Tag Archives: Canada

Bakken Crude, Blast zone, Crude By Rail, DEIR, Derailment, Explosion, Fire, Risk Assessment, Santa Maria Refinery, Tank car design

New crude oil report concludes risks of train spills are real

Repost from The Sacramento Bee
[Editor: Highly significant development – a must read!  – RS]

New crude oil report concludes risks of train spills are real

By Tony Bizjak, 10/23/2014
A train carrying fuel passes through a Bakersfield neighborhood last summer. The dramatic increase in crude oil shipments around the United States and Canada, often on 100-car trains, has led to several major derailments and fires.
A train carrying fuel passes through a Bakersfield neighborhood last summer. The dramatic increase in crude oil shipments around the United States and Canada, often on 100-car trains, has led to several major derailments and fires. Jose Luis Villegas

Mile-long oil trains that are expected to crisscross California daily in the coming years pose significant risks to residents of urban areas, including Sacramento, a new report concludes, contradicting earlier studies that found no major safety concerns.

The report, issued by San Luis Obispo County officials, is based on a plan by Phillips 66 to transport crude oil on 80-car trains, five days a week, to its Santa Maria refinery, some likely through Sacramento. The authors looked at the cumulative impact of all oil trains that could come through California on a daily basis and came to the conclusion that the risk of oil spills and fires is real, and offered suggestions on how those issues should be addressed.

“Up to seven crude oil trains a day could travel on the stretch of track between Roseville and Sacramento,” the report reads. “The cumulative risk would be significant.”

The analysis, called a draft environmental impact report, contrasts with two recent analyses of similar crude-by-rail projects in Benicia and Bakersfield. Valero Refining Co. in Benicia and Alon USA in Bakersfield are proposing to transport crude oil twice a day on trains into their facilities. The Valero trains would come through downtown Sacramento, Roseville, West Sacramento and Davis, likely on the same tracks as the Santa Maria refinery trains. Some of the Bakersfield-bound trains also may come through Sacramento.

Those reports, issued earlier this summer, concluded the risk of spills and oil fires in Sacramento and other areas is not significant and requires no additional safety steps. Those earlier analyses have been challenged. An environmental group, Earthjustice, has sued Kern County over its Bakersfield project review. Two state safety agencies and the state attorney general have sent letters to Benicia challenging the adequacy of its review of the Valero project.

San Luis Obispo County officials said they decided to go beyond what was done in Benicia and Kern County – breaking new ground in California’s evolving crude-by-rail debate – by conducting a qualitative risk assessment, to understand the ramifications of “reasonable” worst-case oil spill scenarios. The new report is an amended version of an earlier report San Luis Obispo issued last year, which also had been challenged as inadequate.

“We have been trying to keep an eye on what is going on around the state, to understand comments coming in on the Valero project and others, and to take a holistic approach,” said San Luis Obispo County project manager Murry Wilson.

That qualitative assessment takes special note of spill risks in urban areas, saying, “The risk is primarily driven by the high-threat urban areas (Los Angeles, Bay Area and Sacramento) since these are the locations where fairly long stretches of track are in close proximity to heavily populated areas.” A series of tables in the report indicate that injuries and deaths could occur up to a third of a mile from a crash site in urban areas, if there was a tank car rupture and explosive fire.

The report points out that derailments of oil trains are rare. The chances of a train spilling more than 100 gallons of oil en route from the California border in the north state to the Santa Maria refinery are anywhere from one-in-19 to one-in-31 in any given year, depending on the route, the county estimated. Similarly, railroad industry officials say their data show that 99.99 percent of freight trains arrive at their destinations safely.

But the dramatic increase in the last few years of crude oil shipments around the United States and Canada, often on 100-car trains, has led to several major derailments and fires, prompting concerns from cities along rail lines, and federal safety officials. Last year in Canada, a runaway crude oil train crashed in a small town and exploded, killing 47 people, many as they slept. Several other crude oil trains have been involved in dramatic explosions around the country in the past year, prompting evacuations of residential areas.

At the moment, two crude oil trains run to or through Sacramento. One carries highly flammable Bakken crude from North Dakota through midtown Sacramento a few times a month to a distribution facility in the East Bay. Another periodically brings oil to a transfer station at McClellan Business Park in North Highlands. The company that runs the transfer station agreed this week to halt those shipments after air-quality officials concluded they had issued the permit in error.

The daily trains to the Santa Maria refinery, if approved, are expected to travel on both southern or northern routes into the state, starting in 2016, depending on where Phillips decides to buy its U.S.-produced oil. The Northern California route is uncertain east of Roseville. West of Roseville, trains are likely to run through downtown Sacramento, West Sacramento, downtown Davis and through East Bay cities, but also could take a route through Sacramento to Stockton, then west into the Bay Area.

San Luis Obispo County officials, in their report, also went considerably further than officials in Benicia and Kern County on the question of “mitigation” or preventive measures that could be put in place to minimize risks of crashes and spills.

Federal law pre-empts cities, counties and states from imposing any safety requirements on the railroads. San Luis Obispo County officials suggest, however, in their report that the county could try using its permitting authority over the proposed Phillips 66 refinery expansion to require Phillips to sign agreements with the railroads ensuring that the railroads use safer tanker cars than those currently in use, and employ better train-control computer technology than is currently in place.

An expert on railroad law told The Sacramento Bee this week that a court likely would have to decide if such a move is legal. “The federal pre-emption of the local regulation of railroads is very strong, about as strong a pre-emption as exists,” said attorney Mike Conneran of the Hanson Bridgett law firm in San Francisco. “It makes sense. You can’t have a different rule every time a rail car pulls into another state or city.”

“I can see there being a (legal) fight on that,” he said. “It is pretty close to the line in telling the railroad what to do. On the other hand, the county is putting the obligation on the refinery, not the railroad. I think the real question may come down to whether such a mitigation measure is feasible if the refinery can’t force the railroad to comply.”

If San Luis Obispo officials determine that they cannot feasibly mitigate for the Phillips 66 project’s potential hazards, the county can still approve the project, in accordance with California law, if county leaders adopt a “statement of overriding considerations,” saying that the project’s benefits outweigh the adverse effects.

Sacramento-area representatives, who have criticized Benicia’s review of its Valero project as inadequate, say they have not yet reviewed the San Luis Obispo analysis.

“We’ll do a similar analysis to what we filed with Benicia,” said Steve Cohn, chair of the Sacramento Area Council of Governments. He said San Luis Obispo’s determination that a train could spill here and cause significant damage is logical, but he wondered what proposed safety measures follow from that conclusion. “We’ll have to take a look,” he said.

It is uncertain at this point whether all of the crude oil train transport projects being proposed in California will actually be built. And, if they are, it’s uncertain still how many of them will route their trains through Sacramento and Northern California. The shipments will come from oil producing areas in North Dakota, Texas, Colorado and other states, as well as Canada.

Benicia officials did not respond to questions from The Bee for comment about their environmental analysis of the Valero project.

Notably, both Benicia and San Luis Obispo based a portion of their reports on analysis by an Illinois professor, Christopher Barkan, who also does work for a major rail industry lobbying group. Barkan’s methods of determining the potential frequency of oil spills have been questioned by state safety officials. Barkan has declined to speak to The Bee.

Barkan estimated that a spill from a Phillips 66 train between Roseville and Santa Maria might happen once in 46 years if the trains use the Altamont Pass and once in 59 years if the trains use the tracks along the Interstate 80 corridor. Those numbers appear to be based on trains using the best available tanker cars.

Canada, Derailment, Explosion, High Hazard Flammable Trains (HHFTs)

History lesson: five Canadian train disasters

Repost from The Winnepeg Free Press

Trending that caught Doug’s eye: Canadian rail disasters

By: Doug Speirs, 10/11/2014
Bill Sandford / The Canadian Press filesA derailment in Mississauga caused explosions and the release of chlorine gas. More than 250,000 people fled. At the time, it was North America�s largest-ever peacetime evacuation.
A derailment in Mississauga caused explosions and the release of chlorine gas. More than 250,000 people fled. At the time, it was North America�s largest-ever peacetime evacuation. CP – Bill Sandford / The Canadian Press files

As train derailments go, it was something to see.

Last Tuesday, a 100-car CN freight train carrying dangerous goods derailed in central Saskatchewan, sending plumes of thick black smoke billowing into the sky and forcing residents of a nearby hamlet to flee.

One day later, the residents of Clair, a small community of 50 people about one kilometre from the crash, and surrounding farms were allowed to return home.

CN says 26 cars jumped the track, including six containing hazardous materials, and the spectacular fireball erupted from two cars carrying petroleum products.

The publisher of the Wadena News said she’d never seen anything like it in her 13 years in the area. “I’ve seen derailments, but this is a pretty bad one,” Alison Squires told The Canadian Press. “You could see… this huge plume of black smoke.”

What Canadians may not realize is there are hundreds of train collisions, accidents and derailments every year on the nation’s railways. Like the latest incident, most don’t result in injury or death, but they can be alarming.

Last month, the mayor of Slave Lake, Alta., called on Ottawa to do more to ensure his town’s safety after the sixth derailment in about four months. Two trains go through the town each day, pulling 56,000 cars loaded with dangerous goods annually. Sadly, our history is rife with horrific train accidents, including this five-pack of disasters:

5) The date: Nov. 10, 1979
The disaster: The Mississauga Evacuation

The details: A derailment doesn’t have to be deadly to be devastating. Just before midnight on Remembrance Day 1979, a 106-car freight train packed with explosive and poisonous chemicals pulled out of the local marshalling yards when, thanks to an overheated bearing, a set of wheels fell off, sparking a derailment near the intersection of Dundas Street and Mavis Road. According to Heritage Mississauga’s website, one of the tanker cars was filled with 90 tonnes of chlorine, while 39 more cars carried butane, propane, toluene, styrene and other highly flammable materials. A witness later recalled seeing a red-hot set of wheels from the train cartwheel 50 feet through the air and crash in her backyard. Several cars filled with propane exploded, sending up a fireball that could be seen 100 kilometres away. Every available bit of firefighting equipment was sent to the blaze. With the possibility of a deadly cloud of chlorine gas spreading throughout suburban Mississauga, more than 250,000 residents were forced to flee in what was North America’s largest peacetime evacuation until hurricane Katrina walloped Louisiana in 2005. Recalled Mayor Hazel McCallion: “If this had happened a half-mile farther down the track — either east or west — we would have seen thousands of people wiped out. It’s a miracle it happened here.” Six days later, residents were allowed to return. Amazingly, no one was reported killed.

4) The date: March 12, 1857
The disaster: The Desjardins Canal Derailment

The details: Ten years before we formally became a country, a Great Western Railway passenger train met a grisly end when a broken axle caused it to jump the tracks and crash through the deck of a timber suspension bridge over the frozen canal outside Hamilton. Here’s a gripping historical account from the archives of the Hamilton Public Library: “The chasm, 60 feet deep, over which this bridge was erected, was made by cutting an outlet for the canal through Burlington Heights. At the time of the accident, the water was covered with ice about two feet thick… The engine and tender crushed at once through the ice. The baggage car, striking the corner of the tender in the act of falling, was thrown to one side and fell some 10 yards from the engine … As far as we can yet learn, everyone in the first car was killed; those who were not crushed being drowned by the water, which nearly filled the car.” A Hamilton railway worker later recalled seeing “the steam suddenly stop, and a sort of dust arise. In a second, there was no train to be seen.” Rescuers raced to the scene, but struggled to reach the wounded because snow coated the embankments leading down to the canal. The tragedy killed 59 of the 100 passengers on board and injured at least 18.

3) The date: Sept. 1, 1947
The disaster: The Dugald Rail Crash

The details: For Manitobans, Labour Day weekend in 1947 will forever be remembered as the date of the worst rail disaster in Western Canada’s history. According to a 2006 report by Free Press writer Bill Redekop, it was around 9:45 p.m. when the engineer of the Minaki Special, travelling at about 75 miles per hour, missed a signal to pull over and slammed into a transcontinental from Winnipeg, which was parked in Dugald waiting for the oncoming train to pull over onto a siding. As Redekop reported, the crash killed 31 people and injured 85, with two victims being decapitated and many others dying in an inferno that quickly spread to a nearby elevator full of wheat. The glow from the blaze could be seen from downtown Winnipeg, 24 kilometres away. The deaths and injuries were in the Minaki train, composed mainly of old wooden, gaslit passenger cars that burst into flames after toppling from the tracks. The special was carrying cottagers, who had just closed their cabins for the summer, and children returning from camps. With few ambulances available, heroic Dugald residents used signs, billboards and doors as stretchers, and a local farmer used his tractor to pull two cars away from the train so they wouldn’t catch fire. At the time, a Free Press night reporter, driving around monitoring his scanner, beat police to the horrific scene. In 2007, a marker was unveiled to commemorate the disaster.

2) The date: July 6, 2013
The disaster: The Lac-Mégantic nightmare

The details: Given its massive media exposure, this is likely Canada’s most famous rail disaster and the one with the most widespread impact, spurring tighter regulations for the transport of dangerous goods. In the early-morning hours, a runaway Montreal, Maine and Atlantic Railway train carrying 7.7 million litres of a particularly combustible crude oil hurtled into the Quebec town, where it derailed and exploded, causing fires that killed 47 people and destroyed the town’s downtown core. The fires burned for days. The victims were mostly identified by DNA samples and dental records. The horror began when, just before midnight, the train was parked on a downward slope with one motor running to power the air brakes. When an engine fire erupted, forcing fire crews to shut down the engines, the air-brake system eventually failed. An insufficient number of hand brakes had been set by the engineer, and the train hit Lac-Mégantic travelling at 105 km/h. One Wednesday, a Quebec coroner released 47 reports — one for each person who died — with each stating: “This is a violent death. This death was preventable, or avoidable.” Three employees of the railway face 47 charges of criminal negligence causing death. The company also faces charges.

1) The date: June 29, 1864
The disaster: The St-Hilaire Horror

The details: It happened a few years before Confederation but remains Canada’s deadliest rail accident. A Grand Trunk train carrying between 354 and 475 passengers — many newly arrived German and Polish immigrants seeking a new life — was travelling from Quebec City to Montreal when, around 1:20 a.m., it approached a swing bridge over the Rivière Richelieu near modern-day Mont-St-Hilaire. The bridge had been opened to allow five barges and a steamer ship to pass, and a red light a mile ahead signalled for the train to slow down because the crossing was open. Tragically, for whatever reason, the conductor and the engineer failed to see the light. As a result, the engine and 11 coaches, with most of the passengers likely asleep, fell through the gap, one atop the other, crushing a passing barge and sinking into the river. An astonishing 99 people were believed killed and 100 injured in our worst rail disaster, including the conductor, though recently hired engineer William Burnie managed to escape with minor injuries. Online reports state he later claimed he was unfamiliar with the route and had not seen the signal.

As Canadians, we know our nation was forged with the might of giant locomotives, but we too often forget how quickly, and tragically, life can go off the rails.

Big Oil, Climate Change, Coal industry, Fossil fuels, Green Industrial Revolution, Oil Industry

Grant Cooke: Big Oil’s endgame: While fossil fuel costs keep rising, renewable costs fall

Repost from The Benicia Herald
[Editor: Benicia’s own Grant Cooke has written a highly significant three-part series for The Benicia Herald, outlining the impending fall of the fossil fuel industry and concluding with good advice for the City of Benicia and other cities dependent on refineries for a major portion of their local revenue stream.  This is the second of three parts.  Read part one by CLICKING HERE and part three by CLICKING HERE.  – RS]

Grant Cooke: Big Oil’s endgame: While fossil fuel costs keep rising, renewable costs fall

October 4, 2014, by Grant Cooke

Grant Cooke, Benicia, California“The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.” — Sheikh Ahmed-Zaki Yamani

THREE KEY FACTORS WILL PUT TO REST the fossil fuel industry and make the good Sheikh Yamani’s prediction come true. Two of them are discussed here.

The first is that the carbon emitters will be held accountable and made to pay for using the atmosphere as a garbage can. While still struggling to price the cost of pollution, most nations, as well as California, have come to realize that the heavy carbon emitters need to pay for the damage they have done. A cap-and-trade process is the first method to hold the emitters accountable. While imperfect and not nearly as effective as a straight carbon tax, this system is growing throughout the world. The European Union’s program, which started several years ago and was described by the fossil fuel interests as failing, is now deemed a success. It has become an established part of European culture and corporate practice. Various nations such as Australia, New Zealand, Canada, Korea and China have developed cap-and-trade programs as well.

California’s own program continues to grow, and our carbon offsets are tradable in parts of Canada as well. As it gains momentum, other states are watching California’s program and thinking about adopting their own. Impoverished state governments see cap-and-trade programs as a boon to their environment and a way to garner vital tax revenues. Since increases in personal income tax are so unpopular, cap-and-trade is seen as a way to bring new money into state treasuries without risking voter rebellions.

The pressure to make the major carbon emitters pay for their pollution is coming from the agreements made at the 2012 UN Conference on Climate Change in Doha, Qatar. At this conference world governments consolidated the gains of the last three years of international climate change negotiations and opened a gateway to greater ambition and action. Among the decisions was to concentrate on a universal climate agreement by 2015, which would come into effect in 2020. The 2015 conference will be held in Paris, and world governments are expecting much greater cooperation and agreement on carbon-reduction policies from the U.S. and other major emitters.

The world is slowly accepting the reality that the mitigation of climate change is a massive problem. A 2012 report by Climate Vulnerable Forum estimated that more than 100 million people will die and the international economy will lose out on more than 3 percent of GDP ($1.2 trillion) by 2030 if the world fails to tackle climate change. But because governments don’t want to use their funds for environmental cleanup and climate change mitigation, it will be the heavy emitters like the oil, coal and utility companies that will pay.

This cost for carbon cleanup, added to the increasing costs of extracting hard-to-get fossil fuel resources, will hit the oil industry hard. A 2013 Harvard University report showed that the cost externalities from coal were about 18 cents per kilowatt hour. Most U.S. end-users who rely on coal-generated electricity pay about 10 cents per kWh. If the external costs were added, those users would pay closer to 30 cents per kWh — which would severely impact those users’ lifestyles.

Grid parity

The second major factor hastening the end of today’s megalithic fossil fuel industries is “grid parity.” Grid parity is a technical term meaning that the cost to a consumer for electricity from a renewable source (without subsidies) is about equal to the cost from a traditional source — be it fossil fuel or nuclear. The Germans used grid parity to price their feed-in-tariff program, or FiT, that launched Energiewende.

Simply put, with PGE’s 2014 rate increase a Benicia resident or small commercial consumer pays about 20 (19.9) cents per kWh for electricity from traditional sources. If that same kWh came from a renewable source and cost the consumer an equal 20 cents, then the renewable source would be at “parity,” or equal to the cost of the traditional generation source.

However, the cost of traditional energy is rising, driven by higher extracting costs, increasing maintenance costs for natural gas pipelines and increases in operating cost at nuclear power plants. At the same time the costs for renewable energy — wind, solar photovoltaic and biowaste fuels — are declining.

The costs for wind generation have been and still are the lowest. However, the costs for solar are declining rapidly as its use spreads. Deutsche Bank reported in January 2014 that there were 19 regions around the world where unsubsidized PV solar power costs were competitive with other forms of generation. In fact, PV competes directly in price with oil, diesel and liquefied natural gas in much of Asia. This equality of costs with fossil fuel and natural gas is creating a worldwide solar boom in 2014-15.

In the U.S., almost 30 percent of last year’s added electricity capacity came from solar. In Vermont and Massachusetts, almost 100 percent added capacity came from solar. According to the U.S. Solar Energy Industries Association, more solar was installed in the U.S. in the past 18 months than in the last 30 years. Solar PV technology, which has been helped by the U.S. military, is improving so fast that it has achieved a virtuous circle.

As described by New York’s Sanford and Bernstein investment bank, we have entered an era of “global energy deflation.” This ratcheting down of energy costs may be slow to start, but as they argue, the fossil fuel-dominated energy market will experience a major decline in costs over the next decade. The market is entering a new order that will erode the viability of oil, gas and the fossil fuel continuum.

The report argues that the adoption of solar in developing markets will translate into less demand for kerosene and diesel oil. The adoption of solar in the Middle East means less oil demand, and the adoption of solar in China and developing Asia means less liquefied natural gas demand. Further, distributed solar in the U.S., Europe and Australia will likely reduce demand for natural gas.

They reason that while solar has a fractional share of the current market, within a decade solar PV and related battery storage may have such a large market share that it becomes a trigger for energy price deflation, with huge consequences for the massive fossil fuel industry that is dependent on continued growth.

Even the Saudis are betting on solar, investing more than $100 billion in 41 gigawatts of capacity, enough to cover 30 percent of their power needs by 2030. Most of the other Gulf states have similar plans.

Grant Cooke is a long-time Benicia resident and CEO of Sustainable Energy Associates. He is co-author, with Nobel Peace Prize winner Woodrow Clark, of “The Green Industrial Revolution: Energy, Engineering and Economics,” to be released in October by Elsevier.

Crude By Rail, Derailment, Explosion, Massive increase in crude-by-rail, Oil Industry, Pipeline transport, Rail industry

Wall Street Journal: Dangers Aside, Railways Reshape Crude Market

Repost from The Wall Street Journal [Editor: A good summary of recent history and market players in the emergence and future of crude by rail.  Interesting quote: “…if all the railcars loaded with crude on one day were hitched to a single locomotive, the resulting train would be about 29 miles long.” – RS]

Dangers Aside, Railways Reshape Crude Market

Shipping Crude by Rail Expands as New Pipelines Hit Headwinds and Train Companies Reap Revenue
By Russell Gold and Chester Dawson, Sept. 21, 2014
Railroad tank cars are filled with oil at the Musket Corp. Windsor Crude Terminal in Windsor, Colo. | Bloomberg

In May 2008, a locomotive with a grizzly bear painted on its side pulled into a railroad siding next to an abandoned grain elevator in the ghost town of Dore, N.D. The engine, property of the Yellowstone Valley Railroad, hitched up a couple of tank cars of crude from nearby oil wells and set off on a thousand-mile journey to Oklahoma.

Dore would never be the same—and neither would the U.S. energy industry. Until then, most oil pumped in North America moved around the continent in pipelines. Suddenly, and just as the oil industry began a period of unprecedented growth, there was an alternative: “crude by rail.”

Today, 1.6 million barrels of oil a day are riding the rails, close to 20% of the total pumped in the U.S., according to the Energy Information Administration, chugging across plains and over bridges, rumbling through cities and towns on their way to refineries on the coasts and along the Gulf of Mexico. If all the railcars loaded with crude on one day were hitched to a single locomotive, the resulting train would be about 29 miles long.

Initially conceived of as a stopgap measure until pipelines could be constructed, and plagued by high-profile safety problems, crude by rail has nevertheless become a permanent part of the nation’s energy infrastructure, experts say. Even pipeline companies have jumped into the rail business, building terminals to load and unload crude.

Behind the new industry are powerful economics. While it costs a bit more to ship petroleum on trains than through pipelines, railroads have the flexibility to deliver it to wherever it will fetch the highest prices. And capital expenses are far lower. Major railroads’ revenue for hauling crude has jumped from $25.8 million in 2008 to $2.15 billion in 2013, according to federal data.

The oil and rail industries have developed “a mutual dependence likely to continue for a long time,” said Ed Morse, global head of commodities research for Citigroup.

It is a similar story in Canada: the amount of crude moving by rail has quadrupled since 2012, and is forecast to more than triple between now and 2016.

The swift growth of crude by rail has been embraced by drillers in new oil fields in North Dakota, Texas and Colorado eager to move their product to the highest bidders. It was also welcomed, at least initially, by railroads looking for new customers after the recession sent traditional shipments tumbling.

But it has frightened communities across the country where first responders fear the fireballs that have erupted in the past year after some oil-train derailments. Federal regulators recently proposed new rules to require sturdier cars to carry oil, lower speed limits on some shipments and testing of the volatility of the crude transported by train.

Pipelines still carry most of the 8.5 million barrels of oil pumped every day in the U.S. And safety experts say pipelines have the best record of transporting crude without accident, despite a few big leaks like the one that left Mayflower, Ark., awash in heavy crude last year.

But pipelines, especially new pipelines, face a lot of problems these days. They draw protests from communities worried about spills and unhappy with the use of eminent domain to take rights of way from local landowners.

Activists opposed to the use of fossil fuels have focused on blocking pipelines in hopes of keeping oil in the ground. The Keystone XL pipeline, which requires federal approval because it crosses the U.S. border from Canada, has been seeking a permit since 2008 amid fierce political fighting, pro and con.

Railroads, by contrast, already own 140,000 miles of track in the U.S., according federal statistics, in a system that can send cargo from coast to coast, north to Canada and south to Mexico. By law, railroads don’t have the ability to turn down cargo, even if they want to, so all oil shippers had to do is to figure out how to get oil on and off the trains.

A big loading terminal might cost about $50 million—equal to the estimated cost of building just one mile of the Keystone pipeline.

With a terminal, “You can build it and have it under contract in 12 months and pay it off in five years,” said Steve Kean, president and chief operating officer of Kinder Morgan Inc., the operator of 80,000 miles of pipeline in North America and a growing network of rail terminals. The company has spent $290 million to date building up a crude-by-rail business.

To justify the massive investments needed for pipelines, their builders usually require drillers and refiners to sign long-term shipping contracts before they start laying pipe. That has been a problem for new oil fields without a track record, and for the mostly independent energy companies that developed those fields using hydraulic fracturing, said Adam Sieminski, who runs the federal government’s Energy Information Administration. Railroads don’t require such lengthy contracts.

The new way of moving crude was born out of frustration and need. In 2006, North Dakota faced what it called, in a report, a “crude oil transportation crisis.” Oil production was rising, but the few pipelines that served the state were full.

Enter Musket Corp., a privately held Houston company owned by the family that also owns Love’s Travel Stops & Country Stores. Musket bought inexpensive diesel from refineries along the Gulf Coast and moved it by rail to locations close to the Love’s service stations, developing and patenting a portable pump for loading and unloading the fuel.

In 2007, Musket tried using its pump to load a couple of tank cars with crude oil rather than diesel. When that worked, the company sent employees driving around North Dakota with binoculars to find an unused railroad siding to lease. They spotted Dore.

“Pretty soon, we knew it was going to be big,” said J.P. Fjeld-Hansen, a managing director of Musket. Trains could deliver Bakken crude to wherever it could fetch the highest prices, including Philadelphia, California, Louisiana or the giant Houston petrochemical complex.

The first loads from Dore were carried to Oklahoma, home to a giant oil-trading hub, by BNSF Railway Co., now owned by Berkshire Hathaway Inc.  It picked up the cars from Yellowstone Valley Railroad, a so-called short line railroad that now operates on just one mile of track — specializing in hauling freight from shippers’ yards to connections with the bigger railroads. The company that owns the railroad, Watco Companies Inc., didn’t respond to requests for comment.

“Crude is a growing part of our business,” said Michael Treviño, a spokesman for BNSF, which now moves more oil than any other major North American railroad and spent $200 million last year on crude-by-rail projects.

The Dore project caught the attention of EOG Resources Inc., a big oil and gas company based in Houston. By the end of 2009, EOG had built an industrial-scale rail-loading terminal in Stanley, N.D., including a 1.3-mile loop of track where trains could be loaded with 60,000 barrels a day.

“We brought the project to fruition in an eight-month period,” Mark Papa, the former chairman of the company, said in a conference call with analysts in 2010. The company declined to comment.

The terminal cost $50 million, according to Wilson & Company Inc., an engineering firm involved in the project. Its chairman, Kenny Hancock, said his firm needed to work out kinks with this first-of-its-kind facility.

One problem was that when tank cars were loaded, hydrocarbon fumes would leak out and, since they were heavier than air, settle in the long open-ended loading shed. “The first seal we tried didn’t work and our explosive limit alarms went off,” he said. New seals and ventilation fans eventually solved the problem, the company said.

The relative ease and low cost of building loading and unloading terminals soon attracted a range of companies. Great Western Railroad, a Saskatchewan short line mostly owned by the province’s farmers in a cooperative agreement, hauled more carloads of crude last year than carloads of grain.

In 2011, Dakota Plains Holding Co. built a loading terminal, acquired a Utah tanning salon business that traded on the OTC Bulletin Board, renamed the business and issued shares to raise funds to expand.

By the end of 2013, there were 13 large rail loading facilities in the state, according to the North Dakota Pipeline Authority. The largest, the Bakken Oil Express outside Dickinson, N.D., can handle 200,000 barrels a day.

There was also a surge in facilities for unloading oil and transferring it to refineries; such terminals are operating or planned in nearly two dozen states and Canadian provinces. Mile-long trains of oil tankers became familiar sights in cities across the country.

The crude-by-rail phenomenon has spread beyond the Bakken Shale in North Dakota and Montana to the Permian Basin in Texas, the Niobrara in Colorado and to western Canada. In July, Global Partners said they planned to build a rail terminal in the heart of the Gulf Coast petrochemical complex that can handle more than 100,000 barrels a day of crude, including Canadian oil sands.

“It is not a layup to build a pipeline to the Gulf Coast,” said Mark Romaine, chief operating officer of Global Partners, a Waltham, Mass., fuel logistics firm. “Look at the Keystone XL.”

But a year ago, those strings of black train cars took on an ominous look after an unattended oil train in Lac-Mégantic, Quebec, derailed and exploded, killing 47 people. Several other derailments were followed by fireballs as Bakken crude burst into towering flames.

Those accidents have given railroads second thoughts about hauling crude, said consultant Anthony Hatch. While companies don’t break out the data, hauling crude is believed to be very profitable for railroads, so “they were excited” at first, he said. But now that business, which makes up only about 3.5% of rail shipments, according to federal data, has attracted unwelcome attention in communities that previously ignored the freight trains rumbling through town. And even some of the largest North American railroads are concerned they might not survive the costs of cleanup and lawsuits if a train exploded in a crowded city.

Regulators are imposing new rules that industry executives fear could slow the entire rail system, cut capacity and cause congestion. Federal regulators recently concluded that Bakken oil contains a high level of combustible compounds, known as light ends, as The Wall Street Journal reported earlier this year. The U.S. Department of Transportation’s proposed new rules on crude by rail will require companies to test crude before putting it into appropriately sturdy tank cars, among other measures being imposed on the little-regulated industry.

Harold Hamm, chairman and chief executive of Continental Resources Inc., a leading exploration and production company in the Bakken, said that the problem isn’t with the oil, but with railroad safety. “There would not be any problems with oil movements in America as long as Mr. Buffett keeps the trains on the track,” said Mr. Hamm, referring to Warren Buffett, the chairman and chief executive of Berkshire Hathaway, the owner of BNSF.

Mr. Treviño, the BNSF spokesman, said that “the facts are that 99.997% of rail industry shipments of hazardous materials reach their destination without a release caused by a train accident,” and that BNSF had a lower percentage of derailments last year than anytime in company history.

Two BNSF trains were involved in a derailment near Casselton, N.D., in 2013 that released more than 400,000 gallons of crude and set off a several-story tall explosion, leading to the evacuation of 1,400 people from Casselton.

The Association of American Railroads said it has increased inspections, decreased speeds and is using more technology to prevent derailments.

But Mr. Hamm said he thinks the situation will be short lived. “Rail is still a temporary thing,” he said. “If rail hadn’t been available, there would have been pipelines built.”

And some are in the works.  Enbridge Inc. recently received approval form North Dakota regulators to start construction on a $2.6 billion, 225,000-barrel a day and 600-mile project called the Sandpiper pipeline, which would move oil from Tioga, N.D., to Wisconsin.

In Dore, Musket says it isn’t worried about business drying up with the addition of pipelines. The company’s terminal in the town can now handle 60,000 barrels a day and employs 50 people; the company has built another rail-loading facility in Dickinson, a two-hour drive to the south, and one in the Niobrara Shale in Colorado.

“I don’t think it’s either/or,” Mr. Fjeld-Hansen said. “I think rail and pipe will coexist for a long time.”

—Betsy Morris and David George-Cosh contributed to this article.