US domestic oil production is at a 24 year high thanks to hydraulic fracturing or fracking, which extracts oil by blasting water mix with sand and chemicals underground to break apart shale rock.
As such, rail transport of oil is also rising. According to the Association of American Railroads, total chemical and petroleum carloads increased 8.8% over 2012 to 3,182,551 carloads. According to the Associated Press, the amount of oil shipped by rail has increased from 10,000 tanker cars in 2009 to more than 400,000 in 2013.
However, there are risk of spills when hazardous materials such as crude oil or fracking fluids are transported by trucks and trains, tankers and pipelines. For example, from January to November 2013, 137 such spills were reported from rail cars alone.
Not only is there a possibility of spillage but also a possibility of fire. Oil tanker cars in use today were designed for the heavy crude oil extracted primarily in Texas. But the Bakken oil has a lower flash point, meaning the vapors can ignite at a lower temperature. That requires thicker tank shells, puncture-resistant shields and stronger valve fittings to prevent spills that could easily explode.
A recent accident took place on December 30, in Casselton, North Dakota when 20 tank cars derailed. A preliminary investigation report released this week by the National Transportation Safety Board reported 18 of the 20 tank cars that derailed were punctured on BNSF tracks and that 400,000 gallons of crude oil spilled and igniting making it one the country’s largest oil spills from a train in decades.
To address some of these increasing transportation risks, the Association of American Railroads issued a press release in November urging the U.S. Department of Transportation to “press for improved federal tank car regulations by requiring all tank cars used to transport flammable liquids to be retrofitted or phased out, and new cars built to more stringent standards”.
“We believe it’s time for a thorough review of the U.S. tank car fleet that moves flammable liquids, particularly considering the recent increase in crude oil traffic,” said AAR President and CEO Edward R. Hamberger.Since the Lac-Mégantic, Quebec train derailment on July 6, 2013 (See July 11, 2013 Ti brief: Deadly Oil Disaster Sparks Transportation Review) calls for both the Canada and the US governments to mandate updated safety regulations for oil tanker cars is on the rise. Expect progress to be made in 2014 in order to prevent another Lac-Mégantic or Casselton from occurring.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)