Repost from ArgusMedia.com
[Editor: Significant quote: “An estimated 59% of all crude produced in North Dakota left by rail, according to state figures. It is too soon say to say whether or not the new DOT rules could impact Bakken output, the state’s director of the Department of Mineral Resources Lynn Helms said.” – RS]
New DOT crude-by-rail rules could cost $2.6bn-$6bn24 Jul 2014
Houston, 24 July (Argus) — The Department of Transportation’s proposed rules to overhaul tank cars transporting crude and ethanol could cost $2.6bn-$6bn to implement, according to the agency’s analysis.
The cost estimates are based on various combinations of the proposed speed limitations and rail car specifications, calculated over a 20-year period. The least expensive combination, at $2.6bn, would pair newer-model jacketed CPC-1232 cars and train limits of 40mph in designated high-threat urban areas. The most expensive solution, at $6bn, would be to pair cars with a design standard proposed by DOT and a system-wide train speed limit of 40mph.
Without the new rules, DOT agency the Pipeline and Hazardous Materials Safety Administration (PHMSA) expects about 15 mainline derailments to occur in 2015, falling to about five per year by 2034. The US could also experience over the next 20 years an additional 10 safety events of higher consequence, with nine having environmental damages and injury and fatality costs exceeding $1.15bn each, the DOT predicts. One future accident over the next 20 years would cost over $5.75bn.
Under the proposed rules, DOT-111 tank cars would no longer be allowed to move crude and ethanol. The cars have been proven to have insufficient puncture resistance, weak bottom outlet valves in accidents and vulnerability in fire and rollover accidents, the DOT said.
Thousands of tank cars used to carry crude and ethanol would be removed from service within two years unless they are retrofit to comply with new design standards under the proposal announced yesterday. The phase-out program would be faster than the three-year program adopted by the Canadian government earlier this year.
The proposed changes range widely in cost. Voluntary rail routing would cost $5.5mn to implement, while new materials classification rules could cost $16.2mn. The three proposed tank car retrofit options would cost $2.5-3mn to implement, and yield benefits estimated to be worth $432.5mn-$3.5bn. The least expensive of the speed restrictions, 40mph in high-threat urban areas, would cost only $27.4mn to implement, while 40mph in areas with 100,000 people would cost $260mn to implement. The most expensive by far would be the $2.9mn implementation of a 40mph speed limit for ethanol and crude trains in all areas.
Retrofit costs for tank cars could cost anywhere from $1,200 for a bottom outlet valve handle to $23,000 for a full jacket to be added to the car.
The DOT estimates a total of 334,869 tank cars are in service, with 42,550 in crude service and 29,708 in ethanol service. Of existing tank cars used to haul crude, 22,800 are non-jacketed DOT-111s, 5,500 are jacketed DOT-111s. There are an estimated 4,850 of the newer model jacketed CPC-1232 cars and 9,400 non-jacketed CPC 1232 cars in crude service.
New cars may have to be built with thicker outer shells and equipped with electronically controlled pneumatic braking systems and rollover protection. Cars built in accordance with design rules voluntarily adopted by the industry in 2011 may have to be retrofit, depending on the standards DOT ultimately settles on.
The agency also is considering three speed limits for crude trains that contain tank cars not built up to the new standards. The first would require a 40mph speed limit across the network, the second a 40mph speed limit in high-threat urban areas and the third a 40mph speed limit in areas with a population of 100,000 or more. Cars built in accordance with DOT’s new design standards will be allowed to operate at 50mph in all areas.
The rules further would require shippers show a rigid written sampling and testing program for mined liquid and gases is in place and make information available to DOT on request.
The rulemaking package is now open for a 60-day public comment period. DOT is requesting feedback on three options for enhancing tank car standards.
An estimated 59pc of all crude produced in North Dakota left by rail, according to state figures. It is too soon say to say whether or not the new DOT rules could impact Bakken output, the state’s director of the Department of Mineral Resources Lynn Helms said.