Alabama rail track sound before oil train crash: Genesee & Wyoming

Reuters News
Posted: Nov 21, 2013 2:46 PM

By Edward McAllister

NEW YORK (Reuters) - Genesee & Wyoming, the owner of a train carrying oil that derailed in western Alabama earlier this month, said on Thursday that there had been no concern about the state of the tracks bought from another company this year.

Upgrades, including safety inspections, continue on many of the lines Genesee & Wyoming inherited in its acquisition of Rail America that were considered below company standards.

But Genesee Chief Executive John Hellmann said the stretch of line where the train derailed on Nov 8 near Aliceville, causing an explosion and an oil spill into a wetland area, had received a "disproportionately high" amount of investment.

In the last two years, $25 million had been spent on that stretch of the Alabama & Gulf Coast Railway, Hellmann said, $15 million of which was focused on track work.

"There was no concern about the state of the track," the head of the $5 billion company told Reuters on the sidelines of a conference in New York.

He said he did not know the cause of the accident, in which no one was hurt, and said the train's crew did a "terrific job."

The Federal Railroad Administration is investigating the crash and has declined to give any detail on the cause.

This and other accidents have stoked a debate about the safety of transporting crude by rail across North America where oil production has rocketed thanks to technologies such as fracking and horizontal drilling that have unlocked new supplies from vast shale rock formations.

A train carrying crude derailed in the Quebec town of Lac-Megantic in July, killing 47 people.

That accident fueled a push for tougher standards for oil rail shipments, including better testing of potentially explosive ultra-light shale crude and improved rail tank car standards. Tank cars made before 2011 have been cited by regulators as dangerously prone to puncture.

Genesee & Wyoming's Hellmann declined to comment about when the DOT-111 cars that derailed in Alabama were built.

Reacting to the spate of incidents, the Association of American Railroads last week urged regulators to improve safety standards for tank cars carrying flammable liquids, including phasing out some old cars.

The proposals has pitted railroads against tank cars owners, some of whom have complained that the upgrades would be too expensive.

(Reporting By Edward McAllister; Editing by Nick Zieminski)