A string of deadly accidents and safety scares in recent months involving rail cars carrying crude oil is vividly demonstrating the dangers of relying on trains to transport the growing volumes of fuel being produced in North America, while giving ammunition to those who say the stalled Keystone XL and other pipelines are preferred ways to safely funnel fuel to market.
With more than 10 percent of the nation’s fuel being transported daily by rail through densely populated cities such as Philadelphia and Chicago, and a rash of incidents just in the past few months in Alabama, North Dakota, Pennsylvania and elsewhere, the multiplying safety threats are raising worries in Congress.
U.S. and Canadian transportation safety agencies last week came together to warn of the rising risk of a “major loss of life” from accidents. Federal data show that more than 1 million gallons of crude oil spilled in railroad accidents last year, dwarfing the total from spills in the previous four decades. Those figures do not even include the gigantic spill of 1.5 million gallons from a runaway train in Quebec in July that touched off an oil firebomb that incinerated much of the small town of Lac-Megantic and killed 47 people.
Environmental groups contend that pipelines are not safe, but the occasional breaks and spills have been mostly in unpopulated areas. Rail transport, however, has required the evacuations of entire towns and put thousands of people in heavily populated areas at risk.
“The continuing series of rail accidents reminds us that in evaluating whether to build more pipelines, human safety should be a paramount consideration,” said Diana Furchtgott-Roth, an economist at the Manhattan Institute. “Road and rail have higher rates of serious incidents, injuries and fatalities than pipelines.”
She said the oil industry has had to turn to rail shipments because not enough pipelines in the U.S. run from north to south or from the heartland to the west and east to deliver new sources of crude where it is needed. Regulatory approval of pipelines — in particular the massive Canada-to-Texas Keystone XL — has been slow, and such projects take billions of dollars and years to build. Rail depots and track extensions, by comparison, can be built more cheaply within months. As a result, rail transport of oil soared by 30 percent last year and is up 25-fold since 2008.
The Bakken epicenter
Many of the more serious rail incidents recently — including the disaster in Quebec and a derailment and massive explosion in North Dakota last month — stemmed from inadequate infrastructure. North Dakota’s Bakken formation is the epicenter of the shale oil revolution that is providing the country with high-quality crude.
Without pipelines, North Dakota has had to flare off much of the valuable natural gas found in the Bakken wells, and the lack of pipelines leading east or west has forced producers to ship two-thirds of their oil by rail to urban destinations on the coasts.
This year, the share of oil leaving North Dakota by rail is slated to reach 90 percent, and some trains extend more than a mile and 100 cars in length.
Heightening the danger, federal regulators have determined, is that Bakken’s light crude is more flammable than other heavy crudes.
The Keystone XL pipeline, which President Obama has not approved for years in the face of intense opposition from environmentalists, is designed primarily to funnel heavy crude from Canada’s Alberta oil sands to the Gulf Coast for refining. But it also would include an extension to carry about 100,000 barrels a day of Bakken crude. Like most other pipelines, it would follow a route that avoids heavily populated areas.
A State Department report last year concluded that if the Keystone pipeline is not approved, much of Canada’s crude will find its way to market by rail, multiplying the threat to human safety in thousands of towns and major cities along the tracks.
Keystone is far from the only oil pipeline in demand. Ms. Furchtgott-Roth said the nation needs a “new generation of pipelines” to carry oil and natural gas from the American heartland and Canada to the Gulf Coast.
Pipelines also are needed to deliver shale gas from sources in Pennsylvania, Ohio, Alabama and North Dakota to the rest of the country, she said.
A need for gas pipelines
Gas pipelines are in short supply particularly in the Northeast, despite the proximity of shale gas fields in Pennsylvania and Ohio. This month, millions of households were threatened with power outages during Arctic cold spells because the existing pipeline network could not carry enough natural gas to heat homes and generate power at gas-burning plants in the region.
“Clearly, pipelines are part of the solution,” Sen. John Hoeven, North Dakota Republican, told Platts Energy Week. “Most of the pipelines go south. So we need to develop the infrastructure that goes with the energy development and the energy renaissance we are having in this country.”
He said the Keystone pipeline would relieve a substantial amount of rail traffic as well as a great deal of road congestion caused by trucks hauling oil from his state.
Mr. Hoeven was hopeful that oil companies will secure approval of the Sandpiper pipeline, a project in the planning stages, to move about 200,000 barrels per day of North Dakota premium crude to Eastern refineries.
The increase in rail incidents has caught the attention of legislators and regulators, who are calling for investigations to determine whether transporters of crude have complied with safety standards or require new regulation.
Transportation safety regulators last week warned of the growing risks to life and property. Among their recommendations, they called for oil to be transported on routes that avoid heavily populated areas.
“The large-scale shipment of crude oil by rail simply didn’t exist 10 years ago, and our safety regulations need to catch up with this new reality,” said National Transportation Safety Board Chairman Deborah A.P. Hersman. “While this energy boom is good for business, the people and the environment along rail corridors must be protected from harm.”
Alarm on Capitol Hill
Concern is rising in Congress with each incident.
“The recent derailments and severity of the resulting explosions demand further action,” Senate Energy Committee Chairman Ron Wyden, Oregon Democrat, and Senate Commerce, Science and Transportation Committee Chairman John D. Rockefeller IV, West Virginia Democrat, said in a letter this month to the secretaries of energy and transportation.
Calling the growing number of derailments alarming, they said “the federal government must have a thorough understanding of the risks to communities near active oil train routes, as well as the current and future volumes of oil transported by rail.”
The Transportation Department has launched a “Bakken blitz” — a series of unannounced oil train inspections, and Transportation Secretary Anthony Foxx met with rail and oil industry officials this month to determine what actions they are taking to ensure safety.
Jack Gerard, president of the American Petroleum Institute, said he assured Mr. Foxx that oil producers were doing what they could to make rail shipments safe. Since 2011, oil companies have been purchasing specially fortified rail cars that exceed federal standards for transporting oil, he said, and those cars now constitute 25 percent of the oil tanker fleet. He predicted that by next year, 60 percent of crude shipments will be in these cars.
“If unit trains of flammable liquids are going to be part of our nation’s energy future, we need to make sure the hazardous materials classification is accurate, the route is well-planned and the tank cars are as robust as possible,” said the NTSB’s Ms. Hersman.
Frank Maisano, senior principal at the law firm Bracewell & Giuliani, predicted that the Keystone pipeline will gain support as a result of the surge of attention to safety.
“Given a number of incidents, expect a wider, more detailed focus on the infrastructure issues surrounding transportation of oil,” a development that will put environmentalists who oppose Keystone on the spot, he said.
Environmentalists say the rail incidents are no worse than incidents involving pipeline spills and do not present a convincing reason to approve Keystone. They point to a pipeline break in April that spilled 200,000 barrels of Canadian heavy crude oil into a small Arkansas community.
“I think it’s apples and oranges, and I haven’t seen a good barrel-per-barrel comparison” of the safety of rail versus pipelines, said Stephen Kretzmann of Oil Change International. “But I think it’s just the wrong question to be asking. I don’t know why you would say, ‘What’s the best way of doing what we know we shouldn’t be doing?’”
Standard & Poor’s Corp. analyst John Kingston said rail has played an important role in the innovative shale revolution.
“It’s been a tremendous bridge in avoiding a real disaster,” he said. “Without adequate rail capacity, wells would have had to shut down because there would have been no place for the oil to go.”