April 22, 2014 / 10:37 PM / in 6 years

Some oil-by-rail cargo should move like propane, U.S. officials say

WASHINGTON, April 22 (Reuters) - U.S. rail industry officials said on Tuesday that some oil-by-rail shipments from energy patches like North Dakota’s Bakken region may be so volatile, that they should be handled like propane.

Rail operators and the tanker car industry have expressed that view to regulators who are trying to understand why several oil-by-rail mishaps have led to fiery explosions in recent months. Those incidents came after the disaster last July, when a 74-car runaway train carrying Bakken crude oil detonated in Lac-Megantic, Quebec, killing 47 people.

Oil-by-rail cargo typically moves in standard tank cars while petroleum gasses like propane must be carried in heavier and costlier, but sturdier, pressure tank cars.

Gassy, volatile oil being moved by rail out of the Bakken traveling in standard tank cars may pose a risk, Robert Fronczak of the Association of American Railroads told a safety panel.

“Those types of commodities could be classified as a flammable gas instead of a flammable liquid which would require (a) pressure car,” Fronczak, told the National Transportation Safety Board.

Rail operators have noted the gas-heavy nature of some Bakken shipments, Fronczak said, “and so we feel a pressure car is more appropriate.”

Regulators have asked the rail and oil industries to offer a tank car design fit for moving fuel from North Dakota and some have proposed incorporating aspects of pressure cars such as a thicker shell.

But oil-by-rail stakeholders cannot make any final recommendations on tank car design until they have a clear understanding of the dangers of Bakken crude oil, said Bill Finn of the Railway Supply Institute, which represents car manufacturers.

“We would like to get the classification work completed so we know what we’re really dealing with,” he said.

The American Petroleum Institute, a leading voice of the U.S. oil industry, has sparred with the Department of Transportation about how much data they will share about oil-by-rail cargo.

U.S. Transportation Secretary Anthony Foxx this month rapped API for balking on a promise to share crude-by-rail data, but the trade group has insisted that its members take proper care with their cargo.

“The shipper is responsible ... to properly classify the material and we are doing that,” API’s Lee Johnson told the NTSB panel.

Transportation officials said they were dismayed by testimony that volatile oil-by-rail shipments were moving on the tracks in standard tank cars when a pressurized tank car might be more fitting.

“There is apparently a regulatory disconnect here,” said NTSB Vice Chairman Christopher A. Hart.

Many Bakken producers prefer moving oil by rail as opposed to via pipelines in order to reach refiners, who are willing to pay more for the light crude. North Dakota production is nearing 1 million barrels per day and roughly 72 percent of that fuel moves on the tracks.

“Under the current regulatory environment there is no requirement to transport this crude oil in a pressure car,” Fronczak said. (Reporting by Patrick Rucker, editing by G Crosse)

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