BNSF Railway Abandons Plans to Buy Tanker Cars

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

Bakken Oil Safety

Bakken Oil Safety
Bakken Oil Safety

Two separate accidents across the Williston region on Saturday have added to the growing concern about Bakken oil safety and is fueling the intense debate about the way oil is produced, contained and transported in the United States.

In a new series of posts, we will examine this issue and try to separate the facts from the hype and the science from the scare tactics.

Related: Bakken Oil Transport Still Not Safe

Explosions Galore

An explosion erupted at 3:00am at an oil and gas waste disposal site north of Alexander, N.D. in McKenzie County. There were no injuries reported, but the massive fire spread to eight storage tanks and was so intense that emergency crews decided to let it burn itself out. The flames subsided by mid morning just as three oil tanks operated by Marathon went up in flames another 53 miles away, near the small town of Killdeer. These incidents were only a few weeks after eight tanks were destroyed in the same area as 1500 barrels of crude blazed across the street from an Enbridge facility.

Crude by Rail

A top concern when thinking about Bakken oil safety is the transport of crude by rail.

According to one report, “there were 117 crude-by-rail spills in the United States during 2013, a near-tenfold rise since 2008 (...) and there were more such spills in 2014 than in any year since the federal government began collecting data on spill incidents in 1975.

With oil production currently at all time highs, the amount of crude traveling the country will escalate and, many fear, so may the number of accidents.

Just in the last few weeks, there have been a number of news reports of these accidents:

  • 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

Next in the series: Is Bakken crude really more dangerous?

Bakken Oil Transport Still Not Safe

Lac-Mégantic rail disaster
Lac-Mégantic rail disaster

When the North Dakota Industrial Commission issued its landmark ruling last week concerning the conditioning of oil, it appeared that they were making a serious move towards improving the safety of transporting crude out of the Bakken. But according to an article in the StarTribune, the new regulations, which go into effect April 2, 2015, won’t bring the industry any closer to a solution for a serious problem that is drawing fire from legislators, concerned citizens and environmental groups.

Alan Stankevitz, an expert on the DOT 111 tanker car, explains in the StarTribune that the standards set by the commission, which includes Gov. Jack Dalrymple, are not enough to adequately address the problem. The order establishes new regulations that demand facilities to maintain an operating pressure at less than 13.7 psi. This is a much larger number than the volatility point for Bakken crude, which is between 11.5 and 11.8 psi.

Stankevitz writes, “The bottom line is that the limit has been set so high by North Dakota that the mandate is toothless. The same volatile oil that caused the massive explosions in Casselton, N.D., and Lac-Mégantic would still have been allowed to ride the rails, according to this new mandate.

Stankevitz goes on to charge the commission with using ‘smoke and mirror tactics’ to divert attention away from the real issue, which he believes to be the routine use of old and outdated tanker cars that are leased by the petroleum industry for transportation.

Read more in the Star Tribune.

New Regulations for Oil Transportation in the Bakken

new regulations for Bakken add strict guidelines
new regulations for Bakken add strict guidelines

In an effort to improve the safety of crude production in the Bakken region, the North Dakota Industrial Commission issued an order on December 9th that will impose new regulations on oil producers.

The order (no. 25417) is the result of an investigation that began at an emotionally charged hearing in September. Over the past two months, commission members Gov. Jack Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring considered oral and written comments from technical witnesses, manufacturers, land/royalty owners and the general public.

The new regulations will go into effect on April 1, 2015 and require that all new wells in the Bakken Petroleum System utilize equipment that controls vapor pressure in order to lessen the likelihood of explosions during transportation. This order comes as a series of troublesome events in 2014 escalated a growing national concern over the transportation methods of Bakken crude.

The commission issued a joint statement that “The North Dakota Industrial Commission reiterates the importance of making Bakken crude oil as safe as possible for transportation. This order will bring every barrel of Bakken crude within standards to improve the safety of oil for transport.

In order to come into compliance, producers will have to shell out millions of dollars for new equipment, updated facilities and increased personnel. The order also establishes the Commission’s jurisdiction over these matters and provides for potential criminal and civil penalties for producers that are deemed noncompliant.

Read the Commission Report here.

Lynchburg, VA Train Derailment Sparks Increased Scrutiny of Bakken Crude Oil

Oil Rail Car Image
Oil Rail Car Image

In late April of 2014, a train carrying Bakken crude derailed and burst into flames in Lynchburg, VA. No one was injured, but the incident has once again raised safety concerns about the transportation of crude by rail.

Currently, the U.S. Department of Transportation (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) is conducting tests of Bakken crude. In February of 2014, PHMSA announced it would pursue fines against Hess, Marthon Oil, and Whiting for failing to properly classify their oil. PHMSA requires the use of nine hazardous materials classifications.

Read more: Hess, Marathon, and Whiting Face Fines for Bakken Oil Classifications

In a May 2014 Wall Street Journal Report, the publication cited the DOT's claim that most energy companies operating in the Bakken haven't provided the requested testing data on crude they ship by rail. Exxon Mobil Corp., Continental Resource and Savage Services Corp. have voluntarily provided the data. A statement released by the U.S. DOT suggested it may take steps to force companies to submit data.

Is Bakken Crude More Flammable?

Bakken oil is produced at a high quality that makes it easier to refine into commercial products and makes it easier to ignite. Light oil production growth in the Bakken isn’t something the industry has never handled before, but the Bakken boom is bigger than anyone expected. As a result of lack of pipelines and additional infrastructure, nearly 70% of all Bakken crude is transported by rail.

Read moreIs Bakken Oil More Flammable?

History of Bakken Crude Oil Train Derailments and Explosions

The incident in Lynchburg, VA is the most recent in a chain of train derailments and explosions connected to Bakken crude. In July 2013, a train derailed and exploded in LacMegantic, Quebec, killing 47 people. The most recent incident, prior to the Lynchburg, VA, incident, occurred when two BNSF operated trains carrying Bakken crude collided and derailed near Casselton, ND, in late December 2013.

Read more: Derailed Train in Canada Was Carrying Bakken Oil

In early April of 2014, a Senate Appropriations Subcommittee hearing was held to examine the level of federal resources that should be allotted for railway safety. Multiple U.S. Senators appealed to the committee for more railway safety funding, including Senators John Hoeven (R) and Heidi Heitkamp (D) of North Dakota.

Read more: U.S. Senators Appeal to Senate Appropriations Committee for Railway Safety Funding

Read more at wsj.com