Ameliorating the Dangers of the North Dakota Oil-by-Rail Industry

The fracking boom in the United States has established North Dakota as the second largest producer of crude oil in the country.[i] North Dakota shale development has primarily occurred in the Bakken Formation. The Bakken Formation is a large oil and natural gas deposit located in the northern states. It lies between Montana, North Dakota, and Canada.[ii] While it initially did not produce significant amounts of oil products, hydro fracking and horizontal drilling have made it an important source of oil.[iii] The fracking industry has spurred the North Dakotan economy and has helped push its unemployment rate to one of the lowest in the country at 2.3%.[iv] While the economic benefits have been numerous, the fracking industry in North Dakota has become dangerous because of the consequences of transporting the volatile crude oil. Each day, approximately 70% of the 1.2 million barrels of oil produced are moved by train.[v] The multiple regulatory efforts to alleviate this danger in North Dakota have not been very successful.

In the last two months, four trains carrying crude oil from or through North Dakota, to Canada and the U.S., have derailed and caused explosions that have burned for days.[vi] The first major explosion occurred in July 2013, when a train hauling crude oil exploded in Lac-Megantic, Canada, killing 47 people.[vii] In February, a 100-car train derailed in Ontario, Canada and a 109-car oil train derailed in West Virginia.[viii] Both accidents resulted in oil leakages and fire damage to the local areas due to explosions.[ix] These explosions primarily occur because of the volatile nature of the crude oil produced at the Bakken Formation. [x] Shale oil results in the production of gases such as ethane and butane, known as “light ends,” which are highly susceptible to combustion when the trains derail.[xi]

As a result of these dangerous accidents, the U.S. government has taken a variety of regulatory actions to safeguard the transport of crude oil and prevent damages to the environment and towns located in the vicinity of these railroads. Beginning in July 2013, the Department of Transportation drafted new oil regulations to safeguard the movement of oil on U.S. rails.[xii] However, those measures have not proven to be very effective in light of the continuing accidents in 2014 and 2015. The Federal Railroad Administration (FRA) has also taken action to improve the railroad network. Most recently, they required oil companies to replace faulty valves on rail cars because they have resulted in leaks on the railways.[xiii] After the July 2013 explosion, the FRA also released an emergency order that prohibited oil trains from being left unattended while the engines were still running.[xiv] The FRA has called for oil companies to work in cooperation with the government to improve the rail cars and oil composition.

However, the constant battle between oil companies and the government regulatory actors and industry experts has resulted in ineffective legislation because of disagreements over the most effective remedy. Oil lobbies, like the American Petroleum Institute, maintain that changing the composition of the crude oil or processing the crude oil before moving it will not reduce the risk of the explosions.[xv] Industry experts argue, “stabilizing units would improve safety, but they are reluctant to make that point publicly for fear of antagonizing the companies that do business in North Dakota.”[xvi]

There are a few solutions that can be pursued to reduce the threat of oil rail car explosions. The first is to invest in safety measures that stabilize the crude oil by removing the fuel gas components before transporting the material, as has been done in Texas.[xvii] While this method is expensive, and can potentially deter business, the effectiveness of this method in Texas shows that it might ameliorate the same dangers faced in North Dakota.[xviii] The stabilization of crude oil in Texas was possible through a multi-million dollar investment, which, “over a two-year period of time,” almost completely diminished the problem of moving crude oil through pipelines and railways.[xix] The North Dakotan companies have not invested in this safety technology to stabilize the components of the crude oil that they are transporting.[xx]

A second solution is to require more stringent regulations by the FRA, Department of Transportation, and other agencies involved in the transportation of these hazardous materials. While the emergency order is an important step towards safeguarding the oil cars, more needs to be done to prevent oil companies from using outdated rail cars, and railways need to inspect the rails more frequently and carefully to avoid weather based derailments. Even with reasonable care, it is unlikely that all explosions can be prevented because of the innately dangerous character of the activity. For example, North Dakota recently issued new regulations, to go into effect on April 1, 2015, to limit and monitor the vapor pressure of crude oil.[xxi] However, vapor pressures can vary in transit and this raises uncertainty about whether the measure will actually reduce the dangerousness of transporting the North Dakotan shale oil.[xxii]

It is clear that the explosions cannot be prevented by a singular actor putting new regulations in place. Cooperation between the oil companies, railways, and regulatory actors will be imperative to successfully prevent the explosions. Additionally, there needs to be cooperation between the federal and state government because there is no federal standard to control the transport of explosive gases.[xxiii] As the shale crude oil supply from North Dakota becomes increasingly important to U.S. oil production, equivalent measures will need to be taken to ensure that the crude oil is transported safely to its destination. It is a necessary measure, to save lives and prevent damage to the surrounding environment, particularly if the damage can be prevented by an investment in technology to make the crude oil less volatile. While it will be expensive in the short term, the benefits in the long run make it a worthwhile investment.

Trisha Parikh is a General Member on MJEAL. She can be reached at tsparikh@umich.edu.


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[i] Russell Gold and Chester Dawson, North Dakota Fracking: Behind the Oil-Train Explosions, Wall St. J., July 7, 2014, http://www.wsj.com/articles/north-dakota-fracking-behind-the-oil-train-explosions-1404761720.

[ii] Bakken Formation: News, Map, Videos, and Information Sources, Geology.com, http://geology.com/articles/bakken-formation.shtml (last visited Mar. 23, 2014).

[iii] Supra note ii.

[iv] Jacquelyn Smith, The Cities with the Best and Worst Unemployment Rates, Forbes, Jan. 23, 2014, http://www.forbes.com/sites/jacquelynsmith/2014/01/23/the-cities-with-the-best-and-worst-unemployment-rates-right-now/.

[v] Patrick Rucker, North Dakota’s New Oil Train Safety Checks Seen Missing Risks, Reuters, Mar. 31, 2015, http://www.reuters.com/article/2015/03/31/usa-oil-safety-idUSL2N0WT14V20150331.

[vi] Joan Lowy, Recent Spate of Derailments in the U.S., Canada Deepens Fear of Possible Oil Train Disaster, Associated Press, Mar. 10, 2015, http://www.usnews.com/news/business/articles/2015/03/10/spate-of-oil-train-derailments-raises-safety-concerns.

[vii] Marcus Stern & Sebastian Jones, BOOM: North America’s Explosive Oil-by-Rail Problem, The Weather Channel and InsideClimate News, Dec. 8, 2014, http://stories.weather.com/boom.

[viii] Supra note vii.

[ix] Id.

[x] Supra note i.

[xi] Alison Sider and Nicole Friedman, Oil from U.S. Fracking is More Volatile than Expected, Wall St. J., June 24, 2014, http://www.wsj.com/articles/oil-from-u-s-fracking-is-more-volatile-than-expected-1403653344.

[xii] Supra note vii.

[xiii] Susan Phillips, Railroad chief says oil companies need to do more for rail safety, StateImpact, Mar. 16, 2015, http://stateimpact.npr.org/pennsylvania/2015/03/16/railroad-chief-says-oil-companies-need-to-do-more-for-rail-safety.

[xiv] Supra note vii.

[xv] Supra note i.

[xvi] Id.

[xvii] Id.

[xviii] Id.

[xix] Id

[xx] Id.

[xxi] Supra note v.

[xxii] Id.

[xxiii] Id.

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