Tag Archives: Berkshire Hathaway Inc.

BNSF Railway plans temporary layoffs with slipping freight demand

Repost from the Fort Worth Star Telegram

BNSF plans temporary layoffs with slipping freight demand

Associated Press, May 27, 2015
BNSF is furloughing some employees due to a decline in demand for shipping, including crude oil.
BNSF is furloughing some employees due to a decline in demand for shipping, including crude oil. Curtis Tate, MCT

BISMARCK, N.D.  –  BNSF Railway says it’s planning employee furloughs due to a drop in freight shipping demand across its rail network.

The Fort Worth-based company said Wednesday in a statement that it hopes to call back employees “as soon as business needs require.”

The railroad declined to say how many employees were being furloughed but that they are “at different locations across our network.” The company also said it’s reducing it’s hiring plans for the next several months.

“Customers’ volumes in the near term have come down somewhat from their prior estimates. As a result we are having to adjust our workforce demand numbers down to match volume and the work required to move that volume,” the statement said.

BNSF is part of Warren Buffett’s Berkshire Hathaway, based in Omaha, Nebraska.

The railroad is the biggest player in North Dakota’s oil patch, hauling most of the 1.1 million barrels that moves out of the region daily. Oil drilling has been curtailed significantly in North Dakota’s Bakken Shale and other fields following the collapse in oil prices.

The railroad also is the biggest hauler of freight in the Upper Great Plains.

Just last year, the railroad was expanding rapidly, adding 6,000 workers and 500 locomotives to meet demand for shipping and ease backups caused by severe winter weather.

    Railroad President Greeted by Bomb Train Protestors in Chicago

    Repost from DeSmogBlog

    BNSF President Greeted by Bomb Train Protestors in Chicago

    By Justin Mikulka, May 27, 2015 – 16:50

    Today at the annual North American Rail Shippers Association, Carl Ice, president of rail company Burlington Northern Sante Fe (BNSF) had his keynote address interrupted by members of Rising Tide Chicago. The activists carried banners reading, “BNSF: Profits over Safety” and “BNSF: Bomb Trains Kill.”

    BNSF moves significantly more oil by rail than any other rail company and much of that oil passes through the Chicago area.

    In March, a BNSF oil train derailed and caught fire in Galena, Illinois. In May, another BNSF oil train derailed and caught fire in North Dakota.

    BNSF makes billions of dollars putting our communities and climate at risk,” said protester Kevin Oliver. “So we took this action to take a stand against the obscene wealth that is being generated at the expense of our safety.”

    Oliver was correct about BNSF making billions of dollars for its parent company Berkshire Hathaway, run by famed investor Warren Buffett. Berkshire Hathaway purchased BNSF in 2009 and it has turned out to be an amazing investment, if you don’t mind the occasionally exploding oil train.

    The success of the investment was summed up best by Jeff Mathews who has written books about Berkshire Hathaway.

    He [Buffett] stole it,” Matthews told Bloomberg. “He’s got to feel really good that he bought it when he did, because it’s a wonderful asset, and it’s done nothing but get more valuable in the time that he’s owned it.”

    And that increase in value is directly related to the huge increase in moving Bakken crude oil in BNSF unit trains in the past several years. Trains that do not have modern braking systems, which is one of the issues raised by Rising Tide Chicago. And BNSF is certainly in no hurry to part with any of their profits to install modern braking systems.

    As reported on DeSmog, BNSF and the rail and oil industries have lobbied extensively against requirements that the industry upgrade the oil trains to use a modern electronically controlled pneumatic (ECP) braking system.

    And while the new regulations released earlier this month will require some oil trains to use ECP brakes by 2021 and all of them by 2023, the American Petroleum Institute has filed a lawsuit against the Department of Transportation challenging this requirement, which is likely to delay even that long timetable.

    The length of time the oil and rail industries have been allowed by the new regulations to implement safer technologies even surprised the former chair of the Pipeline and Hazardous Materials Safety Administration (PHMSA), Cynthia Quarterman. PHMSA is the agency responsible for the new regulations and Quarterman led that agency for most of the time the regulations were being developed.

    “That was the biggest surprise, by far,” Quarterman said in an interview with Argus after the regulations were released. “The push-back for five years for most things, I thought it was a substantial push-back in terms of dates.”

    Extending the timeline for the regulations has been a top priority of the oil and rail lobbyists and their partners in congress in their efforts to weaken the new regulations and protect profits.

    Prior to release of the new regulations Quarterman told USAToday that she thought ECP brakes were a top priority when it came to improving oil-by-rail safety.

    “The more I think about it, the more I think that the ECP brakes may be more important than the tank car itself,” Quarterman said. “Because it would stop the pileup of the cars when there’s a derailment or when there’s a need to brake in a very quick fashion.”

    And it isn’t just Quarterman who believes in the safety benefits of ECP braking systems. In 2007, long before the oil-by-rail boom, BNSF was touting the impressive safety benefits of ECP brake systems according to this press release.

    ECP brakes have the potential to reduce train stopping distances by as much as 50 to 70 percent over conventional air brake systems. ECP brakes utilize electronic signals to simultaneously apply and release throughout the length of a freight train. This differs from conventional brake systems in which each car brakes individually as air pressure moves in a series from car to car.

    But since the existing highly profitable and known to be flawed fleet of DOT-111 and CPC-1232 tank cars being used to move Bakken oil do not have ECP braking systems currently installed, BNSF and their allies at the American Petroleum Institute are now against ECP technology. An approach succinctly captured in today’s banner reading, “Profits over Safety.”

    In 2006, the Federal Railroad Administration released a report on ECP brakes prepared by Booz Allen Hamilton which stated that the brakes are a “tested technology” that offers “major benefits” and could “significantly enhance” rail safety.

    The question raised by today’s protest and the one that is really at the heart of the whole oil-by-rail discussion is how long will companies like BNSF get to continue to put profits over safety? The answer to that question is most likely the one given by former head of the National Transportation Safety Board Deborah Hersman. Hersman said that we’ve “seen a lot of difficulty when it comes to safety rules being implemented if we don’t have a high enough body count.”

    So in all likelihood, the only way that there will be significant safety improvements in the oil-by-rail industry is when the next fatal accident increases the pressure on regulators and the industry to finally part with some of their profits to protect the public.

     

      Tesoro & Phillips 66 building crude railcars stronger than new US rules require

      Repost from Reuters
      [Editor:  These tank cars exceed the new standard, but still fail on several counts.  For instance, note the closing sentences here: “Hack said Tesoro is talking with Union Tank Car on possibly outfitting crude railcars to add enhanced brakes before the 2021 deadline.  ‘We have some time to make that decision,’ he said.”  You can be sure that every refinery seeking permits for crude by rail will crow that they, too, have ordered newer, safer tank cars.  Get ready, Benicia!   – RS]

      EXCLUSIVE-Tesoro building crude railcars stronger than new US rules require

      By Kristin Hayes, May 18, 2015 4:59pm BST

      (Reuters) – U.S. refiner Tesoro Corp has ordered new crude oil railcars with features that surpass safety standards that federal regulators set this month, executives told Reuters.

      The 210 tank cars being built in northern Louisiana are so-called pressure cars, with the same design as those that carry liquid petroleum gases such as propane and butane, gas cargoes that are more flammable than crude oil.

      They will be delivered in the coming months after being ordered in early 2014.

      The new federal rules for all crude and ethanol railcars built after Oct. 1 of this year do not require strength to the level of a pressure car but are stronger than the standards adopted by the industry in 2011.

      Tesoro, like other oil-by-rail players, knew the federal standards were coming and the basics of what they would likely be. But the company went further with a stronger car, “which is the primary thing we control,” C.J. Warner, Tesoro’s head of strategy and business development, told Reuters.

      The order was a sign the refiner wanted to get ahead of the coming regulations and avoid potential capacity bottlenecks at companies that build tank cars as shippers must now renovate their fleets.

      Booming North American onshore production spurred sharp growth in moving oil by rail, particularly for U.S. West and East coast refiners which otherwise must depend on more costly imports. No major crude pipelines move oil from the Midcontinent west across the Rocky Mountains or east through the Appalachians and densely populated northeastern states.

      Fiery derailments, caused in some cases by track failures, have become more frequent as oil-by-rail and crude-only trains carrying 100 cars or more went from nearly nothing five years ago to more than 1 million barrels per day late last year.

      Opposition to moving oil by rail spiked on safety concerns, prompting the U.S. Department of Transportation and Canada to impose new railcar safety standards.

      Tesoro isn’t the only refiner that didn’t wait for word from the U.S. DOT to order stronger cars.

      Phillips 66 confirmed to Reuters that it also last year ordered 350 non-pressurized new cars that mostly match the new DOT standard. Those cars will be delivered by year-end, the company said.

      THICKER HULLS

      Both sets of new cars have 9/16-inch-thick hulls, steel shields on the front and back and protections for valves and fittings where crude goes in on top and drains out the bottom, as the new rules require, company executives said. Tesoro’s design modifies those fittings to handle crude rather than just LPGs.

      Tesoro’s cars also have test pressure specifications of 200 pounds per square inch of internal pressure, twice that for non-pressurized cars. A test pressure is typically 20 to 40 percent of how much pressure it would take for the railcar to burst.

      That level of test pressure is standard for cars that transport LPGs or highly poisonous substances such as hydrogen cyanide, according to the Association of American Railroads.

      “When we saw the design, we were very comfortable that it would meet the new standards that we anticipated,” John Hack, Tesoro’s head of rail operations, told Reuters.

      For Tesoro, which hopes to build the largest oil-by-rail facility in the United States in Washington state, it’s an investment in safety and continued access to cheaper North American crudes.

      “It’s very important to us to continue to transport North American crude and get it from the Midcontinent out to the West Coast where it competes very nicely with the foreign crudes,” Warner said.

      RETROFITS?

      By last year most refiners, including Tesoro and Phillips 66, no longer accepted shipments in older, weaker railcars such as those used on a runaway crude train that careened into the small Quebec town of Lac Megantic in mid-2013, killing 47 people.

      Early last year Tesoro needed to replace the last of its older cars and worked with its builder, Berkshire Hathaway Inc’s Union Tank Car, to develop the new design, Warner said.

      Tesoro and Phillips 66 aim to use their newest cars in crude trains before deciding whether to order more. Both companies’ fleets meet the 2011 industry standard for cars with 7/16-inch-thick hulls and reinforced valves.

      Those 7/16-inch cars don’t have to be thrown out, but to move in crude-only trains, they will need added protections, including ‘jackets’, or an extra layer of steel around the tank, according to the DOT rules.

      Neither Tesoro’s nor Phillips 66’s new cars are equipped with specialized brakes that the DOT said crude-only trains must have starting in 2021 or be held to 30 miles per hour. An oil industry trade group is challenging that provision in court.

      Hack said Tesoro is talking with Union Tank Car on possibly outfitting crude railcars to add enhanced brakes before the 2021 deadline.

      “We have some time to make that decision,” he said.

      (Reporting by Kristen Hays; Editing by Terry Wade and James Dalgleish)