(c) 2013, Bloomberg News.
(c) 2013, Bloomberg News.
WASHINGTON — The train derailment and fire in North Dakota that forced the evacuation of a nearby town is sure to trigger more debate about the safety of transporting oil as the U.S. reviews TransCanada's proposal to build the Keystone XL pipeline.
"Any time there is an incident, you have heightened talk and scrutiny on oil transportation," Brigham McCown, a former director of the Pipeline and Hazardous Materials Safety Administration, said in an interview. "It will add to the conversation."
More than 2,000 North Dakota residents were urged to flee possibly toxic fumes from the fire that engulfed BNSF Railway cars carrying oil after they collided on Monday with another train about 25 miles west of Fargo. BNSF is owned by Berkshire Hathaway.
While climate change has been the focus of the fight over Keystone, a subset in the debate has been the relative safety of pipelines versus trains as the U.S. State Department weighs whether the project is in the U.S. national interest. The agency has jurisdiction because Keystone crosses the border. The $5.4 billion project would link Alberta's oil sands and refineries along the Gulf Coast.
The accident in North Dakota is the fourth major North American derailment in six months by trains transporting crude. Record volumes of oil are moving by rail as production from North Dakota and Texas have pushed U.S. output to the most since 1988 and pipeline capacity has failed to keep up.
"I think this — seemingly yet another rail incident — will add to the clamor," for more regulation of shipping oil by rail, Tony Hatch, an independent rail analyst based in New York, said in an email.
Critics of Keystone have pointed to pipeline spills in Alabama and North Dakota to show that method of transporting oil carries its own hazards.
Despite the incidents, McCown, who is now an industry consultant and a supporter of Keystone, said both trains and pipelines are safe, with few incidents relative to the amount of crude they transport. One advantage pipelines have is that they tend to be in more sparsely populated areas, he said.
"Rail built the West. Rail built most of the towns," he said in a phone interview. "As a consequence, there are more rail lines going through more populated areas."
Anthony Swift, an attorney at Natural Resources Defense Council, said Monday's incident underscores the need to improve train safety in the U.S., regardless of whether Keystone gets built.
"Crude by rail is happening in North Dakota. It's not related to Keystone," Swift said in a phone interview. "Keystone isn't going to eliminate this crude-by-rail movement in the U.S."
The State Department review of Keystone's environmental impact includes whether the pipeline would lead to more carbon- dioxide emissions. That analysis could be released in the next few weeks.
President Barack Obama said in a June speech on climate change that he wouldn't approve Keystone if it would lead to a significant increase in carbon-dioxide emissions.
McCown said rail use would probably increase if Keystone were blocked. "The oil will find its way to market," he said.
Critics of Keystone argue that development will stall if the pipeline, which would have a capacity to carry 830,000 barrels of crude, is blocked by the administration.
Michael Whatley, executive vice president of Consumer Energy Alliance, an industry-backed group that supports Keystone, said more rail accidents can be expected with the increased use of trains to carry oil to market.
"Trains need to be a supplement not a replacement" to pipelines, Whatley said. While both forms of transportation are safe, "we need expanded pipeline infrastructure," he said.
A draft supplemental environmental impact statement released by the State Department in March includes a brief comparison of the safety of pipelines versus rail.
While derailments probably would release less oil than a pipeline rupture, trains have an "increased statistical likelihood of spills," the report said.
The North Dakota crash is "a wake-up call for what increased oil production in North America is going to mean" for communities in the U.S., said Stephen Kretzmann, executive director of Oil Change International, a Washington-based group that opposes the use of more fossil fuels.
Kretzmann said that while he expects advocates of the Keystone pipeline to use the train crash as evidence that rail transport is unsafe, pipelines also pose dangers.
The best solution "is to phase down oil production," Kretzmann said.
The most recent incident occurred when a westbound train carrying soybeans derailed west of Casselton, N.D., just after 2 p.m. local time on Monday, said Cecily Fong, a spokeswoman for the state Emergency Services Department. An eastbound train carrying oil hit the derailed train, causing the fire, she said.
The investigators from the U.S. National Transportation Safety Board were delayed in reaching the accident because the fire was still burning, board member Robert Sumwalt said in a briefing Tuesday morning in Fargo.
Nineteen cars carrying crude oil derailed when the train struck the other freight train that had left an adjacent set of tracks, Sumwalt said.
Initial reports were the rail oil-carrying cars were DOT-111 models, he said. The NTSB has urged the U.S. Pipeline and Hazardous Materials Safety Administration to issue tougher standards for such cars to make them more resistant to puncture during accidents.
The pipeline agency is reviewing updates to its rules.
Two to three rail cars were still burning and 1,500 residents living within a five-mile radius of Casselton heeded warnings to evacuate, Tara Morris, a spokeswoman for the Cass County Sheriff's Office said at a press briefing at 10 a.m. North Dakota time Tuesday. One railcar can hold about 700 barrels of oil, according to the Energy Information Administration, the Energy Department's statistical arm.
No injuries to the train crews were reported in the accident, BNSF said in a statement.
"We are thankful there have been no injuries as a result of the derailment near Casselton, North Dakota, and are terribly sorry for the inconvenience this derailment has caused residents in the area," the company said.
About 65 percent of the 2,400 residents of Casselton left their homes as BNSF crews cleaned up debris while waiting for fires in two or three rail cars to burn out, Morris said.
BNSF, based in Fort Worth, Texas, didn't provide an estimate for when the tracks will reopen. Berkshire's Burlington Northern Santa Fe railroad carried about 500,000 barrels of oil a day in March, Chief Executive Officer Warren Buffett said at the time.
Continental Resources, the largest leaseholder in North Dakota's Bakken shale field, sees "slight delays" in shipments for several days from the region due to the fire, company spokesman Warren Henry said in a telephone interview Tuesday.
The destination of the oil was not immediately known. Phillips 66, Irving Oil and Philadelphia Energy Solutions all said it wasn't headed to their refineries.
Oil produced in North Dakota's Bakken formation for delivery at Clearbrook, Minn., strengthened 75 cents a barrel to a discount of $7.50 a barrel versus U.S. benchmark West Texas Intermediate crude at 2:06 p.m. New York time, data compiled by Bloomberg show.
The Federal Aviation Administration banned flights below 6,000 feet above sea level in the area of the incident, citing possible tank car explosions.
In November, a train carrying oil to the Gulf Coast from North Dakota derailed in Alabama, touching off fires. A month earlier, residents were evacuated from a rural area of Alberta after 13 railcars, four of which were carrying crude, derailed and ignited a blaze.
In July, a runaway train transporting crude exploded and killed 47 people in the Quebec town of Lac-Megantic.
Monday's derailment "is likely to flare up the debate on the environmental side of the shale oil boom, which could result in higher costs for the industry," JBC Energy, a Vienna-based energy consultant, said in an emailed report on Tuesday.
With assistance from Lucia Kassai and Barbara Powell in Houston; David Stringer in Melbourne, Australia; Edward Welsch in Calgary, Canada; Konstantin Rozhnov in London and Brian Wingfield and Alan Levin in Washington.