Category Archives: Tank car design

Emergency Readiness & Response, Insurance Industry, Tank car design, Tank car retrofit

Ca-ching: Oil-by-rail surge to benefit three commercial sectors

Repost from Benzinga
[Editor: Quick & dirty on the 3 sectors: Freight Car Designers And Refitters, Insurance Providers, and Emergency Services And Safety Training.  UNLESS … if we stop crude by rail in its tracks, the only CA-CHING will be in the alternative energy fields.  – RS] 

3 Sectors Expected To Benefit From The Oil-By-Rail Surge

Bruce Kennedy, Benzinga Staff Writer, August 11, 2014

It’s been just over a year since a freight train carrying crude oil from the Bakken shale fields in North Dakota derailed and exploded in a Quebec town near the U.S.-Canadian border, killing 47 people.

That accident, along with several others in its wake, drew attention to the enormous increase in shale oil now being transported from North Dakota and Canada by rail – and the vulnerabilities of that form of transport.

“More crude oil is being shipped by rail than ever before, with much of it being transported out of North Dakota’s Bakken Shale Formation,” Department of Transportation Secretary Anthony Fox pointed out in a press conference last month. “In 2008, producers shipped 9,500 rail-carloads of oil in the U.S.; by just last year, that number skyrocketed to 415,000 rail-carloads — a jump of more than 4,300 percent.”

At that same press conference, Fox announced a rule-making proposal to improve the safe transportation of large quantities of flammable materials by rail – crude oil and ethanol in particular.

The increase in oil being transported by rail, as well as the new safety measures, might also be a windfall for companies in some related fields.

Freight Car Designers And Refitters

The proposed new safety rules for oil freight cars means a potential bonanza for firms like The Greenbrier Companies (NYSE: GBX). The Oregon-based group is a leading manufacturer and marketer of railroad freight car equipment in both North America and Europe.

Along with retro-fitting existing oil rail cars, Greenbrier is also designing a new genreration “Tank Car of the Future,”  with a thicker tank and bigger welds to ensure greater safety.

The new design, according to the Rigzone oil and gas industry web site, is “intended to meet anticipated new industry and government standards for tank cars transporting certain hazardous material.”

Insurance Providers

The Wall Street Journal reports that most, big North American railroads usually carry about $1.5 billion in liability insurance – but notes that accidents like last year’s deadly derailment and explosion in Lac-Mégantic, Quebec, can end up costing billions of dollars more in cost, especially if that accident happens in a populated area.

“Even if it happens outside of town, the massive damage to property and the environment — you’re stymied when you have these kind of crude oil fires burning hot and big for days,” Karen Darch, president of Barrington, Illinois, told the newspaper.

This could lead to an increase in the need for insurance.

“With experts predicting that oil spill derailments may increase in frequency over the next decade, the insurance industry must be prepared to address this new coverage threat,” says the law industry tracker web site Law360 earlier this year, “including the coverage issues and potential exposure which may arise from these disasters.”

Emergency Services And Safety Training

Earlier this year, Minnesota’s state legislature passed an oil transport law. The measure, reportedly worth more than $6 million, took fees generated in part from oil and railroad companies and put that funding towards tanker and pipeline disaster training, as well as more state transportation safety inspectors.

As former National Transportation Safety Board Chairwoman Deborah Hersman pointed out in a letter written this past January to the head of the Federal Railroad Administration, there is no mandate for the railroads to come up with comprehensive disaster response plans for oil train derailments

This means the rail carriers “have effectively placed the burden of remediating the environmental consequences of an accident on local communities along their routes,” the letter said.

According to the Association of American Railroads, the industry is providing $5 million to develop and fund specialized training for first responders handling a crude-by-rail accident, as well as developing “an inventory of emergency response resources and equipment for responding to the release of large amounts of crude oil along routes over which trains with 20 or more cars of crude oil operate.”

Bakken Crude, Crude By Rail, Federal Regulation (U.S.), High Hazard Flammable Trains (HHFTs), Tank car design, Tank car retrofit, Train dwell time, Train speed

An inside look at rail industry views on proposed safety rules

Repost from Railway Age
[Editor: Check out rail industry insider perspectives on the DOT’s proposed new safety rules, and a few of their hoped-for changes before the rules become final.  – RS]

DOT crude oil NPRM: Will cooler heads prevail?

August 7, 2014, by  William C. Vantuono, Editor-in-Chief
A recent call-in forum on crude by rail conducted by Cowen and Company Managing Director and Railway Age Contributing Editor Jason H. Seidl “helped affirm our view that the final version of the DOT’s safety rules may include some changes to the ones proposed on July 23.”

“We believe that the final draft of the [Notice of Proposed Rulemaking on High-Hazard Flammable Trains and DOT 111 tank cars] could be more friendly to shippers than the first proposal,” said Seidl. “This, along with the removed uncertainty, could put a more positive spin on regulations that are sure to add costs for the industry.”

Retrofitting tank cars to 9/16-inch-thick steel is “a tall order,” said Seidl. “A railcar manufacturing executive on our panel suggested that retrofitting existing 7/16-inch-steel cars to 9/16-inch layers would be a problematic task, as the technology for implementing the conversion may not be currently available. Additionally, such an undertaking may be restricted by tight steel supplies, which could disrupt and prolong production for months. This would exacerbate concerns about the two- to five-year proposed compliance period, which is already viewed as insufficient by many players in the industry. According to our panelist, a more realistic retrofitting of the existing 7/16-inch-steel car fleet would take five to seven years and consist of other improvements, such as top fittings and thermal jackets. If retrofitting to a 9/16-inch-steel layer is ultimately adopted in one or more of the paths to compliance, the Greenbrier Companies could benefit as it already applies this standard to its “Tank Car of the Future” group of tank cars. That being said, we believe that the final version of the rules will include some key changes to the ones proposed on July 23.”

The Cowen panelists agreed that reducing crude oil train dwell time would make more sense than reducing speed. “The consensus opinion seemed to be that enforcing broad speed restrictions may not be the right approach,” noted Seidl. “The panelists indicated that emphasis should be placed on reducing the total time that High Hazard Flammable Trains (HHFTs) spend in populated areas, and slower trains do just the opposite. Additionally, reduced train speeds would require more cars and detrimentally impact the supply chain, potentially resulting in higher dwell times in populated areas. One panelist suggested that CBR regulators should communicate with the groups that have created regulations for other rail-transported hazardous materials, such as chlorine. Such regulations, which rely in large part on reducing dwell time in densely populated areas, appear to have been effective in improving transportation safety.”

Crude By Rail, Federal Regulation (U.S.), Tank car design, Train braking systems, Train speed

Two-month comment period starts for new federal oil train rules

Repost from The Hill
[Editor: The U.S. Department of Transportation is proposing new rules for oil train transport. You can post a comment online here.  The proposed rules, including instructions for submitting comments, can be downloaded here.  – RS]

Comment period starts for oil train rules

By Timothy Cama – 08/01/14

The Obama administration Friday formally published proposals in the Federal Register to stiffen safety rules for trains carrying crude oil and other fuels, kicking off a two-month period in which the public can comment.

The proposals were prompted chiefly by the increase in oil shipped by rail from the Bakken region of North Dakota, which Transportation Secretary Anthony Foxx said last week necessitates “a new world order on how this stuff moves.” A train carrying crude derailed in Quebec last year, setting off an explosion that killed 47.

The Department of Transportation (DOT) proposed phasing out old rail cars for oil and other flammable liquids like ethanol, implementing new speed and braking standards for the trains and establishing a new testing and classification system for the fuels. Foxx called the rules “the most significant progress” in protecting the country from explosions caused by trains carrying Bakken crude.

DOT said it wants comments on three different possible rules for speed limits and three different options for the thickness of steel on cars.

DOT also said it was not likely to extend the comment period beyond the 60-day standard, “given the urgency of the safety issues addressed in these proposals.”

Bakken Crude, Crude By Rail, Emergency Readiness & Response, Federal Rail Administration, Hazmat notification, Niobrara crude, Rail industry, State regulation, Tank car design, Train speed

Oil Boom, Part II: How and why railroads keep oil train information from communities

Repost from Boulder Weekly
[Editor: A good summary on the various states’ responses to weak new federal emergency regulations, and the oil and rail industries’ resistance to same.  – RS]

Oil Boom, Part II: How and why railroads keep oil train information from communities

By Matt Cortina, Thursday, July 31,2014

Last week’s Boulder Weekly cover story “Oil Boom” covered the proliferation of trains carrying volatile crude oil in outdated oil tanks through the hearts of Longmont, Boulder and Louisville. With industry estimates of an oil boom in the nearby Niobrara shale formation, Boulder County residents can expect that the risk of a potential explosion from an oil train will increase over the next decade.

On the day that story was published, documents were leaked from the state of Washington’s Military Department that showed the U.S. Department of Transportation and U.S. railroad companies like Burlington Northern Santa Fe (BNSF) and Union Pacific pressured states to keep information about oil trains concealed from the public.

And so this brief part II to “Oil Boom” will take a look at why railroads are not required to tell citizens about oil trains, why this information needs to be a secret at all and how railroads are now working to enact soft oil transportation standards in order to save billions in revenue.

• • • •

Railroad companies have never been required to tell citizens, municipalities or states the contents of their train cars. Then, in May, the U.S. Department of Transportation ordered railroad companies to disclose to state emergency responders how many trains carrying one million gallons or more of crude oil from the Bakken shale region in North Dakota were coming through that state. This came after nine oil trains, many carrying Bakken crude oil, exploded or derailed in the last 12 months in the U.S. and Canada.

In response, railroad companies asked states to sign a confidentiality request form that would keep that information from being passed on to the public. Some states like California, New Jersey and Virginia signed the agreement. Colorado did not sign the agreement, but did ultimately decide to keep the information confidential.

Conversely, some states, such as Washington, North Dakota and Wisconsin, decided to make the information public. This was not without contention from the rail companies. When Montana said it would do the same, BNSF promptly wrote to the state that it would consider legal action to keep the information hidden.

And in Washington, one state official wrote in an email (obtained by DeSmogBlog), “looks like UP is trying to put the burden on us vis-à-vis information transfer on oil trains,” noting that Union Pacific’s confidentiality request claimed states were requesting information about Bakken crude oil shipments, instead of that railroads are now required to share that information.

All this fuss from railroad companies concerns just one mandate on one very large amount of oil from one of several drilling areas nationwide. And that information doesn’t need to be sent until 30 days after trains pass through the state.

This mandate is effectively irrele vant for Boulder County. Crude oil shipped through the county comes from the Niobrara in Northern Colorado. Transporting this crude, like everything that’s not one million gallons of Bakken crude, does not require notification even though it can still overheat and explode and it is still shipped in outdated, dangerous tanks.

What is relevant is that the Niobrara shale region has been deemed by the oil and gas industry as the “next Bakken” region, so legislation and precedent for that region will affect how crude oil is transported through Boulder County in the future.

Now, railroads can keep the majority of oil train information hidden from the public because they have help from federal and state officials.

For instance, in ordering railroads to share Bakken crude oil train information with local emergency responders, the U.S. Department of Transportation also encouraged states to keep that information from the public in a FAQ that accompanied the emergency order.

Mark Davis, Union Pacific regional media director, says the issue is that railroads could face “security” issues if conservative monthly data about crude oil transportation is made public.

“A lot of that is the historic security concerns that were started following 9/11,” says Davis. “I know that is something that on the security side, that from a federal standpoint, they’re taking a look at and reviewing that process.”

Davis added that he was “not sure” if any actual threats to Union Pacific oil trains have been recorded, but that the security detail on crude oil transport via rail is “massive” and involves national, state and local authorities.

According to Dave Hard, director of the Colorado Division of Emergency Management, the state of Colorado is keeping what little oil train information it does receive hidden from the public not because of security concerns but because it is “business confidential.”

“The original guidance we received from the Department of Transportation […] made it clear that at the time, the federal D.O.T. considered it security sensitive and business confidential,” Hard says.

Hard says his department and the Colorado Department of Public Health and Environment and the Colorado Department of Public Safety then reviewed the Colorado Open Records Act (CORA) standards and agreed that crude oil shipments were still “not subject to public disclosure.”

“They still maintain business confidentiality viewpoints. The state is still honoring that [all oil train information] is not for public disclosure, it is for the purposes of preparing [emergency response personnel],” Hard says.

Railroads are also subject to the Emergency Planning and Community Right-to-Know Act, which requires them to report the transport of hazardous materials to local and state emergency responders. But, for some reason, petroleum products including crude oil are exempt from this mandate.

The bottom line is that railroads are privately owned and not required to notify anyone of the contents of their trains. They are, at least, required to make their transport of volatile materials safe.

The Department of Transportation recently issued safety recommendations for railroads carrying crude oil. These recommendations included updated tank cars, new routing systems and reducing the speed of oil tank cars.

But railroads like BNSF, Union Pacific and CSX said implementing these safety measures would be too costly.

In a presentation to the White House Office of Information and Regulatory Affairs, which will amend and codify the safety standards introduced by the Department of Transportation, presenters for the railroads laid out the costs of implementing moderate safety measures.

First, railroads would pay $2.8 billion for capital improvements to railways across the country. Reducing the speed of trains would call for oil companies to build more tankers to the tune of $1.5 billion in order to maintain supply quotas. Reducing train speed would also cost the railroads themselves about $630 million per year because they’d have to pay for additional crew, fuel costs and “lost productivity of track maintenance workers.”

Train speed and outdated tank cars are by far the most common cause of derailments and explosions. Tank cars are not built for modern crude oil and train speed has many times caused modern volatile crude oil to overheat and explode.

BNSF went on to say that implementing these safety measures would take about four years and would result in “the immediate loss of existing business” and growth would be stifled.

Railroad officials and lobbyists are currently working beside federal lawmakers to carve out the new safety and notification rules for crude oil by rail transport. Initial regulations could come as soon as this year.