Oil Production Puts Train Safety in Crosshairs

By George Jones

(RNN) – The rapid increase in U.S. oil production is creating a tug of war between energy companies and federal regulators.

Both sides are working against the backdrop of train derailments that have compromised human and environmental safety due to massive and sometimes deadly oil spills and explosions.

Major oil producers seek to maximize profit from a supply that overwhelms their storage and transportation capacity. The U.S. Department of Transportation issued a final draft of recommendations to improve safety standards Feb. 5.

One focus has been on tanker cars that transport crude oil. The Government Accountability Office highlighted it in a study it released in 2014.

Between 2008 and 2012, transportation of crude oil by train increased from less than 2 million tons per year to around 39 million tons, according to the Association of American Railroads.

“Such an increase raises specific concerns about testing and packaging of crude oil, use of unit trains (trains of about 80 to 120 crude oil cars) and emergency response preparedness,” the GAO report said.

A July 2013 derailment in Quebec, Canada, killed 47 people and brought mass attention to inadequacies in tanker cars that ship oil. The type of cars involved in the crash, DOT-111, were not designed to transport volatile fluids.

They lacked redundant safety features like puncture-resistant jackets, steel shields and thermal insulation because they were built before 2011. Since then, oil and gas producers and refineries – which own most rail tankers – began working with railroad associations to upgrade new cars before stricter federal regulations were drafted.

However, the oil and rail industries have pushed back at proposed requirements to retrofit old tank cars, a job that carries an industry-wide price tag close to $3 billion.

The person who oversees regulatory affairs for the American Fuel and Petrochemical Manufacturers, David Friedman, said the DOT is focusing too much on tanker cars and missing a more serious problem.

“We think prevention is at least as important as mitigation, if not more,” Friedman said. “Because with these accidents, frankly, you need to keep trains on the tracks. There are issues with track integrity and human error that play into this.”

Data from the Federal Railroad Administration, a branch of the DOT, showed the two most common factors in train accidents in 2013 were human error (39 percent) and track defects (31 percent). Equipment failure accounted for 12 percent of accidents.

Also in 2013, the American Society of Civil Engineers released its quadrennial infrastructure report card and graded the U.S. rail network at C-plus. That means the 160,000-mile system that includes freight and passenger track was in fair to good condition but needed attention.

The ASCE credited the industry for heavily investing in upgrades during the two decades leading up to the U.S. oil boom. However, it dinged regional and short-line rail operators – known as Class II and Class III – for doing the minimum to keep the tracks they own operational.

Class I lines, the seven largest freight rail companies in the country, account for the majority of traffic, but they also rely on smaller lines to connect major companies with consumers.

The oil industry brings that relationship into greater focus. Rich oil fields, such as those in Texas and North Dakota, tend to be in isolated, inland areas while refineries are generally coastal businesses.

“It’s a weird thing, but when you look at the best oil production it’s always in flat, desert-type environmental sites,” said Kurlan Barbosa, an engineer with Tennessee-based Enrema LLC. “That doesn’t work out for refineries due to the large amounts of water they need for their work.”
Narrowing down common denominators

Although most oil and natural gas nationwide is transported via pipeline, the U.S. Geological Survey said 70 percent of oil from the Bakken oil shale formation, primarily in North Dakota, is shipped on trains.

The Quebec disaster and U.S. derailments since then – Aliceville, AL; Casselton, ND; Lynchburg, VA and most recently Montgomery, WV – all involved oil that originated from Bakken.

That highlights another concern for federal regulators. Through the GAO study, they found oil from the Bakken region is more volatile than crude oil elsewhere in the country.

Even with regulations calling for tank cars with thicker walls and more safety features, Friedman was still skeptical that would minimize risk.

A typical unit train – one that carries one substance – carrying oil can have 100 or more cars with 2.5 million gallons of crude and travel 1,000 miles or farther. The fiery derailment in West Virginia had 109 cars and 3 million gallons of crude.

“A thicker shell means less product, which means more weight with the increase in steel,” Friedman said. “That essentially means companies will move the same amount of oil with more cars, so that increases risk in the process.”

Companies are already pumping oil at a faster rate than they can ship, spurred by the increased push for energy independence and the cheaper price of domestic oil. That means slowing down production is not a likely option.

Even at the current rate, production in the Bakken region exceeds pipeline capacity by 300,000 barrels per day. There are 42 gallons in a barrel of oil.

Trains are a more expensive transportation option, and they’re less efficient because pipelines allow for a constant flow. But they haul more volume than trucks and are more accessible than barges.

All parties involved – oil producers and buyers, regulators and residents of affected towns – have to deal with the realities of supply, demand and the limitations of infrastructure.

“We understand our job has environmental consequence,” Barbosa said, “and we don’t want that to be bad on our end.”

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