masse and drove him out of town. Hundreds of citizens showed up at city council meetings, week in and week out. We hosted toxic tour, dozens of community meetings, and the biggest march Pittsburg has seen in many, many years. We turned the WesPac campaign into a regional and statewide issue, leveraging the power built in Pittsburg to inspire and support other campaigns fighting extreme oil infrastructure in the Bay Area and beyond.

In January 2014, WesPac agreed to take oil trains off the table. That was a big victory, but WesPac still wanted to build a crude oil tank farm, tanker berth, and pipelines, and we stood ready to continue the fight. But WesPac was not, and will officially pull their applications before a city council meeting on December 14.

Hats off to everyone who contributed to this extraordinary effort: especially the community leaders at the Pittsburg Defense Council and Pittsburg Ethics Council, and also Communities for a Better Environment, Sunflower Alliance, Sierra Club SF Bay Chapter, Natural Resources Defense Council, and 350 Bay Area, among others. This victory belongs to our movement, but most of all to the tireless, resilient, creative, and courageous people of Pittsburg.

Let WesPac’s demise serve as a warning to Valero, Phillips 66, and other oil giants that are trying to build oil train terminals in California right now: our movement will not stop until all oil trains projects are halted in their tracks, and extreme oil stays in the ground where it belongs.