Rail

Concern about crude oil rail accidents has drawn the attention of regulators and the public, but more Bakken Shale crude oil today is, for the first time, being transported into California via barge, according to the California Energy Commission (CEC).

The elected Board of Supervisors in Kern County, CA, in the middle of the state’s oil patch in the lower San Joaquin Valley, was sued in California Superior Court last Thursday for allegedly ignoring environmental risks in approving a $100 million crude-by-rail project in Bakersfield. The Sierra Club, Center for Biological Diversity and the Association of Irritated Residents, among others, filed the legal action.

The competition between rail and pipelines for moving Bakken sweet light crude oil in North Dakota will continue to be brisk, driven by WTI and Brent price spreads and by the ultimate added costs from stepped-up regulation of crude-by-rail transportation, according to an analysis by the University of Texas Center for Energy Economics (CEE) in Austin.

While crude oil from North Dakota moves increasingly by rail, Gov. Jack Dalrymple on Thursday told a federal transportation panel field hearing in Bismarck that his state is suffering from inadequate rail service for its multi-billion-dollar agricultural industry.

Plans for a major Bakken crude oil transfer facility in North Dakota were unveiled Tuesday as a privately bankrolled venture in conjunction with Canadian Pacific Railway (CP). Construction is expected to begin later this year, and initial storage and loading service are expected to start in the second half of 2015.

As industry players continue to expand their ability to move North Dakota’s Bakken crude oil via rail, state officials on Monday were making final plans for a public hearing and eventual rulemaking regarding crude-by-rail shipments.

Bakken crude oil rail shipments traverse 32 of North Dakota’s 53 counties on a weekly basis, and some counties have up to 45 crude-bearing trains pass through their boundaries weekly, according to a white paper released Thursday by an analyst at Genscape, the commodity and energy markets data gathering firm.

In what is a mixed bag for the oil and railroad industries, the U.S. Department of Transportation (DOT) on Wednesday unveiled proposed rules to improve the transport of crude oil via rail, proposing enhanced tank car design specifications, fuel classification and operational requirements for handling crude.

Florida-based CSX Corp. senior executives on Wednesday underscored the continuing growth in the amount of crude oil being shipped by rail and voiced concerns about proposed federal regulations that would drop average train speeds in response to a series of tank car accidents in the past 18 months (see Shale Daily, Aug. 22, 2013).