Oil-by-rail transportDespite disasters, oil-by-rail transport is getting safer
Oil production in the United States is booming. Last year, for the first time since 1987, annual U.S. field production of crude oil topped three billion barrels, a 170 percent increase since 2008. As pipelines quickly reached capacity, oil shippers turned to the railroads, which provided multiple incentives, including: flexibility in shipping options and contract timelines, shorter transit times to the refineries (five to seven days by rail compared with 40 days by pipeline), and the ability to choose which refineries to use. Oil production in the Bakken formation in North Dakota has increased from 81,000 barrels per day in 2003 to more than one million barrels by mid-2014 — with more than three-quarters of those barrels moving daily by rail out of North Dakota. With U.S. crude oil transport by rail nearing all-time highs, many are expressing fears about the potential of a crude oil spill in their community.
For many Americans, railroad transportation rarely appears on our mental radar, and when it does, it often comes with a negative context: either we are stopped at a railroad crossing while running late for work or we come across a news article with shocking images of smoke and flames accompanied by reports of exploding tank cars.
Months go by with no thought of railroad transportation, until another derailment occurs, and we again associate trains with fire and danger.
With U.S. crude oil production nearing all-time highs — averaging over 8.5 million barrels per day in 2014 — many are expressing fears about the potential of a crude oil spill in their community. And last week, the National Transportation Safety Board released “urgent” recommendations to promote the safety of shipping crude oil, ethanol and other flammable materials by rail.
What’s behind this rapid rise in oil-by-rail transport? How dangerous is it and can new technology make it safer? To answer these questions, we’ve prepared two articles on transporting oil by rail in the United States. The first explores the economic drivers and assesses the rail industry’s record on safety; the second evaluates the technology, research and railroad operating practices that can lead to the greatest level of public good (note: the second article – Bryan W Schlake, “Shipping oil by rail is booming. Technology can make it safer” – will be published tomorrow).
By better understanding the underlying issues, we can have a meaningful dialogue and take action towards the common goals of improved safety, security and economic stability.
Economics of oil by rail
Oil production in the United States is booming. Last year, for the first time since 1987, annual U.S. field production of crude oil topped three billion barrels, a 170 percent increase since 2008.
Technological advances such as hydraulic fracturing, or “fracking,” and horizontal drilling allowed for increased production, notably in the Bakken formation in North Dakota. But rail has been integral to the domestic oil surge. It was the availability of low-priced, flexible transportation that allowed crude oil to be shipped to U.S. coastal refineries, creating the market for Bakken oil.
