Many are concerned with safety risks caused by hauling crude oil by rail, but the other risks posed by railroads aren’t a public concern
There are no pipelines that bring crude oil into California. For decades, the fuel that powers the state’s 32 million vehicles has come from tanker ships or in-state production.
But government regulators predict a surge in U.S. oil production will means a steep increase in the number of trains carrying it to California refineries.
The Ventura County Star reported (http://bit.ly/1jCCGBR ) Sunday that the increase in rail traffic will happen quickly, jumping from 9,000 carloads in 2011 to more than 200,000 carloads by 2016, according to California Energy Commission estimates.
Within a few years, analysts predict 25 percent of oil consumed in California will arrive at state refineries by rail.
According to the California Public Utilities Commission, five California refineries have facilities either about to come online or in the planning stages that will let them receive crude-oil deliveries by rail.
The newspaper said state and local agencies are reviewing plans for responding to possible spills and derailments, with more trains carrying oil through mountain passes, over bridges that cross nearly every major waterway and through the neighborhoods of millions of Californians.
Gov. Jerry Brown has asked lawmakers for an additional $6.7 million for oil-spill response. In its request, the administration noted the increased rail shipments will consist mostly of North Dakota Bakken shale crude oil.
“This type of oil is extremely flammable, and its transport increases the risk of serious accidents,” it says.
Because it contains more natural gas than heavier crude, Bakken oil can have a lower ignition point.
To date, the increased traffic has been mostly in Northern California, involving trains bound for refineries in the San Francisco Bay Area.
Diane Bailey, a senior scientist with the Natural Resources Defense Council, told the newspaper that statistics from the federal Pipeline and Hazardous Materials Safety Administration show there were more rail accidents involving oil spills last year than over the previous 30 years combined.
Information from: Ventura County Star, http://venturacountystar.com
WASHINGTON — Grain producers, manufacturers and coal shippers told federal regulators Thursday that rail service has deteriorated drastically in the nation’s midsection in recent months, leaving crops in piles on the ground and fuel stocks low at electric power plants as resources go undelivered.
Railroad representatives told the federal Surface Transportation Board that a brutal winter, combined with a record grain harvest, was to blame for the delays, but the industry’s critics charge that their shipments are taking a back seat to crude oil.
Railroads moved virtually no crude oil just a few years ago, but a surge in production in North Dakota’s Bakken region has strained rail capacity in the Midwest.
It’s putting the squeeze on farmers who rely on rail to turn their crops into cash and delaying passengers on Amtrak’s Empire Builder between Chicago and the Northwest, several witnesses testified.
“The extreme delays to Amtrak and other users of the network are a symptom of a fragile network that is strained and struggling to react,” Federal Railroad Administrator Joseph Szabo told the board, which mediates disputes between railroads and their customers.
Bob Wisness, the president of the North Dakota Grain Growers Association, said the rail snarls had put his state’s farmers in jeopardy. Millions of bushels of wheat, barley and corn are “unmarketable” because of rail deliveries that are weeks and months late.
“We have had big crops before,” he testified, “but we have never had service this poor from the railroads.”
Bob Kahn, the general manager of the Texas Municipal Power Agency, testified that the service problems began almost a year ago. The state depends on coal deliveries by rail to generate a third of its electricity, and lately railroads have not kept up, Kahn said.
Despite reassurances from BNSF, the railroad that supplies the coal from Wyoming’s Powder River Basin, Kahn said, some Texas plants only have a 10-day supply and could run out by the summer, when electricity demand reaches its peak in the state.
“They keep saying, ‘Don’t worry, you’re not going to run out of coal,’ ” he testified. “We don’t see it getting any better.”
While railroad officials acknowledged the problems and the shippers’ frustrations, they said they weren’t shoving other commodities aside for crude oil.
“I make more money hauling grain than I do hauling crude,” said Keith Creel, the president and operating chief at Canadian Pacific Railway.
Much of the shippers’ ire was directed at BNSF. The railroad, based in Fort Worth, Texas, has become the nation’s largest hauler of crude oil in trains, mostly from North Dakota.
BNSF said that it alone had absorbed half the growth in U.S. rail volumes last year. Traffic spiked late last year amid a record grain harvest, the railroad said, and the onset of one of the worst winters in memory.
The railroad said it was hiring thousands of new workers, ordering new locomotives and expanding track capacity.
“We’re not 100 percent there yet, and it’s something we continue to work on week by week,” testified Stevan Bobb, the executive vice president and marketing chief for BNSF.
Vast oil trove trapped in Monterey Shale formation
San Joaquin Valley’s Monterey Shale formation may hold 15 billion barrels of oil, but no one has found an affordable way to extract it.
SHAFTER, Calif. — A bustling city is sprouting on five acres here, carved out of a vast almond grove. Tanker trucks and heavy equipment come and go, a row of office trailers runs the length of the site and an imposing 150-foot drilling rig illuminated by football-field-like lights rises over the trees.
It’s all been hustled into service to solve a tantalizing riddle: how to tap into the largest oil shale reservoir in the United States.
Across the southern San Joaquin Valley, oil exploration sites have popped up in agricultural fields and on government land, driven by the hope that technological advances in oil extraction — primarily hydraulic fracturing and acidization — can help provide access to deep and lucrative oil reserves.
The race began after the federal Energy Information Administration estimated in 2011 that more than 15 billion barrels of recoverable oil is trapped in what’s known as the Monterey Shale formation, which covers 1,750 square miles, roughly from Bakersfield to Fresno.
But getting at that oil isn’t easy. The Monterey Shale is unlike other oil shale formations across the United States. In those booming oil fields, reserves are pooled in orderly strata of rock. Once the rock is cracked open by fracking or other means, operators can sink a single well with multiple horizontal shafts and pull in oil from a wide area.
California’s geology is far more complicated. The earth under the Monterey Shale has undergone constant seismic reshaping that has folded, stacked and fractured the substrate, trapping the oil in accordion pleats of hard rock at depths of up to 12,000 feet. To reach the crude using conventional methods requires oil companies to drill far-deeper wells, and more of them — a prohibitively expensive undertaking.
To crack the code, companies are busily drilling test wells here, using various fracking and acidization techniques in search of cheaper solutions. So far, no one seems to have found a method to profitably extract the oil.
“Very smart engineers are spending their waking hours trying to come up with the magic formula,” said Rock Zierman, chief executive of the California Independent Petroleum Assn., a trade group that has many Monterey Shale prospectors among its members.
“What we do know is there is a heck of lot of oil down there,” Zierman said. “What we don’t know is how we can get it out of the ground in an economically viable way to justify the heavy investment.”
The shallow, 1,000-foot wells in the established Bakersfield oil patch might cost a hundred thousand dollars to sink. In the Monterey formation, that expense might run to $5 million, and with every chance of yielding a dry hole.
Despite the difficulty getting at the oil, the potential bonanza is too big for many oil companies to ignore.
In Kern County — where the bulk of the Monterey formation lies — available land for drilling has nearly all been snapped up. Speculators are believed to be responsible for driving up the cost of obtaining leases.
In 2007, the average successful bid for an acre of land for oil leasing went for $2, according to the federal Bureau of Land Management. The price has since soared above $500, with some recent parcels going for twice that. Oil companies drove up prices sharply in 2010, as various federal assessments began to hint at the magnitude of the Monterey reserves.
The leading edge of the exploration boom is pushing Bakersfield’s oil patch — which has reliably produced oil for more than 100 years — into long-established agricultural tracts. Oil companies are now paying farmers for their water rights, land and, in some cases, buying their homes outright to get at the reserves that might lie underneath.
Exploratory wells are sprouting near homes, schools and in the town of Shafter, where the city charges drillers to hook up to corner fire hydrants for the water they require. Companies are searching for the best well sites with 3D seismic “thumper trucks” that send shock waves underground to create a picture of subterranean deposits.
Should energy companies find a way to crack the Monterey’s deeply folded rock, the ensuing boom could be transformative for California. A USC economic study forecast an enormous impact: A Monterey-fueled oil shale industry could create 2.3 million new jobs by 2020 and boost the state’s GDP by as much as 14%.
The report, which was funded by the energy industry and published in 2013, projected that the Monterey formation had the potential to increase oil production in California sevenfold.
The implications are profound, touching on public health, water use, water quality and the loss of agricultural land. The subsequent transformation also would alter the lives of families living in the resolutely rural communities dotting the valley.
For Tom Frantz, a retired teacher and third-generation farmer, the exploratory drilling is already too much.
“This is prime farmland and they have drilled between 200 and 300 wells in the last 10 years in the Monterey Shale,” Frantz said. “Every one took out an acre or two of farmland. Every one has used hundreds of thousands of gallons of water. Each one has contributed to our air pollution. Each one has had spills on the ground of different chemicals and crude oil. Each one is emitting methane as we speak.
“If this thing happens and there are thousands and thousands of wells — that’s scary because an accident is bound to happen,” he said.
All the predictions — both enthusiastic and dire — are predicated on cracking into the stubborn Monterey formation.
David Hughes, a geoscientist at the Santa Rosa-based Post Carbon Institute, studied both the USC report and the federal data and then published his own assessment, which casts a skeptical eye on the rosy assumptions. His conclusion: “It’s not going to happen.”
Reviewing industry-generated data, Hughes said test wells in the Monterey so far have been expensive and unproductive.
“California oil production peaked in the early ’80s,” Hughes said. “It’s now down to half that. If the Monterey Shale can just maintain California’s production level — I would think that’s about all it could do.”
The uncertainty has kept some of the industry’s heavy hitters on the sidelines. And although the big companies are loath to reveal their strategies, Chevron‘s chief executive has said, “The jury’s out on Monterey Shale.”
Gabe Garcia, manager of the Bakersfield office of the BLM, which permits drilling on federal land, said no one has yet found enough accessible crude to make extraction profitable. “We’ve got areas where they’ve drilled several wells and they are still trying to prove economics to us,” Garcia said.
Any technology that succeeds will probably include either hydraulic fracturing — fracking — or acidizing. Fracking is a controversial but long-used technique that sends a high-pressure mixture of water, chemicals and sand into a well bore to explode the “tight” rock formation and free the oil. Acidizing entails shooting a potent mix of highly corrosive chemicals into the formation to dissolve the rock.
Both practices are under review by the state of California and the BLM and are, at the moment, unregulated.
Another aspect of fracking presents a unique challenge in California. The process of reinjecting drilling fluids into the ground is thought by some to stimulate minor seismic activity around drilling pads, dubbed “frackquakes.”
Fracking operations in Arkansas, Oklahoma and Pennsylvania have measured this phenomenon, but industry officials vigorously dispute the theory.
The San Andreas fault traces the western outline of the Monterey formation.
Oil trains into Richmond spark lawsuit
David R. Baker
Updated 6:45 am, Saturday, April 5, 2014
The cargo is the same kind of crude that fueled a deadly explosion last summer when a train carrying the oil derailed in a small Quebec town, killing 47. Now environmentalists are suing to prevent any more shipments to Richmond.
The suit, filed last week in state Superior Court in San Francisco, would revoke a permit issued by a regional agency in February that allows Kinder Morgan to unload oil trains in Richmond at a facility originally built to unload ethanol.
The Bay Area Air Quality Management District granted the permit without studying how the switch from shipping ethanol to oil could affect the environment, said Kristen Boyles, staff attorney with Earthjustice, the group that filed the suit on behalf of four other environmental organizations.
“These things are going in without a lot of thought to their safety, their impact on the environment and their possible health effects,” Boyles said. “That’s what’s really frustrating with this situation – how little we know until this is rolling through our backyards.”
Kinder Morgan declined comment.
Ralph Borrmann, an agency spokesman, said the change in fuels handled by Kinder Morgan’s rail-yard facility would not increase air pollution – his agency’s primary concern.
“There were no emissions consequences as a result of the permit, no net increase of emissions, which is what we look at,” Borrmann said.
Just a few years ago, California didn’t import oil by rail. But that’s changing fast.
In 2009, railways carried just 45,000 barrels of oil into the Golden State, according to theCalifornia Energy Commission. By last year, that number had soared to 6.2 million barrels. A barrel equals 42 gallons.
California’s refineries have turned to rail to access a glut of petroleum in the Great Plains. Oil production in the Bakken Shale formation that lies beneath North Dakota and Montana has surged so much, so quickly, that area’s pipelines lack the capacity to transport the fuel. As a result, the Bakken oil sells at a discount to other kinds of crude.
Oil by rail is “about discounted oil, delivered to your doorstep,” said Gordon Schremp, senior analyst with the Energy Commission.
The amount of oil carried by rail is rising nationwide. While most of those shipments reach their destination without incident, the United States and Canada have recently seen a series of oil-train accidents leading to explosions and fires, including last July’s derailment in Lac-Megantic, Quebec. In January, the U.S. Pipeline and Hazardous Materials Safety Administration issued an alert warning that Bakken crude, much lighter than many other grades of oil, may be more flammable as well.
The warning spurred opposition to a series of oil-by-rail projects in California. Valero’s refinery in Benicia is seeking approval to build a rail yard that could move 70,000 barrels of oil each day, replacing more than half of the petroleum the refinery now imports from abroad, via ship.
In Pittsburg, another project would bring in oil by ship, pipeline and rail. The $200 million proposal, by WesPac Energy, would refurbish an old Pacific Gas and Electric Co. facility to import, store and supply oil to Bay Area refineries.
Community groups have spent months fighting those proposals. But most Richmond residents knew nothing about Kinder Morgan’s Richmond rail facility until television station KPIX reported on the issue last month.
Kinder Morgan applied to convert its existing ethanol offloading facility last year, and won an operating permit from the air district in February. KPIX filmed trucks carrying oil from the facility to the Tesoro refinery in Martinez.
A Tesoro spokeswoman on Friday declined to confirm whether the refinery collaborates with Kinder Morgan’s Richmond facility. But she said the refinery uses about 5,000 to 10,000 barrels of oil per day taken from rail shipments, equal to between two and four train shipments per month.
Earthjustice and its partners in the suit – the Asian Pacific Environmental Network, Communities for a Better Environment, the Natural Resources Defense Council and theSierra Club - want Kinder Morgan’s operating permit in Richmond revoked until the company conducts a full environmental impact review.
“The risk of train accidents is huge with this kind of crude oil,” Boyles said.
Refinery plans to ship 100 train cars of crude oil through Sacramento
Sacramento officials say they only recently learned that a proposed rail terminal at the Valero company’s refinery in Benicia could dramatically increase the number of trains carrying crude oil through the region, including through populated downtowns. They say they are scrambling to fashion a joint statement to Valero officials expressing concerns.
The trains would travel on the Union Pacific line that runs through both the Roseville and downtown Sacramento railyards, as well as through downtown West Sacramento and Davis. Those are the same tracks that carry Capitol Corridor passenger trains between Sacramento and the Bay Area.
The Valero rail terminal is one of several being proposed by refineries responding to a major shift in how crude oil is transported nationally. Currently, the Benicia refinery receives most crude via pipeline and ships. But Valero and other companies are moving quickly toward more rail transport to align with the boom in hydraulic fracturing, or fracking, in inland areas like North Dakota, where much of the new oil is a lighter, more flammable type from the Bakken oil fields.
“These rail shipments are the wave of the future,” Sacramento city official Fran Halbakken said, “but there is not much information out there.”
Data compiled by the California Energy Commission shows crude oil shipments into the state via rail from other states jumped from 1 million barrels in 2012 to more than 6 million in 2013. Local fire officials, who would be the first responders in case of crashes or derailments, say they do not receive detailed information on how many of those train cars come through Sacramento.
“We’re trying to figure what is the baseline that comes through now,” said Davis city official Mike Webb. “All jurisdictions would want to know.”
Union Pacific officials say their company, one of the major rail transporters in California, shipped less than 1,000 carloads of crude oil statewide on a monthly basis last year – or 33 cars a day. A UP spokesman declined this week to say how much of that goes through Sacramento. “We are not currently breaking out how much crude we move through a specific community,” UP’s Aaron Hunt said. “We are only giving out our state number.”
BNSF, the other major rail transporter in California, also declined to discuss crude oil routing information.
Valero’s terminal project description offers a brief but clear statement on plans for major shipments through Sacramento: “(Union Pacific Railroad)-operated locomotives would haul up to 100 crude oil rail cars a day from the UPRR Roseville railyard to the refinery,” the report states.
And more rail shipments could be on their way: Phillips 66 says it intends to begin deliveries of crude by rail sometime next year to its coastal refinery in Santa Maria. Union Pacific would deliver as many as five 80-car trains a week of oil “from a variety of sources in North America.” One route could pass through Sacramento.
Officials with the state Office of Spill Prevention and Response say refineries around the state may ultimately have the capacity to process up to 143 million barrels of crude shipments via rail a year, far more than the 6 million shipped last year.
Last year, a train carrying Bakken crude oil derailed in a Quebec town, sparking a massive fire that killed 47 people and leveled the town center. Subsequent derailments in Alabama and North Dakota, though not fatal, caused fires and evacuations and showed that disaster could strike again.
While such incidents are rare, local fire officials say the pressure is on to be more prepared for that possibility.
“Any time you increase numbers, you increase the probability of problems that would come with that,” said Sacramento City Interim Fire Chief Dan Haverty.
Last week, The Sacramento Bee reported that McClellan Business Park is being used as a transfer station where oil, including Bakken crude, is being moved from rail cars to tanker trucks. Local safety officials told The Bee they knew little about the McClellan operation.
Valero and Benicia officials are expected to publish a draft environmental impact report later this month on the company’s planned rail terminal next to Interstate 680 just north of the Benicia-Martinez Bridge. Sacramento officials say they likely will issue a joint statement to Valero on what they think should be done to increase safety in “up-line” cities.
The Sacramento Area Council of Governments is planning a meeting of its 32 local cities and counties on April 22 to discuss the issue.
West Sacramento Fire Chief Rick Martinez said officials may ask that Valero be required to finance extra emergency training and safety equipment for up-line communities, and that there be tight rules on when or whether trains are allowed to sit on track sidings.
He said the emerging national discussion about rail safety may provide a platform for cities to push for other safety improvements, such as better “real-time” information on what materials are coming through town, so fire and hazardous materials crews know what they are getting into as they head to a call.
“As they look at this Bakken oil, is there a way through technology to get more information to local agencies?” Martinez said. “We are trying to take advantage of the interest to pose the questions that may guide” future regulations.
Aides to Rep. Doris Matsui, D-Sacramento, say she has begun exploring the issue as well. Matsui’s office issued a statement this week, saying “it is imperative that the rail cars are safe and that local agencies are prepared for the increased risk.” Aides said Matsui sent a letter to the Department of Homeland Security recently, “seeking additional federal funding for first-responder training, arguing that the increased risk posed by these oil cars warrants additional federal funds.”
Although the federal government regulates rail shipments, federal rules haven’t caught up to the surge in oil traffic on the nation’s rail network. That’s left local leaders and community activists in cities around the country at the forefront of pushing for changes in state and federal laws.
Last week, the city councils of Berkeley and Richmond voted to oppose crude shipments on rail lines through their cities. The resolutions call for state lawmakers and members of Congress to seek tougher regulations.
Several environmental groups filed a lawsuit last week against pipeline operator Kinder Morganand the Bay Area Air Quality Management District. The groups said the agency quietly issued a permit to Kinder Morgan for a crude-by-rail facility in February without reviewing potential environmental and health impacts.
“We don’t accept that as a foregone conclusion,” said Diane Bailey, a senior scientist with the Natural Resources Defense Council, one of the groups in the lawsuit.
A group of community activists in Benicia and Martinez has been trying to stop Valero and another refiner, Tesoro, from expanding their crude oil deliveries by rail. And they’re pressing local, state and federal officials to push for tougher oversight of crude oil shipments by rail.
“People are afraid that anybody along the rail line could become the next (Quebec),” said Andres Soto, a community activist in Benicia.
Oil industry officials say fears of derailments and fires are overstated. The Association of American Railroads, an industry group, says 99.997 percent of hazardous materials shipped by rail reach their destination without incident.
Charles Drevna, president of the American Fuel & Petrochemical Manufacturers Association, dismissed the movement to oppose new terminals and additional rail shipments, saying “you’re always going to see the anti-fossil fuel mentality in California.” He said, given the cost savings, “the vast majority of Californians will be happy to get Bakken crude.”
Call The Bee’s Tony Bizjak, (916) 321-1059.
Read more here: http://www.sacbee.com/2014/04/02/6287449/refinery-plans-to-ship-100-train.html#storylink=cpy