North Dakota Oil Train Conflagration Prompts Increased Federal Scrutiny

This article was written by Oilprice.com -- the leading provider of energy news in the world

The year 2013 has ended on a worrying note for oil producers in North America's Bakken region, as a series of recent train incidents in both Canada and the U.S. have highlighted the hazards of moving crude oil by rail.

On 30 December at 2:12 p.m. a mile-long train of 106 tankers carrying Bakken crude collided with a derailed 112 car westbound grain train carrying soybeans about a mile west of Casselton, a city of 2,432 people about 20 miles west of Fargo. The crash triggered a series of massive explosions sending toxic fumes into the air. Local authorities said that 18 tanker cars caught fire and the Cass County Sheriff's Office "strongly" recommended evacuating Casselton and anyone residing five miles to the south and east of the town. Cass County Sheriff Paul Laney said, "Our job right now is to protect the citizens of Casselton and the surrounding area and that's what we intend to do."

The oil tanker train belonged to BNSF Railway Co. BNSF spokesman Steven Forsberg said, "A fire ensued, and quickly a number of the cars became engulfed," adding that firefighters had managed to detach 50 of the 104 cars but had to leave the rest before concluding, "They can't fight the fire due to the extremes of the explosion and high temperatures."

The North Dakota derailment was the fourth incident in 2013 with a train carrying crude oil catching fire. On 6 July a Montreal, Maine & Atlantic train carrying 72 tank cars filled with Bakken crude exploded after its brakes apparently failed, sending it rolling into Lac-Mégantic, igniting a conflagration that killed 47 people and leveled more than 30 buildings, roughly half of the downtown area.

On 19 October residents were forced from their homes in Gainford, Alberta after a CN train derailment caused fireballs to shoot into the sky and set off a state of emergency 53 miles west of the provincial capital Edmonton. CN Rail spokesman Warren Chandler said that 13 tanker cars derailed, with nine of them containing liquefied petroleum gas, the others-crude oil.

South of the border, on 8 November twenty-five of an oil train's 90 cars derailed near a 60 foot-long wooden trestle bridge in Aliceville, Alabama, with several oil tank cars bursting into flames. The train operator was Genesee & Wyoming Inc. The conflagration sent flames hundreds of feet high that could be seen from over 10 miles away. While no injuries were reported, an unknown amount of crude oil spilled into an adjacent marshland. A local official said the crude oil was from North Dakota's Bakken shale fields. A spokesman for Genesee said the train was hauling 90 DOT-108 tank cars, a different model than the DOT-111s usually used, with each carrying 30,000 gallons of crude, 64,000 barrels in all.

Surprisingly, the National Transportation Safety Board declined to investigate the Alabama derailment, leaving it to other federal agencies, the Federal Railroad Administration and the Pipelines and Hazardous Materials Safety Administration.

The North Dakota incident has changed Washington's "hands off" approach. FRA spokesman Kevin Thompson said that the NTSB will be the lead investigator in North Dakota, with the FRA and PHMSA sending their own teams "to determine the facts and learn how we can minimize risk to prevent a similar incident in the future."

Why the plethora of rail accidents?

Increased production.

In North Dakota's Bakken region, hydraulic fracturing has unlocked vast petroleum reserves, propelling the State to become America's No. 2 oil producer behind Texas and dropping Alaska to third place. North Dakota will shortly be producing one million barrels of oil a day, on a par with Azerbaijan, and about 70 percent of it moves by rail. U.S. railroads are now transporting 25 times more crude than they did just five years ago, often in trains with more than 100 tank cars that each transport 30,000 gallons apiece.

What is not being reported is that the accident could have been much, much worse. Alongside the BNSF railway tracks is Tharaldson Ethanol's 153 million gallon per year ethanol complex, just west of Casselton, the nation's seventh largest ethanol facility. Tharaldson Ethanol touts its railway access on its website, noting, "Excellent state highway and interstate access combined with direct access to both the BNSF Railway and the Red River Valley & Western Railroad, providing the plant with efficient means of transporting both inbound and outbound commodities." The derailment occurred midway between Casselton and the ethanol facility.

What the rash of incidents is producing is what oil producers fear most, increased regulation and scrutiny. In the aftermath of the accidents, the Federal Railroad Administration issued an emergency order that tightened operating rules on carrying crude, prohibiting operators from leaving crude trains unattended without getting prior regulatory approval. Separately, the federal Pipeline and Hazardous Materials Safety Administration has begun to devise policies to improve tank car safety. An immediate casualty of the Casselton derailment is likely to be an upcoming report by North Dakota's Mineral Resources Department commissioned by director Lynn Helms to tout the safety of moving oil by rail, as he wanted to the report to "dispel this myth" that the oil is "somehow an explosive, really dangerous thing."

Such regulation is needed, as four incidents in six months, or one every six weeks on average, have signally proven the inability of Canadian and U.S. railways to provide safety to communities alongside their train tracks, and unless such regulation is implemented, with a 2,500 percent increase in hydrocarbon transit in the past five years, another Lac-Mégantic tragedy is seemingly inevitable.

Motley Fool's Top Stock for 2014
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

 

Recent article from Oilprice.com: Saudi Arabia Ups the Ante as it Opens Up a New Pipeline

Recent article from Oilprice.com: Gazprom Hits Record Gas Exports to Europe


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2783639, ~/Articles/ArticleHandler.aspx, 9/17/2014 3:36:33 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement