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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.