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Trains plus crude oil equals trouble down the track

Repost from McClatchy News
[Editor: Once again Curtis Tate has produced an incredible wide-ranging and deep analysis of current issues and developments around crude by rail in the US.  This article can serve as a must-read primer on crude by rail.  Note that the presentation below is only a rough copy – much better viewing on McClatchy’s website.  – RS]

TrainsPlusCrudeOilEqualsTroubleDownTheTracks

By Curtis Tate, December 31, 2014 

— Every day, strings of black tank cars filled with crude oil roll slowly across a long wooden railroad bridge over the Black Warrior River.

Decaying track and bridge conditions on the Alabama southern railroad could pose a risk to Tuscaloosa, Ala., population 95,000. Above, video of trains crossing the bridge.Curtis Tate / McClatchyDecaying track and bridge conditions on the Alabama southern railroad could pose a risk to Tuscaloosa, Ala., population 95,000. Above, video of trains crossing the bridge. 

The 116-year-old span is a landmark in this city of 95,000 people, home to the University of Alabama. Residents have proposed and gotten married next to the bridge. Children play under it. During Alabama football season, die-hard Crimson Tide fans set up camp in its shadow.

But with some timber pilings so badly rotted that you can stick your hand right through them, and a “MacGyver”-esque combination of plywood, concrete and plastic pipe employed to patch up others, the bridge demonstrates the limited ability of government and industry to manage the hidden risks of a sudden shift in energy production.

And it shows why communities nationwide are in danger.

“It may not happen today or tomorrow, but one day a town or a city is going to get wiped out,” said Larry Mann, one of the foremost authorities on rail safety, who as a legislative aide on Capitol Hill in 1970 was the principal author of the Federal Railroad Safety Act, which authorized the government to regulate the safety of railroads.

Almost overnight in 2010, trains began crisscrossing the country carrying an energy bounty that included millions of gallons of crude oil and ethanol. The nation’s fleet of tens of thousands of tank cars, coupled with a 140,000-mile network of rail lines, had emerged as a viable way to move these economically essential commodities. But few thought to step back and take a hard look at the industry’s readiness for the job.

It may not happen today or tomorrow, but one day a town or a city is going to get wiped out.

Larry Mann, principal author of the Federal Railroad Safety Act

In a series of stories, McClatchy has detailed how government and industry are playing catch-up to long-overdue safety improvements, from redesigning the tank cars that carry the oil to rebuilding the track and bridges over which the trains run.

Those efforts in the past year and a half may have spared life and property in many communities. But they came too late for Lac-Mégantic, Quebec, a Canadian lakeside resort town just across the border from Maine. A train derailment there on July 6, 2013, unleashed a torrent of burning crude oil into the town’s center. Forty-seven people were killed.

“Sometimes it takes a disaster to get elected officials and agencies to address problems that were out there,” said Rep. Michael Michaud, D-Maine, a member of the House of Representatives subcommittee that oversees railroads, pipelines and hazardous materials, who’s leaving Congress after six terms.

Other subsequent but nonfatal derailments in Aliceville, Ala., Casselton, N.D., and Lynchburg, Va., followed a familiar pattern: massive fires and spills, large-scale evacuations and local officials furious that they hadn’t been informed beforehand of such shipments.

The U.S. Department of Transportation will issue a set of new rules in January regarding the transportation of flammable liquids by rail.

“Safety is our top priority,” said Kevin Thompson, a spokesman for the Federal Railroad Administration,“both in the rule-making and through other immediate actions we have taken over the last year and a half.”

Nevertheless, McClatchy has identified other gaps in the oversight of crude by rail:

  • The Federal Railroad Administration entrusts bridge inspections to the railroads and doesn’t keep data on their condition, unlike its sister agency, the Federal Highway Administration, which does so for road bridges.
  • Most states don’t employ dedicated railroad bridge inspectors. Only California has begun developing a bridge inspection program.
  • The U.S. Department of Transportation concluded that crude oil from North Dakota’s Bakken shale region posed an elevated risk in rail transport, so regulators required railroads to notify state officials of large shipments of Bakken crude. However, the requirement excluded other kinds of oil increasingly transported by rail, including those from Canada, Texas, Wyoming, Colorado and Utah.
  • While railroads and refiners have taken steps to reserve the newest, sturdiest tank cars available for Bakken trains, they, too, have ruptured in derailments, and Bakken and other kinds of oil are likely to be moving around the country in a mix of older and newer cars for several more years.

We anticipate that crude by rail is going to stay over the long term

Kevin Birn, director of IHS Energy

Staying power

American railroads moved only 9,500 cars of crude oil in 2008 but more than 400,000 in 2013, according to industry figures. In the first seven months of 2014, trains carried 759,000 barrels a day – that’s more than 200,000 cars altogether – or 8 percent of the country’s oil production, according to the federal Energy Information Administration.

The energy boom, centered on North Dakota’s Bakken region, was made possible by hydraulic fracturing, or fracking, a horizontal drilling method that unlocks oil and gas trapped in rock formations. It was also made possible by the nation’s expansive rail system.

Crude by rail has become a profitable business for some of the world’s richest men. Warren Buffett, the billionaire investor, bought BNSF Railway in 2009. It’s since become the nation’s leading hauler of crude oil in trains. Bill Gates, the Microsoft founder and philanthropist, is the largest shareholder in Canadian National, the only rail company that has a direct route from oil-rich western Canada to the refinery-rich Gulf Coast.

Amid a worldwide slide in oil prices in recent weeks, crude by rail shows few signs of slowing down. The price per barrel of oil has dropped nearly 50 percent since last January. Still, the six largest North American railroads reported hauling a record 38,775 carloads of petroleum the second week of December.

“We anticipate that crude by rail is going to stay over the long term,” said Kevin Birn, director at IHS Energy, an energy information and analysis firm, and a co-author of a recent analysis of the trend.

Regulatory agencies and the rail industry may not have anticipated the sudden increase in crude oil moving by rail. However, government and industry had long known that most of the tank cars pressed into crude oil service had poor safety records. And after 180 years in business, U.S. railroads knew that track defects were a leading cause of derailments.

To be sure, railroads are taking corrective steps, including increased track inspections and reduced train speeds. They’ve endorsed stronger tank cars and funded beefed-up training for first responders.

Ed Greenberg, a spokesman for the Association of American Railroads, the industry’s principal trade group, said railroads began a “top-to-bottom review” of their operations after the Quebec accident.

“Every time there is an incident, the industry learns from what occurred and takes steps to address it through ongoing investments into rail infrastructure, as well as cutting-edge research and development,” he said. “The industry is committed to continuous improvement in actively moving forward at making rail transportation even safer.”

But the industry continues to resist other changes, including calls for more transparency. The dominant Eastern railroads, Norfolk Southern and CSX, sued Maryland to stop the state from releasing information to McClatchy about crude oil trains.

The industry also seeks affirmation from the courts that only the federal government has the power to regulate railroads. The dominant Western carriers, BNSF and Union Pacific, joined by the Association of American Railroads, sued California over a state law that requires them to develop comprehensive oil spill-response plans.

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