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2013-06-01 "Canadian tar sands crude heads to Bay Area refineries" by Matthias Gafni from "Contra Costa Times" [mercurynews.com/breaking-news/ci_23366256/canadian-tar-sands-crude-heads-bay-area-refineries]:
A photo of the Valero refinery taken at night in Benicia, Calif., on Tuesday, May 14, 2014. Benicia's Valero refinery is one of the Bay Area's five refineries that have moved toward acquiring Canadian tar sands crude by rail. The refinery wants to bring in 70,000 barrels a day of North American crude by rail and spend $30 million to increase its infrastructure to handle it. (Doug Duran/Bay Area News Group)
While politicians, environmentalists and Big Oil fight over the Keystone XL pipeline, the Bay Area's five refineries have quietly moved toward transporting controversial Canadian tar sands crude oil via another means: rail.
Phillips 66 in Rodeo already brings in trains filled with tar sands crude, and Chevron Richmond refines it. Shell in Martinez receives processed tar sands oil in the form of synthetic crude. Tesoro Golden Eagle in Avon, near Martinez, wants to bring in the heavy crude -- which is refined from an unconventional petroleum deposit that has the texture and smell of tar mixed with sand -- by rail. And Benicia's Valero refinery hopes to bring in 70,000 barrels a day of North American crude by rail and spend $30 million to increase its infrastructure to handle it, according to investment reports, environmental studies and company profiles.
With rail mishaps more common than pipeline failures, Bay Area environmentalists who have previously fought the Keystone pipeline from afar are now paying attention to the possibility of trains full of the heavy crude materials or already refined bitumen rolling through local neighborhoods and into refineries. They say the method of extracting tar sands crude makes it the dirtiest of all fossil fuels and thus a bigger climate change threat, and they worry any increase in infrastructure locally will support an expansion of oil fields in Alberta, Canada, and elsewhere.
"The pipeline is an issue, but so is the development of this type of crude," said Michelle Myers, the Sierra Club's San Francisco chapter director.
Could the East Bay's refinery belt be the next tar sands battleground?
Big Oil has been telling investors the Canadian crude, which involves strip mining and the use of large amounts of water and energy, will help ease its reliance on expensive overseas oil. Analysts and oil executives say it makes economic sense to ship the heavy crude by rail.
"There's no question rail is growing very rapidly by every single company and part of it is because of some of the uncertainty with the pipelines," Valero Chairman and CEO Bill Klesse told investors recently.
In 2008, BNSF railway moved 1.3 million barrels of oil; by 2012, the company -- with rail routes mostly between Chicago and the West Coast -- moved 100 million barrels, it boasts in a news release. By December, a State Department report predicts 200,000 barrels a day or more of Canadian heavy crude oil will reach refineries in Louisiana, Mississippi and Texas by train.
While pipelines are the cheapest way to move oil, there aren't enough of them. The Keystone XL proposal would link the Alberta tar sands to the Texas Gulf Coast refineries by a pipeline. Most of that pipeline has already been built, but environmentalists have been fighting an expansion -- which would enable the transport of up to 830,000 more barrels a day -- and a decision is expected by the Obama administration by the end of the year.
"Essentially it's landlocked and it's hard to move the oil," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com. "So, there's a glut of it and they need to sell it at deep discounts to get rid of it."
While the jockeying for cheaper and dirtier North American crude may make financial sense for companies, DeHaan said he doubts consumers will see any relief at the pump.
Meanwhile, environmentalists -- who worry about added pollution, corrosion, train spills and greenhouse gases -- are gearing up. An East Bay tar sands activist group has lobbied for change and opponents have been organizing tar sands protests for later this year.
Some of them say the heavier crude, with higher sulfur content, increases pollution and the corrosion of pipes in the refining process, similar to the sulfur corrosion that helped cause the Richmond refinery fire in August.
"It's more corrosive, and particularly more corrosive at refinery temperatures it becomes a significant risk," said Anthony Swift of the Natural Resources Defense Council.
Benicia project -
In December, Valero applied to build a $30 million rail project at its Benicia refinery. Valero said the project would reduce pollution, with an increase in rail deliveries offsetting a decrease in smoggy marine shipments. Valero spokeswoman Sue Fisher said about 120 skilled-craftsman jobs would be created during the six months of construction, and that about 30 full-time jobs would be added upon completion.
The refinery hopes to bring two 50-car trains into the refinery between 10 p.m. and 4 a.m. each day, said Charlie Knox, Benicia's community development director.
Asked whether any crude would be refined or unrefined Canadian tar sands, Fisher said, "The Benicia project will allow the refinery to increase its use of light, North American crudes, primarily mid-continent crudes. These crudes are similar in composition to the Alaska North Slope crudes the Benicia refinery began processing in the late 1960s."
However, company executives make it clear in comments to investors that Canadian tar sands are being targeted. That concerns Benicia Mayor Elizabeth Patterson.
"We shouldn't be promoting the idea of using tar sands with the high costs of extraction," she said.
Marilyn Bardet, a member of the Benicia Good Neighbor Steering Committee and self-described Valero watchdog, said the project is so new, she's awaiting specifics. But the prospect of using tar sands sets off alarm bells.
"That is the highest level of concern," she said.
Tar sands concerns -
A 2012 U.S. Energy Information Administration report said the Canadian tar sands extraction would "exacerbate climate change," and it highlighted other environmental concerns, such as "land use, water use, water quality, the impacts of toxic tailing ponds and the possibility of oil spills."
Denny Larson, who has fought to stem emissions at the Chevron Richmond refinery for years, said refining the heavier crudes increases particulate and sulfur emissions and other pollutants, in addition to increasing refinery upsets, which can spike pollution. He said trains must travel from Canada with dangerous loads.
"Ships don't pass through the middle of towns and I think they're trying to ignore the whole idea of the train route," said Larson, whose Global Community Monitor is part of the East Bay delegation of the Tar Sands Refinery Neighbor Collaborative.
The crude-by-rail spike has also led to more U.S. railway oil spills -- 14 from 2007-09 to 158 between 2010-12, according to the Pipeline and Hazardous Materials Safety Administration. In a recent International Energy Agency report based on U.S. Department of Transportation data, the risk of a train spill was six times greater than a pipeline incident between 2004 and 2012.
On March 27, a train derailed in Minnesota, spilling 15,000 gallons of Canadian tar sands crude.
Guidelines -
No matter how the tar sands crude gets to California, refineries must follow the unique-to-this-state Low Carbon Fuel Standard, which takes into account emissions during a fuel's life cycle. David Clegern, a California Air Resources Board spokesman, said heavy crudes can be blended with lighter crudes to reduce the negative effects.
"We aren't banning any particular fuel," he said. "If they mix it right, they can make it work."
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