In a ground-breaking effort, the United States and Canadian transportation safety watchdogs have applied extreme pressure to federal regulators in both countries to waste no time in changing rules for the rail shipment of crude and flammable liquids.
An unprecedented joint statement Jan. 23 by the two agencies — the U.S. National Transportation Safety Board, or NTSB, and the Transportation Safety Board of Canada, or TSB — called for the phasing out of an estimated fleet of 75,000 DOT-111 tank cars, which carry the bulk of Bakken crude and volatile fuels such as ethanol in North America. But neither agency suggested a timeframe for eliminating the cars.
They also recommended greater efforts to reroute those trains outside populated areas and better emergency planning to handle accidents.
Although Bakken crude has been blamed for the explosions and fires on July 6 that killed 47 people and destroyed 40 buildings in Lac-Megantic, Quebec, TSB chair Wendy Tadros said investigations by the two boards was broadened to cover all flammable liquids.
Action up to transportation departments
The boards exist to investigate accidents and make recommendations, but action is up to the transportation departments in both countries.
Joint measures by the two governments are essential because the tank cars are continually crossing the international border.
The language in the agency reports was the strongest yet in criticizing the state of outdated DOT-111 cars, which have been the workhorses supporting a 400 percent increase in crude-by-rail shipments since 2005.
“We can verify that the longer the (DOT-111 cars) are left out there the greater the risk,” Tadros told reporters in Ottawa. “A long phase-out of older cars simply isn’t enough.”
NTSB chairman Deborah Hersman said in a statement that while the “energy boom (created by rail) is good for business, the people and the environment along rail corridors must be protected from harm.”
Tadros said the “sooner (action is taken) the better,” adding that the vulnerability of the cars to rupturing, leading to fires and explosions, is “irrefutable.”
“If North American railways are to carry more and more of these flammable liquids through our communities, it must be done safely. Change must come and it must come now,” she said.
Production could be curtailed
The spate of rail accidents in the U.S. and Canada since Lac-Megantic has crude traders and energy analysts warning that if DOT-111s are sidelined or eliminated Bakken production could be curtailed, while refiners would be forced to rely again on higher-priced imported crude.
Sandy Fielden, an analyst with the consulting firm of RBN Energy, said in a report that if regulators implemented tougher safety standards, and ordered a retrofitting of the older cars, the measures would be “very disruptive.”
Michael Wittner, with Societe Generale, said it is more likely that regulators would stagger the introduction of safety improvements, otherwise transportation costs would rise and crude would start “piling up in North Dakota.”
Robert McNally, president of the consulting firm of Rapidan Group, doubts that new regulations would be introduced so fast that they would cripple the economics of Bakken crude.
A report by the consulting firm of Turner, Mason & Co. has calculated the cost of retrofits would range from $30,000 to $60,000 per car, adding 20 cents to 40 cents per barrel for rail shipments.
Bakken production could drop
If producers are restricted the using the constrained pipeline system, the North Dakota Pipeline Authority has forecast that Bakken production could drop to about 600,000 barrels per day.
But North Dakota Gov. Jack Dalrymple joined other lawmakers in calling for new tank car safety rules to be implemented immediately.
Canada’s Transport Minister Lisa Raitt instructed her department to “review the (safety boards’) recommendations on an urgent basis,” while noting that the Canadian government has already implemented every TSB recommendation stemming from Lac-Megantic.
The U.S. Pipeline and Hazardous Materials Safety Administration is considering new rules based partly on earlier NTSB recommendations.
The PHMSA and the Federal Railroad Administration — both arms of the Department of Transportation — asked railroads and shippers to recommend by mid-February steps that can be taken to increase rail safety, while the PHMSA expects to complete a new set of rules sometime in 2015.
DOT stressing safety
The department said in a statement that “safety is our top priority and we agree that a wide-ranging approach is necessary to ensure the safe transportation of crude oil.
“We have already taken action on the (NTSB) recommendations and many others, from investigating proper classification through the Bakken Blitz to holding a meeting with the rail and petroleum industries asking them to consider their routes and ways to improve first responder training.”
The Bakken Blitz is at the forefront of efforts to test the chemical composition of lighter crude produced from the Bakken formation, which the PHMSA believes are more likely than conventional crudes to combust in an accident.
Canadian railroads endorse call
Canada’s two largest railroads endorsed the call for swift action.
Canadian National spokesman Mark Hallman said CN believes the design of the older DOT-111 cars is one of the “most important systemic issues arising from the Lac-Megantic accident.”
Canadian Pacific spokesman Ed Greenberg said his company favors an “immediate and meaningful increase in federal tank car safety standards as the single most important step to improving the safety of rail transport of dangerous goods.”
Brian Kenney, chief executive officer of GATX, a railcar leasing company, supported “any tank car design that would meaningfully improve the safe transportation of flammable liquids by rail. But we also believe that these regulations need to be comprehensive.
“They should address railroad operating procedures, they should be based on scientific data and they need to be comprehensive enough to avoid unintended consequences such as shifting of this traffic to less-safe modes of transportation, like highways.”
The TSB is also urging that key train routes for dangerous goods be confined to maximum speeds of 50 miles an hour and that the routes have sensors to detect defective rail-car bearings.
