Responding to a series of fiery train crashes, the federal government proposed rules Wednesday that would phase out tens of thousands of older tank cars that carry increasing quantities of crude oil and other highly flammable liquids through America’s towns and cities.
But many details were put off until later as regulators struggle to balance safety against the economic benefits of a fracking boom that has sharply increased U.S. oil production. Among the issues: What type of tank cars will replace those being phased out, how fast will they be allowed to travel and what kind of braking systems will they need?
Oklahoma City-based Continental Resources Inc. is the most active driller in the oil-rich Bakken field in North Dakota and is one of the leading companies using rail to transport its oil throughout the country.
“Overall, I’m glad the Department of Transportation has come out with their notice of proposed rules,” said Jeff Hume, Continental’s vice chairman of strategic growth initiatives. “We want to see the equipment and operation of the rail as safe as possible.”
The upgrades likely will add to the cost of transporting oil, but Hume said a reasonable cost hike will not slow the industry.
“It may be the cost of safety,” Hume said.
Accident investigators have complained for decades that older tank cars, known as DOT-111s, are too easily punctured or ruptured, spilling their contents when derailed. Since 2008, there have been 10 significant derailments in the United States and Canada in which crude oil has spilled from ruptured tank cars, often igniting and resulting in huge fireballs. The worst was a runaway oil train that exploded in the Quebec town of Lac-Megantic a year ago, killing 47 people.
Transportation Secretary Anthony Foxx said he said he expects his department to complete final regulations before the end of the year. First, the public and affected industries will have an opportunity to comment on the proposal.
“We are at the dawn of a promising time for energy production in this country,” Foxx said. “This is a positive development for our economy and for energy independence, but the responsibilities attached to this production are very serious.”
In a report released with the rules, the Department of Transportation concluded oil from the Bakken region of North Dakota and Montana, where fracking methods have created an oil boom, is more volatile than is typical for light, sweet crudes.
The oil industry immediately challenged that conclusion.
“The best science and data do not support recent speculation that crude oil from the Bakken presents greater-than-normal transportation risks,” said American Petroleum Institute President and CEO Jack Gerard. “DOT needs to get this right and make sure that its regulations are grounded in facts and sound science, not speculation.”
Rail shipments of crude have skyrocketed from a few thousand carloads a decade ago to 434,000 carloads last year. The Bakken now produces more than 1 million barrels per day, and production is increasing.
Several pipeline projects are under construction or planned to help more easily move oil throughout the country, but Hume said the industry likely will continue to rely on rail for many years.
“I don’t think we’ll see a huge growth in demand, but I think the demand could be maintained,” he said. “They are serving markets on the east and west costs, while most of the pipelines in the U.S. run north and south through the Great Plains.”
The phase-in period for replacing or retrofitting older tank cars that transport the most volatile types of liquids is shorter than the Canadian government’s three-year phased plan. Congress, fearing another Lac-Megantic, has been pressuring regulators to put new safety rules in place as quickly as possible.
The proposal also includes ethanol, which is transported in the same kind of tank cars. Between 2006 and 2012, seven train derailments led to ruptures of ethanol tank cars. Several crashes caused spectacular fires that responders were powerless to put out.
The proposed regulations apply only to trains of 20 or more cars. Crude oil trains from the Bakken are typically 100 cars or more.
Whatever option regulators settle on, the proposal calls for newly manufactured cars to meet that standard beginning Oct. 1, 2015.
The proposal continues a requirement that railroads transporting at least 1 million gallons of Bakken crude oil notify emergency response commissions before passing through. Communities from upstate New York to the coast of Washington have complained about being left in the dark.