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Crude oil brings boom times and safety concerns to North Dakota

May 11, 2014 at 10:47 AM EST
In North Dakota an oil boom has transformed the state's economy. Nearly a million barrels of crude come out of the ground each day in the state, and instead of traveling by pipeline, most North Dakota oil goes by rail. But as the industry is projected to grow, a series of catastrophic - and at times deadly - accidents has brought new scrutiny to the practice of hauling oil by rail.
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STEPHEN FEE: It was just after 2pm on December 30, 2013 when the calls began streaming in.

Two trains had collided just half a mile outside Casselton, North Dakota, one loaded with grain, the other with crude oil.

Volunteer fire chief Tim McLean headed straight to the scene.

TIM MCLEAN, CASSELTON FIRE CHIEF: Then I kind of knew, this was going to be a big one, the way it was described on the pagers.

STEPHEN FEE: Community banker Bernie Sinner was meeting with a client in his office. His window is just 50 feet from the rail track.

BERNIE SINNER, FIRST STATE BANK OF NORTH DAKOTA: You could see plumes of black smoke rising pretty high above the tree line, above the buildings that are across the street from us.

STEPHEN FEE: From the town’s main intersection, witnesses could hear explosions as the railcars blew apart, sending fireballs into the sky. Ed McConnell has been mayor of Casselton for sixteen years.

MAYOR ED MCCONNELL, CASSELTON, ND: They evacuated the southwest corner of town, the part of the town that was most affected by it.

STEPHEN FEE: But once the wind turned, officials put the entire town of 2,500 under a voluntary evacuation order. Some 400 thousand gallons of crude leaked from 18 ruptured cars. The fire burned for a full day.

TIM MCLEAN, CASSELTON FIRE CHIEF: There’d be no battling this fire. Even if you had an endless supply of water.

STEPHEN FEE: Both trains were operated by BNSF Railway — and for the record, BNSF is a NewsHour funder.

No one was killed or injured. But the accident hit close to home for the state’s governor, Jack Dalrymple — he grew up in Casselton.

GOV. JACK DALRYMPLE, NORTH DAKOTA: I couldn’t believe it. I was having dinner. And all of a sudden somebody sent me a video on my phone. And I said, ‘Casselton?’ I said, ‘I can’t believe that.’

STEPHEN FEE: What did it tell you about what’s going on on the rails here in North Dakota?

GOV. JACK DALRYMPLE, NORTH DAKOTA: Well, it tells me and I think everybody the same thing. You know, what if that happened you know in — in a city or even in the middle of a town? You know, it could be really catastrophic.

STEPHEN FEE: As Mayor McConnell says, his town dodged a bullet. But months earlier, a community in Canada wasn’t nearly so lucky. On July 6, 2013, a similar train, also loaded with crude from the Bakken shale formation, derailed and exploded in the center of Lac Megantic, Quebec, killing 47 people and destroying much of the town center.

Six years ago, US railways carried just 9,500 carloads of crude each year. But today, as huge amounts of oil are produced in states like North Dakota far from traditional pipeline infrastructure, that figure has jumped to more than 400 thousand. And with oil train derailments in Alabama, Pennsylvania, and most recently downtown Lynchburg, Virginia, regulators and policymakers are growing concerned about the safety of moving oil by rail.

DON MORRISON, DAKOTA RESOURCE COUNCIL: It’s just not safe.

STEPHEN FEE: Don Morrison runs the Dakota Resource Council, a consortium of 700 landowners, ranchers, and business people in the state.

DON MORRISON, DAKOTA RESOURCE COUNCIL: They didn’t look down the road to figure out how are we going to get this to market in a safe way.

STEPHEN FEE: Most of the seven and a half million barrels of oil produced each day in the US travels by pipeline– but 70 percent of the million barrels coming out of North Dakota each day goes by rail.

That’s because most of the country’s refining capacity is far from North Dakota. That means North Dakota crude has to travel hundreds of miles to be processed into gasoline for cars or fuel for jet engines.

And while pipelines require new construction and regulatory approval — the long-stalled Keystone XL a case in point — freight rail already crisscrosses North Dakota and the country.

RON NESS, NORTH DAKOTA PETROLEUM COUNCIL: Historically, you would have never thought oil would travel by rail in this day and age.

STEPHEN FEE: Ron Ness heads the North Dakota Petroleum Council. It’s a group that represents the state’s oil industry and supports hauling oil by rail.

How safe is it?

RON NESS, NORTH DAKOTA PETROLEUM COUNCIL: Well safety is certainly the number one aspect that I think all aspects of the transportation industry are focused on. And at 99.7 percent of the time, you know, rail movements get to their destinations safely.

STEPHEN FEE: Actually, the rail industry says its safety record is even better — but just the tiny chance of a catastrophe makes policymakers like the governor uneasy, especially with North Dakota’s major cities and towns situated directly on the rails.

GOV. JACK DALRYMPLE, NORTH DAKOTA: Where we you know never remembered any kind of an accident like this before, now if we’re sending ten or 20 or 30 times as much oil down the track, that obviously increases the chances of an accident occurring. And that becomes sort of a new reality that everybody has to get used to.

STEPHEN FEE: And now, there are mounting concerns about the railcars predominantly used to haul oil across the nation.

Since 1991 the National Transportation Safety Board has warned that railcars like these, DOT 111s, are more prone to rupture in the case of an accident. But it wasn’t until a 2009 derailment in Illinois that the railway industry began instituting its own, more robust safety standards to strengthen cars like these.

But more than 80 percent of those types of railcars in North America are older models that don’t meet those standards. And so far, there’s no mandated timeline for getting rid of the older ones, like those involved in the Casselton and Quebec derailments.

The Association of American Railroads — an industry group– told NewsHour older cars should be phased out “as swiftly as possible” but that a timeline “has to be worked out by the government.” In the meantime, BNSF Railways is seeking to acquire five thousand new, safer tankers.

Just this week, the Department of Transportation advised all carriers of oil from North Dakota and the Bakken shale ‘to avoid the use of older, legacy…tank cars.’ but only ‘to the extent reasonably practicable.’

And it’s not just the cars that have critics concerned — the DOT has also warned North Dakota crude itself may be more flammable than other types of oil, potentially leading to more dangerous accidents.

Again, Dakota Resource Council’s Don Morrison.

DON MORRISON, DAKOTA RESOURCE COUNCIL: Going through people, right next to people’s houses and businesses. It’s, it’s dangerous. And they’ve got to be careful.

STEPHEN FEE: With just 55 inspectors nationwide, the DOT’s hazardous materials regulator has launched routine and surprise inspections to ensure oil is being properly tested for flammability.

As a result, this February the agency announced fines against three oil companies — Marathon, Hess, and Whiting — for allegedly assigning their oil to the wrong safety category. The DOT later dropped fines against Whiting, but is still pursuing enforcement actions against Hess and Marathon.

What is it that — that is distinct about this kind of oil that’s coming out of the ground?

RON NESS: Well, we don’t think the Bakken crude oil is that distinct from any other high-quality, light sweet crude oil across America like WTI or Louisiana Sweet.

STEPHEN FEE: To prove that point, his organization will announce the findings of its own flammability tests later this month. And by this summer, the rail industry will have enacted a series of steps to make crude transit safer, like slower train speeds and enhanced braking systems.

This January, North Dakota’s Republican Party chairman suggested oil development may be moving too quickly. Even with the fastest growing economy in the country, critics say it’s time for a slowdown in the state’s energy development. But the governor thinks that’s unwise.

GOV. JACK DALRYMPLE, NORTH DAKOTA: Ultimately we do have to look at the statistics of everything. You know, we would not– shut down the airline industry because there was one airplane crash. And we don’t close our interstate highways because there’s a car accident.

STEPHEN FEE: After years of discussion, this April the DOT submitted new rules for safer cars to the White House — but those rules likely won’t come into effect before 2015.

Meanwhile mile-long oil trains rumble through towns like Casselton. And despite reassurances, Mayor Ed McConnell is worried.

MAYOR ED MCCONNELL, CASSELTON, ND: It’s a mechanical system, and any time it’s used more, there’s going to be more failures. It’s just inevitable.

STEPHEN FEE: Oil production in North Dakota is expected to climb 70 percent by 2020, and most of that oil will travel by rail.