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Reuters, Published January 10 2014

Oil-rail safety pressure mounts as older tank cars seen in Canada

TORONTO/WASHINGTON - Political pressure to quickly improve the safety of crude oil rail shipments intensified in Washington on Thursday, while Canadian officials said two of the cars involved in the latest fiery derailment were of an older variety long faulted by regulators.

After two more dramatic oil-train incidents in just two weeks, several U.S. lawmakers urged swift measures from Transportation Secretary Anthony Foxx, who in turn promised that tougher federal standards for tank cars would come "in weeks, not months," according to North Dakota's Republican Senator John Hoeven.

"The recent derailments and accidents involving crude oil are alarming," Senator Jay Rockefeller, chairman of the Commerce, Science and Transportation Committee, and energy committee chair Senator Ron Wyden wrote in a letter to regulators. "Taken together, the growing number of incidents requires prompt and decisive action."

The mounting calls come after two recent oil-train incidents in North Dakota and Canada, both of which are believed to have involved a type of tank car that was built before voluntary new standards were adopted in October 2011.

The older model cars, which have been cited as flawed and prone to puncture, have become a focal point in the debate on rail safety regulation as crude-by-rail shipments across the continent surge with the rise of shale oil production.

A Canadian National Railway spokesman said on Thursday that two of the five crude tank cars that derailed and caught fire in New Brunswick on Tuesday were the older DOT-111 models, citing information the company received from the Association of American Railroads.

The older cars were also said to have been involved in the dramatic oil train collision in North Dakota 10 days ago, investigators have said, the latest in a spate of such incidents that have shocked officials and the public with their explosive force and fiery eruption. No one was injured in either case.

While it is not clear what role, if any, the older cars played in the eruptions, regulators are facing more calls from rail operators - who are responsible for the shipments, but do not typically own or lease the tank cars - to press ahead with new rules that would either force owners to upgrade the older versions or pull them out of service.

The railroads and tank car manufacturers support measures to either retrofit or phase out the older fleet, but energy groups have opposed it because they say the cost of retrofitting roughly 80,000 cars could be prohibitive.

CANADA'S LATEST

Tuesday's accident revived memories of a devastating crash last July, when a runaway train carrying light crude from North Dakota's Bakken region exploded in the heart of the town of Lac-Megantic, Quebec, killing 47. That train included DOT-111 cars.

The New Brunswick train derailed in a rural area near a small village in eastern Canada. A total of 19 cars and one locomotive on the 122-car, four-locomotive train went off the rails. Three cars, one of them a crude tanker, were still burning on Thursday.

CN Rail did not specify whether the crude tanker still on fire was an old or new model or whether the newer versions of the DOT-111 fared any better than the older ones in the crash.

Three of the five derailed crude tank cars were new DOT-111 models that comply with higher U.S. standards ordered after October 2011, CN spokesman Mark Hallman said in an email.

Unlike three other such incidents, the crude shipment came from Western Canada, not North Dakota, officials have said. Some of it was destined for Irving Oil's Saint John refinery.

Hallman said CN and the Transportation Safety Board (TSB) of Canada were still investigating the nature of the damage to the tank cars and the volume of product affected.

The U.S. Pipeline and Hazardous Materials Safety Administration is in the process of assessing feedback on proposed new rules on DOT-111 specification, but it is not clear when a final decision will be made or how it would be phased in. The Association of American Railroads has recommended that even newer models get upgrades.

NORTH DAKOTA VISIT

As new drilling techniques have increased oil production in areas of the country where pipelines are scarce, train shipments have emerged as the preferred way to reach distant refiners. Nearly one-tenth of U.S. oil production is now shipped by rail, up from almost nothing just four years ago.

In addition to the rail car design, officials are also concerned that shippers may be incorrectly labeling the contents of their tank cars, which may be more flammable than expected due to the ultra-light nature of Bakken crude.

"There is growing concern that some oil shipments are improperly classified under federal hazardous material standards," Senators Rockefeller and Wyden wrote.

Foxx, the transportation secretary, told lawmakers that he planned to meet with rail and oil executives next week in order to understand the derailments, and also to visit North Dakota's oil patch in coming weeks to see the situation on the ground, Hoeven said after the meeting.

THE EVENTS

Shipping crude by rail is booming across North America as energy producers seek alternatives to congested pipelines to transport their oil and petroleum products to markets.

U.S. shipments of crude by rail rose 44.3 percent year-on-year in the third quarter of 2013 to 93,312 carloads, according to the Association of American Railroads. Based on an average 714-barrel rail tank car, third-quarter shipments averaged about 740,000 barrels per day (bpd), up from 64,658 carloads or about 512,000 barrels per day during the same period a year earlier. That was a 14 percent drop, however, from second quarter 2013 crude shipments.

As the amount of crude shipped by rail increases, the risk of derailments has also climbed.

The following table details a number of derailments across the United States and Canada in the past 12 months involving rail freight cars carrying crude and petroleum products:

DateLocationRail operatorTotal train carsTrain cars involvedType of carType of crude/ownerOriginDetails
Jan. 7Plaster Rock, New BrunswickCN Railway122 cars19 cars on fire, one locomotiveDOT-111, unclear if older or newer modelsPropane and crude oil, owner unknownToronto to Moncton, New BrunswickDerailment and fire
Dec. 30Casselton, N.D.BNSF Railway, owned by Warren Buffett's Berkshire Hathaway106 cars21 cars on fire, both engines destroyedDOT-111Bakken crude, owner unknownFryburg, N.D. to Hayti, Mo.Train carrying soybeans derailed and collided with another train hauling crude oil; multiple explosions reported
Nov. 8Pickens County, Ala.Genesee & Wyoming90 cars25 cars derailed, a number on fireDOT-108N.D. crude, owner unknownAmory, Miss. to transfer staion in Walnut Hill, Fla.Derailed and exploded; cause unknown
Oct. 19Gainford, AlbertaCN Railway134 cars13 cars on manifest train derailed, one LPG car exploded, three LPG cars caught fireDOT-112JCrude oil and LPG, owner unknownEdmonton, Alberta, to VancouverDerailed after emergency breaking
July 6Lac-Magantic, Quebec72 carsEntire trainOlder DOT-111Light shale crude from Bakken region, owned by World Fuel ServicesN.D. to Irving refinery in Saint John, New Brunswick47 people killed when runaway train derailed and exploded in town center
June 27Calgary, AlbertaCP Railway102 cars5 carsUnknownPetroleum distillate, owner unknownUnknownCars derailed on broken bridge over the Bow River, no fire
May 21Jansen, Sask.CP RailwayNot known5 cars on mixed freight trainUnknownWestern Canadian crude, owner unknownUnknown eastbound train575 barrels of crude spilled, no fire
April 3White River, Ont.CP RailwayNot known20 cars on mixed freight trainUnknownLight crude, owner unknownOrigin unknown, bound for Montreal400 barrels of oil leaked from two tankers. Derailment blamed on broken wheel and rail, no fire
March 27Parkers Prairie, Minn.CP Railway94 cars14 cars on mixed freight trainUnknownCanadian crude, owner unknownOrigin unknown, bound for Chicago area15,000 gallons of oil leaked from three tank cars, no fire