By BETSY MORRIS and RUSSELL GOLD
The Federal Railroad Administration plans to start asking
shipping companies to supply testing data they use to classify
their crude-oil shipments, saying it is concerned some
shipments are being transported in tank cars that aren't safe
In a letter to American Petroleum Institute CEO Jack Gerard
last week, the FRA said it is investigating whether some crude
shipments contain chemicals -- possibly from the
hydraulic-fracturing process used to extract it -- that make
them more hazardous than their classification indicates.
The agency told the API it also suspects mixes of crude and
other chemicals might be the cause of an increase in damage to
tank cars caused by "severe corrosion." If shippers can't
supply their testing data, the FRA said in the letter, it will
work with the Pipeline and Hazardous Materials Safety
Administration to test the shipments independently.
Companies routinely add hydrochloric acid, which is
corrosive, to fracking fluid to dissolve minerals. They also
add chemicals to kill microorganisms and reduce friction in
oil. Frack fluids are exempt from federal disclosure laws, but
some companies voluntarily provide details, and some states
require a thorough ingredient list.
The action is the latest by the agency to toughen regulation
of the transport by rail of crude oil after a runaway train
hauling 72 tank cars with crude oil derailed and exploded last
month, killing 47 people and ravaging the Quebec town of
The Quebec disaster follows a number of serious accidents
involving hazardous materials and tank cars in recent years
that have raised federal regulators' concern. More than 34
million bbl of crude were delivered to US refineries by train
in 2012, a five-fold increase compared with a year earlier,
according to the Energy Information Administration.
The Canadian Transportation Safety Board said it would
analyze and compare numerous fluid samples taken from the
Lac-Megantic accident "to verify the properties of the
petroleum product in these tank cars' and to help figure out
"why the oil created such a fierce fire that night." It is also
analyzing metallurgical samples, damage records and photographs
to determine how well the tank cars involved in the derailment
were prepared for a crash.
The company that operated that train, Montreal, Maine &
Atlantic Railway Ltd., filed for bankruptcy protection
Wednesday in US Bankruptcy Court in Bangor, Maine. Its Canadian
counterpart filed for protection from creditors.
The latest FRA action "looks like a shot over the bow," said
Grady Cothen, a former FRA safety official who is now a
transportation-policy consultant. "They seem to be
saying, "Get your house in order or we'll do it for you.'"
The FRA moves will likely pose difficulties for some
shippers. Oil producers and refiners are increasingly using
rail in Texas and North Dakota, where there aren't enough
pipelines to get the crude to markets that will command the
Prentiss Searles, marketing-issues manager for the American
Petroleum Institute, said the institute was reviewing the
letter to see what, if anything, needed to be done to respond
to the FRA's concerns. "Ultimately, we're going to follow the
rules and requirements that currently exist. If somebody made a
mistake and put the wrong type of crude in the wrong type of
tank care, that should not happen," he said.
EOG Resources, a Houston-based shipper with rail yards in
Texas and North Dakota, said it was "in close communication
with our railroad carriers and is currently reviewing the
topics raised by the Federal Railroad Administration."
Jeff Hume of Continental Resources, an Oklahoma City-based
crude producer, said, "We meet all [Department of
Transportation] specifications. If the DOT deems it necessary
to change those specifications, we will support what safety
In the letter to the Petroleum Institute, Thomas J.
Herrmann, acting director of FRA's office of safety assurance
and compliance, spelled out numerous reasons for the agency's
concern. In one case, the FRA said it found that a company was
shipping crude that should have been classified as flammable in
a tank car that hadn't been designed for that material. The
agency could "only speculate as to the number of potential
crude-oil shipments that are being made in violation of
Hazardous Material Regulations," he wrote.
Shippers need to know the chemical makeup of substances they
are shipping, the letter said. But FRA audits indicate the oil
is often classified based on data sheets that contain
inadequate data, it said. Crude is frequently shipped in unit
trains made up of scores of tank cars, containing oil from
different shippers and many wells, some of which has been
blended together. The data don't reflect testing from the many
different sources, the letter said.
The FRA also noted recurring problems with what it said
appeared to be overloaded tank cars. Proper tank-car loading is
based on a calculation that involves relative temperatures and
gravity to determine the quantity to load without
George King, an engineer and technology consultant for Apache,
said hydrochloric acid used in fracking typically doesn't
return to the surface. "I have never seen anything stronger
than a very, very weak vinegar come back in terms of acid," he
However, Mr. King said the acid won't mix with crude oil and
if stored in a tanker, will settle to the bottom. "Could it be
corrosive on steel? Yes," he said.
Dow Jones Newswires