Making Oil-by-Rail Safer

• A series of rail accidents involving trains carrying crude oil has focused attention on safety procedures and even the tank cars used in this service.
• Another concern is the variable characteristics of the "light tight oil "now shipped by rail in large quantities. That isn't the result of "fracking", but of the oil's inherent chemistry.   

The growth of North American oil production from unconventional sources has resulted in a dramatic expansion in the volume of crude oil shipped by rail. Unfortunately, as crude oil rail traffic has increased, so have rail accidents involving crude oil, including the tragic explosion and fire in Lac-Megantic, Quebec last July. That event and subsequent accidents have focused railroads, regulators and shippers on the need to improve the safety of oil-by-rail as quickly as possible.

In the immediate aftermath of Lac-Megantic, the Federal Railroad Administration issued an emergency order on procedures railroads must follow when transporting flammable and other hazardous materials. And on February 21, 2014 railroads reached a voluntary agreement with the US Department of Transportation (DOT) on additional steps, including reduced speed limits for oil trains passing through cities, increased track inspection, and upgraded response plans. These steps have the highest priority, because crude oil loaded in tank cars doesn't cause rail accidents. Every incident I've seen reported in the last year began with a derailment or similar event.

At the same time, the packaging and characteristics of the oil can affect the severity of an accident.  Investigators have focused on two specific issues in this regard, starting with the structural integrity of the tank cars carrying the oil. The vast majority of tank cars in this service are designated as DOT-111--essentially unpressurized and normally non-insulated cylinders on wheels. These cars routinely carry a variety of cargoes aside from crude oil, including gasoline and other petroleum products, ethanol, caustic soda, sulfuric acid, hydrogen peroxide, and other chemicals and petrochemicals.

Their basic design goes back decades, and even the older DOT-111s incorporate learnings from earlier accidents. A growing proportion of the US fleet of around 37,000 DOT-111 tank cars in oil service consists of post-2011, upgraded cars that have been strengthened to resist punctures, but the majority is still made up of older, unreinforced models. The Pipeline and Hazardous Materials Safety Administration (PHMSA) is studying whether to make upgrades mandatory, but some railroads and shippers aren't waiting. Last month Burlington Northern Santa Fe Railway, owned by Warren Buffet's Berkshire Hathaway, announced it would buy up to 5,000 new, more accident-resistant tank cars.

Another issue that has received much attention since Lac-Megantic concerns the flammability of the light crude from shale formations like North Dakota's Bakken crude, which accounts for over 700,000 barrels per day of US crude-by-rail. The Wall Street Journal published the results of its own investigation, reporting that Bakken crude had a higher vapor pressure--a  measure of volatility and an indicator of flammability--than many other common crude oil types.

The Journal apparently based its findings on crude oil assay test data assembled by the Capline Pipeline.  Although a Reid Vapor Pressure of over 8 pounds per square inch (psi) for Bakken crude is higher than for typical US crudes, it's not unusual for oil as light as this. That's especially true where, due to lack of field infrastructure, only the co-produced natural gas is separated out, leaving all liquids in the crude oil stream.

What makes this situation unfamiliar in the US is that domestic production of oil as light as Bakken had nearly disappeared before the techniques of precision horizontal drilling and hydraulic fracturing were applied to the Bakken shale and similar "source rock" deposits. (Note: High vapor pressures are characteristic of the naturally-occurring mix of hydrocarbons in very light crudes, rather than a result of the "fracking" process.) Nor is the reported vapor pressure for Bakken or Eagle Ford crude higher than that of gasoline, a product that is federally certified for transportation in the same DOT-111 tank cars that carry crude oil.

The variability of the vapor pressure data that the Journal's reporters identified for Bakken crude may result from another unfamiliar feature of such "light tight oil". Crude produced from conventional reservoirs, which are much more porous than the Bakken shale, tends to be relatively homogeneous. However, because the Bakken and other shales are so much less porous, limiting diffusion within the source rock reservoir, the composition of their liquids can vary much more between wells.

In any case, vapor pressure isn't the preferred measure of fuel flammability. Actual rail cargo classifications are based on flash point and initial boiling point. These routine quality tests aren't included in Capline's publicly available data. PHMSA initiated "Operation Classification" to ensure that manifests and tank car placards for crude oil shipments accurately reflect the potential hazards of each cargo, based on such measurements. The agency has determined that it hasn't always been done consistently, and DOT issued another emergency order requiring shippers to test oil for proper classification.

As mentioned in an oil-by-rail webinar yesterday, hosted by Argus Media, assigning the proper classification to oil shipments may seem like a bureaucratic concern--it doesn't necessarily affect the tank car type chosen to transport the crude--but it can have a significant impact on operational factors such as routing and the notification of first responders along the route.

There's no quick and simple way to make the transportation of crude oil by rail as safe as hauling a dry bulk cargo like grain. Tank car fleets can't be replaced overnight, not just because of the cost involved, but due to limited manufacturing capacity. However, in the meantime significant improvements can be achieved through a combination of government attention and sustained industry initiatives. Since the new crude streams traveling by rail play a key role in increasing North America's energy security, this is in the interest of everyone involved--producers, shippers, railroads, and not least the communities through which this oil travels.

A different version of this posting was previously published on the website of Pacific Energy Development Corporation.
 

Crude Oil Rides the Rails

Last month's publication of the State Department's latest environmental impact report on the Keystone XL pipeline project has sparked great interest in the logistics of shipping crude oil by rail. As described in a long article in the Washington Post, the availability of a rail option for oil sands crude could prove to be a crucial element in determining whether the pending decision to permit the pipeline to cross the US border would actually affect Canada's oil sands output, and thus its greenhouse gas emissions. As the article makes clear, however, oil's rail trend is already well underway , thanks to the surge of "tight oil" production from shale formations. Moving crude oil by train is experiencing a "Back to the Future" moment.

Oil shipments in rail cars are nothing new; the practice dates back to the earliest days of the oil industry. In fact, control of key railroad routes for oil and petroleum products was an important aspect of the US government's anti-trust case against the original Standard Oil a century ago. My first exposure to crude-by-rail was in the 1980s, when significant quantities of heavy crude from California's San Joaquin valley were routinely transported to Los Angeles refineries by dedicated "unit trains", because there wasn't sufficient pipeline capacity available.

The same dynamic applies today, with the rapid expansion of tight oil production in North Dakota's Bakken fields quickly outstripping the capacity of the state's few existing pipelines to transport the oil to market. A tank car loading rack requires much less time and money to build than a new pipeline or pipeline expansion. US railroads are also eager for the traffic, since coal deliveries, which accounted for 45% of US rail traffic in 2011, fell by nearly 11% last year as natural gas eroded coal's share of power generation. Meanwhile oil shipments by rail grew by 46% in 2012.

Precise data on just how much crude oil is currently moving by rail are hard to find. The American Association of Railroads doesn't differentiate between crude oil and refined petroleum products, which until recently accounted for most oil-related rail shipments. The US Energy Information Agency (EIA) reported last summer that crude oil had grown to roughly 30% of total petroleum rail deliveries, which would equate to around 300,000 barrels per day (bpd) on average for 2012. Yet EIA's analysis of recent trends suggested that crude-by-rail increased by nearly 250,000 bpd last year alone. The CEO of the Burlington Northern Santa Fe recently indicated that his railroad's total oil-related shipments alone could expand to around 1 million bpd, roughly double today's level.

It would be easy to conclude that all this growth reflects a temporary expedient, until North American pipeline capacity can be expanded and realigned to match rising output and the reversal of long-standing import trends. That view is clearly not shared by oil companies and traders who are lining up to purchase or lease new tank cars for this service. Perhaps that's because rail provides a degree of flexibility that would be nearly impossible to match by pipeline. For example, it creates an opportunity to supply domestic crude to East Coast refineries like Delta Airlines' Trainer, Pennsylvania facility, which had previously become uneconomical to operate on a diet of imported crude cargoes. Similarly, even if a pipeline from North Dakota to the San Francisco Bay Area could be justified economically, it would likely never receive the necessary permits. Yet Valero's Benicia refinery might soon receive up to 70,000 barrels per day of Bakken crude by rail.

Railroads are also surprisingly efficient. At an industry average of 480 ton-miles per gallon, my analysis indicates that shipping a barrel of crude from North Dakota to a refinery in either Houston or Philadelphia consumes a quantity of diesel fuel equivalent to just 1% of the energy content of the oil, while adding slightly over 1% to the typical well-to-wheels emissions for gasoline refined from it. That's higher than for pipelines, but not by enough to render the option unattractive.

Pipelines remain the preferred option for moving high volumes of oil safely over long distances and, when capacity exists, are usually cheaper for shippers. However, rapidly shifting sources of production and the high capital costs of new pipelines, combined with an increasingly challenging regulatory environment, could provide a durable opportunity for oil-by-rail, just as it has for moving petroleum products and ethanol by train. 

A slightly different version of this posting was previously published on the website of Pacific Energy Development Corporation.

Is High-Speed Rail Worth Its Cost?

The editors of the Washington Post have expressed serious reservations concerning the administration's plans for investing up to $53 billion in new high-speed rail systems, with the goal of linking 80% of the US population by a new fast rail network. If the facts they cite concerning the ongoing subsidies such systems require in other countries are correct--including countries with more suitable geography for high-speed trains--then attempting to follow their lead here could amount to buying a gigantic money pit. While I certainly see the benefits of high-speed rail as part of an upgraded US transportation infrastructure, I'd like to see the architects of the current proposals provide some hard numbers on how high speed rail compares to our alternatives.

This is a hard subject for me to approach objectively, because I love trains. Access to convenient and reliable rail service was one of the great joys of the two years I spent living in the UK and traveling on the Continent of Europe. I now routinely take Amtrak's Acela service in preference to flying between D.C. and New York, particularly in light of the hassle that air travel has become, especially for short distances. Yet as much as the thought of sleek 200 mile-per-hour trains running on a network of smooth high speed tracks and connecting most major US cities appeals to me as a train fan and futurist, I'm also acutely aware of the cost and risk of such endeavors. For example, despite carrying more than 9 million passengers a year the channel tunnel system connecting London and Paris, which impressed me greatly when I rode it in the late 1990s, declared bankruptcy in 2006. It is now just barely profitable, earning a negligible (negative?) return on its original investment. The UK recently sold off its portion of the line to pay down government debt.

The World Bank report on high-speed rail cited by the Post was generally positive concerning developments in China and elsewhere, though also full of red flags: "The demographic and economic conditions that can support the financial or economic viability of high-speed rail are limited." "The established lines with greatest demand are in East Asia..." "Nevertheless, high-speed rail projects have rarely met the full ridership forecasts asserted by their promoters and in some cases have fallen far short." "Governments contemplating the benefits of a new high-speed railway... should also contemplate the near-certainty of copious and continuing support for the debt." It also explains why high-speed rail is attractive in China, attributing it to, "The combination of supportive features that exist on the eastern plains of China including very high population density, rapidly growing disposable incomes, and the prevalence of many large cities in reasonable proximity to one another..." To that I might add the relative lack of competition from underdeveloped road and air infrastructure. Yet even in China its high cost is drawing criticism.

I'm also not clear on the non-transportation economic benefits for the US, particularly if the core train technology for systems like California's current high-speed rail project is likely to come from Japan, France or Germany. And while the California project cites greenhouse gas savings of 6 million tons per year, that doesn't sound quite so impressive in the context of its $10 billion initial cost. And the total is sure to go much higher, considering that the cost of the first leg, the so-called "train to nowhere" in the Central Valley, is over $4 billion and includes neither rolling stock nor power supply.

So here are some basic questions I'd like to see answered, in lieu of the largely aspirational rhetoric we've heard so far, before I'd be pleased to see my tax dollars spent on this initiative:

• What is the projected return on capital and net present value of the investment?
  
• What is the effective cost per barrel of achieving the oil and other energy savings projected for the first 20 years of operation?
  
• What is the implied cost per ton of the resulting emissions reductions, assuming that the system is powered by the average US grid mix, and how does that compare to other ways to reduce emissions?
  
• How do these results compare to the same metrics for other transportation investments that could be made with these funds, including modernization of US airports and air traffic control systems, key highway segment upgrades, and electric vehicle recharging infrastructure?

Fuel Cell Trains

I often use my gym time to catch up on interesting podcasts, and NPR's excellent Science Friday series is one of my favorite sources. I just caught up with a recent segment on the development of hydrogen-powered trains, which seem like a particularly clever use of a promising technology that must still overcome serious obstacles in its automotive applications. But while I give the host, Ira Flatow, credit for pursuing the question of where the hydrogen for trains would come from, his guests' answers left something to be desired. That's not just because they tended to downplay the emissions associated with producing hydrogen, but because this omission might result in ignoring what could be an even better, more efficient fuel-cell configuration for trains and other large vehicles.

The basic idea of powering trains with fuel cells offers several important advantages--and one very serious disadvantage--for rail companies and their stakeholders. It also represents a less revolutionary change for rail than for automobiles, since trains are already partially or wholly-electrified, and a fuel cell is just another way to generate that electricity. Even the diesel locomotives that fuel-cell locos would be intended to replace are really diesel-electric hybrids. The key benefits of using fuel cells instead of big diesels for this application include substantial reductions in local pollutants, including soot, along with much quieter operation. Unfortunately, even if fuel cell trains could circumvent many of the infrastructure hurdles that have impeded automotive fuel cells, they still look prohibitively expensive. Diesels are pretty cheap on the basis of $ per kilowatt of generating capacity, while fuel cells are still much pricier, by at least a factor of 10.

Ignoring cost, fuel cell trains would face fewer obstacles to wide-scale deployment than fuel cell cars. As one of the program's guests pointed out, hydrogen storage, the Achilles heel of fuel cell cars, is not a problem in this situation. If necessary, a fuel cell train could carry an entire tank-car of compressed hydrogen behind the locomotive, and it wouldn't alter the train's performance or cost appreciably. That would also reduce the need for a widely-dispersed refueling infrastructure. For that matter, a train could carry along its own refueling set-up, in the form of an electrolyzer and compressor. It would require only fresh water--reminiscent of the coal-burning locos of yore--and a place to plug in. However, when you follow that plug back to its ultimate source, you find that the CO2 emissions of a hydrogen train could be quite a bit higher than zero, and possibly even higher than those of the diesel train it would replace, because our power generating mix is still dominated by fossil fuels.

So whether the H2 for a fuel cell train would be produced from natural gas, as most of the substantial quantity of industrial H2 in the US is, or from grid electricity, it results in CO2 emissions somewhere. In fact, because electrolysis of water into H2 is only about 80% efficient, the associated emissions of electrolytic H2 used to fuel a train would be 25% higher than the average of the grid power used to produce it. And although it's theoretically possible to generate H2 solely from off-peak renewable electricity when the latter is not being used to back out higher-emitting power sources, the capital cost of that route is much higher, because it would only operate a small fraction of the time. At least for the near-to-medium term, most H2 will likely be generated from natural gas, and that argues for a very different configuration for the fuel cell train than the one considered in this episode of Science Friday. Instead of using low-temperature automotive-design fuel cells, which require a source of pure H2, a high-temperature fuel cell of the type used for stationary power generation might make more sense. Not only do these operate more efficiently, resulting in lower overall emissions, but they can also run directly on natural gas and other light hydrocarbons, producing the H2 they require internally, rather than externally. In that case, the fuel tank for a fuel cell locomotive might just be an ordinary propane tank car, for which the entire supply chain is already well-developed.

If you've ever waited for a train in an underground or partially-enclosed station with several diesel locomotives idling away, you'll probably join me in wishing the hydrogen train test project team good luck with this initiative. The benefits of converting trains to fuel cells seem obvious, assuming this can ever be done at a competitive cost. At the same time, I hope the developers will take a broader view of hydrogen as not just another fuel, but as part of our overall energy ecology. That might lead them to an even more viable, beneficial result, with a better chance of showing up in real train yards, and eventually even passenger trains.