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Crude oil train in North Dakota catches fire after derailing

BY LYNN DOAN and KONSTANTIN ROZHNOV

CASSELTON, North Dakota (Bloomberg) -- A BNSF Railway Co. train carrying oil caught fire after a collision with railcars in North Dakota, causing a series of explosions that prompted police to urge local residents to evacuate the area.

There were no injuries to the train crews involved, Berkshire Hathaway Inc.’s BNSF said in a statement. The accident occurred yesterday at 2:10 p.m. local time near Casselton, about 25 mi (40 km) west of Fargo and 21 railcars were ablaze as of 9:20 p.m. Central Standard Time, it said.

“There is still a small blaze out there, it’s still controllable right now,” Sergeant Dean Haaland of the Cass County Sheriff’s Office said by phone around 4 a.m. central standard time. “We are waiting for sunrise to evaluate whether they will go in and extinguish the fire, or if it will burn itself out.”

The accident is the fourth major North American derailment in six months by trains transporting crude. Record volumes of oil are moving by rail as shale plays from North Dakota to Texas have spurred U.S. output to the most since 1988 and pipeline capacity has failed to keep up.

“A westbound train carrying soybeans derailed just west of Casselton just after 2 p.m., and then an eastbound train carrying oil hit that derailed train, causing a series of explosions and then a subsequent fire,” Cecily Fong, a spokeswoman for the state Emergency Services Department, said by telephone.

BNSF, based in Fort Worth, Texas, didn’t provide an estimate for when the tracks will reopen. Berkshire’s Burlington Northern Santa Fe railroad carried about 500,000 barrels of oil a day in March, CEO Warren Buffett said at the time.

Oil produced in North Dakota’s Bakken formation for delivery at Clearbrook, Minnesota, was unchanged at a discount of $8.25 a barrel versus U.S. benchmark West Texas Intermediate crude yesterday, data compiled by Bloomberg show. WTI crude fell 27 cents, or 0.3 percent, to $99.02 a barrel at 10:23 a.m. London time.

“If it happened in a bad place, maybe a junction where trains need to get through to go south or east, this could become a big problem for both the Bakken market and for oil refiners in the east,” David Hackett, president of Stillwater Associates, an oil markets consulting firm in Irvine, California, said by telephone. “It wouldn’t surprise me if the railway could move trains around all this and reroute.”

Residents in Casselton and those living within five miles to the south and the east were advised to leave on concern a plume of smoke from the blaze would envelop the area, Captain Judy Tollefson of the Cass County Sheriff’s Office said by phone. The situation will be reassessed at about 12 p.m. central time, according to Sergeant Haaland.

The train carrying crude was made up of 106 cars, BNSF said. About half of the cars detached from the wreck and the rest were involved in the accident, Fong said.

One railcar can hold about 700 barrels of oil, according to the Energy Information Administration, the Energy Department’s statistical arm.

The Federal Aviation Administration banned flights below 6,000 feet (1,829 meters) above sea level in the area of the incident, citing possible tank car explosions.

In November, a train carrying oil to the Gulf Coast from North Dakota derailed in Alabama, touching off a series of fires along the railcars. A month earlier, residents were evacuated from a rural area of Alberta after 13 railcars, four of which were carrying crude, derailed and ignited a blaze.

In July, a runaway train transporting crude exploded and killed 47 people in the Quebec town of Lac-Megantic.

The derailment “is likely to flare up the debate on the environmental side of the shale oil boom, which could result in higher costs for the industry,” JBC Energy GmbH, a Vienna-based energy consultant, said in an emailed report today.

12/31/2013

 

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