Latest derailment: Train carrying crude oil derails in Philadelphia

Repost from  6 ABC Action News, Philadelphia, PA
[Editor: The derailment happened in the CSX Corp. rail yard, and was very near to Interstate 95, Lincoln Financial Field and the Philadelphia Naval Yard.  NBC Philadelphia reported that the tank cars remained upright but were “leaning.”  See also The Morning Call, Allentown, PA.  – RS]

11 train cars derail in South Philadelphia

January 31, 2015

Philadelphia firefighters and Hazmat crews swarmed the area near Lincoln Financial Field and the Philadelphia Naval Yard after 11 train cars went off the tracks early Saturday morning.

The derailment happened after 3:00 a.m. near South 11th Street just south of Interstate-95.

The cars were carrying crude oil.

After it was determined, there were no ruptured cars, crews turned the incident over to CSX.

CSX officials brought in cranes to upright the cars.

There is no word on what caused the derailment.

Rail Tank-Car Orders Threatened by U.S. Crude’s Collapse

Repost from Bloomberg News

Rail Tank-Car Orders Threatened by U.S. Crude’s Collapse

By Katherine Chiglinsky, January 22, 2015

(Bloomberg) — Add tank-car makers to the list of U.S. industries bracing for the effects from the plunge in crude prices.While 2014’s record orders, including an all-time high 42,900 in the third quarter, will drive deliveries this year, according to Susquehanna International Group, manufacturers from Carl Icahn’s American Railcar Industries Inc. to Warren Buffett’s Union Tank Car Co. are facing a decline. New bookings in 2015 may plunge 70 percent, Macquarie Capital USA Inc. said, putting earnings at risk when scheduled deliveries drop in 2016.

Oil prices down 49 percent since June have crimped investment in U.S. fields including the Bakken range, where horizontal drilling and hydraulic fracturing is more expensive than conventional oil drilling. That has hurt industries from steel to heavy equipment. It also has slowed the boom in oil-by-rail shipping, which along with new federal safety rules, had fueled the record orders.

“The confidence of the industry has been shaken quite seriously,” Cleo Zagrean, a New York-based analyst for Macquarie Capital said by phone Jan. 15.

Tank-car maker stocks have suffered amid the oil price decline, with shares of Trinity Industries Inc. dropping 40 percent in the fourth quarter, according to data compiled by Bloomberg. American Railcar shares fell 30 percent and Greenbrier Cos. dropped 27 percent.

“It’s having an impact already,” said Art Hatfield, a managing director of equity research at Raymond James & Associates Inc. in Memphis, Tennessee. “I think the forward-looking minds are realizing that we may have hit a cyclical peak within the industry.”

New freight-car orders fell to 37,431 in the fourth quarter, down 13 percent from record highs, according to data from the Railway Supply Institute, reported Thursday. Leasing company GATX Corp.’s deal with Trinity added 8,950 new car orders in the fourth quarter. Those cars will be delivered over a four-year period beginning March 2016.

Backlogs swelled to a record 142,837 orders the Washington-based RSI said. These may bolster the industry through 2015.

Throughout last year, buyers piled on requests for cars amid an oil boom in North Dakota and Texas. Freight-car bookings and backlogs swelled to record highs even as West Texas Intermediate crude oil prices fell 14 percent between July and the end of September, according to data compiled by Bloomberg.

Orders for cars that carry cement and frac sand, a resource instrumental in the U.S. shale boom, declined in the fourth quarter from a record, according to Bascome Majors, an Atlanta-based transportation and rail-equipment analyst for Susquehanna International. Falling oil prices might temper future demand for frac-sand cars, he said.

Significant Hit

Oil prices tumbled 18 percent in November and 19 percent the next month, ending the year with the steepest monthly loss in six years, data compiled by Bloomberg show.

“The oil price drop is a significant hit” to the tank-car industry, Macquarie’s Zagrean said. As customers re-evaluate the cost of new cars, even extensions on orders can weaken manufacturers’ earnings, she said.

Freight-car producer Greenbrier has dodged order cancellations as oil prices fell. Only one customer approached the company about canceling an order but has yet to call the deal off, William Furman, chief executive officer, said in a conference call Jan. 7.

Trinity had not seen any “appreciable impact” on its business from the low oil prices in the third quarter, Stephen Menzies, group president of the company’s rail and railcar leasing group, said in an earnings call October 29. The company stands by those comments, spokesman Jack Todd said in a Jan. 21 e-mail.

Union Tank Car spokesman Bruce Winslow declined to comment on the company’s orders. GATX’s director of investor relations Jennifer Van Aken didn’t return phone calls seeking comment.

In addition to concerns that low oil prices will threaten demand, the industry faces new regulations spurred by accidents including the July 2013 derailment and explosion in Lac-Megantic, Quebec, that killed 47 people.

Phase Out

The U.S. Pipeline and Hazardous Materials Administration plans to issue rules to phase out older rail cars that carry crude in the coming month, Susan Lagana, a PHMSA spokeswoman, wrote in an e-mailed statement Jan. 15. The type of tank car most implicated in spills, known as the DOT-111, would be phased out or rebuilt to meet the new standards within two years for the most volatile crude oil, according to the proposal.

New rules may create “quite a lot of replacement demand,” Greenbrier CEO Furman said in the earnings call. Currently, the Lake Oswego, Oregon-based company’s tank-car orders comprise just slightly more than a quarter of its backlog, according to company spokesman Jack Isselmann.

Owners are expected to scrap more than a fifth of an estimated 117,000 tankers that would require modifications. The work, which may include adding full height steel shields at the ends and adding a metal jacket around the body, is estimated to cost between $27,000 and $46,700 per car, an RSI study said.

Safety Concerns

BNSF Railway Co., which like Union Tank Car is owned by Buffett’s Berkshire Hathaway Inc., delayed an order of 5,000 new and safer oil-tank cars until the new safety standards are set. The railroad said last year that it would buy the new cars because of safety concerns even though railroads typically don’t own the cars that their locomotives haul on the track.

Many of the orders for safer tank cars might already be included in the backlog as buyers line up in anticipation, Hatfield of Raymond James said.

“This industry has really earned a lot of money in the last few years due to this tank-car boom and when that goes away, it’s going to have an impact on peoples’ businesses,” he said.

Transportation Safety Board of Canada adds new demands to emergency directive

Repost from The Wall Street Journal
Editor: This story is also covered in and The Globe and Mail.  – RS]

Canada’s TSB Concerned Railway Safety ‘Remains Inadequate’

Transportation Safety Agency Concerned Over Ottawa’s Oversight of Railway Companies

By Judy McKinnon, Jan. 28, 2015

Canada’s transportation safety agency said Wednesday it is concerned that Ottawa’s oversight of railway companies remains inadequate, while noting that measures now in place would significantly reduce the risk of runaway trains.

Last year, the agency recommended several measures to strengthen rail safety after a 2013 oil-train derailment in Quebec killed 47 people and devastated the small town of Lac-Mégantic.

“While recognizing significant positive action taken by the regulator, the Transportation Safety Board of Canada remains concerned about Transport Canada’s response to outstanding recommendations,” the agency said Wednesday.

Transport Canada is the Canadian federal ministry responsible for rail transportation.

The TSB said it is specifically concerned the ministry hasn’t yet put in place an effective oversight process “that guarantees all railways will be audited in sufficient breadth and frequency to ensure safety issues are addressed in a timely manner.”

Canadian Transportation Minister Lisa Raitt said the ministry has taken action to boost oversight. “As part of our response to the Transportation Safety Board, Transport Canada will be conducting full (safety management systems) audits of federally regulated railway companies on a three-to-five-year cycle,” Ms. Raitt’s spokeswoman said in an emailed statement.

In August, the TSB cited 18 factors for the Lac-Mégantic disaster, including a weak safety culture at the train’s operator—Montreal, Maine & Atlantic Railway Ltd.—and lax regulatory oversight. The derailment sharply raised concerns about the growing transportation of crude by rail and was followed by a number of other fiery but non-deadly accidents.

Among the TSB’s recommendations was that Transport Canada audit the safety management systems of all railways on a regular basis to confirm that safety measures are in place, and more measures to secure trains.

Transport Canada hasn’t yet shown that an effective oversight regime has been implemented, which could lead to a lag in identifying safety issues, the TSB said Wednesday.

As for preventing runaway trains, the agency said it is satisfied that Transport Canada has introduced “multiple layers” of defenses that, if fully implemented, will significantly reduce risks.

“The Minister of Transport and the department have taken strong action to improve rail safety in the wake of the Lac-Mégantic tragedy, but more work needs to be done,” the safety agency said.

Last year, the TSB found that the 72-car train derailed after being left unattended and improperly secured on a descending grade despite indications there were mechanical problems with the lead locomotive. The agency said then that the now-defunct railway didn’t properly train and oversee its crews and lacked fully functioning safety-management processes.

“As we have always said, and as the Transportation Safety Board report clearly indicates, this was a case where rules were not followed,” Ms. Raitt’s spokeswoman said Wednesday.

—Nirmala Menon contributed to this article.