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Vol. 19, No. 3 Week of January 19, 2014
Providing coverage of Bakken oil and gas

Rail pressure mounting

Congressional leaders demand a solution to ensure safety of crude oil transport

Maxine Herr

For Petroleum News Bakken

In the wake of the Casselton crude train derailment and explosion, pressure is mounting for improved rail regulations in the U.S. and new rules could be just weeks away.

On Jan. 13, the National Transportation Safety Board, NTSB, released its preliminary report of the Dec. 30 Casselton, N.D., train accident in which a derailment caused a subsequent crash between a train carrying agricultural products and one carrying crude oil, resulting in a fiery explosion. That report came just days after two influential U.S. senators called on the Department of Transportation to reevaluate the safety of domestic crude oil transport.

The NTSB report states that 20 of the 21 rail cars on the oil train were carrying crude oil and of those 20, 18 were punctured. Initial estimates indicate that more than 400,000 gallons of crude oil were released. NTSB has repeatedly warned PHMSA, DOT’s Pipeline and Hazardous Materials Safety Administration, that the DOT-111 tank car has a serious design flaw due to a relatively thin metal skin that has a high incidence of rupturing when involved in accidents and derailments.

Bakken crude is currently hauled using DOT-111 tank cars. The Association of American Railroads developed standards that exceed federal requirements and has been urging PHMSA to adopt those standards since March 2011.

Additionally, PHMSA issued a safety alert on Jan. 2 warning that crude oil from the Bakken may be more flammable than other crudes, and that they will conduct further studies.

Helms: crude samples taken

North Dakota Department of Mineral Resources Director Lynn Helms told reporters on Jan. 14 at his monthly production press conference that PHMSA and the Federal Railroad Association are taking crude oil samples and making comparisons to further study its volatility. Helms says DMR has data samples from oil fields in North Dakota and his office is willing to provide it to PHMSA if they ask for it.

“They have not asked us for our data yet, but Canada did and we provided all the data we had. We don’t know if they’re sharing,” he said.

Helms said he hopes the study will determine how to properly handle and move Bakken crude oil by rail safely. When asked if he thought it wasn’t being done safely presently, he replied, “I think the incidents speak for themselves. ... But I don’t think it’s fair to blame the product, or the rail, or the cars because maybe it’s a bit of all of it there.”

The uncertainty as to what new regulations and specifications would be and when they would be released, however, has kept many manufacturers from making investments in the construction of new railcars. Whatever measures are taken, they need to match across the border. Canada has announced its plans to require new DOT-111 cars to meet stricter requirements (see story on page 1).

“The PHMSA has sat on the enhanced safety standards for more than two years,” said Ron Ness, president of the North Dakota Petroleum Council in a Jan. 9 press release. “We are pleased to find out these standards may finally be closer to being released so manufacturers can begin production of better, more secure rail cars.”

Ness told Petroleum News Bakken Jan. 14 that oil producers are waiting for the standards to be set by PHMSA, but many have already moved to using safer cars.

“There needs to be some type of phase in because you can’t convert a fleet that fast,” Ness said, “But a fair number of companies I’ve talked to already have those tank cars with extra safety precautions on them.”

Ness applauded U.S. Sens. John Hoeven and Heidi Heitkamp for “putting pressure on regulators” to approve the regulation standards. The two met with Transportation Secretary Anthony Foxx and PHMSA Administrator Cynthia Quarterman Jan. 9 to push for new regulations while still protecting the state’s energy industry.

The Associated Press reports that Foxx told Hoeven at the meeting that he had already been calling railroad executives and oil industry shippers to gather information and has been “very active on this issue.”

A demand for increased vigilance

Meanwhile, two U.S. Senate committee chairmen also asked Foxx and U.S. Secretary of Energy Ernest G. Moniz to properly evaluate crude oil transportation. In a Jan. 9 letter, Jay Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation, along with Ron Wyden, chairman of the Senate Committee on Energy and Natural Resources, outlined some of the steps taken in the past six months to improve rail safety.

“We asked the Government Accountability Office to examine the impact of shale oil and gas development on transportation infrastructure and safety, including the potential impacts on safety,” the letter states.

They referred to PHMSA’s safety alert, highlighting the importance of properly classifying hazardous materials being shipped by rail. The chairmen also referenced the launch of PHMSA’s “Bakken Blitz,” a series of unannounced inspections on oil train facilities and tests in the region. PHMSA announced in its report that the preliminary results of its “Bakken Blitz” inspection have shown that further testing is necessary.

The letter also urges finalization of a Department of Transportation rail risk reduction program that was signed into law six years ago.

“The recent derailments and accidents involving crude oil are alarming and demand increased vigilance,” Wyden and Rockefeller stated in the letter. “We urge you to work together to quickly resolve issues with the transportation of crude oil in order to protect our communities, and prevent any further disasters.”

Foxx has responded to these pleas by saying new transportation rules are “weeks, not months” away. Foxx also promised to travel to North Dakota in coming weeks to observe the state’s energy infrastructure and meet with local government officials and related industry leaders.

Future pipeline plans wouldn’t help much

The North Dakota Pipeline Authority projects that railroad oil-shipping capacity from the state would exceed 2.5 million barrels per day by 2016, nearly double that of pipelines. Concerns about crude oil transportation continue to grow as more is shipped by rail due to a lack of pipeline options between the Bakken and East Coast refineries.

“Proposed pipelines such as TransCanada’s Keystone XL and Enbridge’s Sandpiper would carry — or divert — a fraction of the crude being carried on railroads, even if those projects are built and operated at full capacity,” Wyden and Rockefeller stated in their letter.

Several derailments of trains carrying Bakken crude in the past year have created a sense of urgency to create new rules for rail cars and testing, and to accelerate their implementation. The derailed train carrying soybeans that crashed with an oil train near Casselton resulted in an explosion that forced the evacuation of the city’s people but caused no injuries. It was a stark reminder of the July 6, 2013, explosion in Lac-Megantic near Quebec in Canada which killed 47 people and caused extensive property damage. Most recently, another train carrying propane and crude oil derailed and caught fire on Jan. 9 in northwest New Brunswick, Canada. This string of train accidents has the industry under heavy scrutiny.

“The industry always has and always will hold safety as a top priority,” Ness said. “And this regulatory certainty is needed to begin making safety upgrades without further delays.”

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