Derailment, DOT-111, Faulty switch, Missing bolts, Rail inspection, Train speed

Inspection finds faulty switch, critical rail and tank car safety defects

Repost from The Times Union, Albany NY

Faulty switch slows trains

Speed limit lowered after defect that could cause derailment found
By Brian Nearing | December 15, 2014
Port-of-Albany_650
Oil tanker and freight cars at the Port of Albany are seen from Corning Tower Monday afternoon, Dec. 15, 2014, in Albany, N.Y. Speed limits for trains were lowered on tracks near a large industrial park near Voorheesville that are commonly used by massive trains carrying flammable crude oil after state and federal safety inspectors found a faulty switch that could have caused a derailment. (Will Waldron/Times Union)

Trains were slowed on tracks last week near a large Albany County industrial park — where passing trains routinely carry dozens of tankers filled with flammable crude oil — after state and federal safety inspectors found a faulty switch that could have caused a derailment.

That switch, which feeds trains into the 550-acre Northeast Industrial Park, was examined Dec. 9 as part of the eighth statewide inspection of oil trains and tracks ordered by Gov. Andrew Cuomo in response to safety concerns about a surge of crude oil shipments through New York from the Bakken fields of North Dakota.

The switch is about three miles north of the village of Voorheesville and feeds trains into the park, which itself contains about 15 miles of tracks.

“We have sent inspection crews to check rail tracks and crude oil cars across New York and we continue to find critical safety defects that put New Yorkers at risk,” the governor said in a statement issued Monday. “We will remain vigilant and will continue to use all available resources to ensure that crude oil transporters are held to the highest safety standards.”

In the Capital Region, the speed limit on the CSX-owned track around the switch was lowered from 50 mph to 25 mph last week after inspectors from the state Transportation Department and Federal Railroad Administration found the switch was too narrow by just an eighth of an inch, said DOT spokesman Beau Duffy.

The switch could have been damaged by passing trains, or could cause a train to derail, he said. Duffy said the switch was repaired and higher speed limits have been restored.

The park is owned and managed by the Schenectady-based Galesi Group. A spokeswoman for company Chief Operating Officer David Buicko said the company was not made aware of the switch issue and learned of it from a Times Union reporter.

“We are committed to strong, ongoing and long-term coordination with state and local officials and will continue our aggressive program of inspection and maintenance of the entire CSX network,” said CSX spokesman Rob Doolittle. “Upon being made aware of the defect, CSX implemented a speed reduction in that area. The switch was repaired over the weekend and the speed restriction has been lifted.”

Cuomo’s office announced that state and federal inspectors examined about 95 miles of track — from Schenectady to Selkirk, and from Albany to Whitehall in the Capital Region, as well as from Plattsburgh to the Canadian border in the North Country.

In addition to the faulty switch, inspectors found about 30 violations on tracks, including “critical problems” like missing bolts from a rail joint and an “insecure switch point heel.”

Inspectors at the Canadian Pacific Railway-owned Kenwood yard at the Port of Albany also examined 478 DOT-111 tanker rail cars, which are commonly used to haul Bakken crude. Found were 16 “non-critical defects,” including worn brake shoes, defective wheels and other issues.

Non-critical rail defects must be repaired within 30 days. Non-critical tank car defects must be fixed before the train departs the yard.

Other inspections were done at rail yards and tanker cars in western New York, uncovering another five “critical defects,” including two broken rails at the Dunkirk and Buffalo-Frontier rail yard, and DOT-111s with defective brakes, a cracked weld and missing bolts.

Oil Industry, Oil prices

Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields

Repost from Bloomberg News

Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields

By Tom Randall, Dec 17, 2014
A disused mining machine is displayed in front of an oil sands extraction facility near the town of Fort McMurray, Alberta, Canada. | Photographer: Mark Ralston/AFP via Getty Images

There are zombies in the oil fields.

After crude prices dropped 49 percent in six months, oil projects planned for next year are the undead — still standing upright, but with little hope of a productive future. These zombie projects proliferate in expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela.

In a stunning analysis this week, Goldman Sachs found almost $1 trillion in investments in future oil projects at risk. They looked at 400 of the world’s largest new oil and gas fields — excluding U.S. shale — and found projects representing $930 billion of future investment that are no longer profitable with Brent crude at $70. In the U.S., the shale-oil party isn’t over yet, but zombies are beginning to crash it.

The chart below shows the break-even points for the top 400 new fields and how much future oil production they represent. Less than a third of projects are still profitable with oil at $70. If the unprofitable projects were scuttled, it would mean a loss of 7.5 million barrels per day of production in 2025, equivalent to 8 percent of current global demand.

How Profitable Is $70 Oil?

Source: Goldman Sachs Global Investment Research. Annotated by Tom Randall/Bloomberg

Source: Goldman Sachs Global Investment Research. Annotated by Tom Randall/Bloomberg

Making matters worse, Brent prices this week dipped further, below $60 a barrel for the first time in more than five years. Why? The U.S. shale-oil boom has flooded the market with new supply, global demand led by China has softened, and the Saudis have so far refused to curb production to prop up prices.

It’s not clear yet how far OPEC is willing to let prices slide. The U.A.E.’s energy minister said on Dec. 14 that OPEC wouldn’t trim production even if prices fall to $40 a barrel. An all-out price war could take up to 18 months to play out, said Kevin Book, managing director at ClearView Energy Partners LLC, a financial research group in Washington.

If cheap oil continues, it could be a major setback for the U.S. oil boom. In the chart below, ClearView shows projected oil production at four major U.S. shale formations: Bakken, Eagle Ford, Permian and Niobrara. The dark blue line shows where oil production levels were headed before the price drop. The light blue line shows a new reality, with production growth dropping 40 percent.

Even $75 Oil Crashes the Shale-Oil Party

Source: ClearView Energy Partners LLC

Source: ClearView Energy Partners LLC

The Goldman tally takes the long view of project finance as it plays out over the next decade or more. But the initial impact of low prices may be swift. Next year alone, oil and gas companies will make final investment decisions on 800 projects worth $500 billion, said Lars Eirik Nicolaisen, a partner at Oslo-based Rystad Energy. If the price of oil averages $70 in 2015, he wrote in an email, $150 billion will be pulled from oil and gas exploration around the world.

An oil price of $65 dollars a barrel next year would trigger the biggest drop in project finance in decades, according to a Sanford C. Bernstein analysis last week.

A pause in exploration and development may sound like good news for investors concerned about climate change. A vocal minority have been warning for years that potentially trillions of dollars of untapped assets may become stranded due to climate policies and improved energy efficiency. The challenges faced by oil developers today may provide a small sense of what’s to come.

However, these glut-driven prices can’t stay low forever. Oil production hasn’t slowed yet, but as zombie projects go unfunded, it will. This is how the boom-bust-boom of the oil market goes: prices fall, then production follows, pushing prices higher again. The longer this standoff goes, the more zombies will languish and the sharper the rebounding price spike may be.

Bakken Crude, DOT-111, Fracking, Oil conditioning, Oil producers, Oil stabilization, State regulation, Tank car retirement, Train braking systems, Train speed, Volatile gases

Maclean’s: So it turns out Bakken oil is explosive after all

Repost from Maclean’s Magazine

So it turns out Bakken oil is explosive after all

Producers in North Dakota’s Bakken oil fields have been told to make crude is safer before being shipped by rail
By Chris Sorensen, December 10, 2014

Oil TrainsAfter years of insisting oil sucked from North Dakota’s Bakken shale wasn’t inherently dangerous, producers have been ordered to purge the light, sweet crude of highly flammable substances before loading it on railcars and shipping it through towns and cities across the continent.

State regulators said this week that the region’s crude will first need to be treated, using heat or pressure, to remove more volatile liquids and gases. The idea, according to North Dakota’s Mineral Resources Director Lynn Helms, wasn’t to render the oil incapable of being ignited, but merely more stable in preparation for transport.

It’s the latest regulatory response to a frightening series of fiery train crashes that stretches back to the summer of 2013. That’s when a runaway train laden with Bakken crude jumped the tracks in Lac-Mégantic, Que., and killed 47 people in a giant fireball. In the accident’s immediate aftermath, many experts struggled to understand how a train full of crude oil could ignite so quickly and violently. It had never happened before.

Subsequent studies have shown that Bakken crude, squeezed from shale rock under high pressure through a process known as hydraulic fracturing, or “fracking,” can indeed have a high gas content and vapour pressure, as well as lower flash and boiling points. However, there remains disagreement about whether the levels are unusual for oil extracted from shale, and whether the classifications for shipping it should be changed.

Still, with more than one million barrels of oil being moved by rail from the region each day, regulators have decided to err on the side of caution and implement additional safety measures. For producers, that means buying new equipment that can boil off propane, butane and other volatile natural gases. Under the new rules, the Bakken crude will not be allowed to have a vapour pressure greater than 13.7 lb. per square inch, about the same as for standard automobile gasoline. Regulators estimate that about 80 per cent of Bakken oil already meets these requirements.

The industry isn’t pleased. It continues to argue that Bakken oil is no more dangerous than other forms of light, sweet crude, and is, therefore, being unfairly singled out. It has also warned that removing volatile liquids and gasses from Bakken crude would result in the creation of a highly concentrated, highly volatile product that would still have to be shipped by rail—not to mention additional greenhouse-gas emissions. It goes without saying that meeting the new rules will also cost producers money—at a time when oil prices are falling.

In the meantime, regulators on both sides of the border are taking steps to boost rail safety by focusing on lower speed limits, new brake requirements and plans to phase out older, puncture-prone oil tank cars. Earlier this year, Transport Minister Lisa Raitt said Canada would be “leading the continent” on the phase-out of older DOT-111 tank cars, which have been linked to fiery crashes going back 25 years. There are about 65,000 of the cars in service in North America, about a third of which can be found in Canada.

Derailment, Double shelf couplers, Rail accidents

Collision and derailment in Missoula rail yard – ‘double shelf couplers’ helpful?

Repost from The Missoulian
[Editor: Significant quote: “the cars were rigged with double shelf couplers designed to prevent individual cars from detaching and potentially causing punctures.  ‘This safety feature of the tank cars worked properly, resulting in all 30 cars rolling on their side(s), as designed,’ Lewis said in a written statement.”
Here is more about double shelf couplers.  And note p. 23 of a 2010 Transport Canada study which found that “Double shelf couplers also have disadvantages: sometimes string of ’empty’ tank cars derail.”  – RS]

Montana Rail Link: Trains collide, tank cars derail in Missoula

By Kim Briggeman, December 16, 2014
derailement in Missoula
The first of 30 derailed tank cars in the Missoula rail yard is put back on the tracks Tuesday morning by a Montana Rail Link crew. The stationary tank cars were rerailed after being hit by a loaded car at low speed. Michael Gallacher

An early Tuesday morning train collision in the Missoula rail yard resulted in the derailment of 30 empty tank cars but no injuries or spills.

Montana Rail Link officials said the accident occurred about 4 a.m. when a rail car loaded with company scrap metal made low-speed contact with a stationary empty tank car coupled to 29 others.

MRL spokesman Jim Lewis said the cars were rigged with double shelf couplers designed to prevent individual cars from detaching and potentially causing punctures.

“This safety feature of the tank cars worked properly, resulting in all 30 cars rolling on their side(s), as designed,” Lewis said in a written statement.

Lewis said there was minimal equipment damage. The loaded car did not derail and was moved from the site.

Crews with heavy equipment started putting the tank cars back on track before noon and worked until 8 p.m. They’ll resume Wednesday morning, Lewis said.

Mainline service was not interrupted, and the cause of the incident is under investigation.

MRL has released no further word on its investigation into a collision east of Missoula near the mouth of the Blackfoot River on Nov. 13. That crash resulted in the derailment of three locomotives and 10 empty grain cars.

Both engineers in one locomotive were hospitalized and released. The shells of the grain cars remain along the tracks by a trestle below the former Milltown Dam as salvage work continues.

For safe and healthy communities…