Boom eases need, raises concerns

COEUR d’ALENE — Even though agencies and companies are acting to ease fears that the next oil-by-rail catastrophe is just around the corner, some observers say only time will tell if those steps are sufficient.

“I’ll believe it when I see it,” said Shannon Williamson, executive director of Lake Pend Oreille Waterkeeper in Sandpoint.

“It’s one thing to (make promises that increase safety). It’s another to see it come to fruition.”

BNSF Railway moves an average of 1.5 loaded oil trains through North Idaho each day, said Gus Melonas, BNSF spokesman. They roll through Sandpoint, Athol, Rathdrum and Hauser from the Bakken oil fields of North Dakota and Montana to coastal refineries.

An oil train typically has about 100 rail cars and each car holds about 29,000 gallons.

Melonas said the volume of oil trains coming through North Idaho is expected to increase, but he declined to speculate on how much.

“It’s all demand-driven, but we certainly know it’s a growing trend,” he said.

Union Pacific, the other railroad that transports commodities through the Panhandle, carries crude that is interspersed with other products, said Aaron Hunt, UP spokesman.

U.S. crude oil production is forecast to reach 8.5 million barrels a day by the end of 2014, up from 5 million gallons a day in 2008, according to government figures. Railroads transported more than 400,000 carloads of crude in 2013, up from 9,500 in 2008.

There have been three fiery explosions involving trainloads of Bakken crude in the past year. The most alarming was last July, when 47 people were killed in Lac-Mégantic, Quebec. At least 10 times since 2008, trains hauling oil across North American have derailed and spilled crude with most touching off fires.

Canada’s Transportation Safety Board on Thursday revealed that the oil aboard the train in Quebec was as explosive as gasoline, dashing theories that it may have been contaminated by hydrogen sulfide or fracking fluids. Such theories may have led to technical solutions to the trend of exploding oil trains.

“It’s very dangerous to move this stuff by rail,” said Eddie Scher, Sierra Club spokesman.

However, according to the American Association of Railroads, 99.99 percent of all hazardous materials shipments, including crude, make it without a leak caused by accidents.

Steps to enhance safety

The most recent accidents have prompted a flurry of steps by the government, rail industry, refiners and others to enhance oil-by-rail safety.

Federal regulators have issued an emergency order requiring more stringent testing of Bakken crude before shipment by rail to determine how susceptible the cargo is to explosion or fire.

Such light crudes are considered by experts to be more dangerous than Canadian heavy crudes because they contain more propane, butane and methane gas that can catch fire and explode amid sparks that fly in a crash.

A recent agreement between the U.S. Department of Transportation and the AAR calls for railroads to decrease the speed of oil trains from 50 mph to 40 mph through major cities, inspect tracks more frequently and bolster emergency response planning along main routes.

The new voluntary safety steps will be implemented starting in late March.

In an unusual move, BNSF has gone out to bid to buy up to 5,000 new crude oil tank cars that go beyond industry standards adopted two years ago. Railroads own the tracks and locomotives. The cars are generally owned by leasing firms or refiners.

“We certainly understand the public’s concern,” Melonas said. “We’re at the forefront to ensure additional safeguards are made and that the public is confident. We want to be a good neighbor.”

Melonas said 60 percent of the oil tanks on the BNSF line that come through North Idaho each day are newer-designed cars that have thicker steel than the older models, reinforced shields and improved valve design.

The lone oil train accident in the past year on a BNSF line was near Casselton, N.D., on Dec. 30. No one was hurt, but a fire burned for more than 24 hours half a mile outside the town.

Melonas said BNSF has not had a fatality on its northern tier as a result of a hazmat release since 1981.

Robert Sumwalt, a National Transportation Safety Board member, last week told a House Transportation subcommittee that many cars being used to ship oil from North Dakota, known as DOT-111s are an “unacceptable public risk” and even cars voluntarily upgraded by the industry may not be sufficient.

 Cynthia Quarterman, head of the Transportation Department’s Pipeline and Hazardous Materials Safety Administration, said she expects her agency to propose new tank car standards before the end of this year.

Ed Hamberger, president and CEO of the AAR, said the industry has strongly urged the government to set new tank car standards.

“We believe there needs to be a safer tank car,” he said.

Emergency readiness

Mike Mather, training chief for the Northern Lakes Fire District that serves Rathdrum and Hayden and a member of the regional hazardous materials team, said local fire districts have had trainings with BNSF on oil-by-rail catastrophes but more awareness is always needed.

“As we all know, the rail industry can be tight-lipped about some of its operations,” Mather said. “There still needs to be more discussion on this subject. There is always more work to be done and more training to ensure we are prepared for these events. But they are concerned about our safety as well as the safety of their employees and the communities where they operate.”

Bryon Johnson, of Kootenai County Fire and Rescue and another haz-mat member, added: “I have to say the rail industry as a whole does its best to keep tracks maintained, as well as the cars and locomotives transporting the products. They do not like having an incident any more than we like experiencing one.”

Melonas said BNSF plans to spend $5 billion on railroad improvements to enhance safety this year after spending $4.3 billion last year, including $130 million in Idaho and Washington. UP is planning more than $3.8 billion in improvements systemwide this year, Hunt said.

Projects in the region will include replacing ties and improving track surfaces. Melonas said BNSF will continue to evaluate how railroads can be separated from the public as much as possible such as in Spokane where there are elevated tracks in the downtown area.

Some refiners, including Tesoro Corp., which has coastal facilities where oil trains rolling through North Idaho are destined, are not waiting to switch to newer railcars. Tesoro is replacing the last of its older cars by mid-summer.

“While this action applies to the vast majority of crude oil deliveries into Tesoro facilities, beginning in mid-2014 Tesoro will also make rail car design a part of its business discussions with all business partners who may ship crude oil into company-owned facilities,” said Tina Barbee, Tesoro spokeswoman.

Two Canadian railroads have decided to charge shippers more for using cars built before October 2011 that the NTSB deemed unsafe. Saying the information is proprietary, BNSF declined to comment on whether it plans to follow suit with higher costs for shippers opting to use its new cars once they are built.

Expansion plans

The oil boom has prompted Tesoro and Savage to propose a crude-by-rail unloading terminal at the Port of Vancouver. Other coastal firms are also planning expansions.

“We expect domestically produced crude oil will continue to be moved to West Coast refineries, providing a viable domestic alternative to foreign supply options,” Barbee said. “With increasing global destabilization, we must reduce our dependence on foreign imports to protect our economic and national security interests.”

The Washington State Energy Facility Site Evaluation Council is expected to make a recommendation on the proposal by the end of August. It will then be forwarded to Gov. Jay Inslee, who will make the final decision on the permit.

Williamson’s environmental group is concerned about the Tesoro/Savage proposal and others because they translate into even more oil tanks moving through North Idaho.

Its message, she said, on the amount of crude coming through the area is similar to what was voiced about the uncovered coal that moves through the region.

“Whoever is looking at any of these proposals should look at the impact to our local communities,” she said. “Evaluate the safety, human health, environmental and economic impacts in our area before making any decision. It’s about being informed and not making a decision in a vacuum.

“We’re not receiving any benefit whatsoever. We’re just in harm’s way.”

At the other end of the line, near the North Dakota oil fields, rail-loading facilities are also in expansion mode.

Steve Magness, managing director of Bakken Oil Express, declined to comment on his two-year-old, privately-held company’s expansion proposal near Dickinson.

“It’s subject to what the customers need,” he said. “As they grow, we grow with them.”

His firm recently added testing for corrosivity of metal to enhance safety in the oil-by-rail debate.

“We want to make sure crude is correctly classified,” he said.

The bigger picture, future

With expansions at both ends up in the air, just how much crude-by-rail will increase in the near future is debatable, some industry observers say.

“This surge in North American oil production has allowed refiners like Valero to end imports of light sweet crude from overseas,” said Bill Day, Valero spokesman. “At this point, rail is the best option for getting oil to the nation’s refineries quickly, efficiently and safely.

“As more pipelines are constructed, it’s likely that transporting oil by rail will decline since rail is more expensive than pipelines. But companies like Valero will probably still transport some oil by rail because we like having multiple options for delivering crude to our plants.”

Bruce Kelly, a Post Falls resident and contributing editor of Railway Age magazine, said some estimates on how big the boom will get are based on assuming every proposed facility will get built.

“Even if one or two new terminals gets built, I question whether the economy, the public or the limited capacity to accommodate more rail traffic would support the construction of any more terminals beyond that, at least in the near term,” Kelly said.

Williamson said she wishes the industries would have been more proactive about taking steps to improve safety regarding the oil boom rather than be in reaction mode.

“I think a lot of companies just saw the bottom line and wanted to exploit the resources as fast as they can,” she said. “We understand that jobs are created, but how long are those jobs going to last? They may last 10 years, but at what cost? Ten years is a blip.”

Magness said crude transportation has been a wake-up call for all those involved.

“No one likes to see these issues,” he said. “That’s why a lot of people are working hard to minimize them. In every business, there’s issues. There’s no avoiding that. But, if we tried to avoid all issues at all times, we wouldn’t be getting much done.”

• The Associated Press contributed to this report.