Emergency Order to Avoid Oil Train Disasters

The emergency order comes in the wake of some 10 derailments of trains carrying crude in North America during the past year.

Feb 28, 2014 at 10:15AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out these recent articles.

US federal regulators on Tuesday issued an emergency order for tougher testing of crude oil before shipment by rail to determine sensitivity to potential explosion and fire.

The new federal order follows some 10 derailments of trains carrying crude in North America during the past year.

The worst accident was in July 2013, in Quebec, when a train derailed and exploded, killing 47 people. And a string of incidents since then, on both sides of the border, has given regulators cause for concern.

On 13 February, a Norfolk Southern (NYSE:NSC) train bound for New Jersey derailed in Vandergrift, Pennsylvania. About 3,500 to 4,500 gallons of crude oil spilled.

In early January, a Canadian train carrying five cars of crude oil and four cars of liquefied petroleum gas derailed and caught on fire in New Brunswick province, prompting the evacuation of 150 nearby residents.

On 30 December, a mile-long train carrying crude oil derailed outside of the North Dakota town of Casselton, bursting into flames and erupting into a series of explosion, prompting the temporary evacuation of nearby residents.

The Transportation Department said the order is aimed at Bakken crude but will cover shipments from anywhere. The testing requirement goes into effect immediately with a stiff penalty for noncompliance.

The Department also said that the order would place crude oil under more protective sets of hazardous materials shipping requirements, rather than allowing some shipments to be treated as less dangerous.

The oil industry turned to train transport because it was quicker and easier to build rail infrastructure than it was to lay pipelines.

Under the emergency order, companies that ignore the order may be fined as much as $175,000 a day for each violation while the individuals may also be subject to fines and up to 10 years in prison.

According to the results of a recent investigation by the Federal Railroad Administration, shippers have at times misclassified the oil they were offering for sale, loading it into tankers that were not sufficient for safely transporting materials in the highest hazard category.

Government investigators found crude oil being transported from the Bakken region was misclassified in nearly one in five samples of truck shipments en route to rail loading stations.

Cynthia Quarterman, the leader of the Pipeline and Hazardous Materials Safety Administration (PHMSA), testified to a House subcommittee that 58 samples of Bakken crude inspected for proper classification uncovered 11 potential violations.

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Written by Charles Kennedy at Oilprice.com.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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