AJOT Digital Edition
Issue #592

Cover of issue-592.png

Breakbulk Quarterly

3PL Quarterly

View Issue #592 Now!

2014 Media Kit

Booming North Dakota takes latest oil train wreck in stride

By: | at 11:45 AM | Intermodal  

In this tiny North Dakota town, the shock of watching a dozen oil tank cars erupt into flames just a mile or two from residents’ homes and businesses stirred little anxiety over the safety of the thriving oil-by-rail business.

Here, in the eastern part of a state whose booming agriculture and oil economy is hugely reliant on railways, residents and officials expressed few signs of alarm over the surging number of trains carrying flammable crude from the Bakken shale, the same variety that erupted earlier this year after a tragic derailment in Quebec and another in Alabama.

Most were thankful that the no one had been injured on Monday afternoon when an east-bound BNSF crude oil train apparently ran into a west-bound soybean shipment that had derailed. The collision triggered a series of blasts that has engulfed nearly two dozen cars, officials said, as the ultra-light oil inside the tanks heated up to the point of eruption.

“It doesn’t change my opinion on the security of the railway,” says Jerome Krandall, who along with his wife and two children was the only Casselton resident to register late on Monday at a Red Cross shelter set up to house residents who had heeded a call to evacuate the town.

“It would have been a little different if it would have been in the town, because I live two blocks off of the railroad tracks. That would have been a little bit more devastating.”

The incident, at least the fourth major explosive derailment this year involving a train hauling oil, is certain to fuel more debate over additional safety measures to address the oil-by-rail boom, including more stringent rules on highly flammable types of crude or costly retrofits of tank cars.

But in North Dakota, the epicenter of a U.S. shale oil boom, there has been more complaint in recent years in over the surge in road traffic than rail, as huge rigs hauling oil equipment add to accidents and wear down rural roads.

“All we could hear was a couple of big booms and that was it,” said Theresa Biel, who lives in Casselton and was working at Casselton Cold Storage when the accident happened.

“It’s no different than driving your car,” she said. “Car accidents happen every day, train accidents happen every day.”

If anything, the impact of the incident is more likely to be felt thousands of miles away, along the densely populated coastal regions such as the Pacific Northwest, where some residents have already raised alarm over the potential environmental impact of oil-rail traffic.

In Canada, where such traffic is still relatively rare, the shock of July’s tragic derailment in Lac Megantic, Quebec, in which a runaway train exploded in a fireball that killed 47 people, was visceral. The country has already moved toward tightening regulation of the oil-by-rail trade, which is now growing quickly to help ship oil sands crude south.

Unshaken Confidence

Sparsely populated North Dakota might be one of the most rail-dependent states, with more than two-thirds of the booming Bakken shale oil shipped by rail due to a lack of pipeline infrastructure, and most of its wheat and soybean crops, the second and ninth largest in the country, are moved by rail to the West Coast, where they are shipped to Asia.

Trains haul grains and crude to coastal markets. Production of both is thriving thanks to new techniques to release oil from tight coal seams, and bumper harvests. Unemployment is just 2.6 percent, one-third the national average. The population, in decline just a decade ago, is now the fastest-growing in the country, data showed this week.

Rail service “is extremely important. It’s probably the most important factor for the North Dakota economy,” says Scott Sinner, Procurement Manager and partner in Casselton-based Sinner Bros. & Bresnahan (SB&B), a family-owned agri-business venture that grows and processes food crops.

“I don’t think it alters our confidence in the rail system,” said Sinner, whose company ships product daily via BNSF, the only rail line through Casselton and the biggest in the state.

In 2011, North Dakota railways loaded some 15 million tons of farm products, over 10 percent of the nation’s total and the third most of any state, industry data show. It has over 3,300 rail miles, or 2.4 percent of the country’s total. With crude oil shipments having surged by 67 percent to nearly 700,000 bpd by October, it accounts for the lion’s share of such loadings, most of which travel thousands of miles to coastal refineries.

Yet it has registered only 16 reportable rail accidents this year through September, just under 1 percent of the nation’s total, Federal Railroad Administration data show.

Monday’s accident, which appeared to stem from a rather small derailment, does not appear to raise any new questions about the safety of oil-trains specifically, but video showing tank cars dramatically erupting in flames might stoke further debate over existing areas of concern, experts say.

“Accidents like this are not only wake-up calls to the residents directly affected, but to those along the heavily-trafficked routes bringing crude to the U.S. east and west coasts,” says Eurasia Group analyst Elena McGovern.

While an order to retrofit pre-2011 oil tank cars remains “unlikely,” she said that pressure is growing and, “may become unavoidable should another incident more directly impact residential areas.” (Reuters)