By SCOTT FALLON, North Jersey Media
The owner of the state’s largest refinery is investing heavily in rail transportation to haul oil across the country to its Linden plant, ensuring that more trains carrying millions of gallons of volatile Bakken crude will be traveling through New Jersey.
The Houston-based energy giant Phillips 66 recently opened a new rail facility at its Bayway Refinery and began accepting shipments of crude in August. The company intends to build its own rail shipping center near the abundant oil fields of North Dakota and plans to almost double its rail fleet to 3,700 tanker cars to bring more oil to its refineries.
The new rail facility at Bayway is cementing New Jersey’s reputation as a major transportation corridor for crude oil even as the burgeoning “crude by rail” industry faces increasing concerns about safety following a series of explosive derailments in the past year.
“This is something that is just continuing to grow in a state like New Jersey, as industrialized as it is,” said James Hall, a former chairman of the National Transportation Safety Board who has called for stronger rail safety standards. “The communities along those train routes ought to know that more dangerous materials are going to be passing through.”
Large volumes of Bakken crude are transported through some of the most densely populated areas of New Jersey. Between 15 and 30 trains – each carrying as much as 3 million gallons of oil – travel every week on the CSX River Line from New York through towns in Bergen County and across the state to a refinery in Philadelphia.
Meanwhile, Bayway has been receiving up to 3.2 million gallons a day since last year via barges that travel down the Hudson River from Albany to Linden. Rail shipments began at Bayway on Aug. 5 and appear to come across the central and southern parts of the state on a Norfolk Southern line.
At an energy conference in New York last month, Phillips 66 Chief Executive Officer Greg Garland outlined the company’s expanding rail operations and the importance of crude oil to the Bayway refinery.
Garland also said that Phillips 66 had acquired 710 acres in North Dakota near the oil fields and plans to build a rail facility there that would move as much as 7.8 million gallons of oil a day to Bayway and its refineries on the West Coast. A Phillips 66 spokesman said the company carries crude oil only in tanker cars with the latest safety features, not in older cars that regulators have called substandard.
The oil business has boomed in North Dakota since a huge reserve was found almost six years ago. The 1 million barrels of crude extracted from Bakken shale each day has been credited with helping reduce oil imports to the lowest level in 29 years along with revitalizing refineries on the East Coast.
But concerns have arisen about the safety of transporting the oil, which federal officials say is more flammable than other crude oils. Because there are few pipelines in the region, most of the oil is transported via rail to refineries on both coasts. While the rail industry says 99 percent of trains reach their destinations without incident, there have been a number of recent derailments and explosions, including one last year in Quebec that killed 47 people.
Despite concerns about safety and calls across the country from officials who believe communities should be notified of oil trains traveling through, the exact route of the train shipments to Bayway is unclear. David Pidgeon, a Norfolk Southern spokesman, declined to comment on the oil train route, saying that making the information public would be a safety risk.
Information on Norfolk Southern’s oil train movements provided to New Jersey emergency management officials was heavily redacted in a copy given to The Record under a public records request. The documents list only the counties the trains pass through: Camden, Gloucester, Hunterdon, Middlesex, Somerset, Warren and Union, where Bayway is located. The trains appear to come into the state through Pennsylvania, according to Norfolk Southern’s maps.
It’s also unclear how much crude is going to Bayway by rail. While Garland announced at the energy conference that the refinery’s rail facility can handle one train a day carrying 70,000 barrels, or 2.9 million gallons, a spokesman said the plant was not yet at that level.
Such information is vital, especially to communities where businesses, schools and homes are near the tracks, said several local officials and lawmakers who represent areas the trains cross.
But Governor Christie’s administration has said making that information public would create a security risk. (New York’s homeland security commissioner disagrees.) Because the rail industry is regulated almost solely by the U.S. Department of Transportation, little can be done at any other level of government. Long before Bayway offloaded its first oil train, crude had been quietly transported from New York through New Jersey on the CSX River Line for at least 18 months without any public notice from the rail company to residents or emergency personnel.
U.S. Sen. Cory Booker called on federal regulators last month to expedite enhanced safety measures on the shipments. State and local officials are demanding that the trains travel at slower speeds in residential areas. And a resolution introduced this month by Assemblywoman Valerie Vainieri Huttle, D-Englewood, calls for prohibiting oil shipments from moving through “populated areas” of New Jersey.
Rail accidents have prompted tougher federal regulations, including a proposal that would phase out within two years aging rail cars that federal officials say are unsuitable for carrying Bakken crude. A railway trade group said the deadline is too soon and would lead to thousands more trucks transporting crude oil, posing greater risks.
Some, including Booker, say the government is not moving fast enough. “Crude oil is a volatile substance with the potential to devastate New Jersey communities and threaten both human life and the environment,” Booker said. “I’m very concerned about the increasing volume moving through our state, and that’s why I’ve called on DOT to act quickly.”
A Phillips 66 spokesman said the company would only use tankers that meet federal rules proposed in July that seek to phase out the old fleet by 2017. “Phillips 66 has one of the most modern crude rail fleets in service in the industry, consisting only of railcars that exceed current regulatory safety standards,” said the spokesman, Dennis Nuss.
Pipeline companies have said they can transport oil more safely, and a start-up company has proposed building a pipeline from Albany to Bayway that may go through parts of upper Bergen and Passaic counties. Pilgrim Pipeline has begun surveying land for a possible route, but the company has no agreement with Phillips 66 and the refinery’s investment in rail may be a stumbling block for a proposed pipeline.
“At this time, we have no plans to make a shipping commitment on the proposed pipeline nor are we involved in otherwise sponsoring the project,” Nuss said.
A spokesman for Pilgrim declined to comment on the moves by Phillips 66.
“We are focused on getting our route finalized so we can submit our permits,” said the spokesman, Paul Nathanson.