Wednesday, February 26, 2014

Feds issue emergency order requiring oil-train shippers to check their crude for volatility

In an effort to improve the safety of shipping crude oil by rail, after a rash of accidents over the past year, the U.S. Department of Transportation on Tuesday issued emergency rules "requiring extensive tests on crude oil moving by rail, concluding the system had become 'an imminent hazard to public health and safety and the environment,'" Russell Gold and Laura Stevens report for The Wall Street Journal. The order is aimed at operations in the the Bakken Shale in North Dakota, "where production has far outpaced the availability of pipelines to move crude to refineries," but will cover all shipments from anywhere. (Journal chart)

The order, which takes effect immediately, "will require companies to test each batch of crude for an array of characteristics, from the temperature at which it boils to the percentage of flammable gases trapped in the oil and the vapor pressure, which is created when crude emits gases that can build up inside railcars," Gold and Stevens write. "Previously, federal rules didn't require that crude be tested as extensively; indeed it only required that crude be properly classified and didn't spell out in any detail how often to test the crude." It "also prohibits moving crude using certain railcars that are suitable only for less hazardous materials," a move that would affect 1,100 tank cars, or about 3 percent of the total crude-oil fleet.

North Dakota has seen a massive growth in the number of trains filled with crude oil leaving the Bakken Shale region, Gold and Stevens writes. In 2008, one train of 100 tankers left every four days, but in 2013 one left every 21/2 hours. (Read more)

UPDATE, March 6: Oil refiners asked officials to delay enforcement of the rule, saying " the lack of detail in the Transportation Department's directive may prompt some shippers to stop moving oil by rail," and result in fuel and chemical shortages, American Fuel & Petrochemical Manufacturers President Charles Drevna wrote Transportation Secretary Anthony Foxx, EnergyWire reports.

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