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RIGZONE – Report: US Energy Secretary Favors Reducing Oil Shipped By Rail

RIGZONE – Report: US Energy Secretary Favors Reducing Oil Shipped By Rail.

 

by  Reuters
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Wednesday, February 19, 2014

Reuters

NEW YORK, Feb 19 (Reuters) – U.S. Energy Secretary Ernest Moniz supports reducing the amount of crude oil shipped by rail in favor of pipelines that are safer, cheaper and cleaner, Capital New York reported on Wednesday.

“What we probably need is more of a pipeline infrastructure and to diminish the need for rail transport over time,” he said in an interview published on the Capital New York website.

He said the infrastructure is “not there” to handle the surge in North Dakota Bakken oil production from near zero to 1 million barrels per day (bpd).

“Frankly, I think pipeline transport overall probably has overall a better record in terms of cost, in terms of emissions and in terms of safety.”

A Department of Energy spokesman was not immediately available to provide more detail on Moniz’s comments.

His comments are among the first by a senior Obama Administration official to signal an apparent preference for shipping oil from places like the Bakken shale by means other than rail lines, in the wake of a series of explosive derailments that have alarmed the public.

While pipelines are generally a much cheaper form of transport, shipping crude in mile-long trains has become a popular alternative since new terminals can be built more quickly than pipelines to serve booming remote shale patches, and offer greater flexibility for refiners.

Moniz has bemoaned the lagging pace of infrastructure development before, but has not been so blunt in backing pipelines over rail shipments.

President Barack Obama has been considering whether to greenlight construction of the Keystone XL pipeline from Canada, without which there could be a significant increase in crude moved by rail, according to a State Department report.

U.S. regulators are considering imposing tougher standards on older models of oil tank cars. Moniz said the U.S. Department of Transportation could issue new regulations this year.

“There’s been a handful of train accidents and that’s been quite troubling,” he said. “We have been transporting oil products by train with a decent safety record over time and there’s a lot of it.”

(Reporting by Jonathan Leff; Editing by David Gregorio)

Just before Lac-Mégantic, railways sought to reduce inspections – Canada – CBC News

Just before Lac-Mégantic, railways sought to reduce inspections – Canada – CBC News.

Just before Lac-Mégantic, railways sought to reduce inspections

Just before Lac-Mégantic, railways sought to reduce inspections 2:02

Canada’s major freight rail carriers attempted to reduce safety inspections on rail cars carrying dangerous goods exactly a month before the Lac-Mégantic, Que., tragedy, CBC News has learned.

The Railway Association of Canada, whose major members include CNand CP Rail, asked the federal transport minister at the time, on June 7, 2013, to repeal rules that require certified rail car inspectors to do detailed examinations of brakes, axles, wheels and car components before they are loaded.

Dangerous goods - rail map

The RAC argued that the examinations done at designated yards were “redundant” and “overlay,” given that train conductors and engineers walk the length of their trains, and rail lines now are equipped with “wayside inspection detectors, wheel impact detectors and cold wheel set detectors.”

Last month, the RAC twice denied they had ever sought to repeal the inspection rules, until CBC News confronted the organization with their own correspondence. A spokesman released a statement Tuesday afternoon. 

“The RAC proposed language to modify the rules,” wrote Paul Goyette, and among them was a suggestion to remove an inspection on dangerous goods cars before they are loaded. “In some instances, depending on route and railways involved, it might result in the elimination of a redundant inspection, but that would not have any direct impact on safety based on industry research, study and science.”

Goyette acknowledged in an earlier e-mail that “in light of events at Lac-Mégantic and in the interest of safety” the RAC withdrew their pitch to reduce inspections.

Late on July 6, 2013, an unmanned, 72-car train carrying crude oil rolled down a hill and into the town of Lac-Mégantic, Que., where it derailed and exploded, killing 47 people.

The RAC wrote to Transport Canada 12 days later, saying: “The RAChas had discussions with Transport Canada surrounding the proposed change, and at this time we both feel there is more work to be done in this area. As such, we would ask that you rescind our filing and we will revisit this matter at a future date.”

Early Wednesday, the office of Transport Minister Lisa Raitt — appointed days after the tragedy — told CBC News: “The RACwithdrew their pitch to reduce inspections and it’s a good thing they did, because I would have never allowed this to happen.”

Unions warned of risk

Unions consulted on the proposed change had objected from the outset, citing safety concerns for employees and the general public.

Robert D. Smith of the Teamsters Canada Rail Conference wrote on May 21, saying that “the boom in oil production has prompted a huge rise in crude-by-rail transport as output has outgrown the existing pipeline network. Recent train derailments causing spills have heightened concerns about the environmental impact of rail shipments.”

Even though it was six weeks before the events at Lac-Mégantic, Smith wrote: “This is therefore not the time to be considering a relaxation of rules … but rather a time to maintain that which is in place to safeguard these increased movements.”

Transport Canada figures show that since 2006, the volume of dangerous goods being shipped by train in Canada has risen more than 30 per cent. However, the numbers of accidents and incidents reported by rail companies involving dangerous goods appears to be falling.

The Transportation Safety Board’s database of dangerous goods derailments and incidents reported by companies shows 3774 mishaps across the country between 2000 and 2012.

Evidence ‘isn’t in’

The TSB data, obtained by CBC News, suggest one-third of all problems with dangerous goods rail cars was detected through inspections. Often, workers noticed the problem either by smelling it or spotting a leak.

Brian Stevens of Unifor, which represents the carmen who would normally make comprehensive inspections, echoed his May 23 objections to the proposed change, telling CBC News about the “over-reliance we see creeping into the industry where they want to rely more and more on the technology — hot box detectors, impact detectors, cold wheel detectors — to do away with the car inspections in the safety maintenance locations and say ‘listen, we have this terrific technology that’s going to tell us when cars are faulty.’

“And the evidence isn’t in on that.”

Stevens points to the recent derailment in Plaster Rock, N.B., where investigators found a broken axle contributed to the accident.

“That train had just recently passed a hot box detector and an impact detector, and didn’t note that,” Stevens said. “We had a similar situation last summer in Sudbury, where there was a derailment, took out a bridge (over the Wanapitei River), and that train I believe only nine miles earlier had gone past a hot box detector that didn’t detect the failure in the wheels.”

‘Dismal’ success rate

In his May 23 letter, Stevens said the most important inspection is on brakes.

“Data provided by CP in relation to Automated Train Brake Effectiveness (ATBE) scanners indicate a dismal train scan success rate of 69 per cent to date,” he wrote. “This misplaced reliance on technology thereby confirms that over 30 per cent of freight car equipment passing these detectors are not monitored.”

Last spring, the RAC argued that it had done a risk assessment and noted that the combination of inspections — by conductors and locomotive engineers who “have been extensively trained” to spot problems, and the automated detectors — would help prevent derailments.

Transport Canada refused to tell CBC News how many of their own inspectors are dedicated to inspections of dangerous goods cars, and whether those inspectors are on the ground or simply monitoring rail company reports on self-inspection.

In an email to the CBC, Transport Canada said: “Railway companies are responsible for the safety of their rail line infrastructure, railway equipment and operations. This includes ongoing inspection, testing and maintenance programs in accordance with regulatory requirements, as well as any particular operating and environmental conditions.”

Transport Canada did not respond to questions about its discussions with the RAC to reduce the inspections.

Please send any tips on this or other stories to John Nicol andDave Seglins.

California Getting Record Volume of Canadian Oil by Rail – Bloomberg

California Getting Record Volume of Canadian Oil by Rail – Bloomberg.

By Lynn Doan and Dan Murtaugh  Jan 31, 2014 7:34 PM ET

California, the third-largest oil-refining state in the U.S., is bringing in a record volume of oil fromCanada by rail as it faces shrinking supplies from Alaska and within the state.

The most populous U.S. state received 709,014 barrels of crude from Canada by rail in December, a 4.9 percent increase from November and up from zero a year ago, data posted on the state Energy Commission’s website show. Canada made up 67 percent of the state’s total oil-by-rail receipts. North Dakota, where fields in the Bakken formation are producing a record volume of crude, shrank to a 5.9 percent share.

U.S. West Coast refiners from Valero Energy Corp. (VLO) to Tesoro Corp. (TSO), lacking pipeline access to the glut of shale oil in the middle of the country, have been turning to rail to counter declining supplies in California and Alaska. California brought in a record 2.83 million barrels of oil by rail in the fourth quarter from all sources, almost double the amount from the three months prior, the state said.

“We’re seeing a lot of Canadian crude-by-rail loading facilities coming online, so it’s no surprise it’s beginning to show up in California,” David Hackett, president of energy consulting firm Stillwater Associates in Irvine, California, said by telephone. “Refinery configuration in California is oriented toward heavy or medium, sour crude, and the Canadian barrels, which are heavy and somewhat sour, are a better fit than the light Bakken barrels.”

North Slope

Alaska North Slope crude, which made up 12 percent of California’s oil slate in 2012, has traded an average $27.73 a barrel above Western Canadian Select, a heavy sour blend, over the past month, data compiled by Bloomberg show. Bakken oil has traded $16.09 a barrel above Western Canadian.

“The discounts have been pretty big, an indication of how constrained the pipelines are up in Canada,” Gordon Schremp, a fuels analyst at the state Energy Commission, said by telephone fromSacramento. “I’m not surprised to see more Canadian come in. Wait until some of these rail projects get built here. The economics will be even better than what we’re seeing today.”

Oil-by-rail receipts from Wyoming totaled 221,793 barrels in December, making up the second-largest share of the state’s volume at 21 percent. North Dakota sent 62,325 barrels and New Mexico 12,927.

Alaskan oil output has declined every year since 2002 as the yield from existing wells shrinks. Alaska North Slope crude production averaged 567,600 barrels a day in December, down from 582,150 a year earlier, data posted on the Alaska Department of Revenue’s website today showed.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Dan Murtaugh in Houston at dmurtaugh@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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