oil by rail

Tue, 2014-09-09 05:00Justin Mikulka
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Goldman Sachs Warns Investors About Tar Sands By Rail Challenges While Investing in Tar Sands By Rail

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In 2009, Matt Taibbi wrote a piece in Rolling Stone in which he described the investment bank Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” 

Apparently tar sands oil smells like money. And thus the vampire squid has found another target. As Reuters reported on August 29:

A Goldman Sachs-led rail terminal operator, USD Group LLC, announced on Friday plans to form a Master-Limited Partnership this year to trade publicly on the New York Stock Exchange.

This new company will be based around a tar sands rail loading facility in Hardisty, Alberta. That is the same place where the proposed Keystone XL pipeline would begin. USD Group already owns a crude-by-rail terminal in the town, with capacity to load two 120-car unit trains per day.

And with the success of this first phase of development, the company has announced plans to double the capacity of the terminal, which would allow it to load 280,000 barrels per day (bpd). The company has also announced plans to add another 70,000 bpd, which would bring its capacity to 350,000 bpd, or roughly half the proposed capacity of TransCanada’s Keystone XL pipeline.

Mon, 2014-09-08 11:56Justin Mikulka
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How Many Crude Oil Scientists Will Testify At Congressional Science Committee Hearing on Bakken Crude? Zero

Bakken crude

Bakken petroleum: the substance of energy independence.

If you think that sounds like the latest branding from the oil industry’s public relations efforts, you might be right. However, it isn’t an ad — it is the title of the congressional hearing on Bakken oil on Tuesday.

When North Dakota congressman Kevin Cramer first announced he would hold this hearing, he promised to bring together the top scientists to discuss the properties of Bakken crude.

Here’s how he explained it when being interviewed by the 6:30 Point of View television show. 

I want three good solid scientists… consultants apart from all of the politicians and the presidential appointees. And I’ve promised them a very fair thorough review of the data and the evidence and the information. So that we can, you know, answer definitively and scientifically what is the volatility, if you will, of Bakken crude. How does it compare to other crudes?”

Congressman Cramer was apparently unable to find those three good scientists. Here are the five people who will be witnesses at the hearing.

Fri, 2014-09-05 13:30Justin Mikulka
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Safety of Citizens in Bomb Train Blast Zones in Hands of North Dakota Politicians

Lac Megantic train explosion

When North Dakota Congressman Kevin Cramer was asked recently if it was scientifically possible to make Bakken crude oil safer by stripping out the explosive natural gas liquids with a process like oil stabilization, his response was quite telling.

So scientifically can you do it? Sure, but you have to look at it holistically and consider all of the other elements including economics, and is the benefit of doing something like that does that trump other things like speed of trains, and what kind of cars,” he said.

This is very similar to the comments made by Lynn Helms of the North Dakota Department of Mineral Resources according to the July 29 meeting minutes provided to DeSmogBlog by the Industrial Commission of North Dakota.

In response to a question regarding other mechanisms besides oil conditioning in the field, Mr. Helms stated there are other mechanisms — none of them without a significant downside….It makes sense to do the conditioning in the field. There are other options to do it downstream somewhere in a very large and very expensive operation.”

Mon, 2014-09-01 13:46Steve Horn
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Labor Day News Dump: FERC Hands Enbridge Permit for Tar Sands by Rail Facility

On the Friday before Labor Day — in the form of an age-old “Friday News Dump“ — the Federal Energy Regulatory Commission (FERC) handed a permit to Enbridge, the tar sands-carrying corporate pipeline giant, to open a tar sands-by-rail facility in Flanagan, Ill. by early-2016. 

With the capacity to accept 140,000 barrels of tar sands product per day, the company's rail facility serves as another step in the direction towards Enbridge's quiet creation of a “Keystone XL Clone.” That is, like TransCanada's Keystone Pipeline System sets out to do, sending Alberta's tar sands all the way down to the Gulf of Mexico's refinery row — and perhaps to the global export market.

Flanagan sits as the starting point of Enbridge's Flanagan South pipeline, which will take tar sands diluted bitumen (“dilbit”) from Flanagan to Cushing, Okla. beginning in October, according to a recent company earnings call. From there, Enbridge's Seaway Twin pipeline will bring dilbit to Port Arthur, Texas near the Gulf.

Enbridge made the prospect of a tar sands-by-rail terminal public for the first time during its quarter two investor call.

“In terms of the rail facility, one of the things we're looking at is – and the rail facility is really in relation to the situation in western Canada where there is growing crude oil volumes and not enough pipeline capacity to get it out of Alberta for a two or three year period,” Guy Jarvis, president of liquids pipelines for Enbridge, said on the call.

“So, one of the things we're looking at doing is constructing a rail unloading facility that would allow western Canadian crudes to go by rail to Flanagan, be offloaded, and then flow down the Flanagan South pipeline further into Seaway and to the Gulf.”

FERC has given Enbridge the permit it needs to make that happen.

Thu, 2014-08-21 09:32Justin Mikulka
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All Aboard! Tar Sands Bitumen by Rail Set to Eclipse Pipelines Like Keystone XL

“Rail can get you just about anywhere. It's like the Harry Potter stairway. You get on the stairs at one end and they move to wherever you need to go. That's the beauty of the railway. You get on at one end here, with your bitumen or dilbit, and then you can end up in different places depending on what are the best markets.”

That quote is from Pete Sametz, president of Connacher Oil and Gas, speaking to the Daily Oil Bulletin about the appeal of moving tar sands oil by rail. And Sametz isn’t alone in his enthusiasm for rail transportation options for bitumen. 

At the Canadian Institute's North American Pipeline Symposium in June, Randy Meyer of Canadian National railway, told the conference how this situation appeared to him. 

“It's kind of amusing when I read in the paper that there's this angst and gnashing of teeth about Keystone and I'm going, 'My goodness, we're already there.' We can go there and we are. We are shipping product there.

The reality is that tar sands bitumen transport is so well-suited for rail over pipelines that it is now cheaper to move tar sands bitumen by rail than it is by pipeline. If you're a tar sands industry executive, this is your light-bulb moment: Who needs the Keystone XL headache when you can bypass the controversy entirely using existing rail lines? 

Aside from the magical Harry Potter flexibility of rail compared to pipelines, rail also offers the option of moving bitumen without having to dilute it, as is required for pipelines, which makes it cheaper as explained by Randy Meyer. 

“We did a study where we took the American Association of Railway's published rates, which averaged out all the traffic that moves and all its products. That average … is about 16 per cent less than pipeline costs.”

This reality and the recent revelations that the impact of the tar sands oil will be much greater than initially predicted, present a grim picture for the environment, although apparently an amusing and exciting one for oil and rail executives. Companies like Grizzly Oil Sands outline their plans on their website. 

Wed, 2014-08-20 07:00Justin Mikulka and Steve Horn
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Big Rail Cites Bin Laden, Al Qaeda to Fend Off Oil-by-Rail Route Transparency

While many states around the U.S. have released information to the public about the frequency and routes of trains carrying oil obtained from hydraulic fracturing (“fracking”) in North Dakota’s Bakken Shale basin, holdouts still remain. 

Why the delay? Homeland security concerns, claim some companies. 

In an ongoing Maryland court case over the issue of transparency for in-state oil-by-rail routes, a July 23 affidavit from Carl E. Carbaugh — director of infrastructure security for Norfolk Southern — goes into extensive detail about the supposed risk presented by terrorism attacks on “Bomb Trains.” 

In so doing, Carbaugh mentions Al-Qaeda. 

The most recent edition of Inspire magazine, March 2014, the online, English-language propaganda publication of [Al-Qaeda in the Arabian Peninsula], presents a full-page collage depicting varied images…in order to construct an explosive device,” reads Carbaugh’s affidavit

Among these images are a derailed passenger train and a partly covered note paper listing cities in the [U.S.] as well as the terms ‘Dakota’ and ‘Train crude oil.’” 

Carbaugh also cited Osama bin Laden, the late Al-Qaeda international ring-leader, in his affidavit.

Among the materials seized in the May 1, 2011, raid on Osama bin Laden’s compound in Abbottabad, Pakistan, were notes indicating interest in ‘tipping’ or ‘toppling’ trains — that is causing their derailment,” Carbaugh wrote.

Osama Bin Laden Compound Diagram; Image Credit: Wikimedia Commons

Thu, 2014-08-14 06:00Justin Mikulka
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Oil Industry Study Claiming Bakken Crude Safe Contains Whopper of a Disclaimer

casselton bomb train explosion

On December 30, 2013, a train carrying Bakken crude oil crashed in Casselton, North Dakota resulting in a massive explosion. 

In January of 2014, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released their preliminary testing results stating that Bakken crude from North Dakota was more explosive than other crude oils. PHMSA is a part of the Department of Transportation (DOT), the regulatory agency that has ultimate responsibility for any new oil-by-rail regulations.

Then the Wall Street Journal published a study showing the same thing. And now PHMSA has released further data proving this fact — Bakken crude is more volatile and prone to explode. However, the North Dakota Petroleum Council has done a study of their own claiming Bakken crude oil is no different from any other crude oils. And yet, they also include the following disclaimer in their study.

“making the claim that vapor pressure and light ends content correlates to increased ignitability and flammability is a broad statement that without extensive and complicated testing cannot be factually stated or supported”

So, while the industry group spent $400,000 on a study it claims proves Bakken is no different from other oil regarding its ignitability and flammability, they admit they didn’t do the work necessary to confirm their hypothesis is “factually stated or supported.”

Wed, 2014-08-13 11:15Justin Mikulka and Steve Horn
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Rail CEOs to Investors: "Bomb Trains" Safe At Almost Any Speed

Burlington Northern Santa Fe (BNSF) recently said it would proceed with plans to increase speeds for oil-by-rail unit trains in Devil’s Lake, N.D. to 60 MPH from 30 MPH, despite opposition from local officials

BNSF’s announcement came merely a week after the Obama Administration announced its proposed regulations for trains carrying oil obtained via hydraulic fracturing (“fracking”) from North Dakota's Bakken Shale basin.  

The rail industry’s position on speed limits for “bomb trains” is simple: they continuously claim velocity has nothing to do with oil-by-rail accidents or safety.

For example, Big Rail — as revealed by DeSmogBlog — lobbied against all proposed oil train speed reductions in its dozen or so private meetings at the Obama White House before the unveiling of the proposed oil-by-rail regulations. 

Recent statements by rail industry CEOs during investor calls put the heads of many companies on record opposing oil-by-rail speed limits for the first time.

Wed, 2014-07-23 10:51Justin Mikulka
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Obama Administration Releases Weak Proposed Rules On Crude By Rail After Industry Lobbying Blitz

The Department of Transportation released its Notice of Proposed Rulemaking today for the transportation of crude oil and ethanol by rail. With the release of the proposed new regulations, a public comment period now begins before the rules will be finalized.

The proposed rules offer a wide variety of options for the public to comment on with the weakest proposals essentially being the status quo, as is the case for the rail tank car recommendations.

These proposed regulations have been under review for the past several months at the White House’s Office of Information of Regulatory Affairs where industry lobbyists have been hard at work to weaken and delay the regulations. An initial review of the proposal makes it clear their efforts have paid off and first reactions from advocates for increased safety reflect this.

Matt Krogh, of ForestEthics, the group which recently released a website where people can check if they are within the blast zone for the oil trains, released a statement telling the Obama administration to “go back to the drawing board and put public safety first.”

“Today the Obama administration announced weak new standards for high-hazard flammable trains that give the oil industry a license to threaten the safety of millions of Americans and leave communities and emergency responders holding the bag.

The administration seems to have carefully calculated and managed the inconvenience of these rules to the oil industry, but they’ve severely underestimated the threat of these trains to the American public.”

A review of the proposal reveals many things in the industry’s favor.

Mon, 2014-07-21 08:13Justin Mikulka
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Exclusive: E-mails Reveal Feds and Rail Companies Pressured States to Keep Oil-by-Rail Information Secret

Documents released to DeSmogBlog by the Washington State Military Department reveal that both the Department of Transportation (DOT) and rail companies attempted to pressure states including Washington to keep information about Bakken crude oil trains from the public.

As previously reported on DeSmogBlog, while rail companies have been asserting that information about the frequency and routes of Bakken oil trains was “security sensitive,” the Federal Railroad Administration and the Transportation Security Administration were saying the opposite.

However, that didn’t stop the Department of Transportation from pressuring states like Washington only to release information on a “need to know” basis. A document provided to the states by the department argues against the public’s right to know:

This data is intended for those persons with a need-to-know; that is, first responders at the state and local level, as well other appropriate emergency response planners. DOT expects the SERCs to treat this data as confidential, providing it only to those with a need-to-know, and with the understanding that recipients of the data will continue to treat it as confidential.

The Department of Transportation went on to explain why it thought it was “appropriate” to keep the oil train information from the public.

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