New York snubs Albany port bitumen project

New York's state government found there would be "at least one" environmental issue with a proposal to build a tar sands storage facility at a rail terminal.

The state Department of Environmental Conservation rescinded a 2013 notice to Global Partners, which has headquarters in Massachusetts, that a proposed project to warm rail cars filled with the heavier form of crude oil called bitumen would not present environmental threats.

Global wanted to install boilers at its Albany terminal to offload to vessels headed for coastal refineries.

DEC rescinded its 2013 notice after reviewing thousands of comments and documents, including those submitted by environmental groups. Its review found "little experience" with heating bitumen in major oil storage facilities.

"This new information suggests that the proposed project has the potential for at least one significant adverse environmental impact that was not considered in the negative declaration," the DEC ruled.

The department pointed further to a 2013 oil spill of the heavier crude from the Lakehead pipeline system in Michigan. The spill was one of the worst of its kind in industry history and cleanup was complicated because bitumen sinks in water.

"The negative declaration did not fully consider the adequacy of Global's spill prevention, control and countermeasures plan to address potential spills of diluted bitumen into the Hudson River and consequently must be rescinded," the DEC said.

An increase in U.S. crude oil production from shale has sparked concerns not only about the safety of the drilling practice known as fracking but also about rail transit. There's not enough pipeline capacity in the United States to handle the shale oil boom, forcing energy companies to rely more on rail as an alternative.

Oil from some U.S. shale basins is similar to Canadian bitumen, the type of crude sent through the Michigan pipeline system. Globals in 2013 signed a deal to build pipeline facilities in the Bakken shale reserve in North Dakota.

Kate Sinding, deputy director of the New York program at the Natural Resources Defense Council, said the industry's track record raises serious questions about Global's proposed plan for its Albany terminal.

"We believe a comprehensive and robust environmental review will show that tar sands do not belong in New York -- and we should continue moving in the direction of cleaner, safer energy sources," she said in a statement.

Global Partners had no comment on the decision.