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U.S. Shale Has A Glaring Problem

U.S. Shale Has A Glaring Problem

Even after more than two…

Oil Industry Wants More Time To Improve Rail Safety

The energy and railroad industries have set aside their differences and joined forces on a bid to persuade the U.S. Transportation Department to increase the deadline for improving the safety of transporting highly flammable crude oil by rail from two years to as many as seven years.

The Transportation Department is considering new rules for stricter safety regulations for rail shipments of crude, including better braking for trains, slower speed limits, reinforced tank cars and new routes to avoid populated areas. In July, the agency suggested that older tank cars be reinforced within two years.

The rule, proposed by the department’s Pipeline and Hazardous Materials Safety Administration, followed several accidents involving oil trains, including a derailment and explosion in Lac-Mégantic, Quebec, in July 2013 that killed 47 people.

Related: Oil-by-Rail Shipments Cutting Into Coal Deliveries

The two industries have disagreed in the past on how to prevent fires and other disasters involving trains carrying crude oil. The oil industry blamed the Lac-Mégantic disaster on track problems and human error, while the rail industry drew attention to the oil’s volatility and flaws in the tank cars.

American Petroleum Institute (API) President Jack Gerard said his group and the Association of American Railroads (AAR) have asked the Transportation Department for six to 12 more months for rail tank car manufacturers to prepare to reinforce newer cars, and three more years to rebuild older cars. They also want an additional three years to upgrade newer tank cars.

Gerard said the longer time line would allow manufacturers to broaden their activities as they continue their core operations of manufacturing new tank cars. To act more quickly, he argued, might hurt consumers by disrupting the movement of fuels and other chemicals, which are moved by rail under the same government regulations that apply to the transportation of crude oil.

Further, Gerard said, the proposed federal rules would increase costs that could risk dampening the current boom in oil and gas production in the United States. He said such regulations “could stifle North America’s energy renaissance and curtail substantial volumes of U.S. and Canadian oil production.” U.S. oil production is at its highest point in 30 years.

Related: Another Export Route for Oil Sands Blocked

As for bolstering the strength of rail tank cars, the API and AAR have proposed half-inch shells for the tank cars, slightly thicker than their most recent design, but one-eighth of an inch thinner than has been proposed by the Transportation Department. Gerard said this proposal is based on API and AAR’s consultations with the cars’ manufacturers.

At least one such manufacturer, though, the Greenbrier Companies of Lake Oswego, Ore., says it can meet the Transportation Department’s stricter deadline, and believes that the deadline is appropriate.

Greenbrier spokesman Jack Isselman told Bloomberg News that unless his industry is required to act soon, “we won’t move as quickly toward those safer standards as we otherwise might.”

By Andy Tully of Oilprice.com

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