July 10 (Bloomberg) -- On a typical day in North Dakota prairie towns like Williston, Dickinson and Beulah, trains with 100 tank cars line up to be loaded with oil destined for markets to the east, west, and south.
In total, about 675,000 barrels of crude leave daily on as many as 10 trains from North Dakota, now the second largest oil-producing state after Texas. That’s due to the drilling process known as hydraulic fracturing, or fracking, that has rendered accessible petroleum once too costly to procure.
Production in the state is rising so fast -- from about 150,000 barrels a day in 2008 to more than 790,000 today -- that pipeline construction can’t keep up. Railroads move 75 percent of its oil, including the load of more than 70 tanker cars that derailed and exploded July 6 in a small Canadian town, killing at least 15 and leaving dozens missing.
“The oil development has happened so rapidly, it’s ahead of the infrastructure to deal with it,” said Wayde Schafer, an organizer for the North Dakota chapter of the Sierra Club, a San Francisco environmental group that wants to decrease use of fossil fuels.
Lines now cross population centers and sensitive wildlife habitats, he said. “The railroads didn’t have transporting oil in mind when they laid out the routes,” Schafer said.
The accident in Lac-Megantic, Quebec, where authorities are investigating how the unattended train managed to roll into town and incinerate 30 buildings, has added urgency to the debate over the safety of rail versus pipelines -- a debate in which both industries offer statistics suggesting an advantage.
In general, railroads tend to have more mishaps though the amount of oil spilled is greater from pipelines.
Oil-trade groups say all modes of transportation are safe.
“Over 99.9 percent of deliveries make it to the end user without incident,” Cindy Schild, senior manager for refining and oil sands for the American Petroleum Institute, whose members include Exxon Mobil Corp. in Irving, Texas, said yesterday in a conference call with reporters.
A boom in North American oil production has helped drive a flurry of proposals to build or expand pipelines, including TransCanada Corp.’s proposed Keystone XL, now under review by the U.S. State Department. Keystone would move mostly crude from Alberta’s oil sands to refineries on the U.S. Gulf of Mexico, though it would also be fed oil from North Dakota.
The Montreal Maine & Atlantic Railway Ltd. train that crashed in Lac-Megantic was hauling crude from North Dakota to Irving Oil Corp.’s 298,800-barrel-a-day Saint John refinery in New Brunswick. The carrier is owned by the closely held Rail World Inc. of Chicago.
The amount of oil hauled by rail in the U.S. rose more than 2,000 percent from 2009 to 2012, when 6.5 billion gallons were carried on trains.
In the 10 years ending in 2012, U.S. railroads suffered 129 spill incidents while hauling 11.2 billion gallons of crude, according to the Association of American Railroads, whose members include BNSF Railways Company, a major carrier in North Dakota and subsidiary of Berkshire Hathaway Inc.
Over that period, 95,256 gallons spilled from railroads, with one accident in Oklahoma in 2008 accounting for 81,103 gallons. More typically, the releases occurred during loading or unloading in a rail yard, according to Holly Arthur, a spokeswoman for the Washington-based group.
While the frequency of spills from railroads is higher than for pipelines, pipeline spills are typically four times larger, Arthur said.
Pipelines carried 13.6 billion barrels (571.2 billion gallons) of crude and petroleum products in 2012 and reported 54,023 barrels released, according to John Stoody, spokesman for the Association of Oil Pipe Lines. Over the past 10 years, the number of leaks has fallen 60 percent while the amounts released have fallen 43 percent.
In the 20 years ending in 2012, there were 364 spills involving pipelines carrying oil, petroleum products and other hazardous liquids, according to the U.S. Department of Transportation. Over that period there have been 39 fatalities and 137 injuries at pipelines, mostly involving pipeline workers.
Andrew Leach, an energy and environmental economist at the University of Alberta, said that while spills from pipelines are likely to be larger, there is a greater likelihood that a rail accident would occur in more populated areas, potentially causing more injuries and property losses. Accidents such as the one in Quebec hurt the image of both industries, he said.
“This is just another reason the public is going to say, ‘I don’t want this near me,’” Leach said in an interview.
Keystone, which is opposed by groups including the Sierra Club and Natural Resources Defense Council because they say it exacerbates the risk of climate change by promoting development of the oil sands, has also sparked a debate over the relative safety of rail versus pipeline to transport oil.
“To frame Keystone XL as something that can save us from oil on rail, it isn’t,” Anthony Swift, an energy analyst for the Natural Resources Defense Council in Washington, said in a telephone interview. “This demonstrates the risks associated with moving crude oil across all modes of transportation.”
In 2009, North Dakota was shipping about 20,000 barrels of oil a day along its rail lines. Four years later, the total had increased by more than 3,000 percent, according to Justin Kringstad, director of the North Dakota Pipeline Authority.
The rapid rise in oil and gas production presents, “new challenges for the entire transportation system,” said Brigham McCown, a former director of the Pipeline and Hazardous Materials Safety Administration, a division within the U.S. Transportation Department that regulates the transport of oil and other dangerous products.
McCown, now a transportation consultant, said rail transport is safe. He supports construction of the Keystone pipeline as another alternative for shipping oil, noting that rail lines pass through more populated centers.
An early focus of the inquiry into the deadly derailment in Quebec is on the risks of a rail car widely used in both the U.S. and Canada. Officials from the National Transportation Safety Board in 2012 recommended that the U.S. Transportation Department require rail companies to retrofit the cars, known as DOT-111s, to make leaks and fires less likely.
The Pipeline and Hazardous Materials Safety Administration is reviewing the recommendations, which are opposed by the Association of American Railroads. The group says the risks don’t justify the costs of the upgrades.
Environmental groups said the Quebec accident shows the need to reduce reliance on fossil fuels in general.
“It’s a false choice to choose between rail and pipelines,” Kate Colarulli, deputy director of the Sierra Club’s “Beyond Oil” campaign, said in an interview. “Communities are going to have to live under this threat of accidents until we reduce the oil we use.”
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