Trains Hauling Crude will keep Rolling

Tuesday, January 7, 2014 @ 04:01 PM gHale

Trains hauling oil are not going to go away, but more regulations may be coming soon.

The final straw in the regulations area could be the derailment of an oil-carrying train in North Dakota last week and the resulting evacuations caused by its explosion.

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The incident “will continue discussion of safety issues surrounding train transport of crude oil,” investment banking firm Tudor, Pickering, Holt & Co. said in a note to investors on Tuesday. The derailment “could pressure the permitting processes currently ongoing for rail facilities” on the west coast, the note said.

Since there is a severe lack of a pipeline infrastructure in the Bakken region of North Dakota, trains appear to be the best way to transport crude. While pipelines have been under the spotlight of late, they are a much safer way to move oil. The problem is there is a limited availability of lines in areas of booming production and that has brought about widespread use of trains to move crude.

Rail movements of crude have skyrocketed in recent years, growing from 18,000 barrels a day in 2008 to 425,000 barrels a day in 2012. The growth continued this past year, with rail shipments of oil and petroleum products up 31 percent from 2012, according to the Association of American Railroads.

The derailment last week resulted in the second major explosion of a train carrying oil from North Dakota across North America this year.

A train that derailed and exploded in the Canadian province of Quebec in July decimated parts of the town of Lac-Mégantic. Forty seven people died in the resulting blaze.

The train was moving oil from North Dakota to a refinery in Canada.

The derailment Monday occurred after a grain train owned by BNSF Railways first derailed in Casselton, ND, according to the National Transportation Safety Board. A train traveling in the opposite direction carrying oil then hit the derailment and also derailed, the agency said. The crash caused explosions that sent huge fireballs into the air near Casselton.

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