Bakken oil safety warning issued by federal government – CNBC, Jan. 2, 2014

January 2, 2014

Categories: News, Oil and gas


By Patti Domm
Jan. 2, 2014
CNBC Executive News Director

Following this week’s fiery train crash in North Dakota, the federal government on Thursday issued a safety alert that crude oil being transported from the Bakken region, which stretches through swaths of North Dakota and Montana, may be more flammable than traditional heavy crude.

The Pipeline and Hazardous Materials Safety Administration said it issued the alert to notify the public, emergency responders, shippers and carriers as a result of its preliminary inspections after recent train derailments and resulting fires in North Dakota, Alabama and Canada.

The most serious of these derailments was in Lac-Megantic, Quebec, where a runaway train speeded for seven miles into the town and crashed into a nightclub, killing dozens last July. The pipeline agency, part of the Department of Transportation, said it is reinforcing the requirement that hazardous materials be properly tested, characterized, classified and where necessary, degasified.

About 700,000 barrels per day of Bakken crude is carried by rail, a fast-growing, flexible alternative to pipelines for transporting the landlocked oil to the Gulf Coast and East and West Coast refineries. A total 900,000 barrels a day of crude moved by rail in North America during the third quarter, according to IHS.

The hazards of rail shipping are expected to give more weight to the argument for pipelines, including the controversial Keystone XL pipeline, under review by the State Department. That pipeline would carry crude from the Canadian sands to a southern extension that would bring it into the Gulf Coast refining region.

The pipeline agency, along with the Federal Railroad Administration, said as part of its investigation of the accidents, it has begun a compliance initiative involving unannounced inspections and testing of crude shipments to verify that it has been properly classified.

The most recent incident occurred when a BNSF Railway train carrying soy beansderailed Monday, and a portion fell onto a neighboring track in front of the approaching oil train. Eighteen of the 106 cars on the oil train derailed and several burned, causing a massive plume and explosions. The 2,400 residents of nearby Casselton, N.D., were temporarily evacuated.

The National Transportation Safety Board had said the oil on the BNSF train was carrying materials classifed as a flammable liquid. An NTSB official explained that the crude was rated packing group Number 1, which has the lowest flash point of three groups.

The official, Robert Sumwalt, a board member leading the NTSB’s investigation, also said the rail cars involved in the crash were older types that do not meet latest industry safety standards. The Transportation Department has proposed requiring rail carriers to upgrade cars.

NTSB Chairwoman Deborah Hersman will appear on CNBC’s “Closing Bell” at 2:30 p.m. MST today.

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