Issue On Front Burner in Kern and SLO County
September 2,2014
A recent California Energy Commission (CEC) report predicts 80 to 100 car oil trains will be a part of California’s future especially in this blog’s reading area – Central California. Statewide we could see a dramatic rise in the number of these trains. Today about 1 percent of oil is brought into California by rail. By 2016 the supply of oil coming into the state by rail could rise to 23 percent estimates officials. Despite an expectation there will be an in-state oil boom sometime soon coming out of the Monterey Shale deposits, the percentage of oil that is produced in California continues to decline. From 1985 to 2103 in state production is down nearly 50% says the CEC.
Yes We Have No Bonanza
Earlier this year a federal energy agency threw cold water on all the “black gold” boom talk – slashing by 96% the estimated amount of recoverable oil buried in California’s Monterey Shale deposits in Central California. Instead of 13.7 billion barrels thought to be recoverable, the US Energy Information Agency said it was more like 600 million barrels. You could feel the balloons deflate across the state’s oil patch. Drillers like Zodiac Explorations who have helped fuel talk of a new oil bonanza in Kern, Kings and San Luis Obispo counties have seen their stock deflate. Zodiac has said they had 86,000 acres in Kings County alone they hoped to drill on back in 2011. Today the company has gone through a name change,just fired their chief financial officer and saw its stock plunge from $1.80 a year ago to 0.29 cents.
Now called Mobius Resources Inc the company now claims to have some 67,000 acres in the Valley. In their most recent filing they say they have “continued ongoing efforts to seek out partners to jointly develop Mobius’ land or monetize the California properties through discussions with several companies.” The same report issued Aug 28 2014 shows a $55 million net loss for the first nine months the year.
Refiners Seek CBR
If there is no turn-around in California oil production the state needs to get oil from somewhere either by rail, pipeline or boat. Interstate pipelines connected to California are now used to export transportation fuels to Arizona and Nevada, so dont’ count on pipelines to bring the cheaper crude from the Midwest,Canada or Texas. On the other hand other hand North Dakota oil interests looking to get rid of a gusher supply offer a discount of about $14 a barrel to refiners in Southern California says a CEC report. With the boom in oil production elsewhere in the US in Texas and North Dakota as well as Canada – the importation of oil by rail into the state went from 1.21 mm barrels in 2012 to 6.3mm barrels in 2103 says the CEC. So far this year Crude by Rail (CBR) into California is up 95% compared to the same period in 2013. At issue are concerns is that this variety of crude that may be both more flammable and more explosive than the region’s heavy oil with routes through populated areas both in the Central Valley and on the Coast down the main UP line, where Amtrak runs, in SLO County. Helping to boost the expected volume are several Central California oil / rail terminals in the works or under construction now. The most immediate is the Plains All American facility in Bakersfield (near Taft) that will be operational later his year. This company will be able to ship cheaper crude oil north to Bay Area refineries and south, so they will obviously have customers lined up says an energy official. Between the Plains AllAmerican and the proposed Alon USD refinery rail project – Bakersfield and the Central Valley will see three 100-car CBR trains a day. Every town along the route has to be paying attention because of the accident potential CRB is arriving both on the BNSF and UP lines.
Alon Plans
Alon refiner’s former owner went bankrupt in 2008. Now the new Dallas-based owners see expansion on the horizon with their plan set to go to the county Planning Commission September 9 and on to the Board Of Supervisors after. The staff report says the objective of the project is to provide ” greater flexibility” for the existing Alon refinery to utilize a variety of crude types,not just the SJV’s heavy crude. Crude will be transferred by rail and either processed into products in Bakersfield or shipped by pipeline. The company has another refinery in LA. One fact in the report is that with the new supply – the refinery will be able to increase pipeline shipments to Fresno of diesel and gasoline from 8736 barrels per day to 19,000 BPD. That would replace truck shipments of product from the Bay Area refineries to Fresno daily argues Alon. Alon says they will build the infrastructure improvements and refinery modifications n 9 months and will be ready to receive by the last quarter of 2015.
SLO County Project Draft EIR Expected This Month
Besides these two Bakersfield CBR projects Central California will also see crude by rail shipped into San Luis Obispo County under a proposal by Phillips 66 at their Santa Maria/ Nipomo refinery. The plan calls for five 80 car unit trains a week delivering oil through what is termed a “twisty approach” on this rail line and offloading within 2000 ft of homes says a description of issues presented June 25 at an energy commission CBR hearing. The CEC hearing cites other hazards to be wary of including a number of schools, a hospital, earthquake faults and a host of “sensitive species” in a “pristine coastal area.” The County is seeking an early warning system in the event of an accident. The SLO Board of Supervisors are expected to weigh in by early 2015 after a new draft EIR is circulated this fall. The company wants to bring in about 41,000 BPD by rail. Phillips 66 says the feedstock would be sourced from oilfields throughout North America based on market economics and other factors. The most likely sources would be the Bakken field in North Dakota or Canada says a CEC analysis. But a Phillips 66 spokesperson denies they will receive any lighter Bakken oil. In April the Tribune reported “We told the county to put it right in the project description that we will not receive Bakken crude,” said Jim Anderson, project manager for the rail spur proposal. Some opponents said that their concerns remain despite any promises about the type of crude oil coming by rail into the county. “Regardless of the type of oil, the trains coming through here are a bad idea,” said Martin Akel. Members of the Mesa Refinery Watch group say Phillips 66’s proposal would dramatically transform its business model locally by creating a new, high-intensity operation with 250 more oil-hauling trains traveling through the county and significantly increasing the potential for accidents.”
The Mesa Refinery Group Facebook page says this week a ”revised draft environmental impact report for a proposed rail spur extension at the Phillips 66 refinery is expected to be released by the first or second week of September, San Luis Obispo County officials told a group of residents at a recent meeting organized by Mesa Refinery Watch.”