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Ohio Utica Shale

Federal inspectors checking Bakken rail shipments of crude oil

By Bob Downing Published: September 3, 2013

From Bloomberg News:

U.S. rail-safety regulators began a “Bakken blitz” of inspections of crude oil tank cars this week as they seek to prevent a railroad disaster in the U.S. similar to July’s fatal inferno in Quebec.

Inspectors from the U.S. Federal Railroad Administration and Pipeline and Hazardous Materials Safety Administration are examining rail cars moving crude from North Dakota’s Bakken region, Cynthia Quarterman, PHMSA administrator, told reporters today during a break in a Washington meeting to discuss U.S. rail safety risks.

Crude produced by hydraulic fracturing in the Bakken was being hauled by a train that rolled away while parked overnight and crashed into Lac-Megantic, triggering an explosion that killed 47 people July 6. U.S. regulators are carrying out the inspections to make sure shippers are properly identifying the cargo in the rail tank cars from the region.

Hazardous materials regulations require tank cars to carry placards telling railroads and emergency responders what’s inside.

“We believe there’s risk,” Federal Railroad Administrator Joseph Szabo said. “Most grades of crude would not be that volatile.”

Known internally as “Operation Classification,” regulators began planning the surprise inspections in March, before the Quebec accident, after employees in the field noticed “inconsistencies with crude oil classification,” PHMSA said in an e-mailed statement.

Volume Doubled

The volume of crude oil moved by large U.S. railroads more than doubled in the second quarter from the same period a year earlier, the Association of American Railroads said today. U.S. railroads originated 108,605 carloads of crude in the quarter ended June 30. That’s a U.S. record for rail shipments in a quarter as oil production increases in North America and rail gains in popularity over pipelines as a means of transport.

The association, based in Washington, estimates railroads carry 11 percent of U.S. crude oil production. The group’s members include Burlington Northern Santa Fe LLC, owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), and Union Pacific Corp. (UNP), the largest U.S. railroad by track miles.

The inspection blitz will continue as long as regulators deem it necessary, Quarterman said. Examinations are occurring where crude is loaded and at its destinations, she said.

“Our big concern is that what is in the tank car is what they say is in the tank car,” she said.

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