Crude By Rail, Federal Regulation (U.S.), Tank car design, Train braking systems, Train speed

Two-month comment period starts for new federal oil train rules

Repost from The Hill
[Editor: The U.S. Department of Transportation is proposing new rules for oil train transport. You can post a comment online here.  The proposed rules, including instructions for submitting comments, can be downloaded here.  – RS]

Comment period starts for oil train rules

By Timothy Cama – 08/01/14

The Obama administration Friday formally published proposals in the Federal Register to stiffen safety rules for trains carrying crude oil and other fuels, kicking off a two-month period in which the public can comment.

The proposals were prompted chiefly by the increase in oil shipped by rail from the Bakken region of North Dakota, which Transportation Secretary Anthony Foxx said last week necessitates “a new world order on how this stuff moves.” A train carrying crude derailed in Quebec last year, setting off an explosion that killed 47.

The Department of Transportation (DOT) proposed phasing out old rail cars for oil and other flammable liquids like ethanol, implementing new speed and braking standards for the trains and establishing a new testing and classification system for the fuels. Foxx called the rules “the most significant progress” in protecting the country from explosions caused by trains carrying Bakken crude.

DOT said it wants comments on three different possible rules for speed limits and three different options for the thickness of steel on cars.

DOT also said it was not likely to extend the comment period beyond the 60-day standard, “given the urgency of the safety issues addressed in these proposals.”

CPC-1232 standard, DOT-111, Ethanol, Federal Regulation (U.S.), Tank car retrofit, Train speed

Ethanol dependent on old-style tank cars

Repost from Argus

Railway Supply Institute: Ethanol dependent on old-style tank cars

1 Aug 2014

Houston  — The US ethanol industry is particularly vulnerable to pending regulatory changes that will require retrofitting or retiring a type of railcar that carries 98pc of ethanol production.

In comments to the US Department of Transportation’s (DOT) planned changes to tank car design released last week, the Railway Supply Institute (RSI) said about 29,200 of the approximately 29,780 tank cars moving ethanol as of June were doing so in unjacketed old-style DOT-111 tank cars. Those cars must be retrofitted or retired under the proposed rules.

Jackets add another layer of steel to the tank, increasing overall protection. They are an option to retrofit DOT-111s to make them safer.

DOT-111 cars have been under renewed scrutiny since several exploded into flames in a July 2013 derailment at Lac-Megantic, Quebec, killing 47 people. Four more fiery crude-by-rail accidents since then spun regulators in both the US and Canada into action on car design.

But it was an ethanol train derailment in June 2009 that spurred the first wave of action. The Cherry Valley, Illinois, accident killed one person and prompted industry to voluntarily strengthen car design in 2011, creating the current industry standard known as CPC-1232.

But despite the reliance on older DOT-111s to move ethanol, documentation from the Surface Transportation Board and the Pipeline and Hazardous Material Safety Administration shows there was only one ethanol-by-rail accident last year — with no release or fire — compared with five crude-by-rail accidents.

The last reported US ethanol-by-rail accident involving a fire was in August 2012 at Plevna, Montana, when 17 cars derailed and 12 spilled more than 245,000 USG.

According to RSI’s comments to the DOT, which were released last week along with a series of proposals on new speed limits and tank car design for flammable liquids, 580 tank cars either of the newer CPC-1232 model or jacketed DOT-111s were moving ethanol in June, making up 2pc of the fleet.

Meanwhile, of the 42,550 tank cars moving crude in June, 19,750 either were newer-model CPC-1232 or DOT-111 with jacketing, accounting for 46pc.

“Our industry’s rapid expansion occurred in 2005-2006-2007, and the only cars made available were the [DOT-111] cars, which were purchased or leased with the expectation of a 40- or 50-year lifespan,” Bob Dinneen, chief executive of the Renewable Fuels Association, told Argus. “When you started to see a lot more crude oil moving from the Bakken, by then the [CPC-1232] cars were being made available, so they were lucky to get those cars.”

DOT last week suggested that DOT-111 tank cars be retired after two years, to be replaced either by a more stringent design it has proposed, another proposed by the Association of American Railroads that is largely similar except that it lacks electronically controlled pneumatic brakes, or continuation of the current CPC-1232 design.

The initial regulatory push is too broad-brush and should be more focused on crude, Dinneen said.

“They ought to be prioritizing by the commodity about which, by their own admission, they are most concerned,” Dinneen said, referring to light crude. Conversely, the American Petroleum Institute chastised the government for singling out Bakken crude, which it said is no more volatile than other grades.

Yesterday, railcar lessor GATX also called for a more commodity-based approach to the DOT-111 phase-out, saying it is not currently clear what markets DOT-111s might serve once they are banned from crude or ethanol use.

Crude By Rail, Emergency Readiness & Response, Rail industry, Rail Safety, Union Pacific Railroad

Union Pacific Railroad touts safety record, offers emergency training

Repost from Progressive Railroading
[Editor: Skim through this one to see how Union Pacific is touting its safety record and buying the confidence of first responders and the public.  There is, in fact, nothing that will make crude by rail a safe enterprise, and every reason on earth to abandon all investment in fossil fuels – sooner rather than later.  – RS]

UP matches first-half safety ratio record, continues crude emergency response training at TTCI

7/31/2014  |  Rail News: Union Pacific Railroad

Union Pacific Railroad employees achieved a 1.01 reportable safety incident rate in the first half, matching the best-ever rate achieved in first-half 2011, the Class I announced yesterday.

The injury rate is calculated using the number of injuries per 200,000 manhours, which is equivalent to the number of hours worked by 100 full-time employees in a year.

“The safety of our employees, customers and communities is our No. 1 priority, and each day Union Pacific employees embrace a safety mindset to keep themselves and others safe,” said UP Vice President of Safety, Security and Environment Bob Grimaila in a press release, adding that the Class I continues to work toward a commitment to zero injuries.

Bolstering crude-by-rail safety is part of that commitment, including proper emergency response techniques. During two three-day courses held earlier this month at the Transportation Technology Center Inc. (TTCI) in Pueblo, Colo., UP conducted training for 80 emergency response personnel from Arkansas, Arizona, California, Illinois, Iowa, Kansas, Missouri and Nebraska.

The training focused on sharpening the responders’ skills to better prepare them for any crude-by-rail incidents that might occur in or near their respective communities. The training covered a variety of safety subjects, including identification of tank-car types that transport crude, tank-car fittings and construction, chemical and physical properties of the different types of crude, and response precautions.

Hands-on exercises focused on assessing tank-car damage, ensuring on-site repairs, controlling oil releases from damaged cars and fire suppression techniques. Class members also participated in a simulated oil fire, which helped them understand how to work with railroad personnel in an emergency and how to work safely on railroad property.

UP also plans to conduct four additional crude emergency response courses in August, one in November and one in December at TTCI. The Class I annually trains about 2,500 local, state and federal first responders. Since 2003, the railroad has trained nearly 38,000 public responders and 7,500 private responders, such as shippers and contractors.

Crude By Rail, Light sweet crude, Oil Industry

Big oil producers in Texas shifting to crude-by-rail

Repost from Midland Reporter-Telegram
[Editor: Significant quote: ““The Permian Basin may be a lot larger than the Bakken and Eagle Ford combined….”  Note: I have added a map of the Permian Basin below this article.  – RS]

Basin operators increase interest in shipping oil by rail

By Mella McEwen. July 31, 2014

Oil Trains

Billions of dollars have been pouring into the Permian Basin in recent years as pipelines rush to help producers move their crude and natural gas to market.

Despite the investment in new pipelines and gathering lines and expansion of existing lines, takeaway capacity remains tight and producers are increasingly turning to the railroads for relief.

Using trains to move crude to market is nothing new, points out Bruce Carswell, West Texas operations manager for Iowa Pacific Holdings. “There has been, over time, crude oil moving by rail out of the Permian Basin almost since the beginning” of oil production, he said.

The increase in pipeline construction has not kept pace with the increase in production from drilling activity, he said, and the railroads his company operators are seeing increased shipments across the board.

Judging by the ringing of his phone, Christopher Keene, president and chief executive officer of Rangeland Energy, says demand for moving Permian Basin crude by rail is growing. His Sugar Land-based company is in the process of constructing the Rangeland Integrated Oil System in the Delaware Basin. A rail terminal is under construction near Loving, New Mexico that will open in October with truck-to-rail transload operations. Initial capacity will be 10,000 barrels a day, eventually growing to high-speed unit train loading capacity of over 100,000 barrels a day. It will be served by the BNSF Railway.

Rangeland is also planning its RIO Pipeline, which will connect the new RIO Hub in Loving to the RIO State Line Terminal and then Midland, which will provide connections to various terminals and interstate pipelines to Cushing and the Gulf Coast.

Carswell’s company operates two railroads, the Texas-New Mexico from Monahans to Hobbs and Lovington and the West-Texas Lubbock, which runs from Lubbock to Seagraves and a line that runs from Levelland to Whiteface.

While new pipelines will come online later this year and into next year, Carswell said, “But my observation is they’re drilling a lot more wells, too.”

Producers, observed Khory Ramage, president of Ironhorse Energy Partners, didn’t expect as big an increase in production as has been seen.

“It just accelerated,” said Ramage, whose company is building a rail terminal at Artesia. The company, which he founded with brother Kyle, already has laid 7,000 feet of track and connected to the BNSF main line. The first phase of the development calls for 18,000 feet of track to accommodate rail cars unloading proppants. By the time development of the unit train terminal is done, there will be nine-and-a-half miles of track with a loop track to hold 200 loaded railcars at once.

“The Permian Basin may be a lot larger than the Bakken and Eagle Ford combined,” he said. “Bringing production into and out of the market is vital.” He reported that his company is talking to two different entities about moving their production.

Keene said his company “just landed the 800 pound gorilla out there in the Permian Basin,” a name he was not yet ready to announce.

The rising use of rail to move crude production has caught the public’s attention recently in the aftermath of the derailment in Canada that killed over 40 people as well as derailments that have resulted in spills. New safety regulations are being proposed by the federal government, something Carswell said the industry welcomes because it has been waiting for the federal government to approve new standards for awhile.

“There’s been a fair amount of effort to improve the safety aspect of moving any flammable liquid,” he said.

Keene said he is glad there is a conversation about safety and said he sees three areas where change is occurring or needed: Safer rail cars need to be designed, the railways themselves need to be maintained and speed in certain areas should be addressed.

“I’m a firm believer rail is here to stay,” Keene said, “if it’s done the right way, in a safe and environmentally friendly manner. I think the industry is going to continue getting better.”

For his part, Ramage sees a need for both rail and pipelines, saying there will always be options for rail. He saw the impact on rail demand with the rise in production from the Bakken in North Dakota and Wyoming. That prompted him and his brother to form Ironhorse.

Keene said the Delaware Basin is different in that the crude seems to want to move by pipeline, but when it can’t, for whatever reason, producers are turning to railroads.

Another benefit of railroads, Carswell said, is they offer producers flexibility as to where to send their commodities, especially given the price differentials. “This week, shipments may go to the Gulf Coast but next month they may go to the West Coast or the East Coast.”

“What’s predominantly driving this is the price differentials” between West Texas Intermediate-Midland, West Texas Intermediate Cushing and even Louisiana Light Sweet, Keene said, a gap that has reached as much as $20. “That’s huge,” he said.

Another driver, he said, is pipeline constraints, and even though significant new and expanded capacity is expected in the coming year, he said price differentials are still playing a role.

Ramage said flexibility is important, especially as traditional pipeline destinations like Cushing, Oklahoma and the Gulf Coast are becoming inundated with light sweet crude. In the 1990s, he noted, refineries were retrofitted to process heavier, more sulfur-laden crudes that were being imported, making them slower to respond to the rise of light sweet crudes from unconventional shale plays.

That quality, Keene said, is the third driver in rail demand. “A lot of the new crude is outside pipeline specifications” of 42 API Gravity, though some pipelines have inched that up to 44 API Gravity. Much of the crudes now coming from shale plays are 45 to 55 API Gravity, he said and can even be considered condensate or natural gasoline.

Producers then have three options, Keene said: Rail the crude to a splitter, where the condensate is split into different components like distillates and naphtha, send it by rail to Canada for use as diluents or send it by rail to coastal terminals where, hopefully, the government will classify it as stabilized condensates that can be exported overseas.

Allowing exports could be key to the industry’s future, Ramage said.

“The only concern is if the government doesn’t consider the importance of lifting the export ban,” he said. “We may see prices decrease and the energy revolution we’re experiencing slow down.

Map of the Permian Basin:

 

 

For safe and healthy communities…