U.S. Rail Transportation of Crude Oil: Background and Issues for Congress

CRS_logoThis is the new report (6 Feb 2014) that our congressional representatives are reading, a 25-page study by the Congressional Research Service on U.S. Rail Transportation of Crude Oil: Background and Issues for Congress.  Download here: US Rail Transportation of Crude Oil.

Summary

North America is experiencing a boom in crude oil supply, primarily due to growing production in the Canadian oil sands and the recent expansion of shale oil production from the Bakken fields in North Dakota and Montana as well as the Eagle Ford and Permian Basins in Texas. Taken together, these new supplies are fundamentally changing the U.S. oil supply-demand balance. The United States now meets 66% of its crude oil demand from production in North America, displacing imports from overseas and positioning the United States to have excess oil and refined products supplies in some regions.

The rapid expansion of North American oil production has led to significant challenges in transporting crudes efficiently and safely to domestic markets—principally refineries—using the nation’s legacy pipeline infrastructure. In the face of continued uncertainty about the prospects for additional pipeline capacity, and as a quicker, more flexible alternative to new pipeline projects, North American crude oil producers are increasingly turning to rail as a means of transporting crude supplies to U.S. markets. According to rail industry officials, U.S. freight railroads are estimated to have carried more than 400,000 carloads of crude oil in 2013 (roughly equivalent to 280 million barrels), compared to 9,500 carloads in 2008. Crude imports by rail from Canada have increased more than 20-fold since 2011.

While oil by rail has demonstrated benefits with respect to the efficient movement of oil from producing regions to market hubs, it has also raised significant concerns about transportation safety and potential impacts to the environment. The most recent data available indicate that railroads consistently spill less crude oil per ton-mile transported than other modes of land transportation. Nonetheless, safety and environmental concerns have been underscored by a series of major accidents across North America involving crude oil transportation by rail—including a catastrophic fire that caused numerous fatalities and destroyed much of Lac Mégantic, Quebec, in 2013. Following that event, the U.S. Department of Transportation issued a safety alert warning that the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.

Contents

Introduction ………………………………………………………………………. 1

Why Is Oil Moving by Rail?………………………………………………. 2

The Economics of Oil by Rail …………………………………………… 4

The Role of Barges and Ships in Domestic Crude Transportation … 7

The Jones Act ……………………………………………………………………………….. 8

The Role of Tank Trucks …………………………………………………… 8

Oil Spill Concerns ………………………………………………………………. 9

Special Concerns About Canadian Dilbit ………………….. 11

Special Concerns About Bakken Crude ……………………….. 12

Federal Oversight of Oil Transport by Rail …………………..12

Issues for Congress ……………………………………………………. 14

Railroad Safety and Incident Response ………………………….. 14

Tank Car Safety Design …………………………………………………….. 15

Preventing Derailments ……………………………………………………… 16

Railroad Operations…………………………………………………………….. 17

Incident and Oil Spill Response ………………………………………… 19

Rail vs. Pipeline Development ………………………………………….. 19

Rail Transport and Crude Oil Exports …………………………….. 21

Figures

Figure 1. U.S. Refinery Capacity by PADD in 2012 ………. 3

Figure 2. U.S. Refinery Receipts of Crude Oil by Mode of Transportation …. 4

Figure 3. Oil Spill Volume per Billion-Ton-Miles …………….. 9

Figure 4. Non-jacketed, Non-pressure Tank Car …………… 15

Public forums – Feb 24, 26 & Mar 1

Repost from Sunflower Alliance

Forums on the New Dangers of Extreme Energy, from Canada to Contra Costa

Tar sands strip mining in Alberta; oil train explosion in Lac-Mégantic; drought in California; train derailment over Schuylkill River in Philadelphia.

Tar sands strip mining in Alberta; oil train explosion in Lac-Mégantic; drought in California; train derailment over the Schuylkill River in Philadelphia.

The Sunflower Alliance is pleased to host a series of forums in northern Contra Costa County on the dangers of the fossil fuel industry’s turn to extreme energy in recent years. CoCoCo and Benicia are home to five refineries, specializing in the dirtiest and heaviest crude oils, and the industry has proposed five major projects to expand refineries and bring in crude oil by train.

In Pittsburg, Martinez, and Richmond, we will have panel discussions with experts and community activists, featuring a special guest from Lac-Mégantic, Canada, which suffered a devastating oil train explosion last July that killed 47 people. They’ll educate us on Big Oil’s plans and the local, regional, and global effects.

Learn about the consequences for your community, and learn how communities are organizing to fight back and protect our health and safety!

The forums will be held on the following dates:

Pittsburg: Monday, February 24th, 2014, from 7pm to 9pm at First Baptist at 204 Odessa Ave. Facebook event here.

Martinez: Wednesday, February 26th, 2014, from 6:30pm to 8:30pm at the Veterans Memorial Building at 930 Ward St. Facebook event here.

Richmond: Saturday, March 1st, 2014, from 12pm to 2pm at the Bobby Bowens Progressive Center at 1021 MacDonald Ave. Facebook event here.

Speakers

Each forum will have a slightly different set of panelists, tailored for the concerns of that area. However, every panel will feature:

Look at the descriptions in the Facebook events for each location (see above) to find out more about each panel’s members.

We look forward to seeing you at one of the panel discussions!

Proposed Projects

Proposed oil infrastructure projects (source: CBE).

Partners

These forums are sponsored by the Sunflower Alliance and 350 Bay Area, in partnership with the Sierra Club, Pittsburg Defense Council, Communities for a Better Environment, ForestEthics, the Good Neighbor Steering Committee, and the Crockett-Rodeo-Hercules Working Group.

Many thanks to the First Baptist Church of Pittsburg, the Richmond Progressive Alliance, and VFW Post 1351 for allowing us to use their spaces!

Latest on Pennsylvania oil train derailment

Repost from Reuters

Train carrying Canadian oil derails, leaks in Pennsylvania

By Robert Gibbons and Elizabeth Dilts
NEW YORK  Thu Feb 13, 2014 3:17pm EST

The wreckage of a train derailment is seen in the snow near Vandergrift, Pennsylvania February 13, 2014. REUTERS/Jason Cohn

The wreckage of a train derailment is seen in the snow near Vandergrift, Pennsylvania February 13, 2014.  Credit: Reuters/Jason Cohn
NEW YORK (Reuters) – A 120-car Norfolk Southern Corp train carrying heavy Canadian crude oil derailed and spilled in western Pennsylvania on Thursday, adding to a string of recent accidents that have prompted calls for stronger safety standards.

There were no reports of injury or fire after 21 tank cars came off the track and crashed into a nearby industrial building at a bend by the Kiskiminetas River in the town of Vandergrift.

Nineteen of the derailed cars were carrying oil, four of which spilled between 3,000 and 4,000 gallons of oil, Norfolk Southern said. The leaks have since been plugged. The two other derailed tank cars held liquefied petroleum gas.

The train, which originated in Chicago, was destined for an asphalt plant in Paulsboro, New Jersey, owned by NuStar, a NuStar spokeswoman said.

The clean-up was under way on Thursday as a heavy winter storm gathered pace, leaving about 4 inches of snow on the ground by midday Thursday. An investigator from the Federal Railroad Administration was en route to the scene, the railroad regulator said.

“I heard a strange noise, a hollow, screeching sound,” said Ray Cochran, who watched the train derail from his home on a hill above the tracks. “I looked out the window and saw three or four tankers turn over and one of them ran into the building.”

The train, which was also carrying food products, crashed into a track-side building owned by MSI Corporation that makes metal products.

All employees had been accounted for, said Sandy Smythe, a public information officer with Westmoreland County’s public safety department, which includes Vandergrift borough.

MSI declined to comment.

Thursday’s accident is the latest in a spate of crude oil train derailments that has prompted calls for more stringent rules regulating crude by rail, shipments of which have soared in recent years as pipelines fail to keep up with growing supply.

It comes ahead of a Senate hearing concerning the safety of transporting crude by rail, which has become a major political issue as the incidents pile up. The hearing was scheduled for Thursday, but was delayed by the snow.

Thursday’s accident was the second in less than a month in Pennsylvania. A train hauling crude on a CSX Corp railroad jumped the tracks and nearly toppled over a bridge in Philadelphia on January 20. There were no injuries or fire in that incident.

A train carrying Bakken oil from North Dakota last July derailed and exploded in Lac-Megantic, Quebec, killing 47 people and decimating much of the small town.

U.S. and Canadian railroad companies, tank car owners and regulators are investigating ways to transport crude on the rails more safely. Much of the focus is on phasing out older tank cars, known as DOT-111s, that do not meet the latest safety standards.

DOT-111s built before 2011 are prone to puncture and fire during accidents, regulators say.

It is as yet unclear what type of cars were involved in Thursday’s accident.

First-hand account, Mayor of Lac-Mégantic…

Repost from The Guardian, Charlottetown, PEI, Canada

Lac-Mégantic mayor tells Federation of Canadian Municipalities conference about train explosion

Dave Stewart, February 13, 2014
In the hours and days after a train derailment and explosion that killed more than 40 people last July, Colette Roy Laroche, mayor of Ville de Lac-Mégantic, Que., said there was too much to do.Laroche was one of four panelists at a conference in Charlottetown on Thursday entitled ‘Decision-making for Resilience: Finding the Path Forward and Minimizing Risk in Our Communities’. It was part of the Federation of Canadian Municipalities conference and trade show.Just after midnight on July 6, 2013 an unattended freight train carrying crude oil derailed, resulting in a fire and explosion of multiple-tank cars. In addition to the dead, more than 30 buildings in the town’s centre, roughly half of the downtown area, were destroyed. It was the fourth deadliest rail accident in Canadian history.Suddenly, a town of 6,000 people became a major story on newscasts around the world.”I wasn’t prepared for that kind of media presence,” Laroche said through an interpreter. “We’re a town of 6,000 people. Everything is usually very quiet. We were overwhelmed by so many media. As the mayor, I didn’t have a lot of time to think.”

Even as she recounts the story today, Laroche remains calm, talking about phone service that was completely cut off and turning to the media to communicate with residents and to encourage them in the face of what had happened.

The local high school was transformed into a shelter for about 2,000 residents and for others to get information. Breakfast was served at the school at 7 a.m. following the initial explosions

More than 80 fire departments came to help fight the massive fire and the provincial government sent what help it could.

Laroche said more than 100 businesses in the downtown, that provide professional services, were relocated while 50 business, as a whole, were also moved.

Rebuilding the town is going to take a while, she said.

“We need three to five years before we can rebuild the area affected by the disaster,” Laroche said, noting that the total rebuild could take a decade.

Four condominiums in the area were turned into makeshift businesses with some opening in the next month or two.

Laroche said there is still so much to do. The town is now planning major consultations with residents.

“We need to involve our citizens. We need our people to find themselves (a part of) the reconstruction. Lac-Mégantic will never be what it was.”

Some residents want the town rebuilt as it was, others want a new image.

“Our citizens are beginning to realize it will be a very long process but we have a patient population. They are able to stand up and remain calm.”

Laroche said if there is a positive that came out of the tragedy it’s that it has brought the residents of the small Quebec town much closer together.

For safe and healthy communities…