Oil Trains, Born Of US Energy Boom, Face Test In New Safety Rules


WASHINGTON, July 18 (Reuters) - North Dakota's Bakken oil patch has thrived thanks in large part to the once-niche business of hauling fuel on U.S. rail tracks. New safety rules may now test the oil train model.

Within weeks, the Obama Administration is due to unveil a suite of reforms that will rewrite standards conceived long before the rise of the shale oil renaissance, at a time when crude rarely moved by rail and few Americans had ever seen the mile-long oil trains that now crisscross the nation.

Taken separately, the changes appear incremental - a question of a fraction of an inch of steel in tank cars, a few miles an hour of speed or rerouting trains; stripping explosive gases out of the oil would be costly but not complex.

But refiners, oil producers, traders and even railroads have become so reliant on such shipments that the reforms, taken together, could upend a practice that has bolstered bottom lines across a wide swathe of industrial America. It may also complicate shipments of one-tenth of U.S. crude to refineries.

Executives have met formally with regulators and the White House more than a dozen times this year, often to resist anticipated reforms or propose alternatives - typically ones that put the onus on a different industry.

Regulators have so far withheld specifics of their rule proposals, but interviews with industry executives and a review of presentations reveal at least four major areas of concern.

An apparent agreement this week between railroads and oil drillers over new tank car standards may offer a way forward on one of the most contentious issues, one that has vexed regulators since a runaway train derailed and exploded in the Quebec town of Lac Megantic last July, killing 47 people.


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