(Bloomberg) — A series of rail accidents involving oil tank cars that exceed federal safety standards yet still burst into flames after derailing is shifting the focus from the container to the crude — and whether it's too explosive to be carried by train.
A wreck over the weekend in Canada brought the total to four in less than a month in the U.S. and Canada. All involved relatively modern tank cars known as the CPC-1232, which are designed to be sturdier than a model that regulators have said are prone to rupture.
Safety advocates say the spills show that a proposed rule now under review at the White House to require even tougher tank cars is necessary, but that it may not go far enough.
"The problem is in the product," said Phil Steck, a New York state assemblyman whose district near Albany is bisected by oil trains.
A boom in U.S. oil production has increased the amount of crude moved by rail 5,000 percent since 2009. But accidents, including a 2013 derailment and explosion of oil from North Dakota that killed 47 people in Lac-Megantic, Quebec, has raised fears in the communities through which the trains travel.
On Saturday, a Canadian National Railway Co. train carrying crude oil from Alberta derailed and caught fire in northern Ontario, close to the same rural stop a CN train derailed on Feb. 14. In the U.S., a BNSF Railway Co. train derailed and caught fire near Galena, Illinois, on March 5. That followed a Feb. 16 accident of a CSX Corp. train traveling in West Virginia that sent a massive fireball into the sky and forced the evacuation of nearby homes.
Siphoning Elements
Steck said he wants the U.S. to require oil producers to siphon off the more explosive elements before the crude is loaded for shipping, which could raise costs by $2 a barrel.
Steck in a letter last month urged the U.S. Transportation Department to compel use of a stabilization tower to remove so-called light ends, including propane and butane, that make oil more explosive.
Last week, the effort got the support of Charles Schumer of New York, the third-ranking Democrat in the U.S. Senate.
Stabilization is commonly done in Texas but not North Dakota, originating point for much of the oil hauled by trains. Two of the derailments in the past month involved crude from North Dakota's Bakken formation. The latest was hauling oil from Alberta, Canada.
Separation Costs
Alison Ritter, a spokeswoman for the North Dakota Industrial Commission, which regulates the oil industry, said it was impractical to require companies to build the 30-foot towers to separate the light ends from the oil.
In Texas, gases that are removed can be easily shipped to nearby petrochemical companies. That option doesn't exist in North Dakota, she said.
North Dakota has set a standard that takes effect in April requiring that oil loaded onto rail cars not exceed a vapor pressure of 13.7 pounds per square inch, a measure of its volatility.
North Dakota lets companies use temperature and pressure to reduce oil's explosiveness through a process called conditioning. It's a less expensive option than stabilization and not as complete. A North Dakota government estimate said stabilization costs $2 a barrel, while conditioning adds about 10 cents.
West Virginia
The oil carried by a train that derailed in West Virginia wouldn't have met the North Dakota standard. Tests by Intertek Group Plc said it was rated at 13.9 pounds per square inch.
Schumer in a letter to the departments of Energy and Transportation said that the oil hauled in Lac-Megantic would have met North Dakota's 13.7 standard. That train, which was left unattended and rolled uncontrolled into town, was speeding at more than 60 miles per hour.
But Schumer said the accident shows North Dakota hasn't done enough to stabilize the Bakken crude oil.
The U.S. Transportation Department's proposed rail safety rule would require tank cars to have thicker steel shells, new thermal protections and tougher valves to prevent punctures and spills.
The White House's Office of Management and Budget is now reviewing the rule, which is expected to be released in May.
It doesn't set a volatility standard for the oil.
Sarah Feinberg, the acting administrator of the Federal Railroad Administration, which regulates trains, said the administration was reviewing whether additional steps are necessary.
'All Options'
"We continue to look at all options available to us for improving the safety of the transport of crude oil, both in the short and long term," Feinberg said in an e-mail. "Everything is on the table."
The Energy Department said it's in the "early stages" of a study of oil volatility and will share the results with the Transportation Department.
Tests directed last year by the Pipeline and Hazardous Materials Safety Administration, a division of the Transportation Department, found Bakken crude has a higher degree of volatility than most other U.S. crudes.
Last week, executives from refiners met with officials at the federal budget office and urged that the rule put a greater focus on preventing derailments.
Charles Drevna, president of the American Fuel & Petrochemical Manufacturers, a Washington-based group that represents refiners, said the safety benefits offered by oil stabilization don't justify the costs. The crude is still flammable and can catch fire and explode under the forces and conditions of an train derailment, he said.
"It's not going to matter a hill of beans if you can't keep the trains on the tracks," Drevna said in an interview.
Railroads have agreed to slow down oil trains in populated areas, and say they've increased the inspections of their tracks to reduce accidents.
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