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Despite Quebec derailment, railroads vital to crude oil transport

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By The Associated Press
Saturday, July 20, 2013, 12:01 a.m.
 

NEW YORK — A train loaded with crude oil could soon roll through a town near you.

A fiery and fatal train derailment this month in Quebec, near the Maine border, highlighted the danger of moving oil by rail. But while the practice could be made safer, it won't be stopped in its tracks. This year, more trains carrying crude will chug across North America than ever before — nearly 1,400 carloads a day. In 2009, there were just 31 carloads a day.

U.S. and Canadian drillers are producing oil faster than new pipelines can be built. As a result, trains have become an unexpected yet vital way to move this bounty of energy from the continent's midsection to refineries along the coasts. Not since the dawn of the petroleum age, when John D. Rockefeller clashed with railroad barons, have trains been so important to the oil market.

Since the July 6 tragedy in Lac-Megantic, in which a runaway train carrying 72 carloads of crude derailed and killed 50 people, there have been calls for tougher regulations, stronger rail cars and more pipelines. But experts say the oil industry's growing reliance on trains won't be derailed anytime soon. There's just no other way to get vast amounts of oil from North Dakota and Rocky Mountain states to refineries along the coasts, which are eager for cheaper, homegrown alternatives to imports brought by boat.

“Stopping crude by rail would be tantamount to stopping oil production in a lot of the places it is now being produced,” said Michael Levi, who heads the Council on Foreign Relations' program on energy security and climate change.

Even safety experts worried about the dangers of shipping oil by rail acknowledge that the safety record of railroads is good — and improving. The scope of the Lac-Megantic disaster, which is under investigation, appears to have been the result of uniquely bad circumstances, these experts say.

“Rail is going to remain a significant part of the way we move crude around the country for a long time,” said Jason Bordoff, head of Columbia University's center on global energy policy. “I don't think this rail accident will significantly change that.”

In the first half of this year, railroads moved 178,000 carloads of crude oil in this country. That's double the number of the same period last year and 33 times more than the same period of 2009. The Railway Association of Canada estimates that as many as 140,000 carloads of crude oil will be shipped on Canada's tracks this year, up from 500 carloads in 2009.

Last year, 663 rail cars carrying hazardous materials derailed or were damaged across the nation, a decline of 38 percent from 1,072 incidents in 2003, according to the Federal Railroad Administration. That's comparable to the total number of train accidents per million miles traveled, which fell 43 percent over the same period, and the number of derailments, which fell 40 percent.

Whether crude traffic on the rails will continue to grow quickly depends on oil prices around the globe, but refineries are gearing up for more.

Just across the Hudson River from New York City, Phillips 66 is building a terminal for its Bayway refinery that will be able to handle up to 100 rail cars — or roughly 70,000 barrels — of crude per day.

While crude transport by rail has grown quickly, it is still a relatively small part of train traffic and the crude trade.

Just 1.4 percent of U.S. rail traffic in the first half of this year was crude oil, according to the Association of American Railroads, an industry group. And of all the hazardous material trains carry, crude is not the most volatile or hazardous. Trains transport materials such as chlorine, phosphoric acid and propane — even rocket fuel for the space shuttle was moved by train. Railroads also move three quarters of the nation's ethanol — which is quicker to explode than crude — from Midwest farms to fuel terminals around the country for blending into gasoline.

“Oil isn't scary at all,” said Mayor Richard Gerbounka of Linden, N.J., home of Phillips 66's Bayway Refinery. Even if the mayor did think it was scary, he wouldn't be able to stop it — local officials do not have the power to restrict rail traffic.

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