PhillyDeals: Local refiners and shippers watch probe of explosion

Smoke and flames rise from rail cars carrying crude oil that derailed and crashed in downtown Lac-Megantic, Quebec, on Saturday.
Smoke and flames rise from rail cars carrying crude oil that derailed and crashed in downtown Lac-Megantic, Quebec, on Saturday. (PAUL CHIASSON / Canadian Press)
Posted: July 11, 2013

The runaway crude-oil train that roasted downtown Lac-Megantic, Quebec, on Saturday has the refiners and shippers who count on similar trainloads to fill the Delaware River refineries paying close attention.

Could this happen here?

After all the blather about running out of oil, more crude is now flowing from deep wells and giant pits in central North America than ever.

Pipeline operators want to ship the stuff East to refiners and consumers. Environmentalists and their alternative-energy allies in the Obama White House have blocked those plans, so far.

So instead, oil has gone by rail - enriching people like Warren Buffett, whose Berkshire Hathaway holding company owns the Burlington Northern Santa Fe lines that dominate energy country, and Edward Burkhardt, who runs Chicago-based Rail World Inc., which ran the killer train of Lac-Megantic.

But oil-by-rail costs more than oil-by-pipeline, and rail spills are more common than pipeline leaks. The thin-steel-hulled DOT-111-style tanker cars that blew up Lac-Megantic also transport a lot of the oil shipped around the United States. From 1991 to as recently as last fall, they have been repeatedly cited by the National Transportation Safety Board as dangerously explosive in case of train crashes.

Maybe NTSB will use Lac-Megantic to toughen rail tankers, just as the government required double-hulled oil tanker ships after the Exxon Valdez spill.

Meanwhile, how much should we worry?

"Since Saturday we have been closely following this evolving story and reviewing related information with our railroad service providers to ensure that proper procedures and guidelines are in place and being followed at our rail facilities," says Michael Karlovich, spokesman for PBF Energy Inc., which buys trains of Western crude for its Delaware City, Del., refinery.

"Any time you have an undertaking in the industrial sector, bad things can happen," notes Jack Galloway, whose Canopy Prospecting Inc. is helping build a $68 million rail-barge terminal at Peco's Eddystone coal plant site to get North Dakota oil to local refiners.

"We expect we can plan out the shortcomings, human and technical, by putting in all these fail-safe devices that have been developed," Galloway told me. He says he's visited operating partner Enbridge Inc.'s North Dakota crude-oil loading site, that it's "the gold standard," and "we expect our off-loading is going to be every bit as good." (Enbridge has been cited by several U.S. states for local spills.) "There'll be people here around the clock. I don't think we're going to have a duplication of the things that went on in Canada."

The oilmen also note that railroads are responsible for safe shipping. When I asked giant energy-by-rail shipper Norfolk Southern about its DOT-111 tankers, spokesman David Pidgeon told me, "We don't comment on the routing of commodities in different kinds of cars."

I asked about an ethanol spill in Columbus, Ohio, last year in which Norfolk Southern DOT-111 tankers blew up spectacularly. "That derailment is still the subject of an NTSB investigation," Pidgeon said.

 I asked about reports that railroads had opposed federal Department of Transportation plans to strengthen existing DOT-111 cars, which account for 240,000 of America's 310,000 rail tank cars.

He referred me to the Association of American Railroads, a lobbying group whose spokeswoman, Holly Arthur, said her group had agreed to government recommendations for tougher new tank cars, but resisted a proposal to retrofit existing tank cars.

The railroads say the government plan would "require taking existing cars apart," plus extensive new heat treatments for each car. The group is still working on an alternative plan.

Contact Joseph N. DiStefano at 215-854-5194, or @PhillyJoeD.

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