Repost from ABC News [Editor: Significant quote: “…even with oil prices falling off a cliff, industry analysts and railroad executives point out that crude shipments still make up just a sliver of the overall freight delivered by rail. What’s more, because fuel is such a huge cost in the industry, railroads are a direct beneficiary of those falling prices.” – RS]
Low Oil Prices Unlikely to Hurt Railroads Much
By Josh Funk, AP Business News, Jan 5, 2015
The stunning collapse in oil prices over the past several months won’t derail the railroads’ profit engine even if it does slow the tremendous growth in crude shipments seen in recent years.
Carloads of crude oil spiked well over 4000 percent between 2008 and last year — from 9,500 carloads to 435,560 — as production boomed and the cost for a barrel of oil soared into the triple digits.
Those prices have tumbled severely, to just above $50 per barrel Friday, and that has rattled some of the investors who have plowed money into companies like Union Pacific, Norfolk Southern and CSX.
All three of those companies have seen their stock prices slip over the past month, along with major U.S. stock markets.
But even with oil prices falling off a cliff, industry analysts and railroad executives point out that crude shipments still make up just a sliver of the overall freight delivered by rail. What’s more, because fuel is such a huge cost in the industry, railroads are a direct beneficiary of those falling prices.
Crude oil shipments remain less than 2 percent of all the carloads major U.S. railroads deliver. Sub-$60 oil might force producers to rein in spending but railroads ? which spend hundreds of million of dollars every quarter on fuel? will see their costs fall away.
Those falling energy prices have also proven to be the equivalent of a massive tax cut for both consumers and businesses, and railroads stand to benefit from that as well.
Fueled by a rebounding employment as well as rising consumer and business confidence, U.S. economic growth reached a sizzling 5 percent annual rate last quarter, the government reported this month. The rebounding economy is likely to drive even greater demand for shipping.
Edward Jones analyst Logan Purk says the importance of crude oil shipments by rail seems to have been inflated by investors.
“It seems like whatever loss in business they see will be offset by the drop in fuel costs,” Purk said.
The crude oil business has provided a nice boost for railroads at a time when coal shipments were declining. Profits at the major U.S. railroads have been improving steadily along with the economy, reaching $13.4 billion in 2013, up from $11.9 billion in 2012 and $10.9 billion in 2011.
Officials from Union Pacific Corp, Norfolk Southern Corp., CSX Corp. and Canadian Pacific all tried to reassure investors about crude oil shipments during their latest investment conferences.
“I don’t think that we are going to see any knee-jerk reaction. I don’t think we are going to see anything stopped in the Bakken,” said Canadian Pacific CEO Hunter Harrison said of the massive oil and gas fields that stretch from North Dakota and Montana into Canada.
The Bakken region is one of the places where railroads are hauling the majority of the oil because pipeline capacity hasn’t been able to keep up with production.
Through the fall, North Dakota oil drillers remained on pace to set a sixth consecutive annual record for crude oil production.
Justin Kringstad, director of the North Dakota Pipeline Authority, said the lower prices will prompt oil companies to look for ways to reduce costs, but he’s not yet sure how much of an effect it will have on production in the region.
“It’s still a little early to make any firm assessments,” Kringstad said.
Repost from WANE-TV, Fort Wayne, IN [Editor: Significant quote by Auburn Indiana Fire Chief Mike VanZile: “’Defensively, to let something burn is usually the safest for the environment. If we start adding a bunch of foam, a bunch of water to a product and it goes into city sewers, lakes, streams, rivers, waterways, the environmental impact could last for years,’ VanZile explained. ‘If it’s one car involved, we would have the resources to help start putting that fire out. If it’s multiple cars, we don’t have close to the resources to do that.’”
Evacuations likely if an oil train derails
By Adam Widener, November 13, 2014
FORT WAYNE, Ind. (WANE) – Northeast Indiana is a major corridor for railroads. It’s no stranger to hazardous shipments and derailments. One particular product is traveling through at increasingly high rates: crude oil.
Explosive and even deadly derailments have recently brought oil train concerns into the national spotlight. It’s a scenario first responders are preparing for now, more than ever.
If an oil train catches fire, the emergency response plan includes evacuating homes and letting the trains burn out, instead of fighting the blaze.
More crude oil produced in North Dakota is being shipped through northeast Indiana and across the U.S. Since the beginning of 2013, there have been at least 10 major oil train derailments in the U.S. and Canada. One incident in Quebec killed 47 people.
Northeast Indiana isn’t exempt from train derailments. In September, a Norfolk Southern train derailed just east of New Haven. Fortunately, most of the tank cars were empty. Officials said no chemicals or hazardous materials spilled.
Serious hazmat incidents
Other areas across the state haven’t been as fortunate. 15 Finds Out looked up records with the Pipeline and Hazardous Materials Safety Administration (PHMSA). They state there have been six “serious” hazmat incidents on Indiana railroads since January 1, 2010. Fortunately, none involved crude oil.
One of the worst accidents happened in Ligonier in March of 2012. More than 200,000 pounds of molten sulfur spilled when a Norfolk Southern train derailed. Some of it caught fire and more than 100 people from 56 homes had to be evacuated because of the toxic plume of smoke.
Other areas impacted include:
Portage – 6/6/10: A CSX train derailed and spilled 22,000 pounds of Polymeric Beads in super sacks
Oakland City – 6/1/12: A mixed freight train derailed and spilled 16,424 gallons of ethanol. It caused $876,000 in damage
Avon – 10/5/13: A CSX train leaked 0.1 gallons of hydrochloric acid
Westville – 1/6/12: Three trains collided, caught fire, and spilled almost two gallons of flammable alcohols. 54 people were evacuated.
Hammond – 12/28/11: An Indiana Harbor Belt train derailed and spilled 150 gallons of diesel fuel
More than 200,000 pounds of molten sulfur spilled when a Norfolk Southern train derailed in Ligonier in 2012.
But what if the incidents had involved crude oil? Michael “Mick” Newton, Noble County Emergency Management Director, handled the Ligonier incident. He said the local response would be similar no matter what hazardous material derails.
Emergency crews plan to call railroad leaders, who will respond to clean up the derailment. They will also immediately get people out of the “danger area,” which could include anyone living near the toxic plume of smoke.
Newton exclusively showed 15 Finds Out an app EMA directors would use in the case of a derailment and toxic fire.
“This program gives us an idea how far, worst case scenario, to evacuate,” Newton explained. One oil train simulation had evacuations up to five miles away from the potential derailment.
Auburn Fire Chief Mike VanZile said his team has recently trained more on crude oil derailments than ever before. He said if an oil train derailed and caught fire, his crews will have to let it burn.
“Defensively, to let something burn is usually the safest for the environment. If we start adding a bunch of foam, a bunch of water to a product and it goes into city sewers, lakes, streams, rivers, waterways, the environmental impact could last for years,” VanZile explained. “If it’s one car involved, we would have the resources to help start putting that fire out. If it’s multiple cars, we don’t have close to the resources to do that.”
With a greater number of oil trains traveling through places like Fort Wayne, Auburn, and Garrett, federal officials say the risk for these extreme responses is growing.
Newton made it clear that he’s not overly concerned by the rising number of oil trains traveling through his county. But when asked for the worst case scenario, he said, “If it were to happen here in the town of Albion or in a community, that would be my worst nightmare because the area we would have to evacuate.”
Repost from WANE TV15 – Fort Wayne, Indiana [Editor: Regarding railroad hazmat notification … significant quote by a County Emergency Management Director in Indiana: “The first I heard about it was from you. I believe if the state was aware of that, I would have that information.” Excellent video on this 2-month investigation. Apologies for commercial content on the video…. – RS]
Through Your Backyard
By Adam Widener, October 30, 2014
FORT WAYNE, Ind. (WANE) – The volume of crude oil being shipped via railroads is rising across the country. Much of it comes from North Dakota and is heading for the east coast. It’s a path that funnels millions of gallons directly through northeast Indiana every week.
The U.S. Department of Transportation said the increase in crude-by-rail poses a greater risk for incidents and recently ordered railroad companies to tell each state where and how often trains are hauling large amounts of the energy product. Federal officials cited several oil train derailments in the U.S. and Canada as a reason for the order.
But some emergency responders in northeast Indiana had no idea about the growing threat traveling through their backyard, until 15 Finds Out began asking questions.
Energy independence
To understand the severity of that communications gap, one must first understand the reason for the rising number of oil trains. More and more petroleum crude oil is being drilled at the Bakken Shale formation in North Dakota. Rail companies say it’s traveling to refineries in high quantities via the most economical option: rail.
“There’s an important development happening in this country and it’s happening here in this community,” said Dave Pidgeon, public relations manager for Norfolk Southern Corp. “We are moving towards greater energy independence.”
A fireball shoots into the air following a deadly oil train explosion in Lac-Megantic, Quebec, Canada in 2013.
On April 30, a CSX train carrying 105 crude oil tank cars derailed in Lynchburg, Virginia. The highly flammable crude oil caught fire. Emergency crews evacuated 350 people from their homes. Up to 30,000 gallons of petroleum crude oil spilled into a nearby river.
The most notable oil train derailment happened in Lac-Mégantic, Quebec, Canada on July 5, 2013. An unmanned, runaway oil train carrying crude oil derailed, exploded, caught fire, and killed 47 people. 2,000 people had to be evacuated from the town.
“Imminent hazard”
The dramatic rise in oil trains combined with recent derailments caused the USDOT to file an emergency order in May. Federal officials cited an “unsafe condition” or “unsafe practice” for crude-by-rail causing an “imminent hazard.”
The DOT ordered railroad companies to begin reporting to each state’s Emergency Response Commission. Beginning in June, railroads were to tell state officials the expected movement and frequency of trains transporting 1 million gallons or more of crude oil from North Dakota.
Norfolk Southern Corp. and CSX Transportation have lines in northeast Indiana. A media spokesperson for each company said they’re following the emergency order.
“We share information with the state emergency management services across our network,” said Tom Livingston, CSX’s regional vice president for government affairs in the Midwest.
“Be as well-informed as possible”
The emergency order makes other important recommendations. It says state and local first responders should “be as well-informed as possible as to the presence of trains carrying large quantities of Bakken crude oil” in their area. That way, they have “reasonable expectations” to “prepare accordingly for the possibility of an oil train accident.”
15 Finds Out uncovered that wasn’t the case for some first responders in northeast Indiana. On October 1, 15 Finds Out spoke with Michael “Mick” Newton, emergency management director for Noble County. At the time, Newton had never heard of the emergency order and didn’t know about the increase in crude-by-rail in his county.
“The first I heard about it was from you,” Newton said. “I believe if the state was aware of that, I would have that information.”
15 Finds Out obtained proof that the Indiana Department of Homeland Security (IDHS) actually did have that information and delayed passing it along. I-Team 8 at our sister station, WISH-TV in Indianapolis, recently got a copy of an email sent to several emergency management directors across northern Indiana.
The email included Norfolk Southern’s oil train route maps and how many of its oil trains travel through 12 northern Indiana counties with more than 1 million gallons every week.
Norfolk Southern sent IDHS that information in a letter dated June 3, 2014. But IDHS didn’t forward it to EMA directors until October 8, ironically after 15 Finds Out and I-Team 8 began asking questions.
The Federal Railroad Administration has noted those crude-by-rail stats are public. Still, IDHS denied a request for copies and said that information could hurt public safety by creating a vulnerability to terrorist attacks.
Millions of gallons “through your backyard”
Northfolk Southern weekly shipments: Click image to see full-screen graphic.
Because of legal concerns, 15 Finds Out is not releasing Norfolk Southern’s oil train exact routing maps. Noble and DeKalb Counties have 13 to 24 trains carrying a million gallons or more of crude oil every week. Whitley and Allen Counties have between 0 and 4 trains carrying a million gallons or more every week.
Leaders with CSX were more forthcoming with oil train information. Livingston said 20 to 35 trains carrying a million gallons or more of North Dakota Crude Oil travel on its Garrett line every week.
15 Finds Out shared those stats with Newton on October 1.
“Nobody’s come up with, other than you, of any information like that to me,” he said.
It was a similar story in DeKalb County. EMA Director Roger Powers said he hadn’t received any crude-by-rail notifications from IDHS until, ironically, the day of his interview with 15 Finds Out.
CSX weekly shipments: Click image to see full-screen graphic.
“It’s always good for us to know,” Powers said. “When we don’t know, that’s when we get caught sometimes and have to pull back and regroup and think about how we are going to attack this.”
“Internal delay”
When asked why it took IDHS four months to give first responders the oil train notifications, public information officer John Erickson released a statement that said in part:
There was an internal delay at IDHS with respect to the first notification the agency received regarding the U.S. Department of Transportation (U.S. DOT) order. This notification was not evaluated as efficiently as it could have been, and as a result, was not forwarded to the local responders as quickly as IDHS would have liked.
The statement said the agency has since modified its evaluation process of these notifications and will, in the future, get them to local emergency responders as quickly as possible.
There was an apparent confusion at IDHS regarding the oil train notification. The statement said officials weren’t sure if it was the particular notification required under the DOT order. Since IDHS considers the information to be highly sensitive, the agency said the documents had to be “carefully evaluated regarding which agencies had a need to know.”
In the end, Newton argued that his department’s response would be the same whether they knew how many oil trains pass through or not. Despite the four month delay, both Newton and Powers are each thankful they now have the proactive information. They are now passing those stats down to first responders, like Auburn Fire Chief Mike VanZile.
“Since you said something to me I’ve done some research, and now I think through your efforts and some other folks’ efforts, now the state has given our EMA director, homeland security office, some vital information that he has passed on to me,” VanZile told 15 Finds Out. “Millions of gallons going across these rails, that’s a huge concern.”
15 Finds Out continues its investigative series “Through Your Backyard” next week. Tune in Thursday, November 6 at 6:00 p.m. to hear what the railroad companies and U.S. Department of Transportation are doing to make crude-by-rail safer.
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