Oil boom boosts flow along the Hudson, and fears of spill risk

The Record (North Jersey) | March 30, 2014 | Scott Fallon


The Hudson River has quietly become a major transportation route for crude oil, with ships moving as much as 25 million gallons down the river each week — a boon for domestic oil production but one that raises concerns about the risk of a spill on the recovering waterway.

From upstate New York to North Jersey’s Gold Coast, the river is now an integral part of the energy trade, allowing oil companies to move large quantities of crude more easily to refineries and, eventually, gas tanks.

The oil tanker Afrodite sailing up the Hudson River en route to Albany to receive a shipment from North Dakota. More than 1 billion gallons of crude could be shipped down the Hudson this year to refineries in New Jersey and elsewhere.

The crude originates from the oil boom in North Dakota and is shipped by rail to Albany, where New York officials have allowed the amount handled at the city’s port to triple in the past 18 months. It is pumped onto several barges and a tanker and travels 145 miles down the Hudson, past Manhattan and through New York Harbor as it makes its way to refineries in New Jersey and Canada.

To the oil industry, the Hudson is a solution to the logjam in getting crude from an isolated part of the country to one of the biggest markets. Oil executives say crude shipments will help the struggling upstate New York economy, make the U.S. less dependent on foreign oil, revitalize refineries on the East Coast and eventually bring down the price of gas.

But environmentalists and some local officials see a looming disaster, especially in the heavily populated lower Hudson, where people live right along the river’s edge. While oil tankers have a safer track record than when the Exxon Valdez spilled its load off the Alaska coast 25 years ago, the first tanker to transport crude down the Hudson ran aground in 2012 and ruptured its outer hull. No oil was spilled but the mishap raised alarms among environmentalists and local officials along the river.

The issue has generated vigorous debate in New York. Gov. Andrew Cuomo, whose administration approved the rapid expansion of crude processing in Albany, is now calling for the development of better emergency response plans for spills.

In New Jersey, however, the oil barges have gone largely unnoticed by state environmental officials, even though they pass some of the state’s most densely populated municipalities, including Fort Lee, Edgewater, Hoboken and Jersey City.

“It hasn’t been put on our radar by anyone,” said Larry Ragonese, a spokesman for the Department of Environmental Protection. “We haven’t had any real input.”

Barges transport an average of 3.2 million gallons a day from Albany to the Bayway Refinery in Linden, according to the refinery’s parent company, Phillips 66. One tanker, the Bahamian-flagged Afrodite, carries as much as 9.6 million gallons of crude down the Hudson and up the Atlantic to a refinery at Saint John in the Canadian province of New Brunswick every eight to 10 days, according to websites that track ship movement.

At that rate, more than 1 billion gallons of crude could be shipped down the Hudson in a year, though the companies are permitted to move as much as 2.8 billion gallons annually.

When spilled in a waterway, light crude like the kind from North Dakota can spread quickly across the water’s surface. It is prone to vaporize and, next to a large population, could cause a rash of headaches, dizziness, nausea or vomiting. In some cases, all that stands between a home and the water’s edge is the pedestrian walkway that runs along the length of the river in New Jersey.

Environmentalists say the potential threat to the river will increase if New York officials approve a permit that could allow a heavier form of crude extracted from tar sands in Canada to be shipped down the Hudson.

After being informed by The Record about the shipments down the river, Assembly Speaker Vincent Prieto, D-Secaucus, last week called on Governor Christie to conduct a comprehensive review of the state’s readiness to handle spills and emergencies. “We’ve seen several recent examples of the damage that can be caused by oil spills,” said Prieto, whose district includes part of the riverfront. “Nobody wants to see that repeated along the Hudson.”

The use of the river as a de facto oil pipeline has emerged as the Hudson is three-quarters through a six-year, $1 billion cleanup of cancer-causing PCBs that made the river a 200-mile-long Superfund site. Since 2009, almost 2 million cubic yards of contaminated sediment has been dredged from the Hudson by General Electric, which had discharged the toxic chemical into the river from two New York plants.

“What’s really tragic is that we spent all this money and time bringing the river back to life,” said Katherine Hudson of the Hudson Riverkeeper environmental group. “Now we’re putting the river back at risk.”

The genesis of the Hudson as a route for crude oil dates to 2007, when Global Partners of Waltham, Mass., bought an oil storage facility at the Port of Albany from Exxon-Mobil.

It turned out to be an auspicious purchase. A year later, the U.S. Geological Survey reported that an estimated 3 billion to 4.3 billion barrels of oil was sitting beneath North Dakota and Montana in a rock formation called the Bakken shale. That estimate recently increased to 7.4 billion barrels.

Oil production at Bakken skyrocketed from 150,000 barrels a day in 2008 to a million barrels a day at the end of 2013.

But while North Dakota has oil, it lacks pipelines. Much of the oil has to be carried by rail over 1,900 miles through Chicago to Albany. There, crude is transferred onto ships, a less costly way to transport it to refineries.

As Bakken production expanded, so did oil transportation on the Hudson. “In the last year or so, it’s been transformational because we’re producing so much in the Bakken,” said Karen Moreau, executive director of the New York State Petroleum Council.

In November 2012, New York environmental officials allowed Global Partners to increase its handling of crude from 450 million gallons to 1.8 billion gallons a year. Buckeye Partners, a Houston-based company that also owns an oil terminal in Albany, received permission last year to increase its threshold from 400 million to 1 billion gallons annually. In December, the company bought an oil tank from Hess in Rensselaer, across the river from Albany.

The Bakken region has played a major role in the recent surge in domestic oil production; in October, the United States began producing more oil than it imports for the first time in almost 20 years. The oil’s  transport down the Hudson has helped reinvigorate refineries on the East Coast, some of which, like the Sunoco refinery in Philadelphia, were on the verge of closing.

Motorists are also expected to benefit. Federal officials estimate that the price of a gallon of gasoline will decline from $3.50 today to just over $3 in 2017 due in part to the increase in domestic oil production.

Neither Global Partners nor Buckeye Partners responded to requests for comment.

Because of the regulatory hurdles, cost and the time it would take to build pipelines, oil industry executives say the Hudson will likely remain an important transportation route for a long time.

“It’s always been a river of commerce,” Moreau said. “It was built as a river to transport commodities.”

The river’s importance to commerce dates to the lucrative fur trade of the Colonial era. In recent years, the river has been used to transport refined oil — home heating oil, diesel, gasoline — from refineries in New Jersey north to upstate New York. But over the centuries, the Hudson Valley’s natural beauty also drew artists, travelers and, eventually, conservationists who saw the region’s natural resources being harmed by an increasingly industrialized America.

“It’s an incredibly precious resource that hasn’t always been treated like one,” said Hudson of the Riverkeeper group.

The frequency of oil tanker spills has decreased considerably in the last 40 years. The 2000s saw an average of 3.5 major spills annually compared with 24.5 a year in the 1970s, according to an industry group that tracks maritime spills. By 2015, all oil tankers that serve U.S. ports will be required to have a double hull, one of the many reforms spurred by the 1989 Exxon Valdez spill.

But oil transport on the Hudson almost got off to a disastrous start. The Stena Primorsk, the first tanker carrying crude out of Albany, ran aground in December 2012 and ruptured its outer hull about seven miles south of the capital city. None of the 12 million gallons of oil it carried spilled because the inner hull was not breached. Shipments resumed last summer.

That mishap raised alarm among environmentalists and local officials in the Hudson Valley. They were also concerned about the three to four hours it took state police and Coast Guard helicopters to confirm that the oil hadn’t spilled into the river.

An oil spill could be disastrous on the Hudson, environmentalists said, because the waterway is a long tidal estuary where the current sloshes back and forth for 153 miles from New York Harbor to Troy, N.Y. That would make it difficult to contain a spill, they said. Environmentalists are also concerned about whether officials are prepared to deal with a crisis. In November, New York officials held an emergency response drill to a simulated oil spill on the river, but the simulation involved a 50,000-gallon leak of home heating oil from an onshore storage tank and a train derailment, not crude oil spilled from a ship.

The concerns have reached the Cuomo administration. The governor issued an executive order in January saying the Hudson and other waterways are now “especially vulnerable to spills of crude oil.” The order directs five state agencies to determine how to prevent and respond to rail and river accidents involving crude oil.

At the same time, Cuomo’s environmental agency is considering a permit application from Global Partners to install seven boilers at its Albany terminal that would heat thicker crude to make it easier to transfer to barges.

In filings with regulators and at public meetings, Global executives have given little information on why they need to heat this new oil. It appears to opponents that they want to bring in oil from the Alberta tar sands in Canada, which has been the subject of a national debate on the need to build the 1,200-mile Keystone XL pipeline to transfer that crude oil to the Gulf of Mexico.

Oil from the tar sands was responsible for one of the worst oil accidents in recent memory, when, in 2010, a pipeline ruptured and 843,000 gallons spilled into Michigan’s Kalamazoo River. This crude is particularly heavy and much of it sank and spread across 35 miles of the river. Even with a three-year cleanup that has surpassed $1 billion, the Environmental Protection Agency estimates that up to 168,000 gallons of heavy crude cannot be recovered and will remain in the river.

Global’s application to install boilers hit a snag this month when Albany County placed a moratorium on the expansion of crude processing at its port pending a look at air pollution and other potential effects on residents near the port.

A spokesman for Cuomo did not return a phone call seeking comment. In a statement after the moratorium was issued, the state Department of Environmental Conservation said it was “aggressively reviewing” the permit and that no other state has been as forceful in ensuring “the public and the environment is protected from accidents related to the transport of crude.”

New Jersey is no stranger to oil spills. The Delaware River, home to the nation’s third-largest petrochemical port, has had four major oil spills over the last 40 years, with almost 1.3 million gallons spilled into the waterway. The most recent occurred in 2004, when 264,000 gallons of heavy crude spilled after a tanker’s single hull was breached by an 18,000-pound anchor and other objects on the riverbed. Oil washed up along 280 miles of shoreline in Pennsylvania, New Jersey, Delaware and Maryland, according to federal officials.

The spill halted commercial traffic on the river for more than a week and temporarily shut down the Salem Nuclear Power Plant, which depends on water from the river to cool its two reactors. More than 16,000 birds were found covered in oil; thousands died. The spill cost $267 million to clean up.

Members of the Delaware Riverkeeper spent years cataloging the damage. A spill “is not just a moment in time, it goes on and on,” said Maya K. van Rossum, head of the environmental group. “It gets into wetlands. Sand absorbs it. You find it everywhere.”

Despite those concerns, the amount of oil moving down the Hudson is likely to increase. Global Partners is looking for regulatory approval to build an additional dock at its Albany facility as well as transfer crude oil from trains to ships at its facility in New Windsor, N.Y., about 50 miles north of the George Washington Bridge.

The American Petroleum Institute, one of the biggest oil lobbying groups, said that 99 percent of tankers reach their destinations without incident.

But the more oil traffic there is on the Hudson, the likelihood of a spill increases exponentially, experts said.

“I have no side in this issue, but I do know one thing: You will have a spill,” said Chuck Kennicutt, a retired Texas A&M University oceanography professor and an expert on oil spills. “It’s almost inevitable. The question is how big.”

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PAUSE, People of Albany United for Safe Energy
PAUSE is a grassroots group of individuals who have come together to promote safe, sustainable energy and fight for environmental justice. We engage the greater public to stop the fossil fuel industry’s assault on the people of Albany and our environment.