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Tags: Tank | Oil | Rail | Industry

Older Tank Cars to Be Phased Out Under Oil, Rail Industry Offer

Monday, 14 July 2014 05:56 PM EDT

Oil companies and railroads that move crude have presented a joint plan to U.S. regulators that would phase out a type of older tank cars implicated in a spate of fiery accidents, according to two people familiar with the plan.

The plan also calls for slightly thicker walls for new cars to make them less vulnerable to puncture, according to the people, who asked not to be identified discussing private communication. The parties agreed to scrap the fleet of thousands of DOT-111s within three years if tank car manufacturers agree they can replace or retrofit the tank cars in that period.

Representatives of the American Petroleum Institute and the Association of American Railroads met with officials of the Transportation Department and Office of Management and Budget on July 11 to present their plan, one of the people said.

Those agencies, along with their counterparts in Canada, are weighing steps that can be taken to increase the safety of moving oil by rail in the wake of a number of accidents, including one a year ago in Quebec that killed 47.

If adopted by regulators, the industry plan would require a significant investment by oil and leasing companies that own rail cars.

Transport Canada in April mandated a three-year phase-out of tank cars ordered before October 2011, when the industry introduced a car design to include steel shields at the ends and protection for valves on the top. The agency also banned immediately tank cars that have weak underbelly support, those built before the mid-1990s, from carrying dangerous goods.

Thicker Steel

The deal between API and the railroad group also would require new cars to be built with a half-inch thick steel shell, or 1/16th of an inch thicker than newer car designs now being produced, known as the CPC-1232.

Officials from the Washington-based API and AAR didn’t immediately respond for comment. API’s members include Exxon Mobil Corp. AAR represents companies such as Berkshire Hathaway Inc.’s BNSF railway. A spokesman for the Transportation Department also did not immediately respond to a request for information about the plan.

Until recently, trains didn’t carry much oil. That changed with a big jump in domestic production that outpaced the capacity of pipelines to carry the fuel.

As many as 10 trains with 100 or more tank cars filled with crude leave North Dakota, home to a booming oil and natural gas industry, every day for refineries across the U.S. Carloads of oil jumped to 408,000 last year from 11,000 in 2009, according to the Association of American Railroads.

Quebec Crash

“We’re seeing exponential growth in the transport of crude oil by rail,” Transportation Secretary Anthony Foxx said in Washington on July 1 at a breakfast sponsored by the Christian Science Monitor. “It requires us to step up our level of safety as a nation.”

A year ago, an unattended train broke free from its brakes and rolled into Lac-Megantic, Quebec, creating a fireball that killed 47 people and incinerated much of the downtown area.

Subsequent derailments and explosions of trains in North Dakota and Virginia that didn’t cause causalities led to heightened concern about using trains to haul oil in the U.S.

The accidents have focused attention on the design of an older tank car, known as the DOT-111, that the National Transportation Safety Board said are vulnerable to rupture. Those cars are still in wide use today.

The U.S. Transportation Department has taken interim steps to respond to what it’s called an imminent hazard.

In February, it reached an agreement with railroads to slow oil trains to 40 miles per hour through urban areas from 50 mph and install sensors to detect faulty track.

In May railroads agreed to give local officials more information on crude shipments routed through their communities.

Tank car owners have balked at the cost, estimated as high as $60,000 each, to modify tank cars to the new specifications. The cost wasn’t clear for the design agreed to by API and AAR.

© Copyright 2024 Bloomberg News. All rights reserved.

Oil companies and railroads that move crude have presented a joint plan to U.S. regulators that would phase out a type of older tank cars implicated in a spate of fiery accidents, according to two people familiar with the plan.
Tank, Oil, Rail, Industry
Monday, 14 July 2014 05:56 PM
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