Bad News, for Coal & Crude

Coal miner by Jan Truter used under CC BY-NC-ND 2.0

Federal Coal Sales Moratorium Shakes Industry Stronghold

• By MEAD GRUVER AND MATTHEW BROWN, ASSOCIATED PRESS via ABC News

GILLETTE, Wyo. — Feb 1, 2016, 9:43 AM ET  

Signs of economic troubles first appeared a few years ago, when drilling for natural gas trapped in water-saturated coal seams went bust. Thousands of wells were idled as companies shifted focus to fracking for gas in Texas and the Northeast.Then last year, mining company Alpha Natural Resources filed for Chapter 11 bankruptcy. Industry giant Arch Coal Inc. followed in early January. Each company has two major mines in Wyoming. Arch's Black Thunder mine ranks among the largest in the world.
Less than a week after the Arch bankruptcy came the Obama administration moratorium on new coal lease sales.

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"All these rules and regulations just make it harder to conduct business," said Susan Doop, owner of a local alternative therapy business. "Everything he (Obama) does to make it more costly to do business makes it harder. People are losing their jobs."
Doop and her husband, Marlin, who owns an auto body shop, already are seeing the changes. He just spent three weeks focused exclusively on repairing a Ford Super Duty pickup truck from a coal mine that had a crushed cab and bent frame.
A $15,000 check he got from Arch the same week the company filed for bankruptcy bounced. He said he can't afford health insurance and was going to use the money to pay for another round of treatments for advanced liver and colon cancer.

FIVE STORIES TO WATCH IN THE ARCH COAL BANKRUPTCY

Big executive bonuses; shafting workers and the environment; and more. Via Sightline

In case you somehow missed the news, Arch Coal, North America’s second largest coal company, filed for bankruptcy a few weeks back. Arch’s management hopes to use bankruptcy protection to shed $4.5 billion in debt—money that Arch borrowed from investors near the peak of the coal market, but that the company can’t pay back now that coal prices have tumbled.
To anyone paying attention, Arch’s insolvency came as no surprise. The company hadmissed a bond interest payment in mid-December after unsuccessful negotiations with creditors. Besides, coal industry bankruptcies are a dime a dozen at this point: Alpha Natural Resources, the #4 coal company in the US, declared bankruptcy in August; Walter Energy declared itself insolvent back in July; and Patriot Coal filed for Chapter 11 protection in October, its second filing since 2012. All told, nearly 50 US coal mining companies have filed for bankruptcy protection since the beginning of 2012.
Arch’s bankruptcy obviously highlights the dire state of the industry’s finances. But it also raises important questions about public policy, fiscal responsibility, and the fate of the coal industry itself. 

Here are the top five stories that I’m going to keep my eye on as the Arch Coal bankruptcy unfolds. Read the article here 

As Coal topples, Crude also falters

Photo by Mark Ralston/AFP/Getty Images

The Syncrude oil sands extraction facility near the town of Fort McMurray in northern Alberta.

Once Unstoppable, Tar Sands
Now Battered from All Sides

Canada’s tar sands industry is in crisis as oil prices plummet, pipeline projects are killed, and new governments in Alberta and Ottawa vow less reliance on this highly polluting energy source. Is this the beginning of the end for the tar sands juggernaut?
by Ed Struzik via Environment360

In the summer of 2014, when oil was selling for $114 per barrel, Alberta’s tar sands industry was still confidently standing by earlier predictions that it would nearly triple production by 2035. Companies such as Suncor, Statoil, Syncrude, Royal Dutch Shell, and Imperial Oil Ltd. were investing hundreds of billions of dollars in new projects to mine the thick, highly polluting bitumen.
Eyeing this oil boom, Canadian Prime Minister Stephen Harper said he was certain that the Keystone XL pipeline — “a no-brainer” in his words — would be built, with or without President Barack Obama’s approval. Keystone, which would carry tar sands crude from Alberta to refineries along the Gulf of Mexico, was critical if bitumen from new tar sands projects was going to find a way to market.
What a difference 18 months makes. The price of oil today has plummeted to around $30 a barrel, well below the break-even point for tar sands producers, and the value of the Canadian dollar has fallen sharply. President Obama killed the Keystone XL project in November, and staunch opposition has so far halted efforts to build pipelines that would carry tar sands crude to Canada’s Pacific and Atlantic coasts.
The industry is suddenly weathering a perfect storm that analysts say has significantly altered its prospects.

Could Low Oil Prices Help Usher in a New Era?
Mark Trahant 1/27/16 Via Indian Country Today

Here is the problem: If the pipeline is built and the train system is upgraded there will be too much transportation capacity at current oil prices. So the railroad companies will have to seek out new customers. Or, as Sightline said, while “the projects are largely designed to transport and handle light shale oil from the Bakken oil formation in North Dakota … the infrastructure could also be used to export heavy Canadian oil.”
The idea of how much capacity — especially given the price of oil — is the wild card in any transportation scheme. Many projects were designed when oil prices were higher than $75 a barrel instead of around $30. Oil is a commodity and traded on international markets. That means it’s subject to the up and down of supply and demand. Currently there is far more oil supply than demand. A report by the International Energy Agency says last year “saw one of the highest volume increases in global oil demand this century, we have long believed that this could not be repeated in 2016. But, with crude oil prices plunging below $30/bbl, must we expect some boost to the rate of growth in 2016? Unfortunately, the New Year has been awash with pessimism about economic growth.”
And that means less economic growth — and less oil consumption. The IEA says that when Iran is fully online selling oil, and if other oil exporting countries maintain current production levels, the demand could exceed 1.5 million barrels a day and “unless something changes, the oil market could drown in over-supply.” So yes prices could go lower.

Broken rails, hidden data- and other links

 After the '64 quake in Alaska.   Cascadia's will be when?     

Broken rails: Track defects behind lethal blasts

BY LAURA ARENSCHIELD AND RICK ROUAN
COLUMBUS DISPATCH      12/20/15    

MOUNT CARBON, W.Va. — Track defects caused fiery crude-oil derailments that forced 1,100 people from their homes in this Appalachian village this year and killed 47 people in a Canadian town in 2013.

In fact, a Dispatch analysis of federal records shows that track defects and human error are to blame for most railway incidents.

Yet U.S. regulators focus on tanker cars instead of the rails that support the cars and millions of gallons of Bakken crude, a highly volatile oil from North Dakota and Montana that crisscrosses the country on the way to refineries each week.....    more here

States, feds keep train-derailment reports from public

By Laura Arenschield & Rick Rouan The Columbus Dispatch • Sunday December 20, 2015

Information that state and federal government agencies collect about train derailments, particularly those that cause crude-oil spills, is hard to find.

Huge amounts of data about collisions, derailments and other accidents that happen along railroads in the United States are collected every year.

Some of it is compiled by the industry and distributed directly to the public upon request. But some is buried in databases that government officials are slow to release, if at all.

For example, the U.S. Department of Transportation requires railroads to submit annual reports to state emergency-response officials estimating how many trains carrying crude oil from the Bakken shale region pass through each county.

Yet in many states, the public is not allowed to see those reports.

A request by The Dispatch to see reports for Ohio went unanswered for months.....

.... Final reports reveal that what railroads initially tell the Federal Railroad Administration doesn’t always hold up in an investigation. Many underestimate damages and list causes that are later changed. more here

Lifting oil-export ban unlikely to affect WA state right away

By Hal Bernton Seattle Times Dec. 19, 2015

The lifting of the national ban on crude-oil exports is unlikely to trigger a rush to send oil to Asia from Washington state terminals, but that could change over the longer term.

With a 40-year oil-export ban lifted Friday by Congress, Washington terminals that receive Bakken shale crude by rail will be able to send unrefined product to Asia.


In the years ahead, that might be an attractive option. But current market conditions make the West Coast terminals an unlikely launching point for major overseas shipments, according to industry analysts..... more here

Obama vetoes GOP push to kill climate rules 

-Benicia Independent   12/19/15

Keep the Oil Export Ban: NW Roundtable on Oil letter to US Senators

    

     November 30, 2015

 

     Senator Patty Murray

     Office of Senator Patty Murray

     154 Russell Senate Office Building

     Washington, D.C. 20510

     Senator Ron Wyden

     Office of Senator Ron Wyden

     221 Dirksen Senate Office Building

     Washington, D.C., 20510

Senator Maria Cantwell

Office of U.S. Senator Maria Cantwell

511 Hart Senate Office Building

Washington, D.C. 20510

Senator Jeff Merkley

Office of Senator Jeff Merkley

313 Hart Senate Office Building

Washington, DC 20510

Re: Opposition to the Lifting the EPCA Rule Prohibiting the Export of Domestic Crude Oil

Dear Senators Murray, Cantwell, Wyden, and Merkley:

We, as organizational leaders and elected officials, are writing to urge you as members of the United States Senate to stop the House of Representative efforts to lift the 40-year old rule ‘prohibiting the export of crude oil and natural gas produced in the United States’ that was  promulgated  under the Energy Policy and Conservation Act of 1975 (EPCA).

Energy Policy and Conservation Act of 1975 (EPCA)

The crude oil export prohibition (the Ban) was signed into law by President Gerald Ford in 1975 in response to the oil embargo by Arab OPEC nations against the U.S. for its support of Israel in the 1973 Arab-Israeli war.  The primary goal of EPCA is to insulate the U.S. from volatile and unpredictable global crude oil markets. EPCA also strives to:

·      

       Increase energy production and supply

·         Reduce energy demand, provide energy efficiency

·         Give the executive branch additional powers to respond to disruptions in energy supply.

·         Establish and maintain the Strategic Petroleum Reserve

·         Establish conservation efforts that are still evolving today – efforts such as the Energy Conservation Program for Consumer Products and the Corporate Average Fuel Economy regulations.

Lifting the Ban will have dire environmental and economic consequences for the Pacific Northwest.

The Pacific Northwest has historically benefited economically from the trade of diverse commodities due to its geographic proximity to Pacific Rim nations.  However, in just the past few years the Pacific Northwest is fast becoming the primary export gateway for massive quantities of fossil fuels to Asian markets, because the energy companies are actively expanding the shipping of tar sands oil out of Canada, Bakken shale oil out of North Dakota, and coal of out of Wyoming and Montana to Asia.

Existing Crude Oil Exportation

Our communities are already at risk of excessive fossil fuel transportation to serve existing facilities – especially in light of the limited emergency response capabilities. In addition, on December 30, 2014, the US Department of Commerce’s Bureau of Industry and Security published a FAQ identifying seven ways in which the oil industry can currently export crude oil and natural gas while the Ban is in place. These seven ways include exports: 1) from Cook Inlet, 2) to Canada for domestic consumption, 3) of minimally processed crude, 4) of certain heavy oil from California, 5) consistent with certain international agreements, 6) consistent with Presidential findings, and 7) of foreign crude oil not co-mingled with domestic crude (e.g., oil from Canada).

This current risk is not theoretical.  A recent analysis of the Washington State Department of Ecology’s data by Friends of the Earth revealed that on 80 occasions between 2010 and 2014 all five Washington refineries used their existing terminals to send 9,805,000 bbls of crude oil outbound.  While the destination of this oil may have been to other domestic ports, it demonstrates the ability of existing refineries, which are already connected to Alberta and Bakken oil fields by either pipeline or rail, to use their facilities to export crude oil.

Likely Crude Oil Terminals in the Pacific Northwest

If the Ban is lifted, the following Sightline Institute table[1] illustrates the likely oil export terminals in the Pacific Northwest.

Current Crude Oil-by-Rail Projects
Burnaby BC	Barrels per Day	Trains per Week
●  Chevron Canada	8,000	0.8
Ferndale, WA
●  BP Refinery	70,000	7.0
●  Phillips 66	35,000	3.5
Anacortes , WA
●  Tesoro Refinery	50,000	5.0
●  Shell Refinery	61,200	6.1
Tacoma, WA
●  US Oil & Refining	40,000	4.0
●  Targa Terminals	40,004	4.0
Hoquiam, WA
●  Westway Terminals	48,918	4.9
●  Grays Harbor Rail Terminal	45,000	4.5
●  Imperium Terminals	73,500	7.4
Longview, WA
●  Riverside Refinery	30,000	3.0
Portland, OR
●  Arc Logistics	16,250	1.6
Clatskanie, OR
●  Global Partners	120,000	12.0
Vancouver WA
●  NuStar Energy	22,000	2.2
●  Vancouver Energy	360,000	36.0
●  Already Operating	379,254	36
●  Proposed	640,618	66
Total Potential	1,019,872	102

Significant Risk of Crude Oil Disasters in the Pacific Northwest

Lifting the Ban will result in significant increases of crude oil transport, which will significantly increase the risk of catastrophic oil spills - not only by rail disasters but also marine disasters. Catastrophic train derailments, involving tank cars that individually carry 30,000 gallons each, will devastate not only the Pacific Northwest’s natural environments but also our economies.

To reach the oil terminals in the Pacific Coast, the oil trains of 100+ tanks car travel over 1,400 miles from North Dakota through Montana and Idaho to get to Washington and Oregon.  In Washington State alone, the oil trains threaten 120 rail communities – communities that bear horrific risks but no economic benefits. The Sightline Institute map[2] to the right illustrates the oil train routes and the proposed and existing crude oil terminals.

 

Coastal communities, such as Anacortes, Grays Harbor, and Longview are under siege.  Three crude oil terminals are proposed for Grays Harbor and two crude‑by‑rail oil terminals (one existing and one proposed) for Anacortes.  Both an oil refinery and a propane-by-rail export terminal are proposed in Longview. These crude oil terminals threaten not only the Pacific Northwest’s sea shores, bays, but also northwest tribal treaty rights and major commercial fishing economies.

A July 2014 Seattle Times article[3] reported, 'A surge in oil trains hauling North Dakota’s energy bonanza is interfering with grain shipments to Pacific Northwest ports, prompting fears of a chronic crisis in which railcars carrying fossil fuels crowd out other products and disrupt exports.’  The same article stated, ‘In testimony to the Surface Transportation Board, the U.S. agency that oversees rail freight, Cargill executive Kevin Thompson on behalf of the National Grain and Feed Association testified that “The sheer gravity, magnitude and scope of rail-service disruptions now being experienced are unprecedented, and have rippled through all sectors of grain-based agriculture.”’

Crude Oil Exports Will Increase the Risk of Marine Disasters

The unacceptable risks of oil spills from increased marine transportation of crude oil will compound the already unacceptable risks of oil spills from trains.  In Washington State, the oil trains follow historic railroad routes along the shores of the Columbia River, the Chehalis River and the Puget Sound.

The likelihood of more marine vessels carrying these harmful substances will significantly increase the greater risk of marine catastrophes like the 1989 Exxon Valdez disaster[1] in Prince William Sound.  Of the two groups of killer whales that swam through the affected parts of the Prince William Sound, one suffered population losses up to 41 percent in the year after the disaster, according to a 2008 study[2], and the other is destined for extinction.  While several thousand sea otters perished because of the spill, sea otter populations[3] have only now recovered to pre-spill levels, the U.S. Geological Survey recently announced. The herring population[4] — once a lucrative catch for the fishing industry in the region — crashed and has never fully recovered.

A major oil spill in the Puget Sound, along one of our magnificent rivers, or on our Pacific coast will destroy economically vital waterways and will harm endangered salmon and orcas— environments and animals that federal and state governments have spent countless millions of dollars to protect and restore over the past several decades.

On a different level, the cumulative impacts from chronic oil and fuel spills associated with fueling, increased accident risks involving smaller marine vessels, will also lead to major disruptions of irreplaceable marine ecosystems.  More crude oil moving both inbound and outbound through our marine waters will increase the frequency and cumulative impacts of these events.

 

Concluding Statements

Lifting the EPCA ban on crude oil exports further enables an economy built around the production, transportation, and consumption of fossil fuels—precisely the opposite of the measures required to avoid the catastrophic effects of climate change.  Currently the Pacific Northwest leads the transition to a clean and renewable energy policy.  Lifting the Ban, in contrast, will allow large energy companies to transform our magnificent Pacific Northwest into a major industrial hub that supports our nation's unwise dependence on fossil fuel. 

As organizational leaders and elected officials, we ask you as members of the United States Senate to preserve the EPCA rule ‘prohibiting the export of crude oil and natural gas produced in the United States’ that was  promulgated  under the Energy Policy and Conservation Act of 1975 (EPCA).

In the Pacific Northwest, maintaining the EPCA ban safeguards our economy, our environment, and our communities.

Note: The Solidarity Roundtable on Oil, a coalition of leaders and elected officials, in conjunction with the Washington State Council of Fire Fighters, organized this letter.  Please respond to this letter via the Washington State Council of Fire Fighters at 1069 Adams Street, SE, Olympia, WA 98501 or wscff@wscff.org.

Sincerely,

Kelly L. Fox, President Washington State Council of Fire Fighters	Ben Stuckart, President Spokane City Council
Eric Labrant, Commissioner Elect Port of Vancouver	E.J. Zita, Ph.D., Commissioner Port of Olympia, District 3 Chair, Thurston County Agriculture Committee
Kent Wright, President Northwest Farmers Union	Dr. Bruce Amundson, President Washington Physicians for Social Responsibility
Fred Felleman, NW Consultant Friends of the Earth, US	Cager Clabaugh, Representative ILWU Local 4, Vancouver, WA
Alan Richrod, Council Member City of Aberdeen	Larry Thevik, Vice President Washington Dungeness Crab Fisherman’s Association Westport
Ahmed Gaya Rising Tide Seattle	Carlo Voli 350 Seattle
Don & Alona Steinke Sierra Club of SW Washington	Arnie Martin, President Grays Harbor Audubon
Arthur “RD” Grunbaum, President Friends of Grays Harbor	Linda Orgel, Treasurer Friends of Grays Harbor
Diane L. Dick, Representative Landowners & Citizens for a Safe Community Longview		Laura Ackerman, Oil Policy Director The Lands Council, Spokane
Zoltan Grossman, Ph.D. Olympia Confronting the Climate Crisis		Terry Hill Spokane Rising Tide
Ann Winkes, Representative Protect Skagit, Skagit County		Tom Glade, President Evergreen Islands, Anacortes

Notes:

---

[1] "Crude oil shipments planned for Puget Sound, Grays Harbor, and the Columbia River,"

Eric de Place, “The Northwest’s Pipeline on Rails”, July 2015. 

http://www.sightline.org/research_item/the-northwests-pipeline-on-rails/

[2] 'The Northwest’s Pipeline on Rails', Eric de Place, June 24, 2013, Sightline Institute.

http://www.sightline.org/2013/06/24/the-northwests-pipeline-on-rails/

[3] 'Oil trains crowd out grain shipments to NW ports,' Angel Gonzalez, The Seattle Times, July 26, 2014.

http://www.seattletimes.com/business/oil-trains-crowd-out-grain-shipments-to-nw-ports/

[4] 'Exxon Valdez 25th Anniversary: 5 Facts About the Historic Spill', Megan Gannon, March 24, 2014

Live Science website.  http://www.livescience.com/44314-exxon-valdez-spill-anniversary-facts.html

[5] C. O. Matkin, et.al., “Ongoing population-level impacts on killer whales Orcinus orca following the ‘Exxon Valdez’ oil spill in Prince William Sound, Alaska”, Marine Ecology Progress Series, March 18, 2008.

 http://www.int-res.com/articles/meps2008/356/m356p269.pdf

[6] Andrea Thompson, “Sea Otters Rebound from Exxon Valdez Disaster”, Planet Earth, March 03, 2014.

http://www.livescience.com/43807-exxon-valdez-sea-otters-recover.html

[7] Sean Cockerham, ‘25 years later, oil spilled from Exxon Valdez still clings to lives, Alaska habitat’,

Alaska Dispatch News, March 21, 2014.

http://www.adn.com/article/20140321/25-years-later-oil-spilled-exxon-valdez-still-clings-lives-alaska-habitat

 h/t Dan Leahy!!