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NTSB Investigates Oil Train Derailment in North Dakota

The National Transportation Safety Board (NTSB) had a team of investigators on the scene Tuesday near Casselton, ND, where a BNSF train carrying crude oil smashed into another train that had derailed earlier, setting off explosions and fires in nine tanker cars.

There were widespread evacuations a mile from the site, but no one was hurt in the accident Monday.

Rail Safety Investigator Richard Hipskind headed the NTSB investigation, accompanied by board member Robert Shumwalt, who was designated as the federal agency's lead onsite spokesperson. Industry observers are already speculating that the latest incident will further push for new federal regulatory action on crude oil rail transport.

The year-end incident comes after several major North American oil rail accidents, including a major accident last summer involving an oil tanker car derailment in Quebec that killed 50 people (see Shale Daily, Aug. 22, 2013, July 9, 2013). In North Dakota, the nation's second largest oil-producing state, where 100-car trains carrying crude are common, transporters have said they see no slowing in the use of rail, although there may be increased regulation (see Shale Daily, Nov. 27, 2013; Aug. 26, 2013).

Christine Tezak, at ClearView Energy Partners LLC said in a new research report issued Tuesday that U.S. federal regulators "could tackle new and existing railcars in separate rulemakings," and a proposed rule could emerge in the first quarter of 2014 with a final rulemaking by the end of the year. "Regulations tend to tighten when accidents reach outside the immediate energy value chain...and [the North Dakota] accident is likely to add momentum to a U.S. federal regulatory process initiated in the wake of the July 6 derailment...in Quebec, Canada."

While noting that the latest incident will prolong discussions of safety related to train transport of crude oil, analysts at Tudor, Pickering, Hold & Co. said on Tuesday there is no change in their belief that "rail will be the long-term transportation solution out of the Bakken to the U.S. East and West Coast markets due to the lack of pipeline infrastructure to those refining centers."

On Tuesday, sources at the scene told NGI's Shale Daily that public safety officials were letting each of the fires in tank cars burn themselves out, and that a total of 24 rail cars had caught fire, nine of which were oil tank cars.

Lynn Helms, the director of North Dakota’s Department of Mineral Resources (DMR), which oversees oil/gas E&P activities, said that he expects producers to use alternative routes for transportation by rail. He did not anticipate the incident having any short term impacts on production.

"Our department receives data regarding the physical properties of Bakken crude from every Bakken and Three Forks field spaced by the North Dakota Industrial Commission,” said Helms, adding that DMR’s Oil & Gas Division will assist federal and state efforts in whatever capacity it can by supplying Bakken data.

“We will continue to monitor reports from the proper authorities regarding the train derailment in Casselton.”

Initially, five powerful explosions were reportedly heard a mile outside of the small town of Casselton, ND, in the southeast corner of the state after a westbound 112-car train carrying soybeans derailed first, and an eastbound 106-car train hauling crude oil ran into it just shortly after 2 p.m. CST.

There are parallel tracks at the Casselton station and the oil car train was on a separate track, but one of the grain-carrying train's cars that derailed spilled over onto the eastbound track, causing the second derailment involving the oil tankers.

"The crude-bearing train nailed that [derailed grain] car and derailed itself," a spokesperson for the state Department of Emergency Services, Cecily Fong, told NGI's Shale Daily. "Local residents reported several loud explosions...about four, possibly five...a big fire plume and thick black smoke. Somehow we dodged a bullet and there were no fatalities or injuries."

Both trains were operated by BNSF Railway Co, which is owned by Warren Buffett's Berkshire Hathaway Inc.

BNSF said in a statement Tuesday that everyone is thankful that there were no injuries, and the company is "terribly sorry for the inconvenience this derailment has caused residents in the area." The railroad company has sent claims representatives to Casselton to resolve any concerns and claims by residents and businesses in the area.

Fong said that evacuations in Casselton were voluntary, but 65-70% of the 2,400 residents did leave their homes, and many were still displaced on Tuesday as air quality tests were being conducted by state and local authorities before they would allow people to return to their homes.

On Tuesday, the amount of oil released, and the origin and destination of the supplies were still not released, and BNSF's corporate spokesperson did not have that information.

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