Category Archives: Spill

Bakken Crude, Crude By Rail, Derailment, Ethanol, Oil prices, Spill, Tar sands crude

How Cheap Crude Stalled America’s Booming Oil Trains

Repost from Bloomberg Business

How Cheap Crude Stalled America’s Booming Oil Trains

It was a record year for oil train mishaps—and the year crude-by-rail hit the brakes.

By Matthew Philips , December 2, 2015 – 4:00 AM PST

 

David Wilson/Flickr

It’s been several months since an oil train accident grabbed big headlines—but not because there haven’t been any. A single weekend in November saw two trains derail in Wisconsin. The first spilled about 20,000 gallons of ethanol into the Mississippi River, followed a day later by a spill of about 1,000 gallons of North Dakota Bakken crude.

This year has already been the costliest by far for crude train explosions. Derailments in 2015 have caused $29.7 million in damage, according to data from the U.S. Department of Transportation, a huge increase from $7.5 million in 2014. Most of this year’s price tag can be attributed to two crashes within a three-week span. The Feb. 16 derailment of a CSX train in West Virginia triggered a massive explosion near a cluster of homes along the Kanawha River and led to more than $23 million in damage. A BNSF train that derailed and exploded in Illinois on March 5 caused an additional $5.5 million in damage. Both trains were carrying highly explosive crude from North Dakota.

The lesser-noticed recent accidents haven’t come with explosions or towering fireballs. At least some of the ruptured tank cars were the newer-model CPC-1232, which are supposed to be less likely to split open. The U.S. and Canada earlier this year announced stricter tank car standards, mandating further improvements in the future. Those rules will cost companies—mostly those that ship crude—an estimated $2.5 billion from 2015 to 2034; government estimates suggest the benefits will range from $912 million to $2.9 billion, presumably from fewer accidents.

But even without changing safety standards, there’s reason to suspect that costly train accidents will decline. While 2015 will go down as the worst year for crude train disasters, it’s also shaping up to be the year crude-by-rail hit the brakes. The crash in prices has slowed activity in the oilpatch and reduced the amount of petroleum riding the rails. The number of train carloads carrying petroleum has fallen 30 percent through Nov. 20 since peaking in December 2014, according to the American Association of Railroads. The monthly data on crude-by-rail shipments kept by the U.S. government lags a few months behind, but as of September those shipments had dropped 21 percent from their peak in January 2015.

Rail shipments of petroleum are down 30 percent in 2015.
Rail shipments of petroleum are down 30 percent in 2015.

This marks the first sustained decline in crude-by-rail traffic since it took off in 2009, jumping an astounding 5,000 percent in a little more than five years. Putting oil on trains was never the most efficient way to move it. It’s expensive and slow, not to mention dangerous. But in the places where the shale boom has unlocked the biggest amounts of crude, trains were often the only option.

That’s especially true in North Dakota, home to the Bakken formation, where oil production has risen from about 200,000 barrels a day to more than 1 million. By 2013, 71 percent of Bakken crude was transported by train. North Dakota has almost single-handedly driven the crude-by-rail boom, accounting for 80 percent of all oil train traffic in the U.S. as of earlier this year.

Since the third quarter of 2014, however, two pipeline projects have been completed in North Dakota, increasing the amount of oil that can be piped out of the state by nearly 200,000 barrels a day. There’s also a new refinery that opened earlier this year, reducing the amount of oil that needs to be railed down to the large refineries outside Chicago. Since 2011, North Dakota’s combined pipeline and refining capacity has doubled, from 400,000 barrels a day to 800,000. By the end of 2017 it’s slated to double again, to 1.5 million barrels a day.

Oil traders now have options for how to move oil out of North Dakota. But there’s another reason they’re pulling back on the amount they put on the rails: It’s not as profitable as it used to be. Early on, the shale boom created an enormous glut of crude that ended up stuck in the middle of the country. Getting it to market meant putting it on trucks and trains and barges, which was expensive and slow. So the price of U.S. crude fell compared with international prices. By October 2011 a barrel of U.S. oil pegged to the West Texas Intermediate contract that trades in New York was $27 cheaper than an equivalent barrel priced against the Brent contract trading in London.

That differential led to one of the biggest arbitrage opportunities the oil market has ever seen. Savvy traders could buy cheap oil in the middle of the U.S., find a way to move it, and sell it for higher prices along the coasts, where the market is more exposed to Brent prices. The price to send a barrel of oil by rail from North Dakota down to the U.S. Gulf Coast was about $9 or $10; the rest became profit. Over the past few years, millions of barrels of oil in North Dakota got loaded onto trains bound for the East Coast and the Gulf.

But as the U.S. oil infrastructure reoriented around the shale boom and pipelines began moving domestic oil to the coasts, instead of moving imports into the heartland, the spread between WTI and Brent has narrowed. The crash in global oil prices has closed the gap even further, to the point that a barrel of WTI crude is now just $3 cheaper than a barrel of Brent. That’s not enough to make money if you have to ship it hundreds of miles on a train. Refineries in Texas and Louisiana have switched from railing oil in from North Dakota to importing more crude from West Africa.

As a result, there’s now a glut of tank cars on the market. According to energy research firm Genscape, lease rates have fallen from $2,500 a month to about $500. Big refining companies, which are among the largest crude-by-rail shippers, are shifting their strategy and trying to lock in prices for three and four years rather than just a few months.

David Vernon, a transportation analyst at Sanford C. Bernstein, thinks crude-by-rail traffic has peaked. “The heyday is over,” he said. “The high-water mark has likely been set in terms of volumes.”

Canada’s growing oil production is expected to outpace its capacity of new pipelines.
Canada’s growing oil production is expected to outpace its capacity of new pipelines.
Citigroup

Canada, however, could be a different story. Although the country’s oil sands industry is struggling against low prices, there are projects currently under construction that will be finished over the next few years. That extra oil will have to move somehow, and as of now, trains are looking like a strong candidate. Canada’s oil production is forecast to grow faster than pipelines can be built, especially now that the Keystone XL is officially dead. So while the number of trains loaded with crude crisscrossing the U.S. may diminish in the next few years, rail may remain a viable option in Canada.

 

 

Bakken Crude, Crude By Rail, Derailment, DOT-111, Emergency Readiness & Response, Ethanol, Explosion, Fire, Keep it in the ground, Massive increase in crude-by-rail, Pipeline transport, Spill, Tar sands crude

Three derailments are three too many

Repost from the Winona Post

Three derailments are three too many

By Kat Eng, Honor the Earth volunteer, 11/23/2015
Train derailment, Alma, Wisconsin << CBS Minnesota

It’s hard to believe Andy Cummings, spokesperson for Canadian Pacific Railway, when he says CP Rail feels it is “absolutely” safe to resume the transportation of oil in the wake of the three derailments last week in Wisconsin.

The first derailed (BNSF) train hurled 32 cars off the tracks outside of Alma, Wis., pouring more than 18,000 gallons of ethanol into the Mississippi River upstream of Winona. The Environmental Protection Agency (EPA) report notes that ethanol (denatured alcohol) is flammable and toxic to aquatic organisms and human life — and it’s water soluble. Though the EPA and Wisconsin DNR admitted they could not remove the toxic product from the water; site coordinator Andy Maguire claims that since they cannot detect concentrated areas of ethanol, it is not negatively impacting the surrounding aquatic life. This was the third derailment on the Upper Mississippi River Wildlife Refuge in the last nine months, according to the community advocacy group Citizens Acting for Rail Safety (CARS).

The next day, 13 DOT-111 tankers with upgraded safety features derailed in Watertown, Wis., spilling crude oil and forcing residents to evacuate from properties along the CP tracks. Four days later, another train derailed a mere 400 feet from that spill site.

Train derailment, Watertown, Wisconsin << fox6now.com

How can we possibly feel safe with ever-greater amounts of toxic products hurtling down inadequately maintained infrastructure every single day? A report released last week by the Waterkeeper Alliance found that “[s]ince 2008, oil train traffic has increased over 5,000 percent along rail routes … There has also been a surge in the number of oil train derailments, spills, fires, and explosions. More oil was spilled from trains in 2013 than in the previous 40 years combined.”

Emergency management has become routine rather than remedial. Teams show up, “contain” the spills, replace some track, and the trains roll on. With forecasts that Canadian oil production will expand by 60,000 barrels per day this year, and an additional 90,000 barrels per day in 2016, toxic rail traffic shows no signs of decreasing.

Energy giant Enbridge has taken this as its cue to size up northern Minnesota and plot pipeline (through Ojibwe tribal lands and the largest wild rice bed in the world) between the North Dakota Bakken oil fields and refineries in Wisconsin and Illinois. Its momentum depends on us puzzling over the false dichotomy of choosing to move oil by pipeline or by rail. At the June 3 Public Utilities Commission hearing, it admitted the proposed Sandpiper/Line 3 pipeline corridor will not alleviate railway congestion but rather potentially reduce “future traffic.” It uses this assumption of unregulated growth to make people today think they have no choice but to sell out the generations of tomorrow.

Proponents of the line want us to choose our poison: will it be more explosive trains or more explosive trains and leaky pipelines? What if an oil tanker derailed on Huff Street in the middle of rush-hour traffic and we became the next Lac-Mégantic (where an oil train exploded downtown killing 47 people)? What if a hard-to-access pipeline spewed fracked crude oil into the headwaters of the Mississippi River?

The real harm is in the delusion that we should accept and live with these risks. It is delusional that despite repeated derailments and toxic spills, business should continue as usual. It is delusional to think the oil and rail industry have our communities’ best interests at heart.

We have the vision, the intelligence, and the technology to choose a way forward that does not compromise our resources for the generations to come. As Winona Laduke says, “I want an elegant transition. I want to walk out of my tepee, an elegant indigenous design, into a Tesla, into an electric car, an elegant western design.” Fossil fuels are history. We need to keep them in the ground and pursue sustainable energy alternatives or risk destroying the water and habitat on which all our lives depend.

 

Bakken Crude, Crude By Rail, Diluted bitumen (Dilbit), Emergency Readiness & Response, Evacuation, Fire, First responder training, Flash point, Funding for emergency response, Let it burn, Spill, Tar sands crude

Templeton California retired fire chief: ‘Do not understate risk of oil trains’

Repost from the San Luis Obispo Tribune

Retired Templeton fire chief: Do not understate risk of oil trains

HIGHLIGHTS
• Despite training, emergency responders may not be able to prevent hundreds of fatalities in a derailment
• Highly flammable Canadian crude more dangerous than California crude
• Project should be denied if safety requirements can’t be enforced

By Greg O’Sullivan, October 23, 2015

Columnist John Peschong in his Aug. 23 column “Local responders are up to task” describes the extensive training and dedication of our emergency responders. This (in his opinion) means “emergency medical technicians and fire crews stand ready to protect us from any disaster,” including an oil train derailment and fire.

Greg O’Sullivan
Greg O’Sullivan, Retired Templeton Fire Chief

Having retired from the fire service after 38 years in the profession, as well as being a qualified hazmat technician and hazmat incident commander, I feel I can speak with greater authority about the ability of local responders to respond to an oil train derailment involving a fire and/or spill.

Mr. Peschong is correct when he states that many hours and dollars have been spent to train our emergency responders and they are capable of mitigating most emergencies. What he doesn’t explain is that an oil train derailment involving multicar fires in a highly populated area could result in hundreds of deaths, despite herculean efforts of first responders. For the incident commander of a hazmat incident, the team’s first responsibility is the safety of the public and our responders. In the case of a multiple car derailment involving fire, evacuation would be the highest priority.

If a life hazard exists, efforts focus on fire suppression to protect rescue operations. The area is isolated, and mutual aid as well as other authorities are notified to assist in the emergency. If evacuation has been successful and no further life hazard exists, then, and only then, could tactical decisions be made concerning whether or not fire suppression should be attempted, or whether the fire should be allowed to burn. It should be noted the closest Type 1 or 2 hazmat team is in Santa Barbara County.

Phillips 66 recently delivered beautifully designed surveys to some area residents expounding the virtues of its oil train project. But nowhere does it explain that approval of the project means five oil trains per week coming through San Luis Obispo County, each train pulling 80 tank cars filled with highly flammable Canadian crude oil. (That would be 500 million gallons per year.)

Al Fonzi in his Oct. 9 Viewpoint “Fear campaign against Phillips” declares that the tar sands crude oil (dilbit) Phillips 66 wants to transport from Canada is no more dangerous than the California crude from San Ardo that has been transported through the county by train for several decades. Mr. Fonzi bases this claim on the fact that the Canadian crude and San Ardo crude have similar vapor pressures.

Vapor pressure is only one measure of the hazard of a liquid. Fire professionals are far more familiar with flash point as the main determinant of flammability of a liquid. The flash point of California crude, like that found in San Ardo, ranges 199 to 232 degrees Fahrenheit (MSDS Product 94-0007-02). In contrast, the flashpoint of Canadian crude is reported to be minus 30 degrees (MSDS Heavy Crude/Diluent mix), comparable to gasoline at minus 42 degrees, both of which are considered highly flammable.

An oil train derailment involving multicar fires in a highly populated area could result in hundreds of deaths, despite herculean efforts of first responders.

Suppose a derailment involves only a spill. What would a single car rupture spilling 30,000 gallons of oil in the Salinas River do to the water supply of Atascadero, Templeton and Paso Robles? The train tracks parallel the Salinas. Mr. Fonzi says opponents of the oil trains are running a “cynical campaign to terrorize the public.”

It is unfair and inaccurate to label the many organizations and individuals who oppose the Phillips 66 oil train project as uninformed, fearful citizens. Opponents of the oil train project include such well-respected bodies as the League of Women Voters, National Education Association and 40 public bodies including city councils, school boards, fire chiefs’ organizations and elected officials, as well as the editorial board of The Tribune.

The final Environmental Impact Report is nearing completion, which will bring the project before the Planning Commission. Because of the serious local and regional safety issues of the project, I agree with and support the League of Women Voters that the Planning Commission and Board of Supervisors must “insist upon full and enforceable mitigations” for all risks, and that if these safety requirements cannot be enforced by the county, the project should be denied.

As a retired fire service professional, I believe protecting the safety of communities along the rail corridor outweighs any perceived benefit of the project. Don’t be misled by PR firms (similar to the one John Peschong represents) who are paid to spin the topic for Phillips 66. Please take the time to get the facts for yourself.

Greg O’Sullivan spent 38 years in the fire service, including 12 years as Templeton fire chief. After retiring, he served four years on the Board of Directors of the Templeton Community Services District.