On December 30, 2013, near the town of Casselton, North Dakota, a westbound train carrying grain derailed. Within minutes, an eastbound 106-car train transporting Bakken crude oil hit the derailed train. The collision caused eighteen oil cars to leave the tracks and catch fire. While no one was hurt, many of the town’s 2,400 residents temporarily evacuated their homes for two days due to explosions, intense flames, and heavy smoke from the burning cars.

Taking note of this and other similar incidents involving trains carrying crude oil (see below), the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a safety alert on January 2, 2014, “to notify the general public, emergency responders, and shippers and carriers that recent derailments and resulting fires indicate that the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.”

This alert follows a joint safety alert from PHMSA and the Federal Railroad Administration (FRA) dated November 20, 2013, to reinforce “the importance of proper characterization, classification, and selection of a hazardous materials packing group as required by the Federal hazardous materials law (49 U.S.C. 5101-5128) and Hazardous Materials Regulations (HMR; 49 CFR parts 171-180).” PHMSA and FRA have initiated an “Operation Classification” program in which there will be “unannounced inspections and testing of crude oil samples to verify that…the materials have been properly classified…”
With the volume of produced oil rising faster than can be moved by pipeline, railroads are being used more and more to transport oil products to processing facilities. The Energy Information Administration estimates that 1.37 million barrels per day of oil and petroleum products were shipped on railways during the first six months of 2013, that is approximately 356,000 carloads, up 48% from the same period in 2012. Review the numbers. This increased volume has led to an increase in the number of oil-related accidents. Since April of 2013, there have been oil tanker derailments in western Minnesota, Baltimore, and at three sites in Canada: Lac-Mégantic, Gainfield, and Landis.In the Lac-Mégantic incident, on July 6, 2013, an unattended 72-car freight train wrecked in the center of the small town, rupturing many of the tanker cars, and causing a fire approximately 400 feet in diameter. Forty-seven people died in the explosion and fire. See article.

On October 17, 2013, the Canadian government imposed new regulations requiring tests to be conducted on crude oil before transporting or importing it into Canada. In the Lac- Mégantic crash, inspectors determined that the oil the train carried was more explosive than labeled. See David Ljunggren, “Fuel on train in Quebec disaster more explosive than labeled,” Reuters Canada.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright’s Energy Practice Group.