BNSF Railway Abandons Plans to Buy Tanker Cars

Crude by Rail Safety Debate Escalates
Crude by Rail

Crude by Rail

Citing ‘customer complaints’, the BNSF railway has abandoned plans to buy 5,000 crude oil tankers.

Typically, leasing companies or oil companies own the tank cars that move crude along the tracks and not the railroads themselves. But last year, BNSF requested proposals from railcar manufacturers to produce cars for them that were stronger and safer cars than the current DOT standards. The company had hoped that producing cars with thicker shells, reinforced ends and thermal blankets would reduce the risks of using trains to haul oil.

Over the past two years, BNSF Railway has been involved in a number of incidents including a derailment and fiery crash that caused the evacuation of a small town in North Dakota just last week. The company confirmed that the eight cars that derailed were the unjacketed CPC-1232 models that the federal government would like phased out by 2020 due to safety concerns.

Related: Bakken Crude Train Derails

A company spokesperson commented about the company’s decision to scrap the plans by saying, “If our customers do not want us in this business, we’ll re-evaluate. We’ll do something else”

The debate over rail safety is continuing to escalate and just last month, NTSB urged stricter standards due to findings from study of recent train derailment accidents. They concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition.

Related: Crude by Rail Facing Tougher Standards

DOT Tells Oil Tankers to Slow Down

Emergency Order Restricts Speed to 40 MPH
Crude by Rail

Crude by Rail

The DOT’s Federal Railroad Administration issued an emergency order on Friday that establishes a maximum speed of 40 miles an hour for certain trains going through high threat urban areas.

Related: Bakken Crude by Rail Under Attack

Citing “gaps in the existing regulatory scheme”, the agency beefed up the 2014 voluntary agreement by making this speed limit a requirement for trains hauling crude oil and other flammable liquids. The emergency order defines affected trains as:

  1. 20 or more loaded tank cars in a continuous block or 35 loaded tank cars of class 3 flammable liquid
  2. AND at least one DOT-111 tank car loaded with class 3 flammable liquid
The emergency order states that “Speed is a factor that may contribute to the severity of a derailment or the derailment itself. Speed can affect the probability of an accident. A lower speed may allow for a brake application to stop a train before a collision, or allow a locomotive engineer to identify a safety problem and stop the train before an accident or derailment occurs.”

The requirements go into effect immediately and carry potential penalties of $105,000 dollars for companies that don’t comply.

This order is one of many attempts by the DOT to address this huge issue of rail safety including two previous emergency orders in the last two years. The department has also proposed a more comprehensive series of regulations that are under review by the White House that includes a stronger tank car design and better train braking systems.


Crude by Rail Facing Tougher Standards

NTSB Urging Stricter Controls for Bakken Carriers
NTSB Calls for Stricter Rail Standards

NTSB Calls for Stricter Rail Standards

The National Transportation Safety Board (NTSB) is urging tougher standards for oil tankers carrying Bakken crude.

Related: Bakken Crude by Rail Under Attack

In a 10 page letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA), the NTSB outlined its findings from their study of recent train derailment accidents and concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition. The agency also found that performance of the industry’s enhanced CPC-1232 rail car is unsatisfactory.

Controversy over the safety of moving crude by rail has skyrocketed as several high-profile accidents have recently made headlines. This combined with a sharp increase in crude by rail since the start of the oil boom has many concerned.

Related: Crude by Rail Up 1700%

“We can’t wait a decade for safer rail cars,” said NTSB Chairman Christopher A. Hart. “Crude oil rail traffic is increasing exponentially. That is why this issue is on our Most Wanted List of Safety Improvements. The industry needs to make this issue a priority and expedite the safety enhancements, otherwise, we continue to put our communities at risk.”

Based on their study, the NTSB gave the following recommendations that would require:

  1. All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with thermal protection systems that meet or exceed the thermal performance standards
  2. All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with appropriately sized pressure relief devices that allow the release of pressure under fire conditions and that minimizes the likelihood of energetic thermal ruptures
  3. An aggressive, intermediate progress milestone schedule, such as a 20 percent yearly completion metric over a 5-year implementation period, for the replacement or retrofitting of legacy DOT-111 and CPC-1232 tank cars to appropriate tank car performance standards
  4. Establishment of a publicly available reporting mechanism that reports at least annually


Bakken Crude by Rail Under Attack

Lawsuit Threatens the Flow of Oil Across Tribal Lands
Crude by Rail

Crude by Rail

On Tuesday, the Swinomish Indian Tribal Community filed a lawsuit in federal court against BNSF Railway to restrict the movement of crude oil by rail through their reservation. They are seeking a permanent injunction that requires the company to live up to a 1991 agreement to limit the number of trains on its land to two per day.

The Tribal Community is located in Washington State, but the train tracks that run across its land bring crude from the Bakken region of North Dakota. Many believe that this oil is more dangerous.

Related: Is Bakken Oil More Flammable?

“Experiences across the country have now shown us all the dangers of Bakken Crude,” Swinomish Indian Tribal Community Chairman Brian Cladoosby said in a statement. “It’s unacceptable for BNSF to put our people and our way of life at risk without regard to the agreement we established in good faith,” he said.

Recent reports have crude by rail transport up 1700% over the last five years and accidents at a near-tenfold rise since 2008. With oil production currently at all time highs many fear that the number of accidents will increase and add to recent incidents:

  • 3/8/15:Train carrying crude oil derails in northern Ontario more
  • 3//7/15 Train carrying crude oil derails in Canada more
  • 3/6/15: Oil train carrying Bakken crude explodes in Illinois more
  • 2/14/15 Train carrying crude oil derails in Canada more
  • 2/17/15: WV derailment carries Bakken crude in more

Related: Bakken Oil Safety


photo: © Kolyvanov | The Railway Tanks Photo

Crude by Rail Up 1700%

EIA Reports Huge Increase Since 2010
Crude by Rail

Crude by Rail 2015 | Click to Enlarge

The Energy Information Administration (EIA) released the latest data today for crude by rail  (CBR) across the country that shows a significant increase over the last five years.

Total CBR movement in the United States and between the United States and Canada was more than 1 million barrels per day (bbl/d) in 2014, up from 55,000 bbl/d in 2010. The regional distribution of these movements has also changed over this period.

Crude by rail continues to be highly controversial as people question the safety for individuals and the environment.  With production at an all time high, the CBR numbers will continue to escalate as producers must find a way to move their product.

Related: How the Keystone XL Pipeline Would Impact the Bakken

Related: DOT Seeks New Rail Car Design and Bakken Crude Testing

crude by rail3

The EIA developed a new tracking system that will gather data across all regions of the country and parts of Canada from January 2010 through the current month. CBR activity is tracked between pairs of Petroleum Administration for Defense District (PADD) regions (inter-PADD), within each region (intra-PADD), and across the U.S.-Canada border.

EIA Administrator Adam Sieminski says that “EIA expects that the new data it has developed using information provided by the U.S. Surface Transportation Board (STB) along with data from other third-party sources and our own survey data, will provide key insights into oil-by-rail movements, including shipments to and from Canada.”



How Bakken Crude Wellhead Valuation Influences Transport

Increase in Bakken Crude Transport by Rail Creates Industry Demand for Price Valuations Closer to Wellhead
Bakken Rig

Bakken Rig |Click to Enlarge

Since 2012, Bakken crude transport by rail has grown significantly – today nearly 70% of all crude produced is transported to the consumer by rail.

Although pipeline transport is still critical in the Bakken, much of the movement has shifted to rail due to its overall cost effectiveness, and experts anticipate this growth to continue.

In response to this increase in rail transport, Platts, an energy news and price publisher, began offering its subscribers an assessment of value nearest the Bakken crude wellhead in late April of 2014. Platts Editorial Director Sharmilpar Kaur said in a written statement that crude transport by rail has influenced industry demand for crude value assessments closer to the wellhead.

“Given the rapid growth in the transportation of crude oil by rail, the industry was in need of Bakken Shale oil value at North Dakota terminals with the operational capacity to move crude by rail or by rail/pipeline, said Kaur.

The service captures the value of Bakken crude at the point where there is transportation flexibility either by rail, or rail/pipeline. This assessment ultimately provides industry with greater intelligence before the decision is made on using truck, rail and/or pipeline to deliver the crude to customers.

Founder of and industry veteran Kenny DuBose, commented, “It is important to attempt to establish pricing points as close to the wellhead as possible, in order to separate and distinguish between the commodity value and any transportation expenses.”

According to Platts, in 2016, more pipelines are expected to come online in the Bakken, which should ultimately offer industry more transportation flexibility in the region. The first Platts’ Bakken price assessment was 91.93 per barrel on April 23, 2014.