Crude Oil on the MoveDown the Hudson River Valley Pipelines Virtual and RealTuxedo Town BoardAugust 10, 2015Kate Hudson, Director, Cross Watershed Initiatives

Crude Oil on the MoveRisks for Hudson River Communities1.Crude Oil on the move: Where is it coming from, how is it shipped, what are the risks?2.Proposed Pilgrim Pipelines: a new riskAre pipelines safer? Why not?Pipeline impacts and costs5.Pipeline benefits? 6.What actions can be taken and why now

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Crude Oil = Unrefined Petroleum Before 2012, little or no crude oil was sent through the Hudson ValleyTar Sands Crude

Photo: Ben Garvin

Bakken Crude

Crude oil is unrefined petroleum extracted from the ground, including from fracked shale deposits and Canadian tar sands.

Crude oil is different from home heating fuel, diesel fuel, gasoline, ethanol or any of the other refined petroleum products that are currently being shipped on the Hudson River.

In the U.S. and Canada, new sources of crude oil are located in remote areas far from refineries, necessitating long distance transport of crude.3

Bakken-to-East Coast Virtual Pipeline Route Crude Oil Trains, Barges and Ships

As industry has extracted more oil, it has employed a virtual pipeline of trains, barges, and ships to get Bakken crude from North Dakota and Canada to coastal refineries.

Having a major source of oil in the center of the continent is new.

Most U.S. refineries were built on the coasts to receive shipments of crude oil from abroad.

Crude oil from North Dakota and Canada is transported by rail, barge and ship to refineries on both coasts via a virtual pipeline.

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More Oil = More Oil Transport

Unit trains carry 80-120 tank cars, each with 30,000 gal. capacity

A 4000% increase in crude transport in 7 years2008: 9,500 tank carloads of crude by rail2013: 400,000 tank carloads of crude by rail2014: 493,126 tank cars of crude oil

Most U.S. refineries were built on the coasts to receive shipments of crude oil from abroad.

Regulations require that railroads have either a so-called basic response plan or a morecomprehensive response plan, depending on the volume capacity of the rail car transporting the oil

Comprehensive plans are subject to FRA approval, and must ensure by contract or othermeans that personnel and equipment are able to handle a worst-case discharge

However, the regulatory threshold for the comprehensive response plan is a tank car holding more than 1,000barrels, so does not apply to the DOT-111 tank cars used today, which hold around 700 barrels ofoil apiece. For these smaller tank cars, railroads must prepare only basic response plans, whichare not subject to FRA approval.

Crude oil from North Dakota and Canada is transported by rail, barge and ship to refineries on both coasts via a virtual pipeline.

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Current Crude Oil Transport in the Hudson Valley Up to 5 billion gallons shipped Per Year (more than 10 million gallons per day)

Crude Oil Transport RisksTrain derailment of Bakken crude oilCould lead to devastating explosions and fire and/or discharges of oil to adjacent waterways, including the Hudson River or its tributaries.On-Water Spill of Bakken crude oilFederal spill responders have said that the best case spill response would only recover 20-25% of the oil.On-Water Spill of Tar Sands crude oil Federal spill responders have said the best case spill response for heavy, sinking oil would be 5% recovery.Pipeline Spill of crude oilFrequency and spill quantities much greater than other forms of transport.

Derailments have triggered chemical spills and massive blasts like one in July in Columbus, Ohio, that blew up with such intensity that one witness said it "looked like the sun exploded." Some communities with busy railways are beginning to regard the tankers as a serious threat to public safety.

Crude is a nasty material, very destructive when it spills into the environment, and very toxic when it contacts humans or animals. Its not even useful for energy, or anything else, until its chemically processed, or refined, into suitable products like naphtha, gasoline, heating oil, kerosene, asphaltics, mineral spirits, natural gas liquids, and a host of others.

Five out of the ten largest oil spills in U.S. history were from boats7

ProposedPilgrim Pipelines

Pilgrim Pipelines Basics

Two parallel pipelines are proposed to run from Albany, NY for 178 miles, more or less parallel to the NYS Thruway, from Albany, connecting to distribution points along the way, before turning east at I-287 to reach the Phillips 66 Bayway refinery in Linden NJ.The two lines proposed are an 18 inch line would transport crude oil south and a 16 inch line refined products (aviation fuel, gasoline, heating oil) north.In Orange County, laterals would run to the Roseton tank farms and through New Windsor and the City of Newburgh to tank farms on the Hudson River. The pipeline would also run through the towns of Cornwall, Woodbury, and Tuxedo.

Pilgrim Pipelines Basics

In Ulster County, the pipeline path would run through the towns of Esopus, Lloyd, New Paltz, Plattekill, Rosendale, Saugerties and Ulster, and the City of Kingston.

Other affected counties in NYS include Albany, Greene and Rockland.

Pilgrim Pipeline Holdings, formed specifically for this project, is a Connecticut-based affiliate of Petroleum Solutions Management LLC, based in Winter Haven, Florida.

Pilgrim Pipelines: The Siting ProcessNo federal agency with overarching authority to permit oil pipelines as FERC does with gas pipelines. Thus, no opportunity for public input until permit applications filed.

Out of state, private oil pipeline companies like Pilgrim do not have power of eminent domain. They cannot take private property from homeowners who refuse to grant access/easement.

Access to Thruway right-of-way will be difficult, due to cost, permitting restrictions and notoriously tough approval process.

But a pipeline corporation could be formed by Pilgrim under NYS Transportation Corporation Law that would have the power to condemn in order to construct and operate a petroleum pipeline for public use.

Pilgrim Pipelines: Permitting

Permits Required DEC wetlands, 401 Certification Army Corps 404 dredging, stream crossing, wetland disturbanceCZMA Coastal Consistency (Army Corps, DOS)

The Permitting ProcessNeed for full EIS under NEPA/SEQRA in all permitting proceedings.Full review would require impact of pipeline transport of oil on climate change/ GHG emissions. Federal permits need for ESA consultation if endangered species or their habitat is affected.

Pilgrim Pipeline

What are the risks for the Town of Tuxedo?

Are pipelines safer?Spill Risks of Pipelines v. Rail v. VesselPipeline spills are inevitable (Forbes, April 2014).

Pipeline spills release much larger amounts of oil than spills from any other mode of transport. From 2004 to 2012, pipelines spilled three times the oil that oil trains did over the same period (PHMSA).

The 10 year average (2004-2013) is 631 pipeline incidents per year with 97,263 barrels (over 4 million gallons) per year spilled resulting in $494 million per year in property damage (PHMSA).

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Why arent they safer? New technology will not reduce the riskPhoto: The AdvocatePhoto: pbs.orgPHMSA data indicates that 44% of pipeline leaks are due to non-technology factors Examples: excavation damage, natural force damage, outside force damage, and incorrect operation

Pipelines poor track record from 2003-2013, 1,880 crude oil pipeline spills (on average, nearly one every other day), 44 million gallons spilled

Preliminary results showing the pipe lost nearly half the metal near the break vastly underestimated just how thin the pipe had becomePIG = pipeline inspection gauge (shown in the photo) Cathodic Protection (CP) is a technique used to control the corrosion of a metal surface by making it the cathode of an electrochemical cell. A simple method of protection connects the metal to be protected to a more easily corroded "sacrificial metal" to act as the anode.16

Author (A) - Too small and too many colors to mean anything. Consider giving it a full slide if it is really important.

Kalamazoo RiverMichigan, 2009

843,000 gallons of tar sands crude

35 miles of river

Cleanup at $2B+

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Tioga, North DakotaSeptember 2013 Farmer finds 865,200 gallons of fracked oil spilled onto his property from a pipeline leak, covering the equivalent of seven football fields. One of the largest spills in state history, soils were contaminated to a depth of 30 feet. Photo: John Wathen, Hurricane Creekkeeper

Source: Neal Lauron

Train was carrying 2.7 million gallons, unknown how much spilled into wetlands18

Glendive, MontanaJan 2015 Pipeline breach spilled 50,400 gallons of crude oil into the Yellowstone River, contaminating drinking supplies. At time of rupture, 110 feet of pipeline lay uncovered on the bottom of the river, exposing it to damage. Three and a half years before it was 8 feet under the river.Photo: The Advocate

Photo: pbs.org

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Pipeline Under SedimentPipeline exposed leak

Santa Barbara, CaliforniaMay 2015 Pipeline breach spilled ~105,000 gallons of crude oil near the coastline of southern Santa Barbara County, contaminating Refugio State Beach. Photo: The AdvocatePhoto: pbs.org

Source: KTLA~21,000 gallons passed through storm drain to ocean$3 million/day. $62 million as of 6/10/15

Source: LA Times

Too early to tell how much the clean up will cost (already over $62 million) Amount spilled is only an estimate and the 21,000 gallon estimate has been said to be extremely low24-inch Las Flores to Gaviota pipeline runs about 11 miles soiled 60 miles of scenic coastline Spill coated dozens of marine animals in crude oil, including seals, dolphins, and birds, many of which diedcommercial fisherman has filed a federal lawsuit seeking class-action certification for affected businesses

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What Went Wrong in Santa Barbara? The Smart Pig Didnt Work!Photo: The AdvocatePhoto: pbs.orgDevices (e.g., Smart PIGs) used to detect corrosion not always effective, especially in high corrosion areas.

Possibility of human error in analyzing the results of tests.

Preliminary PIG results showing that the pipe had lost half its metal near the break vastly underestimated just how thin the pipeline had become.

Pipeline Inspection Gauge (PIG). Source: PPSA

Preliminary results showing the pipe lost nearly half the metal near the break vastly underestimated just how thin the pipe had becomePIG = pipeline inspection gauge (shown in the photo) Cathodic Protection (CP) is a technique used to control the corrosion of a metal surface by making it the cathode of an electrochemical cell. A simple method of protection connects the metal to be protected to a more easily corroded "sacrificial metal" to act as the anode.22

Costs and Impacts of Oil PipelinesCondemnation Pilgrim will need to lease or condemn all or part of several hundred privately owned parcels along its proposed route

Secondary impacts Many more property owners just off the route will face secondary impacts including construction impacts (noise and traffic), threats to property values and health and safety risks

First responder preparedness costs

Spill clean-up costs and damages Pilgrim will not indemnify

Threats to public drinking water supplies if impacted it could take years to clean up

Impact on property values, not only as a result of a spill, but even proximity to an oil pipeline (lower property values means lower property tax revenue)

Presence of an oil pipeline can cause homeowners insurance premiums to rise for that property and potentially for adjacent properties

Pipeline Construction Impacts (There are none for rail or vessel transport)Impacts on homeowners Noise and air impacts associated with clear-cutting, blasting and drilling, and construction vehicle traffic, among others

Construction across key waterbodies including important tributaries to the Hudson River (e.g., Wallkill River, Quassaic and Moodna Creeks)

Wetland Disturbance: federal and potentially state

Stormwater impacts due to vegetation removal

Potential impairment of sensitive aquifers on which residents depend for drinking water

Crossing of Delaware and Catskill aqueducts that supply drinking water to more than 9 million New Yorkers

Disturbance of critical wildlife habitat

Are There Any Benefits? Will constructing Pilgrim Pipelines take crude oil transport off the rails and the river as Pilgrim LLC predicts?

Pilgrim has not designed the pipelines to be big enough to end both rail and river transport, or even both vessel and barge

No one can require that rail or vessel transport be moved to the pipelines. It will depend on the choices that the industry makes, which no one can predict. Here is what the industry has said:

When we look at the modes of transportation, our industry the oil and gas industry we take an all of the above approach. Robin Rorick (oversees transportation of oil and gas from well to market for the American Petroleum Institute)

Two thirds of Bakken crude is now transported to East Coast refineries by rail, demonstrating the industrys preference for the extensive network and increased flexibility of rail as compared with pipelines.

It is just as likely that the building of Pilgrim Pipelines will increase the amount of oil being transported down the Hudson Valley not, as Pilgrim claims, move it from rail and vessel to pipelines. More oil transported encourages more fossil fuel extraction, accelerating climate change.

Other Benefits claimed by PilgrimJob growth? Temporary, construction, primarily to out of state firms; small number of permanent jobs, but are they new jobs or just replacing jobs that will be lost in the Port of Albany and on barges and vessels?

Pipelines are a safer means of transport? Not supported by the pipeline safety track record and pipeline spills are larger and so harder and more expensive to clean up.

Pilgrim pipelines will mean cheaper fuel for consumers because transport will cost less? How do we know that Pilgrim will charge less and whether that savings for wholesalers will be passed on to consumers. No guarantees.

May reduce GHG emissions? Compared to barge traffic, but will lock the region into fossil fuel for decades at a time when we need to rapidly transition to more sustainable forms of energy.

1. Jobs: - Temporary construction jobs go to out of state firms.- General manager of the Port of Albany, says a proposed east coast oil pipeline would threaten jobs and growth at the Port of Albany.Keystone XL 840 mile pipeline (~5 times longer), will only create 35 permanent jobs.3. Safety/new technology:292 spills in Bakken fields in 2012/13, only 10 years old, spill from wastewater pipe less than one year old.

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Actions We Can Takeon Pilgrim Pipelines

Write to the Governor and the NYS Thruway Authority and Department of Transportation and urge them to deny Pilgrim the ability to use the Thruway right of way for their pipelines.

Write to the NYS Department of Environmental Conservation and the Army Corps of Engineers and urge them to require a full environmental review of Pilgrims proposal.

Work in your community to introduce and pass County and local/municipal resolutions opposing Pilgrim Pipeline and a zoning ordinance prohibiting oil pipelines that do not bring products or services to town residents.

Urge your state and federal elected representatives to join you in pressing regulators not to authorize the Pipeline.

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18 New York Hudson Valley communities pass resolutions opposing the pipelines City of KingstonCornwall EsopusMarbletown New Paltz, Town of* New Paltz, Village ofNewburgh, City of* Newburgh, Town of*Plattekill*

34 New Jersey Municipal Resolutions also passed

Red Hook Rhinebeck* Rochester Rosendale* Saugerties (No confidence resolution)Tuxedo ParkUlster County*WawarsingWoodstock* available online

Why take action now?There is an opportunity now to influence decisions yet to be made by regulators, Pilgrim investors and even Pilgrim itself that could be lost after applications are filed.

A resolution by the Town Board opposed to the pipelines that directs the sending of letters to the NYS Thruway Authority, the Department of Transportation and other regulators, combined with those of many other Towns, could:

influence their decision about granting or denying access to the Thruway right of way;impact decisions that Pilgrim makes re route selection;result in a more comprehensive environmental review process being required by state and federal regulators;send a message to investors in the pipelines that this is not a good capital investment for them. Without investors, the Pilgrim pipelines project may fail to move forward.

Article 7 of New York Transportation Corporations Law deals with pipeline corporations. http://codes.lp.findlaw.com/nycode/TCP/7.

Section 83, copied below, addresses the condemnation of real property:

In case such corporation is unable to agree for the purchase of any real property required for the purposes of its incorporation, and its route in the county in which such real property is situated has been finally located, it shall have the right to acquire title thereto by condemnation, but such corporation shall not locate its route or construct any line of pipe through or under any building, dooryard, lawn, garden or orchard, except by the consent of the owner thereof in writing duly acknowledged, nor through any cemetery or burial ground, nor within one hundred feet of any building except where such line is authorized by public officers to be laid across or upon any public highway. No such corporation shall lay or construct its line of pipe through or under a street in any city, unless it shall first obtain the consent of a majority of the owners of property abutting on that portion of the street in which its pipe line is to be laid. Such pipe line shall be laid with reasonable care and prudence.

Section 80 lays out what constitutes a pipeline corporation:

A pipe line corporation is a corporation organized to construct and operate for public use, wholly within or partly without this state, except in the city of New York, lines of pipe for conveying or transporting therein petroleum, gas, liquids or any products or property, or, except in such city, to maintain and operate for public use for which such purposes lines of pipe already constructed.

Article 1 of the transportation corporations law deals with the formation of transportation corporations:

(a) A transportation corporation may be formed under this chapter, in accordance with the procedure for the formation of corporations set forth in article four of the business corporation law, by delivering to the department of state for filing a certificate of incorporation entitled "Certificate of incorporation of . . . (name of corporation) pursuant to section three of the transportation corporations law". (b) In addition to the statements prescribed by section four hundred two of the business corporation law, a certificate of incorporation of a transportation corporation shall designate the particular kind of transportation corporation to be formed, and shall state: 1. If a gas corporation, an electric corporation, or a gas and electric corporation, the county or counties in which its operations are to be carried on; 2. If a telegraph corporation, a telephone corporation, or a telegraph and telephone corporation, the territory in which its operations are to be carried on; 3. If a water-works corporation, the cities, towns and villages to be supplied with water, and that the consent of the authorities of such cities, towns and villages required by this chapter has been obtained, and that such consent has been annexed thereto; 5. If a ferry corporation, the places from and to which the ferry is to run; 6. If a pipe line corporation, the places from and to which the pipe line is to be maintained, as nearly as practicable, and the county or counties through which or in which it is to be maintained and operated; 7. If a freight terminal corporation, the limits of the locality in which its operations are to be carried on; 8. If a district steam corporation, the cities, towns and villages to be supplied with steam and that the consent of the authorities of such cities, towns and villages required by this chapter has been obtained, and that such consent has been annexed thereto.29

Further Information and Resources on Pilgrim PipelinesIf residents have interactions with Pilgrim, LLC representatives trying to gain access to their property that are concerning or have questions about your rights and Pilgrims, call the New York State Attorney Generals Consumer Frauds and Protection Bureau at 845-485-3900.

Further information available at stoppilgrimpipeline.com and riverkeeper.org/crude.

Kate Hudson, Riverkeeper khudson@riverkeeper.org

Iris Marie Bloom, Coalition Against Pilgrim Pipelines-New York 845-687-7810, protectingourwaters@gmail.com

THANK YOU!