TRANSPORT:

'Bakken blitz' sets up battle between oil producers, shippers

The Obama administration's launch of a crude-by-rail safety inspection push dubbed the "Bakken blitz" could open fault lines between freight operators and oil producers that have turned to the tracks to tote a record-high volume of flammable fuel.

The potential for tension centers on parallel safety concerns stemming from the fatal July 6 derailment in Quebec of a 73-car Bakken oil train; operator choices such as using one-person crews on freight trains carrying hazardous materials, now prohibited in Canada; and shipper responsibilities such as classifying crude to reflect chemical properties that could lead to more severe fires and damage in the event of an accidental release.

A month before the Federal Railroad Administration and Pipeline and Hazardous Materials Safety Administration kick-started their joint oil-train inspection operation, a senior FRA official pointed to possible tank car corrosion from hydraulic fracturing chemicals and warned of regulators' inability to detect widespread misclassification of fuel shipments.

"FRA can only speculate as to the number of crude oil shipments that are being made" in tank cars not covered by new industry standards for durability in the event of accidents, the agency's acting director of safety assurance wrote to the American Petroleum Institute on July 29.

On the operator side of the ledger, the Transportation Department's rail safety advisory council agreed at the same Thursday meeting that yielded news of the "blitz" to open a long-term inquiry into whether to change crew staffing practices and strengthen safeguards against the accidental movement of parked trains.

Referring to an emergency order issued after the Quebec disaster, FRA chief Joseph Szabo stated in remarks prepared for the advisory council meeting that "we need to discuss how to make these provisions permanent" (Greenwire, Aug. 29). He also said the agency plans to start publicly "tracking industry compliance" with both the emergency order and a nonbinding, stricter safety advisory.

Asked about the FRA-PHMSA inspection operation, API spokesman Eric Wohlschlegel underscored the importance of railroads properly handling hazardous oil-industry cargo.

"We are eager to assist the rail industry in its efforts to ensure that its systems, its standards and its operating procedures are followed to the highest degree of safety possible and in compliance with all federal regulations," Wohlschlegel said in an interview. "We understand that rail operators are re-examining their rail systems, brake equipment, personnel requirements and other areas, and we believe the federal government's efforts to enforce rail standards are critical to protecting the environment and human lives."

FRA declined a union petition to require two-person train crews in 2009, but Szabo recently rapped the president of the railroad involved in the Quebec disaster for adding a crewman to his Canadian trains but not his U.S. counterparts. Maine Democratic Reps. Chellie Pingree and Mike Michaud introduced legislation last month that would make solo crews illegal.

Association of American Railroads spokeswoman Holly Arthur said that the rail industry would postpone official comment on FRA's recommendations until the agency's advisory council completes its months-long work. "We certainly support what FRA and PHMSA are doing with their examination of the oil that is being shipped," Arthur said via email.

The audits that sparked the Bakken blitz began before March, when regulators began formally planning the inspection push, an FRA spokesman said in an interview. While sampling of crude oil cargo by shippers and proper behavior by operators are both under the microscope, it remains unclear whether one end of the supply chain is set to be examined more closely than another.

Faulting the 'groceries'?

As oil shippers publicly look to operator behavior and rail operators publicly look to the crude cargo in the wake of the Quebec derailment, the prospect of two ends of the fuel supply chain butting heads over the response becomes more palpable.

"I find it really ironic that you have operating systems, braking systems, all of the other rail systems involved, and regulators are scrutinizing hydraulic fracturing fluid without providing data to support the move," said an oil industry source tracking the inspection blitz who spoke candidly on condition of anonymity. "Why are they going to fracking fluid? It's like blaming a car accident on the fact that there were groceries in the trunk."

At issue in FRA's scrutiny of fracturing fluid, the industry source said, is the potential appearance of deflecting rail operators' responsibility for the prevention of accidental releases onto shippers of Bakken crude.

The federal agencies' push to ensure proper classification of fuel cargo likely would not raise significant questions among crude shippers if it came in the context of a broader internal inquiry among rail operators themselves, the source added.

FRA outlined the risk of misclassified shale oil running the rails out of the Bakken in its Aug. 7 safety advisory, issued with PHMSA. Federal hazmat regulations allow liquid cargo such as crude oils "that do not meet the definition of any other hazard class to be reclassified as a combustible liquid," the agencies stated, which in turn would exempt that cargo from certain rules for handling dangerous materials, to include the requirement that the material be "transported in a DOT-specification" railcar, the agencies added.

Even when oil is shipped in DOT-specification cars, heightened danger in the event of a crash remains a major concern after the Quebec disaster for investigators on both sides of the border. PHMSA remains nearly a year behind schedule on its announcement of a proposed rule to strengthen safety standards for the DOT-111 tank car involved in the blast, a type of car that the National Transportation Safety Board and its Canadian equivalent have linked to a higher risk of rupture during accidents (EnergyWire, July 10).

The Transportation Safety Board of Canada continues to look at whether the composition of the Bakken crude that spilled in the Quebec town of Lac-M├ęgantic played a role in the intense nature of the resulting fire. "It was shipped as a Class 3, Packing Group 3 flammable liquid, and some of the fire characteristics" didn't align with that category, Donald Ross, the board's lead investigator in Lac-M├ęgantic, told Reuters last month.

Class 3 hazardous materials have a higher flashpoint than those in Classes 1 and 2, considered more dangerous and closely regulated under federal rules. Oil is historically considered a Class 3 material, though regulators have noted that excess hydrogen sulfide in sour crudes could add to the flammability and toxicity risks that typically keep the fuel in the lowest category.

Hydrogen sulfide found in light Bakken crude sparked a summertime tussle before the Federal Energy Regulatory Commission between pipeline operator Enbridge Inc. and some of its shippers (EnergyWire, May 30).

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