The US and Canada are in the midst of a boom in crude oil production, thanks in part to new technologies and newly discovered sources. Production of oil, natural gas, and ethanol fuel has increased dramatically in the past fifteen years.
On May 8th, 2015, the US Department of Transportation (DOT), in cooperation with Transport Canada, issued a Final Rule to improve the safety of flammable liquids shipped by rail
. The new rule comes in response to a rash of high-profile train derailings involving large shipments of crude oil and other products across the US and Canada. Background: Skyrocketing Production
Two major sources of crude oil, the Bakken Fields in North Dakota and Montana and the Alberta Oil Sands in Alberta, Canada, present a unique logistics problem for the oil and gas industry: They are far away from most high-capacity oil refineries—those that can handle 250,000 barrels or more per day—which are located near the Gulf Coast and in New Jersey, New York, California, and near the Great Lakes. The Bakken Fields alone produce more than one million barrels of crude oil per day. [79 FR 45019] With existing refineries located far from the source of oil and obstacles to building new refineries nearby or building a pipeline, producers rely heavily on trains to transport crude oil and ethanol to refineries. Rail Car Loads of Crude Oil on Class I Railroads (Per Year)
[Source: 79 FR 45019] Carloads of Ethanol on Class I Railroads (Per Year)
[Source: 79 FR 45019] Lac-Mégantic, Quebec Incident
On July 6, 2013, a freight train carrying one and a half million gallons of petroleum crude oil (UN 1267) derailed, causing explosions and fires that killed forty-seven people, destroyed fifty three vehicles, and spilled about one million gallons of product. This catastrophe was just one of a number of high-profile derailments, spills, and fires involving rail shipments of crude oil in the US and Canada since 2013. Defining "High Hazard Flammable Trains"
Effective July 7, 2015, trains carrying large volumes of crude oil and other flammable liquids will be subject to more stringent operating requirements. The more stringent requirements apply to "High-Hazard Flammable Trains" (HHFT) and "High-Hazard Flammable Unit Train" (HHFUT).
Bolstered requirements for HHFTs and HHFUTs include:
- A train is an HHFT if it includes 20 or more loaded tank cars of a Class 3 flammable liquid in a continuous block OR 36 or more loaded tank cars of a Class 3 flammable liquid across the entire train.
- A train is an HHFUT if it includes 70 or more loaded tank cars containing Class 3 flammable liquids traveling at speeds greater than 30 miles per hour.
Effect on shippers:
- Restricted top speeds,
- Enhanced braking technology to reduce the "pile-up" effect,
- Bolstered design requirements and performance criteria for tank cars constructed after October 1, 2015, and
- An ambitious schedule of retrofitting older tank cars that carry crude oil and/or ethanol.
While tank car manufacturers and railroads will feel the brunt of these new requirements, stricter regulations for "high-hazard flammable trains" may limit availability for shipping out by rail, shipping rates, and routes offered. New Classification/Characterization Requirements
On January 2, 2014, PHMSA issued a safety alert for crude extracted from the Bakken formation in North Dakota. The alert warned that crude oil from this region may be more dangerous than traditional heavy crude oil and encouraged shippers to ensure materials are properly classified and characterized before transport.
In February and March of 2014, Federal authorities followed up on this safety alert by issuing Emergency Orders that prohibit rail transport of crude oil assigned to Packing Group III (the lowest hazard level). The Emergency Order requires shippers to classify crude oil as PG II or PG I (medium or high-hazard level, respectively), even when testing shows the oil to be PG III.
Continuing this trend, the May 8 rule adds a new section 173.41 to 49 CFR. The new section will explicitly require certain shippers to establish a written sampling and testing program for unrefined petroleum products. Effect on shippers:
This new rule will require shippers to regularly test the output of their gas and oil wells and keep accurate records.
Rail Routing Risk Assessment
On the recommendation of the National Transportation Safety Board (NTSB), the DOT now requires railroad operators to analyze and plan the routes for HHFTs using the same 27-point process they use for high-hazard materials under 49 CFR 172.820. This new requirement will reduce the number of HHFTs traveling through densely populated areas and increase safety when they do. Effect on shippers:
New emergency preparedness requirements for railroads may have tangential effects on shippers. To ease the burden of new SERC notification, oil spill planning, and/ or safe-routing requirements, rail carriers may adjust the volume and frequency of the shipments they accept. Expert 49 CFR Hazmat Shipper Training
Get up to speed with the latest hazmat shipping regulations for ground, air, and ocean with interactive hazmat workshops
, online courses
, and webinars
at Lion.com. For hazmat shipping managers and personnel, staying up-to-date with rule changes is critical; missing a single mandate can lead to rejected shipments, incidents in transit, and DOT fines up to $75,000 per day/violation. Per 49 CFR 172.704, hazmat employee training is required within 90 days for new employees and at least once every three years thereafter.