The crude gamble – part one

A growing continental oil boom and lack of pipeline infrastructure have forced amazing amounts of oil onto US and Canadian railroads resulting in the hauling of more than 43 times more oil along US rail lines in 2013 than in 2005.

It is estimated that 9 million barrels of crude oil are moving over the rail lines of North America at any given moment but a string of crude by rail catastrophes – like the fiery derailment that rocked Casselton, N.D in late 2014 – has increased public scrutiny on the growing form of transportation by rail and now communities across North America are bracing for another catastrophe.

According to data from the American Association of Railroads report published in late 2013, during 2013 US railroads moved 11 times more crude oil than all the oil moved by train from 2005 to 2009.

Calculated another way, railroads shipped an estimated 425 000 rail carloads of crude oil – that's approximately 815 000 bpd. Between 2008 and 2013 oil by rail grew a whopping 4100% and now environmentalists say the derailment with new tank cars proves that any kind of oil by rail is too dangerous and presents too much risk for those who live near railways that transport crude oil across the US.

Ferrying oil from where it is produced to ports for transport is clearly the safest and most efficient when it is transported by pipelines designed fit for purpose for the task at hand. Pipelines are undeniably the lowest risk and most efficient means of transport onshore for point to point movement. They require both regulation and ongoing inspection and maintenance and are normally replaced based on predetermined age and risk factors. According to findings by the Associated Press: since 2008, 10 train accidents have caused the spill of almost 3 million gallons of oil in North America, with the most recent incident on 13 February 2015, where a train crashed in Western Pennsylvania.

At present, the US crude oil production levels are more than the existing pipeline infrastructure can handle, forcing energy companies to use rail as an alternative transit method. The increase in crude oil transport by rail has also raised safety concerns, most notably in the wake of another deadly 2013 accident in Lac-Megantic, Quebec, destroying roughly half of the downtown area and killing over 40 people.

CSX Transportation headquartered in Jacksonville, Florida, owns about 21 000 route miles, operating one of the three major Class I railroads, serving most of the East Coast of the US. In March 2015, a CSX train carrying Bakken oil derailed and erupted into flames after spilling the equivalent of approximately 8000 barrels near Mount Carbon, West Virginia. The fires burned for hours after the train carrying more than 100 tankers of crude oil derailed in a snowstorm, sending a fireball into the sky and threatening the water supply of nearby residents. The derailment added to the rising debate about the safety of transporting crude on America's railroads. The crash was the second in 10 months involving a CSX train, carrying oil from North Dakota. The derailment affected two counties, and forced residents to flee their homes in the harsh winter weather as power cuts out and drinking water was threatened.

Currently, the mass of oil transported on America's rails is from the Bakken formation – a large source of oil that covers North Dakota, and portions of Montana and Canada. While there is some pipeline capacity to ship the shale oil, the main transport option is via railroads. Despite the petroleum industry's efforts and the increase of oil production in the Bakken formation, America's appetite for cheap energy and the lack of sufficient pipelines infrastructure has caused shipping of crude by the intricate rail system. Some portions of that infrastructure date back decades, when builders had no idea the rails would one day transport hundreds of thousands of crude oil a day.

Testifying before the National Transportation Safety Board (NTSB), NBC News reported Robert Fronczak, Assistant VP of Environment and Hazardous Materials for the Association of American Railroads, said the most updated standard adopted by the industry in 2011 is "no longer adequate." Prior testimony suggests even newer oil car models adopted by the industry in 2011 may not be sufficient.

According to most experts, the increasing volumes of crude oil now being moved by train, and the routes they are required to take, are creating dangers that cannot be overlooked. Adding to the danger equation is the fact that the Bakken oil contains high natural gas at low ignition point, which adds extra instability as it was evident in the recent train crashes.

Since 2008, of the six trains that have derailed and caused an explosion, four have been from Bakken. What’s more, oil trains require the vast network of railroads that cover the continent to transport their product. These rails also run through every major American city and heavily populated areas, leaving untold numbers of people at risk. The increasing occurrence of oil-related explosions and derailments is one byproduct of the shale oil boom that has boosted US crude production and pushed down the price of oil around the world.

"The large-scale shipment of crude oil by rail simply didn't exist ten years ago, and our safety regulations need to catch up with this new reality," Deborah A.P. Hersman, Chair of the National Transportation Safety Board, said in 2014 when proposing tougher standards. But those standards have been slow to occur, as a growing surplus of new US oil looks for ways to get to market. With pipeline infrastructure constrained and highly controlled, much of the crude is being transported by rail.

References

1. 1 https://www.aar.org/newsandevents/Freight-Rail-Traffic/Pages/2014-01-09-railtraffic.aspx
2. 2 http://www.huffingtonpost.com/2014/02/17/oil-train-accidents-crude-by-rail_n_4803045.html
3. 3 http://www.upi.com/Business_News/Energy-Resources/2015/02/18/NTSB-Oil-by-rail-needs-scrutiny-after-W-Va-incident/2981424268941/#ixzz3S8GU065d
4. 4 http://en.wikipedia.org/wiki/CSX_Transportation
5. 5 http://www.cnbc.com/id/102430760
6. 6 http://www.cnbc.com/id/102430760#
7. 7 http://www.alexanderinjury.com/oil-train-derailments-raise-fears/

Written by Jack Behar and edited by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/special-reports/28042015/the-crude-gamble-part-one/