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BNSF to take bids to buy up to 5,000 safer oil railcars

By: | at 01:02 PM | Intermodal  

BNSF Railway Co plans to buy its own fleet of up to 5,000 new crude oil tank cars with safety features that exceed the latest standards adopted by the industry more than two years ago, the unit of investor Warren Buffett’s Berkshire Hathaway Inc said.

The unusual step is intended to further the industry’s push for safer movement of crude by rail in light of several derailments and crashes in recent months, including one involving a BNSF train in North Dakota last December.

The company, a major mover of crude by rail throughout the United States, plans to seek bids from railcar makers for up to 5,000 new tank cars with more safety features than those that already meet stronger industry standards, such as thicker walls, thicker ends and more protection of safety and pressure valves.

BNSF’s plan is atypical for a railroad, which generally owns only the tracks and locomotives that pull trains. Railcars are usually owned by companies that lease them to others that rely on rail transport such as refiners Phillips 66 and PBF Energy Inc, which buy as well as lease their own cars.

The December crash of a BNSF crude train in North Dakota involved railcars that do not meet industry safety standards, according to investigators. The train collided with a derailed grain train, setting off fires that burned for more than a day. No one was hurt.

Crude-carrying tank cars built after October 2011 are based on stronger design standards recommended by the Association of American Railroads trade group. That design features stronger hulls and reinforced valves less likely to puncture or leak in a derailment.

The U.S. Transportation Department’s Pipeline and Hazardous Materials Safety Administration is considering new rules for safer tank cars as crude transport via rail surges in tandem with the booming onshore oil production in the United States and Canada.

Last week, Canadian National Railway Co and Canadian Pacific Railway Ltd said they would charge higher rates for customers that move crude in railcars built before October 2011, which the National Transportation Safety Board said in 2009 were unsafe.

BNSF declined to comment on possible pricing to shippers opting to use the railroad’s tank cars once they are built, saying such information is proprietary. Other U.S. railroads also declined to comment last week on the Canadian railroads’ decision to charge shippers more for using older tank cars.

But BNSF’s plan to move into tank car ownership and the Canadian railroads’ pricing decisions to push shippers to use newer railcars all came before U.S. regulators have issued any new safety standards.

BNSF did not identify railcar makers from which it will seek bids, but those manufacturers in the United States include Trinity Industries Inc, American Railcar Industries Inc and Greenbriar Cos Inc. (Reuters)