Oil Industry And Railroads Shipping Shale Boom Riches Are Separated By Just An Eighth Of An Inch
By Meagan Clark | April 29 2014
Coal railcars in Wyoming | Shutterstock.com
Energy companies and the firms that make the rail cars carrying the flow of crude oil and other products from America’s shale boom are separated by a mere 1/8 of an inch.
That’s the added thickness in the walls of the steel rail cars that the manufacturers say is needed to achieve safe standards. The oil and gas industry argues that the current 7/16 of an inch thickness is adequate.
The debate is important because the U.S. is currently hammering out guidelines that will eventually set the new national standards for transporting hazardous cargo by rail.
The standards for tank cars have made national headlines after several fiery derailments of trains carrying crude in the past year, some near homes.
After several congressional hearings, the Department of Transportation (DOT) is expected to propose a new set of rules this week for White House review, including “options for enhancing tank car standards,” Anthony Foxx, transportation secretary, blogged for DOT on Thursday. Foxx was visiting Casselton, North Dakota, the site of an explosive train derailment and 400,000-gallon crude spill late last year that managed to not injure anyone.
The White House’s Office of Information and Regulatory Affairs (OIRA) will review the DOT’s proposal. The turnaround usually takes about three months, but could take longer since the regulation in dispute is controversial and costly. The public will have a chance to submit comments before the final rules are set.
“We look forward to working collaboratively with OIRA on the Administration’s proposal and initiating the formal comment process as soon as possible,” Foxx said in the blog post.
The current regulation DOT-111 has been the federal standard for oil-by-rail shipping for more than a decade, and nearly all parties involved in the trade agree it needs updating. Some officials claim the crude from the Bakken Shale formation in Wyoming and North Dakota is more volatile and dangerous than other domestic crude oil.
Rail operators, oil producers and tank car manufacturers have argued without resolve for months on what the best dimensions would be to transport crude.
The American Petroleum Institute claims that the current a 7/16th inch-thick steel frame is adequate for crude shipments, while the Association of American Railroads, the rail industry’s lead representative, proposes a thicker 9/16th inch frame.
The thicker tank not only would cost the companies more to buy; it also holds less crude, which adds to shipping costs.
A 7/16th inch model called the CPC-1232 has been a voluntary industry standard since 2011, and factories have sold many of the tank cars in recent years to transport crude. AAR introduced the standard after several DOT-111 derailments, but now recommends phasing out or retrofitting the older models for a minimum 9/16th inch-thick tank.
AAR estimates its proposal would phase out or retrofit about 92,000 cars built since 2011 that meet the current standard. Retrofitting the whole existing fleet of current-standard cars carrying flammable liquids would be more than $3 billion, according to the rail group.
Once the rules are final, rail companies will have to decide whether to upgrade their existing fleet or wait for tanks to be built to the new standard.
North America’s oil boom has increased rail transport of crude from 9,500 carloads a year in 2008 to 400,000 carloads last year, according to the U.S. Energy Information Association. The more oil riding the rails, the more likely spills and accidents are to occur. Only 0.0023 percent of hazardous material carloads spill or crash, according to the Association of American Railroads and the American Shortline and Regional Railroad Association. But that small percentage of accidents gets a lot of attention.
Repost from Forbes
[Editor: This lengthy analysis is worthwhile for its factual background and its many links to source material, even though the author seems unaware that fossil fuels are on their way out. – RS]
Pick Your Poison For Crude — Pipeline, Rail, Truck Or Boat
By James Conca | 4/26/14
Crude oil is moving around the world, around our country, around pristine wilderness, around our cities and towns. It’s going to keep moving, will undoubtedly increase during our new energy boom, so what is the safest way to move it?
The short answer is: truck worse than train worse than pipeline worse than boat (Oilprice.com). But that’s only for human death and property destruction. For the normalized amount of oil spilled, it’s truck worse than pipeline worse than rail worse than boat (Congressional Research Service). Different yet again is for environmental impact (dominated by impact to aquatic habitat), where it’s boat worse than pipeline worse than truck worse than rail.
So it depends upon what your definition is for worse. Is it death and destruction? Is it amount of oil released? Is it land area or water volume contaminated? Is it habitat destroyed? Is it CO2 emitted?
In both the United States and Canada, more crude oil, petroleum products, and natural gas are transported in pipelines than by all other modes combined, using the unit of ton-mile which is the number of tons shipped over number of miles (The Fraser Institute).
In the U.S., 70% of crude oil and petroleum products are shipped by pipeline. 23% of oil shipments are on tankers and barges over water. Trucking only accounts for 4% of shipments, and rail for a mere 3%. In Canada, it’s even more lopsided. Almost all (97%) of natural gas and petroleum products are transported by pipelines (Canadian Energy Pipeline Association).
Amid a North American energy boom and a lack of pipeline capacity, crude oil shipping on rail is suddenly increasing. The trains are getting bigger and towing more and more tanker cars. From 1975 to 2012, trains were shorter and spills were rare and small, with about half of those years having no spills above a few gallons (EarthJustice.org). Then came 2013, in which more crude oil was spilled in U.S. rail incidents than was spilled in the previous thirty-seven years.
Crude is a nasty material, very destructive when it spills into the environment, and very toxic when it contacts humans or animals. It’s not even useful for energy, or anything else, until it’s chemically processed, or refined, into suitable products like naphtha, gasoline, heating oil, kerosene, asphaltics, mineral spirits, natural gas liquids, and a host of others.
U.S. Refinery Capacity by PADD (Petroleum Administration for Defense Districts) in 2012. Source: Congressional Research Service; Energy Information Administration
Every crude oil has different properties, such as sulfur content (sweet to sour) or density (light to heavy), and requires a specific chemical processing facility to handle it (Permian Basin Oil&Gas). Different crudes produce different amounts and types of products, sometimes leading to a glut in one or more of them, like too much natural gas liquids that drops their price dramatically, or not enough heating oil that raises their price.
As an example, the second largest refinery in the United States, Marathon Oil’s GaryVille Louisiana facility, can handle over 520,000 barrels a day (bpd) of heavy sour crude from places like Mexico and Canada but can’t handle sweet domestic crude from New Mexico.
Thus the reason for the Keystone Pipeline or increased rail transport – to get heavy tar sand crude to refineries along the Gulf Coast than can handle it.
The last entirely new petroleum refinery in the United States opened in 1976 (Congressional Research Service). Since then, the number of refineries has steadily declined while refining capacity has concentrated in ever-larger facilities. 25% of U.S. capacity is found in only eleven refineries. Recently, Shell’s Baytown refinery in Texas, the largest in the nation, was expanded to 600,000 bpd. Most of the big refineries can handle heavy crude, but many smaller refineries can process only light to intermediate crude oil, most of which originates within the U.S.
Thirty-three states have refineries, and most refineries can handle tens-of-thousands to hundreds-of-thousands of barrels per day, but the largest capacity sits around the Gulf Coast and in California where the oil boom in America began. However, in the 1990s after production of sweet domestic crude had significantly declined from mid-century highs, the big companies like Exxon, Shell, CITCO and Valero spent billions upon billion of dollars to retool their refineries to handle foreign heavy crudes.
Oil spill volume per billion-ton-miles compared among transportation modes. Source: the Congressional Research Service
With the number of refineries decreasing, and capacity concentrating in fewer places, crude usually has to be moved some distance. There are four ways to move it over long distances: by pipeline, by boat, by truck, or by rail. Each has its unique problems and none is without harm.
The question is: which is safest and which should we invest in most? Take two spills for comparison.
The Quebec train wreck last year killed 47 people and spilled 1.5 million gallons of crude onto land (Bloomberg.com). The Enbridge pipeline rupture in 2010 spilled over a million gallons of similar crude into the Kalamazoo River but did not kill anyone (Wikipedia).
Contamination of water is generally much worse for the environment than contamination of land as it spreads quickly over more area and impacts more species and habitat. But killing people makes a big difference. I don’t want to put a price tag on human life, but the Government has, and it’s about $8 million a person (NYTimes).
So the Quebec train derailment cost over $400 million in human life, and will cost another $150 million or so for clean-up and rebuilding the town. The Enbridge pipeline cost no human lives but will cost about a billion dollars to clean-up and, like the Exxon Valdez, will never really succeed.
Note: using this value of $8 million a person, we 300 million Americans are worth $2.4 quadrillion, hmm…maybe not a good number. If we use our net value for America as a whole, about $75 trillion, divide by 300 million people, then the average value of a human life in America would be $250,000. So the Quebec train derailment cost less than $12 million in human life. Thus the danger of trying to gauge the value of a human life.
These are not easy questions and one’s vested interest has a great deal of sway in the answer. You really do need to pick your poison.
Like always, it will probably come down to money. And it won’t be about jobs (Pipeline Jobs), regardless of which end of the spectrum you believe, because there just isn’t enough jobs to matter compared to the value of the oil itself and the refinery capacity. It’s simply cheaper and quicker to transport by pipeline than by rail or by truck. The difference in cost is about $50 billion a year for shipping via the Keystone versus rail, totally eclipsing any economic effect of jobs in either direction.
A rail tank car carries about 30,000 gallons (÷ 42 gallons/barrel = about 700 barrels). A train of 100 cars carries about 3 million gallons (70,000 barrels) and takes over 3 days to travel from Alberta to the Gulf Coast, about a million gallons per day. The Keystone will carry about 35 million gallons per day (830,000 barrels). This puts pressure on rail transport to get bigger and bigger, and include more cars per train, the very reason that crude oil train wrecks have dramatically increased lately.
The Congressional Research Service estimates that transporting crude oil by pipeline is cheaper than rail, about $5/barrel versus $10 to $15/barrel (NYTimes.com). But rail is more flexible and has 140,000 miles of track in the United States compared to 57,000 miles of crude oil pipelines. Building rail terminals to handle loading and unloading is a lot cheaper, and less of a hassle, than building and permitting pipelines.
It isn’t acceptable to just say we shouldn’t be moving oil, because we will for the next decade or more, no matter what. So, keeping in mind the difference between death/damage to humans and damage to the environment, which would you choose?
Like a few weeks ago, I would appreciate just one comment from each person for the first 24 hours after posting so we can get a tally before we get into the normal animated back and forth debates. Below is some more information on each transportation mode.
Two seemingly opposite facts –
1) from 1980 to 2012, the train accident rate in the United States fell 80 percent, the rail employee injury rate fell 85 percent and the RR crossing collision rate fell 82 percent, but
2) more crude oil was spilled in U.S. rail incidents in 2013 than was spilled in the previous thirty-seven years.
Using data from the Pipeline and Hazardous Materials Safety Administration, 1.5 million gallons of crude oil were spilled from rail cars in 2013. On the other hand, from 1975 to 2012, railroads spilled a total of 800,000 gallons of crude oil (McClatchy; check out their great interactive map of spills over space and time).
Even worse, these data do not include rail accidents in Canada. 1.5 million gallons of crude oil spilled in a single day last year in Lac-Megantic, Quebec, and 47 people were killed. The shipment did originate in North Dakota so take your pick of provenance.
If crude oil shipping on rail is becoming a preferred mode for oil producers in our North American energy boom, this trend is very disturbing. In 2011, crude rail capacity between southern Alberta and the northern U.S. Great Plains tripled to about 300,000 barrels per day, about a third of the Keystone XL capacity. U.S. railroads delivered 7 million barrels of crude in 2008, 46 million in 2011, 163 million in 2012, and 262 million in 2013 (almost as much as that anticipated by the Keystone XL alone). To replace the Keystone XL with rail shipments would mean another doubling of rail capacity, but that would be just another couple of years given this trend.
The Association of American Railroads points out that over 11 billion gallons of crude were shipped in 2013, so these spills account for only one-hundredth of one percent. On the other hand, the environment and people’s health don’t care about what made it though OK, just what was spilled.
Our railroad infrastructure was not built to handle this mass of crude on its system and doesn’t use enough specialty cars. If this trend continues, major infrastructure investments need to occur on both sides of the border, as well as significant changes in protocol and regulation.
Like: big oil trains have to go slower, or oil tank cars have to be hazardous material cars.
It turns out that the rail industry recently modified its guidelines in response to the Quebec derailment (Congressional Research Service) as follows:
restrict train speeds to less than 50 mph
increase the frequency of track maintenance
install wayside defective equipment detectors, such as “hot box” detectors, that detect wheels with faulty bearings, every 40 miles, with specific protocols for conductors when defects are indicated
use only track in good condition to support speeds of 25 mph or higher.
Reducing train speed can reduce the number of cars that derail as well as the likelihood that oil will be released from those cars, or that explosions will result.
Although the news is filled with comparisons between pipelines and trains, the third vector is trucks. While we can compare relative risks, the issue with trucking is that it takes lots and lots of trucks to move billions of gallons of crude since a single tank trailer only holds about 9,000 gallons or 200 barrels, a little under a third of a rail car. Our present fleet only handles 4% of our needs, so shipping by truck instead of the Keystone XL would take another million-and-a-half tanker trucks. Trucking is the most risky form of transport from an accident standpoint (yes, driving is one of those things, like smoking, that will always be in the top four most risky things to do – What’s Really Gonna Kill You?) and also from a spill standpoint. However, it is the least impactive from an environmental standpoint since each truck is small and is mainly on land, so large spills to waterways are less likely than any other mode of transport.
What is important to note, however, is that regardless of the long-hauling mode, most petroleum eventually gets onto a truck for the short moves. This limits the tons-mile risk but increases the incident number risk.
In a white paper about the dangers of transporting dangerous goods by truck, the Canadian Trucking Alliance repeats its long-standing position that “the federal government should introduce a universal mandate requiring all trucks, where the driver is currently required to carry a logbook under the federal hours of service regulations, to be equipped with an electronic recording device; and introduce a manufacturing standard (in lock-step with the United States) requiring all new heavy trucks to be equipped with a roll stability system” (Canadian Trucking Alliance). In addition, the Alliance wants all Canadian provinces and U.S. states to follow Ontario’s and Quebec’s lead by requiring truck speed limiters.
Ship transport is possible along coastal waters and along large rivers and is the method that is used for almost all foreign imports except from Canada. The thing about ships is that they carry a lot of oil per boat and many of the largest spills in history are from boats, such as the Exxon Valdez and the latest one from a collision in the Houston Ship Channel just last month (NOLA).
Five out of the ten largest oil spills in U.S. history were from boats (List of oil spills). Most important is that they have immediate impact on aquatic ecosystems both in the ocean, in rivers, or along shorelines that are usually sensitive habitats. I still don’t understand why these keep happening with modern technologies to detect water depth and nearby boats. Human error needs to be better removed from this equation.
The most controversial transport mode today is pipeline, mainly because of the Keystone XL debate and the recent Pegasus and Enbridge pipeline ruptures. The industry points to the generally good safety record in terms of percentages. Among oil pipeline workers, the rate hospitalization was 30 times lower compared to rail workers involved in transporting oil, and 37 times lower than for road transport, between 2005 and 2009, the latest period for which complete data exists (Intermodal Safety in the Transport of Oil).
But pipeline spills are inevitable. About 280 pipeline spills occur each year in the U.S. that are deemed significant (USDOT), that is, either there is a fatality or injury requiring in-patient hospitalization, it causes $50,000 or more in total costs (measured in 1984 dollars), there are highly volatile liquid releases of more than 5 barrels or other liquid releases of more than 50 barrels, or there are liquid releases that result in an unintentional fire or explosion.
Again, you’ll notice that these measures are in human health and property damage, not environmental effects. Environmental impacts are very difficult to estimate and, in almost all cases, are not even attempted.
In the end, all of these transportation modes can be made safer if stricter regulatory controls and modern technologies are emplaced, but the questions remain – can we make the industry comply and which ones do we want to invest in?
Finally, what brave reader wants to calculate the value of an acre of land destroyed by an oil spill? The EU recently allotted $100 per acre for removing pristine land for energy use, but this seems way too low. My muse suggests you start with Sierra Club, NRDC and EDF.
Failure rates raising new fears over use of aging oil tankers
Article by: JIM SPENCER , Star Tribune | April 22, 2014
Rail industry estimated their chance of leaking in derailments at 1 in 4.
A BNSF Railway train hauled crude oil near Wolf Point, Mont, in November. A National Transportation Safety Board forum on Tuesday looked at the safety in transporting crude oil and ethanol. One focus was the use of older tank cars, especially as oil train traffic increases. Photo: Associated Press file.
WASHINGTON – Tens of thousands of older tanker cars used to haul North Dakota crude oil and Midwestern ethanol run a one-in-four risk of leaking if they derail, railroad officials told the National Transportation Safety Board (NTSB) Tuesday.
The failure rate, estimated by the Rail Supply Institute and the American Association of Railroads, illustrates a growing concern for safety that has accompanied skyrocketing shipments of crude oil across the country.
Crude oil shipments originating in the United States have grown from about 6,000 carloads in 2005 to roughly 400,000 in 2013 as the United States has tapped domestic petroleum sources. At the same time, the government has yet to issue new standards for safer tanker construction.
About six North Dakota oil trains per day travel across Minnesota and through the Twin Cities, many of them 100 cars long. Each tank car holds 25,000 to 30,000 gallons of crude oil. Ethanol trains, which pose a similar hazard, move on Union Pacific tracks through the state.
But recent fiery crashes have convinced some policymakers that the threat of derailments like the one that happened in December in North Dakota put the public at unacceptable risk.
“A spate of recent accidents in the United States and Canada [demonstrate] that far too often, safety has been compromised,” NTSB chairwoman Deborah Hersman said.
While the rail industry says it moves 99.9 percent of its crude oil shipments incident-free, industry data show that 46,400 rail cars have been damaged in 29,000 accidents since 1970.
The older, general-use tanker cars hauling oil and ethanol meet current government safety standards, but government videos on the first day of a two-day forum about safety in crude oil and ethanol transport showed an older car rupturing during a puncture test, spraying its contents over the test site.
“Taking [older cars] out of the fleet reduces risk,” Robert Fronczak of the Association of American Railroads told the board.
But, he said, eliminating them by attrition alone could take 40 to 50 years.
Setting new standards
The sturdier tank cars being built now are half as likely as the older model to spill contents in a derailment, the rail industry estimates. But car construction standards being discussed by the government could lower the chances of a derailment leak to less than one in 20.
However, the rail supply industry has “to have regulatory certainty” before it commits to major new tanker production and retrofitting of old cars, William Finn of the Railway Supply Institute told the board.
Lee Johnson, representing the American Petroleum Institute, questioned the spill data attributed to older, so-called “legacy cars.” He called the numbers “preliminary.”
Johnson said the oil industry needs to keep shipping oil in the older cars “to move increasing production.” There are not enough of the newer, sturdier tanker cars available to meet oil producers’ demands, especially in North Dakota’s Bakken field, which Johnson said will soon be producing 2 million barrels of oil per day.
Roughly 23,000 older “legacy cars” now carry crude oil, and 29,000 more carry ethanol. The United States may soon have even more crude oil moving in the more vulnerable rail cars because of a surcharge Canada now places on their use. That means railroads may divert newer, sturdier cars to haul oil to Canada. Retrofitting older legacy cars to make them more leakproof will take years, if not decades, several participants said.
“We don’t want to disrupt the country’s need for the fuel these cars are hauling,” Finn said.
Why the details matter
Meanwhile, a better car design remains the subject of debate.
Greg Saxton, chief engineer of the Greenbrier Cos., one of the country’s four major train car builders, believes in greater tanker wall thickness. “Engineers deal with uncertainty by adding some margin of safety,” he explained to the board.
Others argue that thicker walls add weight and reduce storage space without improving safety.
Wall thickness is probably the biggest sticking point in the tanker safety discussion. The Railway Supply Institute wants a standard width of seven-sixteenths of an inch. The Association of American Railroads wants nine-sixteenths of an inch.
“Crude oil contains a significant amount of dissolved gas,” the railroad association’s Fronczak said. A nine-sixteenth-inch wall will contain the vapor pressure that can build inside a crude oil tanker.
Videos shown Tuesday explained why such minutiae might matter. In one, a train car with a thicker wall withstood the whack of a giant prod traveling 14.7 miles per hour, while a car built to current DOT 111 standards ruptured in a 14 miles-per-hour collision.
Other issues include reinforcing the ends of tanker cars where they are most likely to be struck in a derailment, installing pressure-relief valves on tankers to keep crude oil from exploding in the event of a derailment and applying additional thermal protection to cut the risk of fires.
The NTSB’s Hersman asked Johnson how long he felt the older, more vulnerable cars would be needed to haul crude oil.
When Johnson couldn’t provide a specific time frame, Hersman replied: “You’re not making me feel very optimistic.”
Repost from The News Tribune, Tacoma, OR
[Editor: This article is a good start, but it leaves much unsaid. Information and disinformation abounds regarding the DOT-111 tank car, designed in 1964. There are retrofitted (improved) versions of the DOT-111, but they are a small percentage of DOT-111’s currently in use, and are not REQUIRED BY LAW for transport of hazardous materials … and even these retrofitted cars are considered by many to be unsafe. A place to begin learning more is Wikipedia. Even better is this NTSB document, or this by New York Senator Schumer … and especially this technical publication by Turner, Mason & Company. See also the authoritative and exhaustive American Association of Railroads’ Field Guide to Tank Cars. The City of Benicia should condition Valero’s Crude By Rail proposal by requiring tank cars of the latest and safest designs for all deliveries, with stiff requirements for daily verification and harsh penalties for violations. – RS]
Old oil tanker cars, old regulations, new danger
The News Tribune | April 22, 2014
Freight trains have an excellent overall safety record, which is why we don’t flee at the sight of them. But the growing numbers of oil trains rumbling through Washington ought to be making us nervous.
U.S. petroleum production – especially at the Bakken formation in North Dakota – has been expanding far more quickly than the nation’s pipeline capacity. As a result, the crude oil is getting carted across states by train and by truck. Let’s take a closer look at the tanker car that hauls much of that oil through Western Washington.
It’s called the DOT-111, a 1964 design. The Bakken oil that exploded catastrophically in Quebec last July, killing 47 people, was being carried in DOT-111 cars.
Five years ago, the National Transportation Safety Board investigated a low-speed train crash in Illinois in which 15 DOT-111 cars carrying fuel-grade ethanol went off the rails. Thirteen of the cars ruptured; the resulting explosion killed a motorist waiting at the crossing.
The NTSB did the math: 13 out of 15.
“This represents an overall failure rate of 87 percent,” it concluded, “and illustrates the continued inability of DOT-111 tank cars to withstand the forces of accidents, even when the train is traveling at 36 mph, as was the case in this accident.”
The NTSB noted that the basic DOT-111 lacks many puncture-resistance systems and has a thinner shell than cars designed to carry extremely hazardous liquids, such as chlorine. It reportedly is well-suited for things that don’t blow up, like corn syrup.
Bakken crude – as the Quebec disaster demonstrated – is turning out to be unexpectedly volatile and even explosive. It shouldn’t be in the older DOT-111 fleet – newer models are reputedly safer – if the cars aren’t retrofitted with heavier steel armor and other safety features.
The American petroleum boom caught regulators and railways with their pants down.
Railroad companies didn’t have enough modern, thick-walled tanker cars, so the DOT-111s were pressed into service. Spills and explosions have resulted. The U.S. Department of Transportation hasn’t come up with the tighter tank-car standards the new reality obviously demands.
Earlier this month, U.S. Sen. Patty Murray held a hearing that put Transportation Secretary Anthony Foxx on the hot seat. Sen. Susan Collins of Maine asked Foxx when the new oil train standards would be arriving.
“My target date is as soon as possible,” he said.
Four years ago – when North Dakota ran out of pipeline capacity – would have been better timing.