Crude-by-railUpdated crude oil regulation worries environmental groups, increases shipments

Following several deadly explosions of oil-tanker railroad cars in towns across the United States and Canada in the past several years, the Department of Transportation (DOT) issued an emergency order that required railroads publicly to inform states of movements of 100 crude oil tanker cars or more as part of any single shipment. However, on 1 May the agency revised the order with a long-awaited rule which would require carriers to upgrade tanker cars instead of having to report the information, leading some to question the safety of the new ruling.

As the Commercial Appeal reports, the DOT has shielded rail carriers from having to release the information as a compromise in part for full tanker car upgrades. Most rail carriers have famously fought the rulings to release payload information right away.

Now, carriers only need to provide the information to emergency responders after an incident has already occurred. Many of these trains are transporting Bakken crude shale oil which is transported from the Bakken formation which stretches through parts of Montana, North Dakota and the Saskatchewan and Manitoba provinces of Canada.

The revised measure, and the lingering memory of incidents such as the July 2013 tanker explosion in Quebec, Canada which killed forty-seven people, have led to questioning and debate from environmental groups such as Earthjustice, which has criticized the development.

Following the new ruling, carriers such as CSX are operating an average of five trains a week through heavily populated centers such as Memphis, Tennessee, carrying over a million gallons of crude through the region.

According to theLos Angeles Times, “crude-hauling trains have been involved in a couple dozen incidents in the U.S. since 2013, a byproduct of the domestic oil production boom.” The paper went on to add that “crude shipments by rail went from 29,605 cars in 2010 to 493,126 in 2014, although lower oil prices have slowed the growth in the past year.”

Additionally, sea-based oil barges are also increasing operation to meet the growing demand and output. These barges are less regulated than rail networks, though major transfer terminals are based in coastal cities.

Nashville-based Ingram Barge, the fourth largest owner of oil-barges, announced that it would increase its crude hauling fleet by 10 percent. Each barge will carry roughly 10,000 gallons.

“Just a few years ago, crude-by-barge was essentially nonexistent, and today it has become one of the largest commodities moved by the barge industry,” reported the southern banking firm BB&T in a Capital Markets research report.