Economy
California expects more crude oil by rail, seeks to beef up spill response
WASHINGTON Wary of a series of fiery train derailments elsewhere in North America, California officials are bracing for a huge increase in the amount of crude oil transported by rail into the state and the dangers it brings with it.
The state budget plan Gov. Jerry Brown unveiled this week bolsters the state Office of Oil Spill Prevention and Response, increasing its budget by $6.7 million and adding 38 staff members, “to address the increased risk of inland oil spills.”
The move comes as California’s Energy Commission projects that rail deliveries of crude oil could increase to as much of a quarter of the state’s total by 2016. In 2012, only 0.2 percent of the 598 million barrels of oil received by state refiners came by rail, according to the commission. Nearly two-thirds arrived by ocean-going vessels, and another third by pipeline.
Chuck Bonham, director of the California Department of Fish and Wildlife, which includes the oil spill unit, said the state is preparing for a shift in deliveries by more traditional modes to rail, and the risks associated with it.
“We’ve exceeded pipeline capacity, and that distribution is now shifting to rail,” he said. “In California, that change means we may see less of our oil coming in through marine terminals and more by rail into the state.”
The volume of crude oil shipped by rail has increased exponentially in just the past few years, and many state and federal agencies are scrambling to adjust their emergency response plans.
Especially worrisome is oil from North Dakota’s Bakken region, which federal officials have come to believe is more flammable than the more conventional oils California produces or imports. And most of the railroad tank cars that carry it to California and other states have proved vulnerable to ruptures or punctures in a derailment.
In July, an unattended crude oil train derailed and exploded in the lakeside town of Lac-Megantic, Quebec, killing 47 people. A similar train derailed in Alabama in November, followed by another in North Dakota last month. Though both accidents resulted in spectacular fires and limited evacuations, no one was injured or killed.
The rail industry and its Washington regulators insist that railroads have a good safety record. The Association of American Railroads, an industry group, says 99.997 percent of hazardous materials shipped by rail reach their destination without incident. The Federal Railroad Administration, which oversees the nation’s rail network, said 2012 was the industry’s safest year on record.
Initially, rail was a stopgap measure taken as proposed pipeline expansions encountered delays. But producers discovered its advantages. Though it costs more to ship by rail than by pipeline, it’s faster, has more capacity and can go pretty much anywhere pipelines don’t.
Crude oil is already moving into California by rail. BNSF Railway, the nation’s largest rail carrier of crude oil, now hauls entire trainloads from North Dakota to terminals in Richmond and Bakersfield. Though the shipments are infrequent, plans are in the works to enable six more locations in California to refine oil brought in by train or transfer it to ships or pipelines. If all are completed, five or six 80- to 100-car trains a day would supply about 25 percent of the state’s oil needs.
Bonham said the 245-member oil-spill unit is adapting to a shifting risk. To fund its expansion, the agency will begin collecting a fee of 6.5 cents a barrel to all crude oil shipped to refineries. Currently the fee only applies to marine shipments. Bonham predicts rail will largely displace tankers coming from Alaska or foreign countries.
BNSF and Union Pacific, the state’s other major railroad, plan to increase their shipments of crude oil to the state in unit trains. Both railroads operate lines through the state’s major population centers and along its major waterways, creating new potential hazards for communities and the environment.
“It’s not going to be just one car,” said Tom Cullen, administrator of the state oil-spill unit. “We know it’s going to be more.”
The largest chemical spill in state history was the result of a rail accident. In July 1991, a Southern Pacific freight train derailed near the northern California town of Dunsmuir. One tank car spilled 19,000 gallons of a pesticide into the Sacramento River. The toxic green chemical created a vapor cloud that made residents ill and killed a million fish in a 42-mile stretch of contaminated river.
One tank car can carry about 30,000 gallons of crude oil. Canadian authorities estimate that the train that derailed in Quebec spilled 1.5 million gallons, leaving an environmental catastrophe as well as a human one.
State officials say they’ve dealt with large amounts of oil spilled from marine vessels and inland wells.
“We’re not going through this blindly,” Cullen said. “We appreciate what we’re taking on.”
What does worry them, however, is Bakken crude’s flammability.
The federal Pipeline and Hazardous Materials Safety Administration last week warned that the oil is more hazardous than others and should be handled with extra care. The tendency of older, less protected tank cars to fail in derailments has compounded the concern. Some members of Congress and the rail industry are pushing regulators to move faster on new standards for tank car construction.
Trains brought about 3 million barrels of oil to California last year. In two years, it could be 143 million.
“I think people want their public entities to prudently prepare for the future,” Bonham said.
CLARIFICATION: A previous version of this story implied that a Chevron refinery in Richmond, Calif., receives crude oil by rail. A crude by rail transfer terminal is adjacent to the refinery, but the refinery does not receive rail shipments.
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