(John Kemp is a Reuters market analyst. The views expressed are
By John Kemp
LONDON Jan 9 Train accidents involving crude
oil and other flammable liquids are becoming uncomfortably
common. The fiery train derailment in New Brunswick on Tuesday
is the third major accident involving crude by rail in just
three months, and the fourth since July 2013.
Serious accidents involving derailments and train fires are
running at one a month, which suggests the dangers of this form
of transport have been underestimated by the industry and
Railway tank cars have played an essential role in the shale
revolution as well as the carriage of ethanol for blending into
the gasoline supply. But as the volume of flammable liquids
carried by rail rises, the risks are becoming more apparent.
Based on historic derailment rates and the increased number
of tank cars carrying oil and ethanol in the United States and
Canada, it is likely that over 70 tank cars carrying flammable
liquids will derail each year.
In the event of accidents, it is vital tank cars do not
rupture and retain their loads to avoid the risk of fires and
explosions to minimise the threat to train crews and nearby
Unfortunately, current tank car designs cannot be relied on
to maintain their integrity in the event of an accident. In
recent incidents, more than half of the tank cars which have
derailed have caught fire. On current trends, that means more
than 35 oil and ethanol tank cars are likely to catch fire each
The rail industry and regulators have been slow to respond.
Safety measures have not kept pace with the rapid growth of the
industry. It is not enough to keep reiterating that rail tank
cars are relatively safe. As the amount of crude and ethanol
moving by rail surges, accidents are becoming unacceptably
PROMPT CORRECTIVE ACTION
Efforts to reduce the risks by writing new rules for tank
cars carrying flammable liquids like crude oil and ethanol have
become bogged down in disputes between communities, railroad
operators, tank car owners and oil producers over who is
ultimately responsible for improving safety, what modifications
are needed and how much money should be spent
Attempts to introduce new safety standards and designs for
tank cars carrying crude and ethanol have been an example of
rule-making at its worst. The purpose of a consultation process
should be to write better rules. In this instance, it has simply
led to lengthy delays, leaving railroad workers and communities
exposed to unacceptable risks.
The behaviour is self-defeating, leaving the entire industry
exposed to massive legal liabilities. The cost of a serious
accident in a densely populated area of the United States or
Canada would dwarf the costs of even the most stringent and
expensive upgrades to the tank car fleet.
In the case of the Quebec rail disaster in 2013, the
railroad operator immediately went bankrupt. So the business
case for making safety improvements is overwhelming.
It is time for the industry to set aside its differences and
pull together to recognise the absolute commercial, safety and
political imperative of improving tank car performance.
To address the problem, the Pipeline and Hazardous Materials
Safety Administration (PHMSA) and the Federal Railroad
Administration (FRA), which are jointly responsible for
regulating railroad safety in the United States, need to bring
the consultation process to a swift conclusion.
PHMSA and FRA should move to introduce rules for oil and
ethanol tank cars based on the most recent recommendations of
the Association of American Railroads (AAR) and the U.S.
National Transportation Safety Board (NTSB).
New designs should become mandatory with immediate effect
and existing rolling stock should be retrofitted or phased out
on an accelerated timetable to ensure the carriage of crude by
rail is made as safe as possible. It is time to stop consulting,
finalise new rules and begin enforcing them.
HIDDEN RISKS REVEALED
Derailments and spillages from trains carrying crude and
ethanol "are very rare events" according to a joint task force
established in 2011 by the AAR as well as the Railway Supply
Institute (RSI) (which represents tank car owners), the American
Petroleum Institute (API) (representing crude producers) and the
Renewable Fuels Association (RFA) (representing ethanol
"Unfortunately, while they are low frequency such incidents
can represent very high consequence and, in the case of
flammable liquids such as denatured alcohol, are very
news-worthy," the task force wrote.
Low frequency/high consequence events are always
problematic. They pose the question of just how much money to
spend to reduce the risk of an incident which is a remote
possibility but could have catastrophic consequences if it
Unfortunately, the task force probably underestimated the
frequency of derailments and spillages occur based on a small
data set. It turns out that accidents involving ethanol and oil
by rail are relatively high-frequency events, and therefore pose
a much more substantial risk.
MORE TRAINS, MORE FIRES
The number of tank cars loaded with crude oil has risen
100-fold since 2006, according to the AAR, and there has been a
similar surge in tank car originations of ethanol.
More tank cars are being loaded with crude and ethanol and
travelling along more miles of track than ever before. As the
number of barrel-miles travelled has grown exponentially, it is
not surprising that risks have become more apparent.
The number of serious derailments and conflagrations
involving ethanol and crude has increased alarmingly.
Between 2006 and 2011, a period of six years, almost 1.4
million tank cars travelled on the railroads loaded with
ethanol, according to the task force. Just 163 (0.01 percent)
were involved in derailments in 10 separate incidents.
In 2013, however, around 400,000 tank cars were loaded with
crude oil in a single year, with almost as many originated with
ethanol. Taking the derailment rate as 0.01 percent, around 70
tank cars will derail each year.
In the last seven months, there have been no fewer than four
- In July 2013, a unit train carrying crude derailed in
Quebec, dozens of tank cars caught fire or exploded, killing
over 40 people.
- In November 2013, 25 tank cars derailed and some caught
fire in Alabama.
- In December, a crude train was involved in a collision in
North Dakota, with several tank cars bursting into flames.
- In New Brunswick on Tuesday, five tank cars carrying crude
and three containing propane derailed with at least some
In addition, in October 2013, four tank cars carrying crude
and nine carrying LPG derailed in Alberta and a fire was
In 2011, there were two serious accidents involving ethanol
trains, in Illinois (where 19 cars derailed and one person was
killed in the resulting fireball) and Ohio (involving 18 tank
cars and a giant fireball visible 15 miles away).
Crude and ethanol tank cars, of the type known as DOT-111,
did not cause any of these accidents, but their failure to
contain their flammable loads made the consequences much worse.
In Illinois, more than half of the tank cars which derailed were
breached, spilling some or all of their contents and catching on
Railroads carry far more dangerous cargoes which could kill
thousands of nearby residents in the event that they rupture,
creating enormous potential liabilities. "Every time we pick up
a carload of chlorine, we're placing a bet on the company,"
Norfolk Southern railroad chief executive Charles Moorman told
the Wall Street Journal ("Fiery oil-train accidents raise
railroad insurance worries" Jan 8).
But those travel in different tank cars built to DOT-105 and
DOT-112 standards which are far less likely to rupture in the
event of an accident.
"The fact that DOT-111 general service tank cars experience
more serious damage in accidents than pressure tank cars, such
as DOT-105 or the DOT-112 cars, can be attributed to the fact
that pressure tank cars have thicker shells and head," according
to the NTSB.
"The pressure cars are also usually equipped with metal
jackets, head shields and strong protective housing for top
fittings. They do not have bottom outlet valves, which have been
proven to be prone to failure in the event of derailment," it
For this reason, the NTSB has recommended much tougher
safety standards for all new and existing DOT-111 tank cars to
ensure they retain their load in the event of an accident.
NEW CARS AND RETROFITS
The AAR and railroad operators have finally embraced these
tougher standards, and called on PHMSA to mandate them for all
new tank cars, as well as requiring an "aggressive" timetable
for retrofitting or phasing out old tank cars which do not
But railroads own few tank cars themselves. Most are owned
by shippers and leasing companies.
We "continue to support ... the task force recommendations,
which recommend no retrofit requirements for the existing fleet
of tank cars carrying crude oil and ethanol," the American
Petroleum Institute and the Renewable Fuels Association, among
others, wrote to the PHMSA in September 2013.
"(We) do not wish to address the merits of any potential
retrofit proposals," they wrote. "(We) do request that ... PHMSA
initiate an expedited rulemaking on regulatory requirements for
new tank car construction standards ... and address potential
retrofits proposals at a later date in a separate rulemaking,"
they added, citing the need to move quickly.
The Railway Supply Institute, representing tank car owners
and manufacturers, supports tougher standards for new cars but
is also cautious about retrofits, and has requested a ten-year
programme for modifying, re-purposing or retiring old DOT-111
tank cars so as not to "overwhelm the tank car maintenance and
"None of the high-profile derailments mentioned (in this
rulemaking) would have been prevented by any of the recommended
improvements to tank car designs," according to the institute.
"The overall safety of hazardous transportation by rail cannot
be achieved by placing the sole burden ... on the designs of
"NTSB investigations determined that the probable cause for
each of these accidents was attributable to railroad operating
practices including track maintenance and track inspection
programs," the institute wrote to PHMSA in December.
"(The institute) agrees that broken rails are an
indisputable factor in the frequency of derailments and supports
efforts to improve rail integrity throughout the entire North
American system. A reduction in broken rails must be central to
the effort to improve the safety of tank car operations," it
HOPING TO AVERT DISASTER
The current DOT-111s cannot all be retrofitted at once or
withdrawn from service without massively disrupting the flow of
oil from the shale regions to refineries, bringing the North
American shale revolution to a temporary halt. There is an
inevitable trade-off between safety, cost and convenience.
But the risks of unmodified DOT-111 tank cars are very real;
it is only a matter of time before another fiery derailment. If
it occurs in an densely inhabited urban area, the risks to life
and property are considerable and the liabilities could easily
bankrupt any rail operator or shipper found to be at fault.
Ten years is much too leisurely a pace to correct defects
with existing DOT-111 tank cars. They need to be upgraded or
removed from service far quicker. PHMSA should set a much more
aggressive timetable for retrofitting, as well as working with
railroad operators to enhance the safety precautions around
trains carrying multiple tank cars.
Most railroads have already agreed to designate all trains
carrying large volumes of ethanol or crude as "key trains"
subject to stricter speed limits and other enhanced safety
measures to reduce derailments.
In the meantime, as the old DOT-111s continue to trundle
around the rail network, both the industry and regulators must
hope derailments continue to be relatively small and occur in
sparsely populated areas.
(Editing by Jason Neely)