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Oil Transport: Will the Latest Rail Accident Cause the Next President to Look Closely at Keystone?

rail carsOil companies have made the news lately — involving everything from price swings to climate change to oil spills. The latest such event is a rail accident that caused a crude oil explosion along Oregon’s scenic Columbia river.

Safety is paramount. And while the cause of this accident that led to fires for six hours is a train derailment, the incident will also cause the debate over the Keystone XL Pipeline to flare up. In other words, oil is moving around the United States one way or the other. Rail transport will remain necessary. But additional pipelines may ease the burden on trains carrying crude oil.

In this case, it was a Union Pacific train that derailed about 70 miles of Portland. It was carrying oil drilled by Bakken in North Dakota. All this in the context of a congressional measure to improve rail safety as it relates to the transport of oil. The goal there is to avoid derailments by phasing out older tank cars and adding electronic braking systems.

In fact, Bakken shipments of tight oil by rail have increased because producers there are unable to build pipelines fast enough; the vast majority of such finds are transported by rail. Moreover, the rails currently exist whereas the regulatory process to build pipelines is meticulous and just like Keystone, proposed lines can languish.

The problem that has now come to light is that the rail system is not equipped to handle such huge shipments of oil — that the cars carrying it are often outdated.

Currently, about a million barrels are moved through the rail system, where about 10 major accidents have taken place in the United States and Canada since 2008. Generally, oil uses pipelines 70 percent of the time, river barges 23 percent, trucks 4 percent and railway 3 percent. Of note, analysts say that it can cost as much as five times more to transport oil by rail than it does pipe, for moderate to long distances.

Before the accident in Oregon, there was one that occurred outside Charleston, WV in February 2015. Before that, there has been a string of them: Quebec, Canada, Lynchburg, Va., Aliceville, Ala. and Casselton, ND. All share a common thread, which is that they were carrying North Dakota-based shale oil that had been plucked from tight formations in the Bakken region — one of the nation’s richest shale oil deposits.

A key question here is whether it is safer and more efficient to transport such hazardous liquids by rail, barge, truck or pipeline within the United States. And by extension, the bigger question is whether this latest rail accident will push a new administration sworn into office in January 2017 to Okay the Keystone XL Pipeline — a project that has just as much symbolic significance as it does practical implications.

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