Category Archives: Rail industry

Federal Regulation (U.S.), Oil Industry, Rail industry, State regulation

California Energy Commission workshop on trends in sources of crude oil (Wed. 6/25/14)

Repost from California Energy Commission
[Editor: this 9am-5pm workshop will have a broad range of knowledgeable presenters.  Agenda here.  Sorry for short notice.  – RS]

Lead Commissioner Workshop on Trends in Sources of Crude Oil

Wednesday, June 25, 2014, 9:00 AM

The California Energy Commission Lead Commissioner on the Integrated Energy Policy Report will conduct a workshop to highlight changing trends in California’s sources of crude oil with emphasis on the potential growth of crude oil transport to California by rail, and the impacts of these trends on the transportation energy market and existing government policies. The discussions will focus on existing and possible new roles of federal, state, and local government to address market changes.

Commissioner Janea A. Scott, Chair Robert Weisenmiller, and Commissioner Karen Douglas will be in attendance. CPUC President Michael R. Peevey will also be in attendance. Commissioner Scott is the Lead Commissioner for the 2014 IEPR Update and the Lead Commissioner on Transportation. Other Commissioners of the California Energy Commission and the California Public Utilities Commission may attend and participate in the workshop. The workshop will be held:

June 25, 2014 9:00 AM
Berkeley City College Auditorium
2050 Center Street
Berkeley, California 94704
(Wheelchair Accessible)

Remote Access Available by Computer or Phone via WebEx
Presentations and audio from the meeting will be broadcast via our WebEx web meeting service. For additional details on how to participate via WebEx, please see the notice at: http://www.energy.ca.gov/2014_energypolicy/documents/#06252014

Computer Log on with a Direct Phone Number:
– Please go to https://energy.webex.com/ec/ and enter the unique meeting number 924 482 257
– When prompted, enter your information and the following meeting password meeting@9 . (Please note that password is case sensitive.)

For More Information:
http://www.energy.ca.gov/2014_energypolicy/documents/index.html#06252014

Agenda  (Go here for the detailed timed agenda.)
This workshop will address current and anticipated trends in petroleum, crude oil distribution logistics, safety requirements and oversight of crude oil by rail transport, and California policies and activities designed to diversify the mix of future transportation fuels. Staff will facilitate discussions on these topics from industry, government agency, and academic perspectives. Participants will be asked to present information and insights on crude oil trends, the need for changes in government oversight responsibilities and regulatory requirements, and the potential options to reduce the need for petroleum as a transportation fuel.

Background

California obtains crude oil from foreign imports, Alaska, and in-state production. Since 2003, crude oil production from Alaska and California has declined while foreign imports have increased to over 50 percent of the state’s supply. Imports from Alaska and foreign sources are delivered to California by marine vessel. However, California’s crude oil sources appear to be shifting to new supplies, spurred by hydraulic fracturing and other extraction technology advances in North Dakota and other states and development of Canadian oil sands. Shipments of these new resources by rail or by barge from the state of Washington are increasing and could represent over 25 percent of California’s crude oil within a few years, depending on the economics of the extraction, transport, and development and approval of receiving/storage terminals in California. The development of the Monterey shale formation in California, while offering significant production potential, has not progressed primarily because the complex geology of the formation makes it expensive to develop.

California’s gasoline demand is expected to decline from 14.6 billion gallons in 2013 to 12.7 billion gallons in 2020 as the result of improvements in corporate average fuel economy standards (CAFE), requiring automakers to achieve 35.5 miles per gallon in 2016 and 54.5 mpg by 2025. Diesel and jet fuel are expected to grow at a rate of 1 – 2 percent per year, spurred by increased freight movement and other factors. California’s net crude oil demand to produce refined petroleum products is expected to decline in this period. California refineries also produce petroleum products for Arizona and Nevada and may be exporting the refined products to international markets.

Federal and California laws, regulations, and incentives designed to reduce greenhouse gas emissions, reduce transportation demand, and increase the development and use of alternative fuels as a petroleum displacement have begun to show modest changes in the transportation energy market and could be poised for significant growth and displacement of petroleum fuels. The federal government provides the primary oversight of rail safety with additional roles by state agencies. California local governments review the environmental impacts of modifications and new construction of crude oil storage and delivery terminals under the California Environmental Quality Act regulations.

Public Comment

Oral Comments. The IEPR Lead Commissioner will accept oral comments during the

workshop. Comments may be limited to three minutes per speaker. Any comments will

become part of the public record in this proceeding.

Written Comments. Written comments should be submitted to the Dockets Unit by

July 10, 2014. Written comments will also be accepted at the workshop, however, the

Energy Commission may not have time to review them before the conclusion of the

workshop. All written comments will become part of the public record of this proceeding.

Additionally, written comments may be posted to the Energy Commission’s website for

this proceeding.

The Energy Commission encourages comments by e-mail. Please include your name

and any organization name. Comments should be in a downloadable, searchable format

such as Microsoft® Word (.doc) or Adobe® Acrobat® (.pdf). Please include the docket

number 14-IEP-1F and indicate Trends in Sources of Crude Oil in the subject line. Send

comments to docket@energy.ca.gov and copy the technical lead staff at

Gordon.Schremp@energy.ca.gov.

If you prefer, you may send a paper copy of your comments to:

California Energy Commission

Dockets Office, MS-4

Re: Docket No. 14-IEP-1F

1516 Ninth Street

Sacramento, CA 95814-5512

Public Adviser and Other Commission Contacts

The Energy Commission’s Public Adviser’s Office provides the public assistance in

participating in Energy Commission proceedings. If you want information on how to

participate in this forum, please contact Alana Mathews, Public Advisor, at

(916) 654-4489 or toll free at (800) 822-6228, or by e-mail at

PublicAdviser@energy.ca.gov.

If you have a disability and require assistance to participate, please contact Lou Quiroz

at LQuiroz@energy.ca.gov or (916) 654-5146 at least five days in advance.

Media inquiries should be sent to the Media and Public Communications Office at

(916) 654-4989, or by e-mail at mediaoffice@energy.ca.gov.

If you have questions on the technical subject matter of this meeting, please call Gordon

Schremp, Senior Fuels Specialist, at (916) 654-4887 or e-mail at

Gordon.Schremp@energy.ca.gov. For general questions regarding the IEPR

proceeding, please contact Lynette Green, IEPR project manager, at (916) 653-2728 or

by e-mail at Lynette.Green@energy.ca.gov.

The service list for the 2014 IEPR Update is handled electronically. Notices and

documents for this proceeding are posted to the Energy Commission website at

www.energy.ca.gov/2014_energypolicy/index.html. When new information is posted, an

e-mail will be sent to those on the energy policy e-mail list server. We encourage those

who are interested in receiving these notices to sign up for the list server through the

website at www.energy.ca.gov/listservers/index.html.

Remote Attendance

You may participate in this meeting through WebEx, the Energy Commission’s online

meeting service. Presentations will appear on your computer screen, and you may listen

to the audio via your computer or telephone. Please be aware that the meeting may be

recorded.

To join a meeting:

VIA COMPUTER: Go to

https://energy.webex.com/energy/onstage/g.php?d=924482257&t=a and enter the

unique meeting number: 924 482 257. When prompted, enter your information and the

following meeting password: meeting@9

The “Join Conference” menu will offer you a choice of audio connections:

1. To call into the meeting: Select “I will call in” and follow the on-screen directions.

2. International Attendees: Click on the “Global call-in number” link.

3. To have WebEx call you: Enter your phone number and click “Call Me.”

4. To listen over the computer: If you have a broadband connection, and a headset

or a computer microphone and speakers, you may use VolP (Internet audio) by

going to the Audio menu, clicking on “Use Computer Headset,” then “Call Using

Computer.”

VIA TELEPHONE ONLY (no visual presentation): Call 1-866-469-3239 (toll-free in the

U.S. and Canada). When prompted, enter the unique meeting number: 924 482 257.

International callers may select their number from

https://energy.webex.com/energy/globalcallin.php.

VIA MOBILE ACCESS: Access to WebEx meetings is now available from your mobile

device. To download an app, go to www.webex.com/overview/mobile-meetings.html.

If you have difficulty joining the meeting, please call the WebEx Technical Support

number at 1-866-229-3239

Availability of Documents

Documents, agenda and presentations for this meeting will be available online at

www.energy.ca.gov/2014_energypolicy/documents/index.html by June 20.

Date: June 16, 2014

JANEA A. SCOTT

Lead Commissioner

2014 Integrated Energy Policy Report Update

Mail Lists: energy policy, transportation, altfuels

 

 

 

Rail industry, Rail Safety, Research and development

Senators introduce bill to establish shortline safety institute

Repost from Railway Track & Structures (RT&S)

Sens. Collins and Murray introduce bill to establish shortline safety institute

 By Jenifer Nunez, assistant editor  |  June 19, 2014 

U.S. Sens. Susan Collins (R-ME) and Patty Murray (D-WA), ranking member and chair of the Senate Appropriations Subcommittee for Transportation, respectively, have introduced a bill that would authorize a new Short Line Rail Safety Institute the senators say will enhance the safety practices and culture of shortline railroads.

The legislation would authorize funding to support grants for research, development, evaluation and training efforts to support the 550 shortline railroad companies that operate more than 50,000 miles of track in the United States.

“Whether a train is carrying crude oil on a major rail line or on a short, local route through small towns across America, we need to make sure everyone is safe, both on the train and near the tracks,” Sen. Murray said. “We need to have the right policies in place to prevent accidents and respond to emergencies wherever they happen and establishing a Short Line Rail Safety Institute is a strong step in the right direction.”

The senators said the new Short Line Rail Safety Institute would assess the operations and safety programs of shortline railroads; develop best practices and work with shortlines to implement these practices; provide professional on-site safety training for shortline employees; purchase and utilize safety training assets (such as locomotive simulators); assist the Federal Railroad Administration in implementing its railroad research and development and outreach programs and tailor such programs for shortline railroad operations and help improve safety culture, including a reduction in the frequency and severity of injuries and incidents, as well as improved compliance with regulatory requirements.

The American Short Line and Regional Railroad Association (ASLRRA) President Richard Timmons said the legislation “will do much to bring a continuous and active focus on safety with the objective of assisting individual shortlines to improve their safety performance. Sens. Collins and Murray are creating a very important tool for a very important task and the entire shortline industry will be an enthusiastic partner in this effort.”

Timmons added, “Shortlines are small businesses with far fewer employees, most of whom have multiple responsibilities. A large percentage of their revenue goes to track rehabilitation, which itself is a driver of safety. The Collins/Murray initiative will help shortlines to do much more and to do it much better.”

Crude By Rail, Diluted bitumen (Dilbit), Oil Industry, Oil prices, Rail industry, Railbit, Tar sands crude

Tar Sands on the Tracks: Railbit, Dilbit and U.S. Export Terminals

Repost from DESMOGBLOG

Tar Sands on the Tracks: Railbit, Dilbit and U.S. Export Terminals

2014-06-17  |  Ben Jervey

Last December, the first full train carrying tar sands crude left the Canexus Bruderheim terminal outside of Edmonton, Alberta, bound for an unloading terminal somewhere in the United States.

Canadian heavy crude, as the tar sands is labeled for market purposes, had ridden the rails in very limited capacity in years previous — loaded into tank cars and bundled with other products as part of so-called “manifest” shipments. But to the best of industry analysts’ knowledge, never before had a full 100-plus car train (called a “unit train”) been shipped entirely full of tar sands crude.

Because unit trains travel more quickly, carry higher volumes of crude and cost the shipper less per barrel to operate than the manifest alternative, this first shipment from the Canexus Bruderheim terminal signaled the start of yet another crude-by-rail era — an echo of the sudden rise of oil train transport ushered in by the Bakken boom, on a much smaller scale (for now).

This overall spike in North American crude-by-rail over the past few years has been well documented, and last month Oil Change International released a comprehensive report about the trend. As explained in Runaway Train: The Reckless Expansion of Crude-by-Rail in North America (and in past coverage in DeSmogBlog), much of the oil train growth has been driven by the Bakken shale oil boom. Without sufficient pipeline capacity in the area, drillers have been loading up much more versatile trains to cart the light, sweet tight crude to refineries in the Gulf, and on both coasts.

Unfortunately, some of these “bomb trains” never make it to their destination, derailing, spilling, exploding and taking lives.

While shale oil, predominantly from the Bakken, has driven the trend, Canadian tar sands producers are increasingly turning their attention to rail. Hobbled by limited pipeline capacity out of Alberta, and frustrated by their inability (so far) to ram the Keystone XL pipeline through the American heartland, tar sands producers are signing contracts with Canadian rail operators. Canadian National Railway is getting the lionshare of the business.

Canadian National not only has the infrastructure in place near Alberta’s tar sands developments, but also operates 19 subsidiary railways in the United States under the Grand Trunk Corporation. Strung together, Canadian National network stretches 2,800 miles from Western Canada down to the Gulf Coast, the only company that can offer straight-through shipping from the tar sands to Gulf Coast refineries.

Of the upstream infrastructure — or the loading terminals up near the tar sands, the Oil Change International report explains:

At the time of writing there were 31 terminals in operation that load tar sands or heavy crude, with six of these expanding and an additional eight planned or under construction…

The first terminal designed to load unit trains with Canadian tar sands crude, the Canexus terminal in Bruderheim, northeast of Edmonton, Alberta, started operations in December 2013. It has a capacity of 70,000 bpd and loads tar sands bitumen from MEG’s Christina Lake SAGD project, among others.

Downstream, rail terminals are similarly adapting to handle shipments of tar sands crude. From the Runaway Train report:

Terminals designed to unload tar sands crude are currently concentrated in the Gulf Coast region, where the biggest concentration of heavy oil refining capacity is located…

The Gulf Coast terminals have about one million bpd of unloading capacity today, set to grow to over two million bpd in 2016. Some of this capacity is at refineries such as those operated by Valero in Port Arthur, Texas, and St. Charles, Louisiana. Valero has ordered 1,600 insulated and coiled tank cars specifically for hauling tar sands crude to its refineries.

The Gulf Coast also has significant midstream capacity on the Mississippi River, where crude oil, including tar sands crude, is unloaded from trains and pumped from storage tanks into local pipelines or loaded onto barges that deliver to coastal refineries via the Intracoastal Waterway.

Meanwhile, refineries on the Atlantic and Pacific coasts are angling to get in on the action, hoping that their shipping advantages to Europe and Asia respectively will prove appealing to tar sands producers.

As described in Runaway Train, terminals on the West Coast are particularly well positioned to serve as a “fast-track out of North America for Canada’s tar sands.”

There are currently 13 crude-by-rail unloading terminals in California, Oregon and Washington, of which four are currently expanding their capacity. There are also 11 terminals planned or under construction.

Many of these are at refineries that, like their counterparts on the East Coast, are looking to take advantage of discounted domestic or Canadian crudes that they have little hope of ever gaining access to via pipeline. With a larger proportion of refining capacity geared up for heavy tar sands processing than exists on the East Coast, West Coast refineries such as the Valero facility in Wilmington, Calif., and the Phillips 66 refineries in California and Washington, are keen to rail in tar sands crude.

Accessing these West Coast refineries by rail, as well as the prospect of export terminals in Washington and Oregon, are potentially the tar sands industry’s best bet for major market expansion in the face of delays and possible cancellation of the Keystone XL pipeline and pipelines to the Canadian west coast such as the Northern Gateway and Trans Mountain expansion.

These latter projects, which are primarily focused on exporting tar sands crude to Asia, face particularly stiff opposition from coastal communities, which fear the destruction of fisheries and coastal environments from the increased tanker traffic that would ensue.

Given the relative proximity particularly of Washington State refineries and ports to Alberta’s tar sands fields, these terminals offer oil companies a potential solution to the transportation bottlenecks that are threatening the viability of tar sands production growth. At least three proposals in southern Washington State have the potential to unload tar sands crude from trains and load it onto tankers for export to Asia or transport to refineries along the California coast.

Tar sands producers are particularly motivated to get their crude to coastal terminals and refineries for export. As we’ve covered in the past on DeSmogBlog, tar sands companies want to export their product, because the low-grade crude is more easily refined into diesel, which has a much larger market in Europe and Asia. This is the core reason that the Keystone XL, if built, would be little more than an export pipeline, and wouldn’t actually provide more oil to American markets, nor lower American gas and heating oil prices.

The Oil Change International report also shines a light on the fact that though crude exports are banned from the U.S., domestic refineries can legally export crude from Canada.

While crude oil of U.S. origin is subject to export restrictions, no such restriction applies to exports of Canadian oil through the U.S., as long as it can be shown that no U.S. oil was blended.

Shippers wishing to export Canadian oil from U.S. ports still have to apply for export licenses from the Department of Commerce, but these can and have been granted. Given the lack of pipeline capacity to Canadian ports, it is attractive for tar sands producers to find ways to get their product to a U.S. port where it can be exported. Crude-by-rail terminals on the West and East Coasts are strategically important as they are closer to Alberta than those on the Gulf Coast and it is therefore cheaper to reach these ports by rail.

Railbit vs. Dilbit

As this still-nascent segment of crude-by-rail develops, it’s worthwhile to take a moment to understand the distinction between a couple of different tar sands products that are being shipped by train. The vast majority of tar sand crude-by-rail shipments thus far have been diluted bitumen, or dilbit. Dilbit, which you have heard of as the tar sands crude that is already funneling through North American pipelines, is composed of the sticky, viscous tar sands bitumen, which is then mixed with about 30 percent diluent, allowing it to flow through pipelines. This mixture of dilbit is particularly volatile and abrasive, and reports have pointed to it being more likely to cause leaks and spills and explosions during transport.

Railbit is a relatively new designation for crude, and is defined as bitumen that has been mix with roughly 17 percent diluent. Moving railbit, rather than dilbit, saves tar sands shippers about half of the so-called “diluent penalty,” or the cost of adding the diluent to the mix.

So why are most trains still loaded with dilbit? Because to this point, most loading terminals are still being fed by feeder pipelines or trucks that can only handle this more watered down blend. That and the fact that special loading and unloading facilities are necessary to handle railbit, which is more viscous and needs to be heated in special tank cars to be unloaded. Some downstream terminals are making these investments, seeing railbit as a viable alternative going forward, but today dilbit is still dominant.

Either way, it’s dirty and dangerous, and tar sands bitumen in any form does nothing to lower American energy bills. Bitumen, by rail or pipeline or barge, is bound to wind up on a tanker to Europe or Asia.

Crude By Rail, Hazmat notification, Rail industry, Rail routing, Train speed

Railroads oppose some oil train safety measures

Repost from Politico

Documents: Railroads want to hit brakes on some oil train safeguards

By KATHRYN A. WOLFE | 6/13/14 5:08 AM EDT
A fireball goes up at the site of an oil train derailment in Casselton, North Dakota, on Dec. 20, 2013.
The report previews what the administration may be considering to stop crashes. | AP Photo: A fireball goes up at the site of an oil train derailment in Casselton, North Dakota, on Dec. 20, 2013.

The railroad industry is warning the White House against some potential safety rules for trains carrying explosive crude oil, saying freight and passenger rail traffic could be disrupted for years if companies must obey 30 mph speed limits, install more sophisticated brakes and keep the trains manned at all times.

The arguments, contained in documents posted after a meeting this week between railroad officials and the Office of Management and Budget, also offer a preview of what steps the Obama administration may be considering in response to oil train crashes that have struck the U.S. and Canada in the past year. Those include a disastrous July 6 explosion that killed 47 people in Lac-Mégantic, Quebec, after an engineer left a train packed with North Dakota crude oil parked on a steep incline with brakes that may not have been properly set.

The Department of Transportation declined to comment on the documents. DOT submitted a draft rule proposal to OMB in April but has offered no details about what’s in it.

Companies represented at Tuesday’s OMB meeting included the four major freight railroads — BNSF, Union Pacific, Norfolk Southern and CSX — as well as other industry groups and Amtrak, according to White House records.

While Amtrak doesn’t haul crude oil, a BNSF handout arguing against lower speed limits said the passenger rail’s travel schedules on one 1,815-mile route could be lengthened by two hours if oil trains’ top speeds are lowered to 30 mph from 50 mph. That route stretches between Aurora, Ill., and Spokane, Wash., which BNSF called its primary route for crude oil.

Slowdowns would cause “severe” impacts for the railroad’s operations, including both oil and grain shipments, BNSF said in the handout, calculating six-hour delays for freight trains along the same route. All told, the railroad said it would have to spend $2.8 billion to rebuild its lost shipping capacity during the next four years, while facing $630 million in additional annual expenses such as additional crew wages and lost productivity.

The Association of American Railroads, the freight railroad industry’s main trade group, offered a similar document on the speed limit issue.

None of the documents address the main issue people are expecting the DOT rule to address: increased safety requirements for the tanker cars that carry the oil.

Oil train traffic across the U.S. has increased 40-fold since 2008 because of booming production in places like North Dakota and western Canada. It’s also become an increasingly contentious issue for communities from California and Washington state to Albany, N.Y., and Lynchburg, Va.

The documents may not accurately reflect DOT’s undisclosed draft — the railroads may have been blindly making a case for what they don’t want to see happen. But they reveal that industry insiders have given thought to potential regulations that would go much further than the mostly voluntary measures DOT has imposed so far.

Earlier this year, DOT announced that railroads had voluntarily agreed to restrict some oil trains to 40 mph in certain populous areas.

But lowering the speed limit to 30 mph would harm “delivery capability” for BNSF’s oil customers, the railroad said in the document. To keep up with demand, it said, it would have to add an additional 11,280 tank cars to its crude oil fleet.

In the other documents posted on OMB’s website:

— A handout from CSX argues against requiring electronically controlled pneumatic braking systems, saying the technology is “expensive and only works if the entire train is equipped.” The company says the brakes would have “limited use and minimal safety impact.”

As part of an existing voluntary agreement between the industry and DOT, railroads agreed to equip all trains pulling 20 or more carloads of crude oil with other types of advanced braking systems — either distributed power or two-way telemetry end-of-train devices.

— And a final handout, whose authorship is unclear, argues against requiring that crude oil trains never be left unattended. It says “attending crude oil trains from origin to destination will increase congestion, require additional handling, and significantly drive up costs,” including $96 per hour for a two-person crew.

It also says that “appropriate securement and security measures are already in place to ensure safe movement of crude oil shipments.”