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North Dakota Oil Train Explosion

posted on January 3, 2014

I'm Mike Pearson. Warren Buffett's company has agreed to trade about $1.4 billion worth of stock in Phillips 66 for one of the refiner's chemical businesses.

Houston-based Phillips 66 said this week that Berkshire Hathaway will give up about 70 percent of its shares to acquire a business making additives that help crude oil flow through pipelines.

The “Oracle of Omaha” has good reason to consider multiple methods of shipping fossil fuels. And that was demonstrated vividly this week when a pair of BNSF trains – owned by Berkshire Hathaway – collided in North Dakota.

North Dakota Oil Train Explosion

Residents of the southeastern North Dakota town of Casselton are back home this weekend after a massive explosion following a crash involving two trains – one carrying grain and the other loaded with oil from the state’s oil patch. The collision happened about a mile from the community, but the fireball and smoke trail could be seen for miles west of Fargo.

Loren Parks, Witnessed Explosions "So we're coming in on 94 heading east maybe doing 75-80 mph. And as we come underneath these clouds it was almost like night time. Ya know. It was just dark. The entire sky is just blacked out, you can't see anything. So we come in digging on these side streets trying to get a closer view. It was a pretty surreal feeling."

A westbound Burlington Northern Sante Fe train carrying soybeans derailed first, and a portion of it fell onto an adjacent track carrying the eastbound BNSF oil train. Eighteen cars of the 106-car oil train left the tracks and burned.

24-hundred residents of Casselton were under voluntary evacuation due to unsafe air. The order was lifted Tuesday after follow-up tests were completed.

No one was injured in the incident.

Investigators located a broken axle near the crash site, but have yet to say which train it belonged to. The signals around the crash site were in good working order and the derailment point has been determined.

Repair crews hoped to have both tracks open late this week.

The rate of oil train accidents remains low, but there has been a sharp increase in the past several years, in the number resulting in spills. That increase is being driven, largely, by a surge in drilling in the Bakken formation in North Dakota and other western states.

North Dakota is the number two oil-producing state in the U.S. trailing only Texas. A growing amount of the oil is shipped by rail and the state’s top oil regulator expects as much as 90 percent of North Dakota’s oil to be carried by train this year, up from 60 percent in 2013.

The number of crude oil carloads hauled by U.S. railroads surged from 10,840 in 2009 to a projected 400,000 this year. Despite the more than 3,500 (35-hundred) percent increase, the rate of accidents has remained low. Railroads say 99.997 percent of hazardous materials shipments reach destinations safely.

This week’s mishap in North Dakota was not the only train derailment in 2013 involving crude oil. Back in July, 47 people died following a rail disaster in Quebec, and another train carrying crude derailed in Alabama in November.

The Pipeline and Hazardous Materials Safety Administration issued a warning late this week for first responders that light, sweet crude being transported from the Bakken region may be more flammable than traditional heavy crude oil.

Based upon preliminary inspections conducted after recent rail derailments in North Dakota, Alabama and Quebec involving Bakken crude oil, PHMSA is reinforcing the requirement to properly test, characterize, classify, and -- where appropriate --  sufficiently degasify hazardous materials prior to and during transportation.

The derailments were not the only incidents involving oil in 2013. Two pipelines reported leaks in North America last year. One occurred in North Dakota and the other in Arkansas. 

The string of spills and derailments serve as talking points for both sides in the debate over the proposed Keystone XL pipeline that would transport oil from Canada and North Dakota to refineries in Texas.

In April, the former head of the PHMSA testified at a Keystone hearing in Nebraska. He told Market to Market then that leaks can occur, but insisted technology improvements would improve safety.

Brigham McCown, Former head of the federal Pipeline and Hazardous Materials Safety Administration: “So 13.5 billion barrels transported, crude and refined product, transported each year, the safety rating is 99.9999952% and that is pretty dag-gone good and that is a much safer record than rail or truck or any other mode of transportation.”

Tags: BNSF Casselton derailment Explosion Keystone XL Pipeline Lac-Megantic Montana North Dakota oil Quebec railroads railways


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