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Off the Tracks: Quantifying Potential Monetary Exposure From Crude-by-Rail Incidents

This article is the second in a three-part series that began with “Off the Tracks: A Data-Driven Analysis of Crude-by-Rail Liability Factors, Exposure, and Potential Solutions,” which was published on December 19, 2015. In Part One of this series, we analyzed factors that influence liability for crude-by-rail (CBR) incidents. But knowing the liability factors leads … Continue Reading

Off the Tracks: A Data-Driven Analysis of Crude-by-Rail Liability Factors, Exposure, and Potential Solutions

Crude oil prices are now approaching what pundits believe is likely to be the bottom phase in the current market cycle. Due to the price downturn, the arbitrage window that drives a substantial portion of crude-by-rail (“CBR”) shipping volumes is closed. Yet once the price recovery begins, producers and refiners will again avail themselves of … Continue Reading

Crude-By-Rail Update: Siting a Crude Oil Transloading Terminal in California? Developers Should Seek Old Industrial Sites and Proactively Embrace the Environmental Impact Review Process

Proposed crude-by-rail (CBR) projects in California increasingly face opposition lawsuits designed to stall and derail the terminals. The suits often focus on alleged noncompliance with the California Environmental Quality Act (CEQA)—a tactic that has produced success.[1] Undoubtedly, CEQA review presents its own delays and costs to industrial development. But if approached in the correct way, … Continue Reading

Crude-by-Rail Update: PHMSA Rejects Administrative Challenges to CBR Rule

Despite challenging oil prices and a decrease in the volume of crude oil traveling by rail,[1] recent events have renewed the spotlight on crude-by-rail (CBR) transportation. First, two trains derailed in Wisconsin last weekend – one carrying ethanol and the other hauling crude oil.[2] Second, the Pipeline and Hazardous Materials Safety Administration (PHMSA) reaffirmed its … Continue Reading

Crude-by-Rail Update: The DOT’s Final Rule Is Out—How Can Producers and Midstream Transporters Comply with the New Classification Standards?

On May 1, the Department of Transportation—through its operating agencies the Pipeline and Hazardous Materials Safety Administration[1] and the Federal Railroad Administration—issued its final crude-by-rail rule. The rule mandates more stringent standards for newly constructed tank cars—along with the retrofitting of older ones—and imposes new operational controls for high-hazard flammable trains.[2] Despite the new rule, … Continue Reading

Keystone XL’s Opponents Won’t Derail Canadian Oil Trains to the Gulf Coast

The U.S. Gulf Coast—with its 1.4 million barrels per day of coker[*] refining capacity geared to maximize output of high-value lighter products from lower-cost, heavy, high-sulfur crude oil feedstocks—is an ideal market for Canadian tar sands oil.[1] Two core factors have opened the door to Canadian supplies—which hit 377 thousand barrels per day (“kbd”) in … Continue Reading

Crude-by-Rail Update: What to Expect From Recent Crude Oil Derailments

These are uncertain and stressful times for all involved in the transportation of crude oil by rail. Since February 14, two fiery derailments in West Virginia and Ontario have refocused an unwelcome spotlight on the necessity of transporting crude oil production by railroad in areas without adequate access to pipelines. The attention comes at a … Continue Reading

When Oil Prices Head South, So Do the Bakken Oil Trains

Bakken crude oil increasingly heads south as low oil prices erode its competitive advantage in the U.S. East Coast market. The price of WTI crude oil—the benchmark price for most U.S. shale crudes—is moving toward parity with Brent, the international crude price benchmark for grades such as Nigerian Bonny Light that compete with Bakken in … Continue Reading

Crude-by-Rail Update: Municipalities in the Bakken Push Back Against Increasing Train Traffic

Throughout the 19th and early 20th centuries, towns in the western United States grew and thrived around the railroad. In fact, the railroad tracks often became a central geographic feature within towns, birthing the colloquial phrase “the other side of the tracks.” But with increasing train traffic, largely due to unit trains transporting Bakken crude … Continue Reading

Poe Leggette & Alex Obrecht Present on the Safety Concerns that Face Crude-by-Rail Transportation

BakerHostetler’s energy group co-head and a member of the energy team recently presented on the safety concerns that confront the transportation of crude oil by rail. Focusing primarily on federal regulation, the team explained the role and powers of the Department of Transportation (DOT), the Federal Railroad Administration (FRA), and the Pipeline and Hazardous Materials … Continue Reading

Department of Transportation Issues Order Requiring Rail Carriers to Notify States of Crude Shipments

In response to recent derailments of trains transporting crude, the Department of Transportation issued an emergency order pursuant to its regulatory authority over the transportation of hazardous materials.  The order applies to all carriers that transport a single train within the United States carrying 1 million gallons or more of UN 1267, Petroleum crude oil, … Continue Reading

Safety Alerts and Other Recommendations in the Wake of Rail Accidents Involving Bakken Formation Crude Oil

Editor’s Note: This entry is also to be published in the Spring 2014 Bakken Oil Report. Recent accidents involving rail cars transporting crude oil from the Bakken shale region have resulted in the heightened interest of rail industry regulators and other federal agencies, including the Pipeline and Hazardous Material Safety Administration (PHMSA), the Federal Railroad … Continue Reading

State Department Paves Way for Keystone XL Pipeline Approval

On Friday, State Department officials released the final environmental impact statement for TransCanada’s Keystone XL pipeline, concluding that the project would not substantially increase carbon emissions, and clearing the way for State Department and White House approval. The pipeline—which would extend 1,179 miles from western Canada through Steele City, Nebraska—would allow delivery of 830,000 barrels … Continue Reading

Don’t Get Caught on the Wrong Side of the Track: PHMSA Issues New Safety Alert

On January 2, 2014, the Pipeline and Hazardous Material Safety Administration (PHMSA) issued a safety alert for the purpose of notifying the general public, emergency responders and shippers and carriers that recent derailments and resulting fires associated with the transport of crude oil from the Bakken region indicate that this kind of crude oil may … Continue Reading

Oil Transportation Safety under Scrutiny by the Federal Railroad Administration

The United States Federal Railroad Administration (FRA) announced in a July 29 letter to the American Petroleum Institute that it is investigating the safety of transporting crude oil by rail, citing potential safety issues related to improper classification of crude oil being shipped by rail, the determination and selection of proper tank car packaging, and the … Continue Reading
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