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Oil trains -- pipelines on wheels -- headed to Northwest terminals and refineries from North Dakota fracking | Energy in BC & beyond

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Oil trains -- pipelines on wheels -- headed to Northwest terminals and refineries from North Dakota fracking

Scott Learn, OregonLive.com, May 13 2013

The boom in North Dakota's Bakken oil field is speeding to the Northwest, a boon for ports and refineries that could bring in upwards of 200 million barrels of crude each year on mile-plus oil trains.

The first oil train arrived last September. Today, all five Washington refineries handle or plan to handle oil trains, called "pipelines on wheels."

A train-fed terminal near Clatskanie, originally built as an environmentally friendly ethanol plant with millions in subsidies from the state of Oregon, is now shipping crude on the Columbia River.

Five other terminals are proposed for Washington ports. The largest is in Vancouver, where Tesoro wants a Columbia River terminal that could ship more than 100 million barrels a year to West Coast refineries.

The oil rush could generate hundreds of millions in new investment and hundreds of jobs. The region has shipped fuels for years, developers say, and the vast majority of Bakken's light crude will be for domestic fuel.

But the phenomenon is catching the attention of environmental groups, already intent on stopping train-fed U.S. coal exports to Asia from Northwest ports. As with coal, the most likely route for loaded oil trains is the Columbia River Gorge.

The region's environmental responders, charged with preparing for potential spills from oil trains, barges and ships, are bracing for a steep increase in train and terminal activity.

Oregon's Department of Environmental Quality is pushing a bill in the Legislature to regulate loading crude onto ships, something a state with no refineries didn't anticipate. Washington's planners are used to dealing with crude by tanker and pipeline, not by train.

Former ethanol plant in Clatskanie storing crude oil
Cascade Grain's $200 million ethanol plant was supposed to be an environmental success story for Oregon, with the state plowing in $36 million of green loans and tax credits to help make it so.
Instead, the original owner filed for bankruptcy in 2009, less than a year after startup. The ethanol plant produced little ethanol and is now mothballed. And the latest owners are using its two 3.8 million gallon ethanol storage tanks to store and ship crude oil.

Read the rest of our story.

"It's not to say the sky is falling," Washington Department of Ecology spokesman Curt Hart said. "What we're saying is you're bringing more crude oil by train, there are more transfers and that all increases the risk of spills."

 

A GUSHER

Domestic oil production has surged to its highest level since 1997, using fracking technologies to pull oil from shale formations -- U.S. oil production is projected to exceed Saudi Arabia's by 2020.

Production in the Bakken field in North Dakota, Montana and southern Canada has been particularly productive. But pipelines from the area are scant.

Enter trains. In 2008, the largest railroads carried 9,500 carloads of crude. Last year: more than 200,000.

Tesoro expanded its Anacortes, Wash., refinery last year for oil trains and is pursuing a crude oil addition to its bulk terminal in Vancouver.

North Dakota oil is helping refiners offset a steep decline in Alaska oil production and diversify supply sources, said Dan Riley, a Tesoro vice president. "We're able to back out foreign crude and use a domestic source," he said, "and that's good from an energy security standpoint."

U.S. Oil and Refining in Tacoma is also accepting trains. BP, Shell and Phillips 66 refineries plan to do so.

Proposals are also afoot to receive oil trains at other shipping terminals, sending the oil on ships and barges to Washington, California and Alaska.

The Columbia Pacific Bio-Refinery near Clatskanie began shipping crude late last year. Also on the table: an oil terminal in Tacoma and three in Grays Harbor.

The volume of all the Northwest projects could approach 500,000 barrels a day, about what Washington refineries processed in 2011.  

oilderricks_9.JPGView full size Excess natural gas is burned off at oil well sites, east of Williston, N.D., in the heart of the Bakken oil region. Fracking has also boosted domestic natural gas production.
 

Terminal developers stress that U.S. crude can't be exported in most cases; Congress outlawed most exports after the 1970s Arab oil embargo.

But Canadian oil, including oil from controversial, and messy, tar sands extraction could be exported, environmental groups worry. Some oil industry executives are making the case for domestic crude exports amid rising production and flat U.S. demand.

And motor fuels and other refined products can be exported. From 2005 to 2011, motor fuel exports nearly tripled, according to government figures. In 2011, 13 percent of Washington refinery products went to foreign buyers, half in Canada.

Michael Marx, senior director of the Sierra Club's "Beyond Oil" campaign, said U.S. demand will likely fall further as new mileage standards kick in, while demand increases in developing countries.

"Our sense is they're positioning themselves for an export play," Marx said.

ON THE TRACKS

The Sierra Club and other environmental groups have focused on stopping coal export and the Keystone Pipeline, which would carry Canadian tar sands crude to Texas.

Shipping crude by rail has been low on the list, but Marx said the club is "elevating it as a priority.

"We're realizing that our success in stopping pipelines is shifting transport to railroads."

Oregon and Washington received just 50 trainloads of oil in the last four months of 2012, Hart of the Department of Ecology said.

If all the proposed oil terminals are built, the traffic could hit nearly 3,000 loaded trains a year, not counting direct trips to refineries.

GS.31OILL114-02.jpgView full size

That could come on top of coal traffic. Three proposals for Northwest coal export terminals would generate nearly 7,000 coal train trips a year at full capacity on already congested tracks in Spokane, the Gorge and along Interstate 5.

BNSF Railway is likely to carry most of those loads. Spokesman Steve Forsberg said BNSF is investing a record $4.1 billion in upgrades nationwide this year.

West Coast rail lines have ample right of way to add sidings and second or third tracks to relieve congestion, Forsberg said.

On spills, port officials and terminal developers say tanks and rail transfer points will be surrounded by concrete with sumps to contain leaks. Transfer to ship would be enclosed, with containment booms at the ready. Regulators will scrutinize emergency response plans.

"It's a very strictly regulated industry, and all three of (Grays Harbor's) projects are definitely committed to going above and beyond the standards," Port of Grays Harbor spokeswoman Kayla Dunlap said. The Port of Vancouver's commissioners hold a workshop today on marine safety issues, including oil spills.

 

FEAR OF SPILLS

Regulation of oil ships tightened considerably after the 1989 Exxon Valdez spill in Alaska.

Railroad oil cars are double-hulled, Forsberg of BNSF said, rail personnel inspect tank cars for leaks every 1,000 miles and trained crews are ready to respond.

But local opponents worry about the potential for spills, and say the projects are proceeding quickly with little public input.

The Quinault Indian Nation objected in Grays Harbor to potential fouling of its traditional fishing grounds.

"This whole phenomenon of crude-by-rail is brand new," said Kristen Boyles, an Earthjustice attorney for the Quinault. "It's flying under the radar."

A Wall Street Journal analysis found 112 oil spills from U.S. rail cars from 2010 to 2012, up from 10 in the previous three years. The paper scrutinized safety data after a derailed train in spilled up to 714 barrels of oil in March.

Three-quarters of the rail spills were less than five gallons and occur at far lower rates than pipeline leaks, railroad officials say.

Washington and Oregon regulators say the industry's record is good, but the damage could be high.

"A good recovery number for a spill of Bakken crude would be maybe 20 percent," said Scott Smith an Oregon oil spill contingency planner. "It's a huge deal."

-- Scott Learn

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