Seeking Alpha

U.S. issues emergency testing order to crude-by-rail shippers

  • Companies moving crude oil by rail must test the volatility of fuel out of North Dakota's Bakken oilfields to ensure the proper classification of crude oil before it is transported, the Department of Transportation announces.
  • The move is meant to step up oversight after several recent fiery derailments of oil moved by rail out of the Bakken; some data contends that Bakken crude is more combustible than oil from other areas.
  • Bakken oil names include: CLR ,EOG, WLL, HES, KOG, OAS, NOG, EOX, MRO.
  • Rails: CSX, NSC, KSU, GWR, CP, UNP.
From other sites
Comments (19)
  • Big Bad Bulls
    , contributor
    Comments (164) | Send Message
     
    This is going to get interesting...Let's see we don't allow the Keystone pipeline, we delay it for 5 years plus. One of the major railroads that greatly stood to benefit by this delay is bought out and this railroad has made oodles of money during this time transporting oil.

     

    Now, we have to classify the oil properly, at least some of which could have been shipped by the very same pipeline. We are having to classify the oil properly because we have had a reasonable number of incidents regarding this oil being shipped by rail. Oh, the tangled web.....
    25 Feb 2014, 05:37 PM Reply Like
  • Bandinellij
    , contributor
    Comments (87) | Send Message
     
    I hear ya, let’s fix the trains and finish the pipeline stupid! But it's the government whose mantra is 'take something simple and complicate it', in other words ‘let’s see what we can do to destroy jobs, and the economy at the same time’. The elected administration’s unelected regulatory agencies are completely unregulated. It’s time to fight back on this nonsense spewing out from these fools. It’s time to organize the industry leaders and thinkers on par with these unregulated regulation agencies to achieve some semblance of sanity. Caligula alone should not be capable of shutting down any company or industry on a whim. Nowhere in our Constitution or Bill of Rights was that power granted to anyone in our government. God help us if listening to stupid, or having to obey Caligula’s insanity is our only options left, that will surely be our demise!
    26 Feb 2014, 08:32 AM Reply Like
  • geologist
    , contributor
    Comments (378) | Send Message
     
    This is no surprize at all to BNSF's owner. He had free access to the 2009 White House -- thus no pipeline, and in return the WH got the Buffett Tax Rule.

     

    Next in 2013 Buffett bought $3.7billion worth of Exxon. So I see the pipeline being approved at some point in the recent future. It is the way business is done. Regards.
    27 Feb 2014, 11:29 AM Reply Like
  • cibor
    , contributor
    Comments (10) | Send Message
     
    It's not like a rail car suddenly blew up. The accident involving the rail car resulted in a small spill, much less than oil tankers and/or pipeline ruptures.

     

    This is more Federal Railroad Administration (FRA/DOT) federal employees justifying their jobs with more regulations to get more taxpayer dollars - at the increased expense of any American who buys oil products.

     

    This is a (no pun intended) boon for rail car makers like Trinity (TRN), Greenbrier (GBX) and ARII. Hopefully oil producers like KOG (reporting tomorrow) won't lower 2014 forecasts for these frivolous new rules.

     

    I wonder if the EPA will declare oil from fracking too dangerous for pipelines...
    25 Feb 2014, 06:32 PM Reply Like
  • smkbk
    , contributor
    Comments (25) | Send Message
     
    you did hear about the Lac-Megantic derailment. Nothing frivolous about it.
    25 Feb 2014, 07:38 PM Reply Like
  • Hendershott
    , contributor
    Comments (1619) | Send Message
     
    Not like a rail car blew up? How about a whole fracking train!
    25 Feb 2014, 09:50 PM Reply Like
  • cibor
    , contributor
    Comments (10) | Send Message
     
    The "Lac-Megantic derailment" resulted from a train left running on a main track while the moron went to sleep in a nearby hotel. My point is that no explosion has occurred as the result of a rail car leaking and igniting.

     

    "The engineer parked the freight train on the main line by setting the brakes and followed standard procedure by shutting down four of the five locomotives. The engineer, who was the lone crew member under the MMA's work rules, which had been discussed with Transport Canada, could not park the train on the adjacent siding because MMA used it routinely to store empty boxcars for Tafisa, a particleboard factory located in Lac-Mégantic's industrial park. The Nantes siding has a derail that could have stopped the train from accidentally departing. According to Transport Canada, it is unusual to leave an unattended train parked on a main line, but there were no regulations in place to prevent that behaviour.

     

    The engineer left the lead locomotive, #5017, running to keep air pressure supplied to the train's air brakes and also applied a number of manual hand brakes. Yves Bourdon, a member of the MMA's Board of Directors, stated that the air brakes of all locomotives and freight cars had been activated, as well as manual hand brakes on 5 locomotives and 10 of the 72 freight cars. The TSB found that the MMA's operating plan was to leave the train parked on the main line, unattended, with an unlocked locomotive cab, alongside a public highway where it was accessible to the general public, with no additional protection.

     

    The MMA has alleged that the lead locomotive was tampered with after the engineer had left; that the diesel engine was shut down, thereby disabling the compressor powering the air brakes which allowed the train to roll downhill from Nantes into Lac-Mégantic once the air pressure dropped in the reservoirs on the cars. Teamsters Canada Rail Conference vice-president Doug Finnson disputed this theory, stating that the key braking system on a stopped, unsupervised train are the hand brakes, which are completely independent from the motor-powered compressor that feeds the air brakes."

     

    Bottom line: Five died because 5 locomotives and 72 freight cars were left unattended on a main rail line with no siding with a derail setup to prevent a breakaway from rolling into the town. It has absolutely nothing to do with the volatility of the oil, the oil rail cars used, or improper labeling on the tanker cars. This was manslaughter in my opinion, and easily preventable and horribly regretful.
    26 Feb 2014, 09:06 AM Reply Like
  • Hendershott
    , contributor
    Comments (1619) | Send Message
     
    If you follow the industry, you know rail accidents are not exactly uncommon. The nature of the cargo is not a trivial item, be it toxic, volatile, corrosive or whatever. Rail companies really don't want excessive risks to themselves or the shareholders, which is why they want the new cars. A Lac-Megantic event could be a disaster for the rail copmpany, the shipper, the car leasing company and everyone else involved.
    26 Feb 2014, 11:04 AM Reply Like
  • Crud2Diesel
    , contributor
    Comments (2) | Send Message
     
    I make a Zero Emission machine which can process Crude Oil in the field, at well head or pump station. Zero Emissions means the crude will become off road classification Diesel 2, it can run in diesel equipment but the diesel needs to stage 2 and Stage 3 processed for desulfurization. Still the same, I process fuel with my machine, I do not sell the machine, I use it as a tool, to convert crude oil into diesel, totally mobile, modular. If this machine was simple someone would have already made it, I made it but I will process crude with it but it is not for sale. However some base for value is placed, for all 4 stages, the machine leases for $77,000 each, they process up to 181 barrels per day if desulfurization is required, if just diesel for off road, then capacity is three times 181 barrels per day, no particle in the fuel will be greater in size than 900 nano meters, a special formula will be added after it is purified. I will only process with 10 machine min order and prefer to process with 100 machines. If you had 100 machines, you would process 18,100 barrels per day, only diesel but diesel is in very high demand especially when it is desulfurized, which is another process, all chemical not heat or distillery, neither would result in Zero Emissions, as mine will.
    Desulfurization is another process and will cause another set of parameters and processing lease.
    I make these machines, I have my test machine up and running, I need 2 gallon of crude which I will process and get the Assay results.
    25 Feb 2014, 08:33 PM Reply Like
  • PeteCal
    , contributor
    Comments (90) | Send Message
     
    What do you do with the sulfur (and other by products)?
    26 Feb 2014, 09:08 AM Reply Like
  • lldarthpaul
    , contributor
    Comments (12) | Send Message
     
    Let's see, a passanger train derails killing scores of people and the NTSB investigates and places blame on a faulty rail connection or too much speed and nothing more is said after the funerals. A trains derails with a load of crude oil causing the destruction of the cargo and the government blames the crude oil it was carrying, where is the sense in these conclusions? The oil is more valuable than the people.
    25 Feb 2014, 09:54 PM Reply Like
  • cibor
    , contributor
    Comments (10) | Send Message
     
    That incident was in CANADA, and five people regretfully died. The freight train was parked, so there was no "too much speed" at issue, but rather whether the unattended train left on a main line had the brakes set or off. The NTSB did not investigate. The Canadian government never said anything about the crude oil "causing the destruction", much less blaming the crude oil.

     

    I wish people would do a little reading before posting wild claims which have no basis in fact whatsoever.
    26 Feb 2014, 09:19 AM Reply Like
  • Robert Rapier
    , contributor
    Comments (89) | Send Message
     
    "That incident was in CANADA, and five people regretfully died."

     

    Actually 47 people died in the Lac-Mégantic incident.
    27 Feb 2014, 07:15 PM Reply Like
  • sethmcs
    , contributor
    Comments (3445) | Send Message
     
    Want to bet these rules do nothing whatsoever to prevent accidents.
    26 Feb 2014, 12:01 AM Reply Like
  • 2839298249
    , contributor
    Comments (376) | Send Message
     
    We can't build pipelines due to government interference and foot dragging. We won't be able to ship crude by rail due to high vapor content. Colorado is regulating methane emissions from drilling. NY State won't allow fracking. We can't drill off the US Atlantic margin. We can't drill in ANWR. California does everything it can to throw up roadblocks to drilling and refining in-state. Etc, etc, etc...

     

    Yet whenever the price of gasoline goes up or utility bills are higher citizens complain. If we want to drive, fly, heat, cook or turn on our laptops we need hydrocarbons. If we want energy as cheaply as possible, we need to be able to drill, produce and ship it.
    26 Feb 2014, 12:15 AM Reply Like
  • Felix Lumpe
    , contributor
    Comments (565) | Send Message
     
    Great. Just what we need, more regulation. Why can't we just accept some reasonable amount of risk and deal with the occasional consequences? Soon, chocolate milk will be the only thing allowed or the only thing that we can afford to transport. All of this will only result in higher prices and lower competitiveness.
    26 Feb 2014, 08:26 AM Reply Like
  • PeteCal
    , contributor
    Comments (90) | Send Message
     
    All of these government restrictions are intended to get us off fossil and onto renewable. Even though there isn't enough renewable and won't be for years --- if ever.
    26 Feb 2014, 09:11 AM Reply Like
  • cibor
    , contributor
    Comments (10) | Send Message
     
    I agree with Felix. Derailments have been happening since rail was laid. 99% of the time, it's cleaned up, nobody is hurt, and life goes on.

     

    I think the "environmentalists" will object when chocolate milk is spilled into a creek with minnows, and call for an end of rail transport or anything that can soak into the ground.

     

    Who among them cares when energy prices triple when the government check paying all your expenses arrives in the mail every month thanks to the 53% of Americans who pay federal taxes.
    26 Feb 2014, 09:11 AM Reply Like
  • Hendershott
    , contributor
    Comments (1619) | Send Message
     
    For investment purposes, all this adds up to an advantage for the Texas producers and a disadvantage for the Bakken producers. the Eagle Ford companies got around $94 last Q, WLL just reported getting $84.47. With testing, rail car certification and insurance costs, the differential will likely expand.
    26 Feb 2014, 10:26 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs