Tag Archives: Tank car retrofit

Bakken Crude, CPC-1232, DOT-111, Federal Regulation (U.S.), Massive increase in crude-by-rail, Obama administration, Tank car design, Tank car retrofit, Train braking systems, U.S. Department of Transportation, US Department of Transportation

Obama admin to give companies more time to upgrade DOT-111 & C-1232 tank cars

Repost from Bloomberg Business News

Revised Oil-Train Safety Rule Said to Delay Upgrade Deadline

by Jim Snyder, February 12, 2015

(Bloomberg) — The Obama administration revised its proposal to prevent oil trains from catching fire in derailments, giving companies more time to upgrade their fleets but sticking with a requirement that new tank cars have thicker walls and better brakes.

The changes, described by three people familiar with the proposal who asked not to be identified because the plan has not been made public, are in proposed regulations the U.S. Transportation Department sent to the White House last week for review prior to being released.

The administration is revising safety standards after a series of oil-train accidents, including a 2013 disaster in Canada that killed 47 people when a runaway train derailed and blew up. Earlier this month a train carrying ethanol derailed and caught fire outside of Dubuque, Iowa. No one was hurt.

Companies that own tank cars opposed the aggressive schedule for modifying cars in the DOT’s July draft, saying it would have cost billions of dollars and could slow oil production. That plan gave companies two years to retrofit cars hauling the most volatile crude oil, including from North Dakota’s booming Bakken field.

Railroads and oil companies fought the brake requirement and proposed a standard for the steel walls that was thinner than suggested by the agency.

‘Too Long’
Karen Darch, the mayor of the Chicago suburb of Barrington, Illinois, and an advocate for safer cars, said she was encouraged that the rules included stronger tank cars and upgraded brakes. She disagreed with adding years to the retrofit deadline.

“Taking more time on something that’s already taken too long is problematic,” Darch said Thursday in a phone interview.

Officials in the President Barack Obama’s Office of Management and Budget could change the proposal before the final version is released, probably in May. Darius Kirkwood, a spokesman at the Pipeline and Hazardous Materials Safety Administration, the Transportation Department unit that wrote the rule, said he couldn’t comment on a proposed rule.

“The department has and will continue to put a premium on getting this critical rule done as quickly as possible, but we’ve always committed ourselves to getting it done right,” Transportation Secretary Anthony Foxx said this month in a statement about the timing of the safety rule.

Rolling Deadlines
The current proposal would require companies to first upgrade tank cars known as DOT-111s, which safety investigators have said are prone to puncture in rail accidents, according to one of the people. Cars with an extra jacket of protection would remain in use longer before undergoing modifications, according to one of the people.

A newer model known as the CPC-1232, which the industry in 2011 voluntarily agreed to build in response to safety concerns, would have a later deadline than the DOT-111s for modification or replacement, three people said.

The CPC-1232s have more protection at the ends of the cars and than the DOT-111s and a reinforced top fitting.

The draft rule also would require that new tank cars be built with steel shells that are 9/16th of an inch thick, the people said. The walls of the current cars, both DOT-111s and CPC-1232s, are 7/16th of an inch thick.

A joint proposal from the American Petroleum Institute and the Association of American Railroads argued to set the tank-car shell thickness at half an inch, or 8/16ths.

Company Lobbying
Railroads and oil companies also lobbied against a proposal that the trains have electronically controlled pneumatic brakes, which are designed to stop all rolling cars at a same time.

The Association of American Railroads in June told Transportation Department officials that the electronic brakes would cost as much as $15,000 for each car and have only a minimal safety impact.

Trains often haul 100 or more tank cars filled with crude. These trains have increasingly been used to haul crude as oil production has boomed in places, like North Dakota, that don’t have enough pipelines.

Rail shipments of oil surged to 408,000 car loads last year from 11,000 in 2009.

Derailment, DOT-111, Ethanol, Fire, Tank car retirement, Tank car retrofit

Latest Derailment: near Dubuque, Iowa, involving outdated tank cars

Repost from KCRG.com, Cedar Rapids, IA
[Editor: apologies for the video’s commercial ad, but otherwise a good report.  See also coverage with another photo and perhaps better information on Reuters.  – RS]

Fiery derailment near Dubuque involved outdated tank cars

DOT-111s prone to puncture, but still heavily used

By Erin Jordan, The Gazette, Feb 4, 2015


DUBUQUE COUNTY — A train derailment Wednesday near Dubuque that caused three tank cars to erupt in flames and three others to plunge into the icy Mississippi River involved outdated cars prone to punctures and spills.

The Canadian Pacific freight train headed southeast derailed around 11:30 a.m. Wednesday in a remote area north of Dubuque. Eleven cars left the track, with 10 of those carrying ethanol, officials reported. Three of those cars caught fire and three slipped into the river.

An aerial shot of the derailed train north of Dubuque. (Charlie Schurmann/KCRG-TV9)

“I can confirm that DOT-111s were involved, how many of the derailed cars were DOT-111s I am not sure yet,” Canadian Pacific spokesperson Jeremy Berry reported Wednesday evening.

DOT-111s, black, tubed-shaped tank cars, make up about 70 percent of the U.S. tank car fleet. The outdated cars have been blamed for explosions and spills during derailments across North America. In the worst of these crashes, 47 people died when a runaway train of crude oil in DOT-111 cars exploded in Lac-Megantic, Quebec, July 6, 2013.

In July, the U.S. Department of Transportation proposed a two-year phase out of DOT-111s for carrying some flammable liquids, such as crude oil and ethanol, unless the tanks are retrofitted. The rail car supply industry has so far built more than 17,000 upgraded tankers that include thicker steel, stronger end caps and more protection for top fittings, Tom Simpson, president of the Railway Supply Institute, a trade group that acts on behalf of suppliers to North American railroads, told The Gazette in April. The group expect to have 55,000 by the end of 2015.

Tens of thousands of the cars are still in use because of the high volume of crude oil being shipped from the Bakken region or North Dakota, Montana and Canada.

Nine Iowa counties, including five along the Mississippi River in Eastern Iowa, see rail shipments of one million gallons or more of extra-flammable Bakken crude, The Gazette reported in June.

“You have these older cars that don’t meet the specs carrying these flammable liquids, this is what you’re going to get,” Albert Ratner, a University of Iowa associate professor of mechanical engineering who studies fires during train derailments, said about Wednesday’s crash.

No one was injured in the derailment. Because the tracks run between the river and a steep, snow-covered slope, fire crews were not able to put out the blaze Wednesday, the Dubuque County Sheriff’s Office reported.

The derailment could have caused more damage in a metropolitan area, Ratner said. The snow also likely reduced the potential for nearby trees catching fire. But because DOT-111s are notorious for breaking apart in derailments, ethanol could have spilled from the tank cars into the Mississippi, Ratner said.

“You could have problems with it going downstream and spreading out the environmental effect,” he said.

Canadian Pacific officials were still gathering information Wednesday evening.

“Safety is the priority and we take these incidents seriously,” Spokeswoman Salem Woodrow wrote in an email. “CP’s emergency protocols were immediately enacted and all safety precautions and measures are being taken as our crews respond to the incident.”

Bakken Crude, DOT-111, Federal Regulation (U.S.), Oil Industry, Oil prices, Rail industry, Tank car manufacture, Tank car retirement, Tank car retrofit

Rail Tank-Car Orders Threatened by U.S. Crude’s Collapse

Repost from Bloomberg News

Rail Tank-Car Orders Threatened by U.S. Crude’s Collapse

By Katherine Chiglinsky, January 22, 2015

(Bloomberg) — Add tank-car makers to the list of U.S. industries bracing for the effects from the plunge in crude prices.While 2014’s record orders, including an all-time high 42,900 in the third quarter, will drive deliveries this year, according to Susquehanna International Group, manufacturers from Carl Icahn’s American Railcar Industries Inc. to Warren Buffett’s Union Tank Car Co. are facing a decline. New bookings in 2015 may plunge 70 percent, Macquarie Capital USA Inc. said, putting earnings at risk when scheduled deliveries drop in 2016.

Oil prices down 49 percent since June have crimped investment in U.S. fields including the Bakken range, where horizontal drilling and hydraulic fracturing is more expensive than conventional oil drilling. That has hurt industries from steel to heavy equipment. It also has slowed the boom in oil-by-rail shipping, which along with new federal safety rules, had fueled the record orders.

“The confidence of the industry has been shaken quite seriously,” Cleo Zagrean, a New York-based analyst for Macquarie Capital said by phone Jan. 15.

Tank-car maker stocks have suffered amid the oil price decline, with shares of Trinity Industries Inc. dropping 40 percent in the fourth quarter, according to data compiled by Bloomberg. American Railcar shares fell 30 percent and Greenbrier Cos. dropped 27 percent.

“It’s having an impact already,” said Art Hatfield, a managing director of equity research at Raymond James & Associates Inc. in Memphis, Tennessee. “I think the forward-looking minds are realizing that we may have hit a cyclical peak within the industry.”

New freight-car orders fell to 37,431 in the fourth quarter, down 13 percent from record highs, according to data from the Railway Supply Institute, reported Thursday. Leasing company GATX Corp.’s deal with Trinity added 8,950 new car orders in the fourth quarter. Those cars will be delivered over a four-year period beginning March 2016.

Backlogs swelled to a record 142,837 orders the Washington-based RSI said. These may bolster the industry through 2015.

Throughout last year, buyers piled on requests for cars amid an oil boom in North Dakota and Texas. Freight-car bookings and backlogs swelled to record highs even as West Texas Intermediate crude oil prices fell 14 percent between July and the end of September, according to data compiled by Bloomberg.

Orders for cars that carry cement and frac sand, a resource instrumental in the U.S. shale boom, declined in the fourth quarter from a record, according to Bascome Majors, an Atlanta-based transportation and rail-equipment analyst for Susquehanna International. Falling oil prices might temper future demand for frac-sand cars, he said.

Significant Hit

Oil prices tumbled 18 percent in November and 19 percent the next month, ending the year with the steepest monthly loss in six years, data compiled by Bloomberg show.

“The oil price drop is a significant hit” to the tank-car industry, Macquarie’s Zagrean said. As customers re-evaluate the cost of new cars, even extensions on orders can weaken manufacturers’ earnings, she said.

Freight-car producer Greenbrier has dodged order cancellations as oil prices fell. Only one customer approached the company about canceling an order but has yet to call the deal off, William Furman, chief executive officer, said in a conference call Jan. 7.

Trinity had not seen any “appreciable impact” on its business from the low oil prices in the third quarter, Stephen Menzies, group president of the company’s rail and railcar leasing group, said in an earnings call October 29. The company stands by those comments, spokesman Jack Todd said in a Jan. 21 e-mail.

Union Tank Car spokesman Bruce Winslow declined to comment on the company’s orders. GATX’s director of investor relations Jennifer Van Aken didn’t return phone calls seeking comment.

In addition to concerns that low oil prices will threaten demand, the industry faces new regulations spurred by accidents including the July 2013 derailment and explosion in Lac-Megantic, Quebec, that killed 47 people.

Phase Out

The U.S. Pipeline and Hazardous Materials Administration plans to issue rules to phase out older rail cars that carry crude in the coming month, Susan Lagana, a PHMSA spokeswoman, wrote in an e-mailed statement Jan. 15. The type of tank car most implicated in spills, known as the DOT-111, would be phased out or rebuilt to meet the new standards within two years for the most volatile crude oil, according to the proposal.

New rules may create “quite a lot of replacement demand,” Greenbrier CEO Furman said in the earnings call. Currently, the Lake Oswego, Oregon-based company’s tank-car orders comprise just slightly more than a quarter of its backlog, according to company spokesman Jack Isselmann.

Owners are expected to scrap more than a fifth of an estimated 117,000 tankers that would require modifications. The work, which may include adding full height steel shields at the ends and adding a metal jacket around the body, is estimated to cost between $27,000 and $46,700 per car, an RSI study said.

Safety Concerns

BNSF Railway Co., which like Union Tank Car is owned by Buffett’s Berkshire Hathaway Inc., delayed an order of 5,000 new and safer oil-tank cars until the new safety standards are set. The railroad said last year that it would buy the new cars because of safety concerns even though railroads typically don’t own the cars that their locomotives haul on the track.

Many of the orders for safer tank cars might already be included in the backlog as buyers line up in anticipation, Hatfield of Raymond James said.

“This industry has really earned a lot of money in the last few years due to this tank-car boom and when that goes away, it’s going to have an impact on peoples’ businesses,” he said.

Crude By Rail, Federal Regulation (U.S.), Tank car design, Tank car retirement, Tank car retrofit, US Department of Transportation

U.S. Senators on new safety rules: Hurry up! or maybe… Slow Down!

[Editor: The news on Wednesday, January 28 carried two stories about U.S. Senators, one urging speed and the other urging delay in the Obama administration’s effort to – finally after over 20 years of delays – pass new rules governing rail transport of crude oil and other hazmat materials.  Washington Senator Maria Cantwell: the Department of Transportation should “move its behind.”  South Dakota Senator John Thune: the government is “moving too quickly.”    Read both stories below.  – RS]

Get moving on oil train safety rules, Cantwell tells Obama administration

Seattle PI, By Joel Connelly, January 28, 2015
In this image made available by the City of Lynchburg, several CSX tanker cars carrying crude oil in flames after derailing in downtown Lynchburg, Va., Wednesday, April 30, 2014. (AP Photo/City of Lynchburg, LuAnn Hunt)
Several CSX tanker cars carrying crude oil in flames after derailing in downtown Lynchburg, Va., Wednesday, April 30, 2014. (AP Photo/City of Lynchburg, LuAnn Hunt)

With 19 oil trains passing through Washington towns and cities each week, the U.S. Department of Transportation should move its behind, finalize and enforce safety rules for tanker cars, Sen. Maria Cantwell, D-Wash., said Wednesday.

“We should go faster: The administration should get those recommendations implemented,” Cantwell said at a Senate Commerce Committee hearing.

“My constituents are now seeing trains through every major city in our state: They’re literally hitting Spokane through the Tri-Cities, through Vancouver, up through Tacoma, Seattle, Everett and then up to the refineries.”  (…continued)

Thune urges White House to delay tank car safety rules

Argus Leader, By Christopher Doering, USA TODAY, January 28, 2015
poet ethanol Chancellor
Jeff Hansen tightens the bolts on top of an ethanol rail car after filling it Thursday at the POET ethanol plant in Chancellor, Jan. 27, 2011. (Elisha Page/Argus Leader)

WASHINGTON – An Obama administration effort to boost the safety of tank cars used to transport crude and other materials by train could disrupt the country’s already congested rail network if an unrealistic proposal is allowed to go forward, the head of the powerful Senate Commerce, Science and Transportation Committee said Wednesday.

Sen. John Thune, R-S.D., who chairs the Senate panel that oversees the country’s railroads, said the government was moving too quickly with a proposal for phasing out or retrofitting older freight-rail tank cars known as DOT-111 that carry crude oil and ethanol. The Transportation Department is to finalize the regulations on May 12, before giving the rail industry two years to comply.  (…continued)