A few weeks ago, I had a chance to spend an hour with Professor Debra Dragseth’s Business Ethics class at Dickinson State University. It was their last class of the semester, just two days prior to their final exam. The students were attentive and polite, but mostly unenthusiastic, as students will be in the waning days of a semester.
The subject of my “lecture” was the ethics, or lack of them, of the oil industry in North Dakota. I told them, among other things, what I had learned about the transport of oil by rail out of North Dakota, mostly that the oil tank cars carrying the oil were old and vulnerable to rupture in a derailment, with the result of those ruptures being the gigantic explosions and fires like the one that killed 47 people in Quebec and the one that polluted a wetland in Alabama last summer. I told them that the greed of the oil companies was evident in their refusal to upgrade their car fleet or retrofit the existing cars to make them safer, and that we are going to see more of these incidents of the magnitude of the Quebec disaster. Those are the kind of incidents that make national news, and the news reports always say “the cars were carrying oil from the Bakken oil field in North Dakota,” continuing to give North Dakota a black eye.
Well, now there’s a third, and it happened right here in North Dakota. A train carrying a hundred or so tankers of oil almost made it out of the state, but just 20 or so miles before it crossed the Red River into Minnesota, it derailed and exploded just outside Casselton, sending up spectacular towering fireballs and huge dense black smoke clouds that caused the evacuation of the town that’s home to Governor Jack Dalrymple and is the former home of Governor George Sinner. (If you haven’t seen the fireball video yet, take a look here. I’ll guarantee you’ve never seen anything like this in your life.)
Those three made the national news—yesterday’s blaze at Casselton was on the NBC Nightly News within just a few hours of when it happened—but there were more than seven dozen rail accidents involving crude oil in the U.S. and Canada in 2012, most of which got only local notice, and the 2013 tally hasn’t been added up yet, but you could probably make a little money betting it was higher than in 2012.
The problem is not just confined to railroads. Because of the massive expansion of the oil industry in the Bakken Oil Field of North Dakota, Montana and Saskatchewan, and the tar sands development in Alberta, the movement of crude oil from inland well sites to coastal refineries has put incredible pressure on railroads and pipeline companies. Safety practices so studiously observed at well sites are seemingly absent from transportation facilities, both railroads and pipelines. Here’s a brief story from Grist.org about two incidents you probably didn’t read about:
Last Wednesday, (March 27, 2013) a southbound train carrying Canadian oil derailed in Minnesota, spilling about 15,000 gallons of tar-sands crude . . . Two days later, (March 29, 2013) an ExxonMobil pipeline carrying tar-sands oil burst beneath a suburban neighborhood in Arkansas. The exact size of the spill hasn’t yet been determined, but ExxonMobil says it’s preparing to be able to clean up 420,000 gallons, though it doesn’t believe the spill is that large. The oil flooded yards and streets and led to the evacuation of 22 homes in Mayflower, a small community about 20 miles northwest of Little Rock. (You can see some pretty amazing video here.)
And then, of course, there was the massive 865,000 gallon leak in a Tesoro pipeline near Tioga, ND, a few months ago.
Who’s to blame, and what can we do about it? Those are the two questions that must be answered right now. The railroad explosions were all the result of derailments of trains carrying crude oil. One of the biggest problems is that many of the cars used to transport the oil—those greasy, grimy black cylindrical tankers you see passing through your home town in 120 car unit trains if you live along the BNSF’s main line, which parallels Interstate 94 through North Dakota—are not designed to carry flammable Bakken crude oil. They are not safe. Critics point out that old tank cars can puncture easily, and that trains carrying heavy oil loads can wear down railroad tracks, according to a report in the Toronto Globe and Mail. The result: derailments and explosions.
That paper is doing a tremendous job of investigating the oil transport industry. Excerpt from a recent story:
“In the rush to capitalize on one of the world’s biggest oil booms, questions about the potential hazards of shipping Bakken crude by rail took a back seat. When railways were chosen to supplement a pipeline shortage, the modern boom quickly stretched the limits of a century-old transportation network and regulatory system designed for safer goods such as grain and lumber.
Much of the oil moved around the U.S. and Canada is shipped via an aging tanker model known as the DOT-111. These cars, the subject of repeated warnings from the U.S. National Transportation Safety Board, have a thin metal skin that’s easily punctured in the event of a derailment.”
The story pointed out there are about 92,000 of the old DOT-111 tank cars and of these, about 78,000 cars should be retrofitted to be made safer or phased out, according to a spokesman for the Association of American Railroads (AAR), the industry group whose members include the BNSF and the Canadian Pacific, the two major shippers whose rail lines run through North Dakota.
The changes the industry wants, which are meant to prevent explosions like we saw in Casselton Monday, should include a steel jacket, thermal protection and pressure relief valves. An AAR spokesman said recently even cars built since October 2011, when the rail industry brought in its latest design standards (about 14,000 of them are being used right now), will need modifications.
“It’s time for a thorough review of the U.S. tank car fleet that moves flammable liquids, particularly considering the recent increase in crude oil traffic,” said AAR President Edward Hamberger, according to the Globe and Mail: “U.S. and Canadian railway laws require shippers, railways and even buyers to ensure hazardous goods such as petroleum are properly classified so they are carried in sufficiently sturdy cars. But interviews with rail officials and exclusive access granted to a Globe reporter to the North Dakota crude facility that loaded the Lac-Mégantic train indicate that the makeup and flammability of Bakken oil is not always tested.” (emphasis added to point out a black eye to North Dakota)
So who’s responsible for making sure the oil going into these cars is tested? Well, likely the people who own the tanker cars. The thing is, the railroads don’t own the cars. Who does? The Globe and Mail:
“Railways themselves don’t own the tanker cars, they just hitch their locomotives to a train of leased cars and away they go. The shale oil boom has been great for third-party vendors such as Procor Ltd. in Canada and Union Tank Car in the U.S. As an aside, both outfits are owned by Berkshire Hathaway, Warren Buffett’s holding company, which is seeing big bets on rail pay off, such as buying Burlington Northern Sante Fe in 2010.”
Well now. Ain’t that something? Warren Buffet (no relation, by the way, to Jimmy Buffett, mayor of Margaritaville) owns the railroad running through North Dakota. But his railroad doesn’t own the tank cars. Instead, another company owned by Buffett owns them. But before you blame Buffett for any explosions, remember that he leases them to the oil companies who own the oil. It’s the oil companies seeking to maximize every penny of profit, who certify, before the train leaves the transloading facility in North Dakota, that the product inside is safe for transport in those old cars.
Still, it is Buffet who owns those old cars (he can’t be happy when he sees them burning up, and making a mess of the tracks he owns), which really should be scrapped or retrofitted—this boom is not going away any time soon, and the cars are going to be needed for a good many years. Problem is, the cost of bringing those cars up to the standards required in new cars, including steel jackets and pressure relief, could exceed $40,000 per car, according to the Rail Supply Institute. The Globe and Mail reports that at that rate, just the cost of refitting the 78,000 old cars would top $3-billion, although some of those old cars will be retired if the AAR proposals are taken up.
Well, hell, just $3 billion? Old Warren’s got that much, and more. And all he’d have to do to recover it is up the price of leasing the cars to the oil companies.
But the problem there, I’d guess, is the pressure on the railroads and Warren to keep those cars in service just the way they are, safety be damned. Because the state of North Dakota just keeps signing drilling permits as fast as Lynn Helms can replace the ink cartridges in his pen.
Well, can’t government regulatory agencies do something about this? Uh huh. They could. If they wanted to. According to a report I came across earlier, the source of which I can’t find right now, the “U.S. National Transportation Safety Board has issued safety guidelines on the widely used, cylindrical tank cars known as DOT-111s, including a recommendation that all tank cars used to carry ethanol and crude oil be reinforced to make them more resistant to punctures if trains derail. The new guidelines, put forward in March 2012 but which have not yet been adopted by the Department of Transportation agency that oversees the sector, stem from a deadly ethanol train derailment and explosion in Illinois in 2009.” (emphasis added as a hint to the DOT that it is time to take some action)
What’s become obvious is that oil companies will take advantage of any regulatory lapse they can find. In the Quebec incident, for example, the oil in the tank cars was mislabeled, certified as safe for transport in those old cars. Certified by the oil industry person who loaded them in New Town, North Dakota. 47 people are dead. That person ought to go to the pokey. Meanwhile, what started out as an incredible success story about North Dakota is turning into a public relations nightmare, the most recent bad dream being Monday’s fiery crash. Here’s what one Toronto newspaper story said recently:
As oil output soared, so did hazards. Workplace accidents increased so dramatically that North Dakota now has the highest rate of job fatalities in the U.S. – 12.4 per 100,000 workers, or four times the national rate. Gas pipelines are in such short supply that 30 per cent of natural gas isn’t properly harvested and is instead burned off. From satellite cameras, North Dakota looks like a birthday cake with thousands of glowing candles . . . What should have been an economic miracle for North Dakota has instead been a logistical nightmare. Since 2009, the state has been producing oil faster than it can be shipped to refineries. The bottleneck is so bad that market prices for Bakken crude are at times heavily discounted, falling as much as 28 per cent below benchmark prices in early 2012. Existing pipelines winding through the state were already operating at full capacity. As a result, more than a third of the state’s production was being shipped out on trucks by 2007, according to the North Dakota Pipeline Authority. The trucking frenzy was chewing up roads, driving accident rates to record highs and infuriating local residents. What happened next was the largest surge ever in rail shipments of hazardous goods. By last month, more than 400,000 tank cars were carrying crude oil through Canadian and U.S. towns and cities. In 2009, the number was 8,000.”
So, back to my original questions: Who’s to blame, and what can be done about it?
After reading this, you can form your own conclusions about who’s to blame. As for what can be done about it, well, maybe it’s time to just slow the fuck down.
4 thoughts on “Another Day, Another Fireball: Surprise–Heeeeeere’s Warren Buffett!”
This accident should be a wake-up call. Oil development has gone out of hand. Nobody is in charge. The tail is wagging the dog. Dalrymple needs to call a special session, and the legislature needs to move at least as far to the center as far-right Socred turned Tory politicians did in Alberta when they instituted the Alberta Heritage Fund in 1976. The Bakken long ago stopped being an economic boom and has turned into social anarchy.
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I am a former North Dakota resident. I saw the smoke and fireballs near Casselton while returning home from a visit with my mother in Jamestown, ND. As a person who believes in looking outside the box, here’s my comment. Is it just me who questions why crude oil needs to be transported to the coasts to be refined? Why do we say that we are trying to end our use of foreign oil, when it’s obvious that if the crude oil we are producing needs to go to coastal refineries, that it’s not for our own use, but is being transported overseas? Most people probably don’t know that most of Alaskan oil is shipped from Valdez to Asia. That being said, why don’t we build refineries at the source of the oil?
why, don’t you know? That oil starts to spoil once that drill bit hits it! So, it has to be pumped out as quickly as possible!! Right!
Good column and comments, thanks!