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Last week, the US National Transportation Safety Board (NTSB) included railroad tank car upgrades to its Most Wanted list of safety improvements for the first time since the list was created in 1990. This action was a direct response to increased public awareness of and concern about the risks of transporting crude oil and other flammable materials by rail. (See ARC Insight, The Risky Business of Transporting Crude Oil, June 12, 2014).
Unfortunately, the Department of Transportation failed to meet the January 15, 2015 deadline set by the US Congress for establishing new safety standards for oil trains and now plans to issue final rules by May 12. Regulatory delays such as this combined with the railroad industry's inability to act quickly on its own to improve safety have left many wondering if the appropriate rail safety improvements will ever be realized.
Moving Pipelines Fill a Need
The resurgence of North America as a leading oil producer has been a boon not only for that industry, but for the railroad industry as well. The remote locations of many of the newly developed unconventional oil fields, particularly in the Bakken region, are not currently served by pipelines. In addition, the lag in pipeline approval and construction to meet the increasing demand has provided the opportunity for the railroad industry to emerge as a viable alternative for transporting crude from point of production to refining or export facility. While rail offers oil producers flexibility, favorable hauling contracts, and bi-directional transport; the risks to public safety and the environment far outweigh those of stationary pipelines.
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Keywords: Oil Train, Safety, Transporting Crude Oil, Oil & Gas, Keystone Pipeline, ARC Advisory Group.