Tag Archives: Rail industry

Bakken Crude, Crude By Rail, Oil Industry, Oil producers, Rail industry

Crude oil joins rail industry staples as key revenue producer

Repost from Reuters

Crude oil joins rail industry staples as key revenue producer

By Jarrett Renshaw, Mar 16, 2015 2:05pm EDT

(Reuters) – U.S. railroads generated almost as much money last year hauling crude oil and sand, largely used in hydraulic fracturing, as they did moving industry staples like field crops and motor vehicles, according to a Reuters’ analysis of newly released federal data.

The previously unreported company data submitted to the U.S. Department of Transportation provides the latest piece of evidence of the blossoming marriage between the energy and rail industries, forged on the back of the U.S. shale oil boom.

Led by Berkshire Hathaway-owned BNSF Railways, the seven largest railroads operating in the United States generated $2.8 billion in gross revenue from hauling crude oil in 2014, up nearly 30 percent from 2013, according to company data filed with the federal government and released earlier this month.

The $2.8 billion figure puts crude oil in sixth place among similarly classified products, trailing industry standards like coal, field crops and motor vehicles, the analysis shows. Sand and gravel, an often overlooked winner in the shale boom, generated $2.7 billion last year in gross revenue.

Crude oil provides the biggest return on a per-carload basis, drawing $5,700 in gross revenue for each car that originated on the network, more than double than what coal brings.

The continuing financial success comes as the industry faces threats from a massive drop in oil prices and impending new U.S. regulations aimed at public safety that could impose additional costs.

“Will the major carriers go belly up? No,” said Barton Jennings, a professor of supply chain management at Western Illinois University. However, short-line cariers that rely upon crude for the bulk of their business may be exposed, he said.

Overall, the seven major carriers reported U.S. profits of $14.4 billion last year, led by Union Pacific and BNSF, which combined accounted for 67 percent of the industry’s U.S. profits, the analysis shows.

KING CRUDE

The biggest player in the U.S. crude rail business is BNSF, which dominates North Dakota, home to the Bakken shale.

BNSF’s gross revenue from crude oil rose to $1.48 billion from $63 million in 2010. Gross revenue from hauling sand and gravel climbed to $651 million last year, a more than 300 percent jump from 2010.

The growth in crude and sand hauling helped BNSF boost profits, which climbed from $2.6 billion in 2010 to $4.4 billion last year.

(Reporting By Jarrett Renshaw; Editing by Jessica Resnick-Ault and Jonathan Oatis)
Bakken Crude, Crude By Rail, DOT-111, Oil Industry, Rail industry

Refiners’ Association sues railroad over fee on oil loaded in older tank cars

Repost from McClatchy DC
[Editor:  Incredible: The complaint says, “Despite BNSF’s distaste for the DOT-111 cars, (emphasis added) they are authorized bulk packaging for crude oil service.”  “Distaste?”  Really!  Oh, and … the BNSF surcharge would suggest that $1000/car will help exactly whom if/when the next explosion occurs?  Surely not those whose bodies and livelihoods are incinerated.  See this story also at Bloomberg Business News and Courthouse News Service.  – RS]

Refiners sue BNSF over fee on oil loaded in older tank cars

By Curtis Tate, McClatchy Washington Bureau, March 16, 2015

A trade group representing oil refiners has sued the nation’s largest hauler of crude oil in trains over a surcharge for oil loaded into older tank cars that have punctured and ruptured in numerous derailments.

The American Fuel & Petrochemical Manufacturers, a trade association for producers of gasoline, jet fuel, home heating oil and other refined products, sought an injunction last week in U.S. District Court in the Southern District of Texas to block BNSF Railway from imposing a $1,000 surcharge for every DOT-111 model tank car loaded with crude oil.

Tens of thousands of DOT-111 cars have carried a surge in domestic energy production, but their poor safety record in oil and ethanol train derailments has drawn fresh scrutiny from regulators, lawmakers and the National Transportation Safety Board.

BNSF hauls 600,000 barrels a day of crude oil, mostly from North Dakota’s Bakken region, to refineries on the east and west coasts. In October, the railroad announced it would impose a $1,000 surcharge on oil shipped in DOT-111 tank cars, effective Jan. 1.

But the trade group, which represents more than 400 companies, said in its complaint that BNSF asserted “unlawful regulatory authority” when it began imposing the surcharge.

The U.S. Department of Transportation regulates rail transportation, and until regulations require tank cars of a different design for oil shipments, the group’s complaint says that BNSF and other railroads are obligated by law to accept them in whatever cars the government currently allows.

“Despite BNSF’s distaste for the DOT-111 cars,” the complaint says, “they are authorized bulk packaging for crude oil service.”

One DOT-111 tank car holds about 30,000 gallons, or 700 barrels of oil. The complaint says the $1,000 surcharge adds $1.50 per barrel in rail transportation costs.

The trade group’s complaint says that BNSF’s surcharge causes “direct and substantial harm” to its clients and “breaches BNSF’s common carrier duty to ship hazardous materials.” By law, railroads must provide rail transportation on reasonable request.

The Pipeline and Hazardous Materials Safety Administration submitted a new design for tank cars to the White House Office of Management and Budget for review in January.

Four crude oil trains have derailed and caught fire across North America since mid-February. One of them was a BNSF train that derailed earlier this month near Galena, Ill.

In all four derailments, the tank cars were a modestly improved version of the DOT-111.

Bakken Crude, Crude By Rail, Derailment, Explosion, Federal Regulation (U.S.), Fire, Oil Industry, Rail industry, Tank car design, Tank car retrofit

Federal Railroad Admin: oil industry must do more to boost train safety

Repost from Reuters

Oil industry must join U.S. railroads to boost train safety – regulator

By Patrick Rucker, Mar 13, 2015 6:06pm EDT

WASHINGTON, March 13 (Reuters) – Rail operators are going to great lengths to prevent oil train derailments but the energy sector must do more to prevent accidents from becoming fiery disasters, the leading U.S. rail regulator said on Friday.

Oil train tankers have jumped the tracks in a string of mishaps in recent months that resulted in explosions and fires.

Several of those shipments originated from North Dakota’s Bakken energy fields. Officials have warned that fuel from the region is particularly light and volatile.

Sarah Feinberg, acting head of the Federal Railroad Administration, said the energy industry must do more to control the volatility of its cargo.

“(We) are running out of things that we can put on the railroads to do,” she said. “There have to be other industries that have skin in the game.”

A national safety plan for oil trains, due to be finalized in May, would require trains to have toughened tankers, advanced braking and other safety improvements.

The plan, however, would do nothing to mute the dangers of the fuel itself.

As officials try to prevent mishaps, they will also highlight the energy companies that supplied crude oil involved in accidents, Feinberg said.

Officials want to identify publicly “the owner of the product when we talk about these derailments,” she said.

The American Petroleum Institute said it hoped to work with the rail industry and other stakeholders to prevent mishap.

“Our safety goal, along with the railroads, is zero incidents,” said Brian Straessle, a spokesman for the trade group.

While U.S. officials have warned for more than 12 months that Bakken fuel can be volatile, the verdict is mixed on whether that contributes to the intensity of accidents.

In September, the FRA determined that Bakken crude oil may be no more explosion-prone than other fuels carried by rail.

Ethanol, a corn-based gasoline additive, “poses a similar, if not greater, risk as (Bakken) crude oil when released from a tank car failing catastrophically and resulting in a large fireball type fire,” according to a study from the agency.

On Friday, the FRA said that about 6,000 tankers had a top valve that allowed small amounts of oil to escape. The agency said it ordered the fitting to be replaced and said it would work with industry to identify and replace defective parts more quickly.

That defect was not believed to have played a role in any mishaps, the FRA said.

(Reporting by Patrick Rucker; Editing by Dan Grebler, Bernard Orr)
Federal Regulation (U.S.), Rail industry, Rail industry lobby, Tank car design, Train braking systems

As Galena IL Tank Cars Burned, Industry Met at White House to Weaken Safety Standards

Repost from Reuters

U.S. rail industry pushes White House to ease oil train safety rules

By Valerie Volcovici & Patrick Rucker, Mar 10, 2015 2:24pm EDT

(Reuters) – The U.S. rail industry is pushing the White House to drop a requirement that oil trains adopt an advanced braking system, a cornerstone of a national safety plan that will soon govern shipments of crude oil across the country.

Representatives of large rail operators met with White House officials last week to argue against the need for electronically controlled pneumatic brakes, or ECP brakes, saying they “would not have significant safety benefits” and “would be extremely costly,” according to a handout from the meeting.

ECP brakes trigger all axles simultaneously rather than one at a time in current design.

More than a dozen industry representatives made their case at the Washington meeting last Friday, a day after a crude oil train derailed in Illinois.

Reuters reported last month that the national oil train safety plan now under review at the White House Office of Management and Budget would require the advanced braking.

The Transportation Department has concluded that ECP braking would deliver meaningful safety improvements but the industry officials argued that the department estimates “grossly overstate benefits and understate costs.”

The industry claims fitting rail stock with ECP brakes would not prevent accidents, but merely limit the number of cars that derail in an accident.

Adopting the new technology would lead to more frequent service problems and mechanical delays, industry officials said.

The oil train safety plan being considered by the White House would also demand tougher tank cars and other safety steps that the government estimates would cost at least $3 billion over the next 20 years.

Oil and rail executives contend that much higher costs would needlessly hinder a sector that has helped push a national energy renaissance.