The Crude Oil-By-Rail “Bounce” – What You Should Know

The recent U.S. shale revolution has brought drilling and oil production to places that previously had little industry of the type, like our Bakken Shale Formation. Before, we never had the infrastructure to move product away—but all that changed with the advent of “virtual pipelines,” aka rail tank cars.

According to E&E News, at the peak period here in North Dakota, oil-by-rail traffic reached a staggering 1.1. million barrels a day. In other words, if you put all of those barrels on a train moving through town at 50mph, you’d be waiting in your car at that traffic stop for about half an hour.

The popularity of moving crude oil by rail has waned, both due to fluctuating markets and the creation or expansion of new pipelines. Today, though, the industry is poised for another oil boom and the rails could once again be humming with tankers of oil. However, there’s a growing concern among citizens and environmentalists alike that these tankers are a disaster waiting to happen.

From Bakken to the rails

About a decade ago, advances in hydraulic fracking and horizontal drilling made it possible to access previously untapped reserves of shale and crude oil. The Bakken formation was rich in both. However, what it did lack was pipeline capacity. Moving crude oil by rail out to the East Coast was both a creative and economical choice.

New York State quickly became a hub for companies moving oil to barges on the Hudson River. And more companies began moving crude down from Canada. Soon, residents of Albany became familiar with the sight and sound of rail tankers rumbling through town. It became a battle of activists versus industry as environmentalists and neighbors attempted to stop more and more expansions. Both sides claimed victory in a number of battles.

The question of safety

Those opposed to moving crude by rail are concerned about safety and the potential environmental damage in a derailment or accident. Defenders point out that the majority of shipments make it to their destinations without incident.

However, there has been precedent for concern. The Midwest ethanol industry used trains to transport the highly flammable liquid in a series of attached cars. Many used the DOT-111 car, which was originally designed to carry corn oil and had a record of being “rickety,” according to the E&E article. Several large-scale derailments and fires prompted the NTSB to recommend regulators build stronger cars. The older cars still being used on the track were given the disturbing nickname “bomb trains.”

In 2015, the DOT put out a timetable to either retire or retrofit all DOT-111s and laid out plans for a new, safer standard called the DOT-117. To bolster their decision, they predicted that up to 14 oil and ethanol trains would derail each year—for 20 years—unless regulators acted.

Their prediction hasn’t come true, though, because the market dropped, and so has the number of crude oil trains on the track, and thus the number of derailments. Further, the Dakota Access Pipeline was completed in June 2017, drastically cutting the need to move crude by rail.

But suddenly, a bounce in crude-by-rail traffic has trains moving again, mostly to the Pacific Northwest. In the first three months of the year, U.S. railroads moved 5,500 more carloads of crude than they did in the last quarter of 2017, says E&E. It remains to be seen how this next bounce will affect the crude-by-rail industry.

For many of us, the North Dakota oilfields are our lifeblood. But if you suffer an accident that wasn’t your fault, the attorneys at Larson Law are here to support you. We represent the people. To schedule your free initial consultation with an attorney, call our Minot office at 701-484-4878, or fill out our contact form.