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Analysis: Oil trains to keep rumbling through North America's cities

A tanker with an inscription which reads, "empty and inspected", is pictured on the rail track in Lac-Megantic, November 21, 2013. REUTERS/M
A tanker with an inscription which reads, "empty and inspected", is pictured on the rail track in Lac-Megantic, November 21, 2013. REUTERS/M

By Solarina Ho

TORONTO (Reuters) - Mile-long trains carrying crude oil will likely keep chugging through North American cities even after a string of fiery disasters spurred safety officials to urge that railways send risky cargo along less populated routes.

Re-routing the crude-by-rail trains that support booming North American oil production would be hugely difficult given the location of major rail lines and lack of alternatives, industry watchers say, adding that skirting major centers carries different types of risks.

"In the U.S., rail built the West. Literally. The railroad came first, and then towns sprung up along the route. And so as a consequence, rail transit's the heart of many of our cities and towns," said Brigham McCown, a former chief counsel at the U.S. Department of Transportation and former head of the Pipeline and Hazardous Materials Safety Administration (PHMSA).

"It's called the main line for a reason," he added.

The dangers of sending crude by rail due to increasingly clogged pipelines were highlighted last July, when an unmanned, runaway train carrying crude crashed into Lac-Megantic, Quebec, leveling the heart of the small lakeside community and killing 47 people.

Last week, the U.S. and Canadian transportation safety boards, which can only suggest and not impose new rules, recommended more rigorous route planning for shipping crude and other flammable liquids.

The U.S. National Transportation Safety Board (NTSB), which urged that such shipments avoid populated areas, wants crude oil be added to a list of hazardous materials that already requires tougher routing protocols.

"We're not asking for new rails to be built, we're not asking for major modifications," NTSB board member Robert Sumwalt told Reuters.

The thrust of the proposals is risk mitigation, not complete elimination, said Jason Kuehn, vice president for rail practice at management consulting firm Oliver Wyman, which makes route planning software used by Canadian Pacific Railway Ltd and CSX Corp.

Kuehn said existing routing regulations in the United States, which govern products such as anhydrous ammonia and chlorine gas, which are even more dangerous than crude oil, have been effective.

FEW ALTERNATIVES IN THE BAKKEN REGION

The Bakken oil fields of North Dakota pump out a type of crude that is more explosive and flammable than some others. It was involved at Lac-Megantic and in other major crashes last year.

But for Bakken oil headed to refineries in the east, alternative train routes are limited.

The most direct route eastward for Canadian Pacific and BNSF Railway Co, the two main railroads running through the Bakken region, is through Minneapolis and St. Paul, Minnesota, then Chicago.

"Getting oil from North Dakota to the refineries around Philly without going through Chicago, for one, is enormously difficult," said Trains magazine writer Fred Frailey, who has followed the industry for more than three decades.

An alternative route for CP Rail, Canada's second largest railroad, would require going north to Winnipeg, Manitoba, across Northern Ontario, southeast to Toronto and likely to Montreal before heading south to the United States. It's a route that would swap Chicago for three of Canada's largest cities.

CSX, which expects to ramp up U.S. crude shipments by 50 percent this year, mostly to East Coast refineries, said it already complies with federal routing guidelines for shipping the most hazardous materials.

"We will evaluate whether those protocols could be applied to oil shipments," spokeswoman Melanie Cost said in an email.

"However, re-routing requires careful thought and analysis to make sure that hazardous materials operate over tracks that incorporate the most safety features, and that additional miles that may involve other risks are not added to shipments."

Doniele Carlson, spokeswoman for Kansas City Southern, the smallest of U.S. Class I railroads, noted its network's size limits routing options.

Some companies have rail lines that bypass city centers, traveling through the outskirts, but those tracks may not necessarily be equipped to handle a high-capacity load or trains traveling at higher speeds, industry experts said.

A crash in a less populated area might wreak less havoc, but emergency responders could take longer to reach a more remote site and may be less equipped to deal with it, they said.

Taking a circuitous route, or traveling on secondary tracks, will also mean a shipment of crude spends more time traveling longer distances, using more fuel, producing higher emissions, and costing more to ship.

"If you're doubling the length that it takes to get from point A to B, you are potentially doubling the risk for an accident," said transportation safety expert McCown.

The American Railroad Association and the Railway Association of Canada have said they support the recommendations to improve rail safety, but they declined to comment specifically about route planning. They point to an improving safety record.

The rate of main-track accidents has declined over the past 10 years in Canada and the United States, according to the most recent government data. In Canada, accidents fell 33 percent to 1.6 per million main-track train-miles in 2012, from 2.4 in 2011. In the United States, the main line accident rate fell some 20 percent to 0.8 in 2012, from 1.0 in 2011.

Canada had 2.6 accidents per million main-track train-miles in 2003. The United States had 1.5 in 2003.

But shipping companies are just as involved as the railways in deciding what cargoes are moved and how, and under government-mandated common carrier regulations, North American railroads are legally required to transport products they might otherwise choose to avoid.

"They've taken on an inordinate amount of the risk. Even though it's not their car, and it's not their product, and it might not have been loaded by them," said Tony Hatch, independent transportation analyst at ABH Consulting.

"They don't want to be on the front page of the paper unless it's for opening a new terminal or cutting a ribbon."

(Additional reporting by Kristen Hays in Houston; Editing by Jeffrey Hodgson and Peter Galloway)

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