Oil sector withholding info on rail cargoes: U.S. regulator

Reuters News
Posted: Mar 28, 2014 5:34 PM

By Patrick Rucker

WASHINGTON (Reuters) - U.S. transport regulators on Friday scolded the oil industry for not sharing important information on the kinds of rail shipments that have been involved in a number of fiery train derailments.

In letters to regulators and testimony to lawmakers, leaders of trade groups like the American Petroleum Institute have said since January that they will share results of their tests on fuel from North Dakota's booming Bakken oil patch, where the derailed trains were loaded.

Despite those assurances, the Department of Transportation said the industry has dragged its feet in cooperating with regulators who are trying to understand why several recent derailments of freight trains carrying crude oil also resulted in explosions.

"Despite the energy industry making assurances to DOT more than two months ago, we still lack data we requested and that energy stakeholders agreed to produce," the agency said in a statement to Reuters on Friday. "The overall and ongoing lack of cooperation is disappointing, slows progress, and certainly raises concerns."

An oil industry representative denied that stonewalling was taking place and said that examining North Dakota crude was an ongoing process. "We continue to do prospective testing, and we will continue to share that information," the representative said.


Officials have been scrutinizing North Dakota rail shipments since a derailment in July in the Canadian town of Lac Megantic killed 47. Other derailments in North Dakota and Alabama prompted more scrutiny.

Technicians with the Department of Transportation have in recent months run spot-checks at wellheads and loading terminals in North Dakota to check that fuel on the tracks is being handled properly. Officials say, however, that they need industry data to best understand the situation.

In early January, the department's Pipeline and Hazardous Materials Safety Administration (PHMSA) warned that the light fuel typically produced in the Bakken could be more volatile than traditional heavy crude oil.

By late January, the API said it would "share expertise and testing information with DOT, most notably PHMSA, about characteristics of crude oil in the Bakken region."

Some North Dakota shippers have openly shared what they know about Bakken crude, Cynthia Quarterman, PMHSA's administrator, told lawmakers at a hearing last month.

But officials with the Department of Transportation say many shippers have gotten mixed messages from their trade groups about how far they should go to aid regulators.

"I told them that they have a choice to provide DOT the information directly or to work through the association that is in the process of providing a consolidated response," Richard Moskowitz, chief counsel for the American Fuel & Petrochemical Manufacturers said of his message to the nation's refiners.

Bakken fuel is typically classed crude oil and carried in standard tank cars but the liquid may contain such large amounts of flammable gas that it requires more care on the tracks, officials have said.

Shippers must attest to the dangers of their cargo but officials want the industry to go further and share data about any tests or other studies they have done about Bakken fuel.

Moskowitz said some refiners have misgivings about handing over details about their operations and business.

"They have asked for parameters of crude oil that are confidential business information that our members don't share," he said.

The refining sector is preparing an aggregate report of industry tests on North Dakota fuel that it hopes will satisfy regulators, Moskowitz said.

A DOT official said regulators can allay industry concerns about sharing proprietary information and that those worries are not an obstacle.

While Washington officials lead the push for answers from industry, state and local officials along the oil-by-rail routes are also eager for whatever DOT does find.

Upstate New York has become a major shipping route with roughly 20 percent of Bakken fuel moved through the state.

"We need to understand the exact properties of the crude oil in these trains," said Basil Seggos, New York Deputy Secretary for the Environment. "It is unacceptable that the petroleum industry has stonewalled on this fundamental safety question."

(Reporting by Patrick Rucker; Editing by Ros Krasny, Lisa Von Ahn and Andrew Hay)