Latest Derailment Draws New Attention to Amount of Oil Now Transported by Train

Another major accident involving a train carrying crude oil from North Dakota is drawing attention to the vulnerabilities of transporting oil by rail.

Officials are still trying to determine what caused a 90-car train, reportedly carrying 2.7 million gallons of crude oil, to derail and explode in rural western Alabama last week. No injuries were reported.

That accident comes just four months after a runaway train, also carrying crude from the Bakken oil field, exploded and virtually destroyed a small town in the Canadian province of Quebec, just across the border from Maine. At least 47 people died in that incident.

The shale oil boom in Canada and North Dakota, coupled with a lack of oil pipelines in the production regions, has meant the amount oil transported by rail has skyrocketed in recent years. The Los Angeles Times says railroads are currently carrying 25 times more crude oil than they were just five years ago

Reuters reports rail shipments of crude oil were up 44 percent in the third quarter, compared to a year earlier, to over 93,300 carloads of oil – the equivalent of 740,000 barrels per day or nearly one-tenth of overall U.S. production.

The Obama Administration's apparent lack of enthusiasm for the Keystone XL pipeline project – which, if approved, would carry oil from Canada to Gulf Coast refineries in Texas – has prompted oil companies to work on new rail terminals. The New York Times reports plans for three large rail loading terminals have been announced in western Canada since this past summer.

“The indecision on Keystone XL really spawned innovation and mobilized alternatives, and rail is a clear part of the options available to our industry,” Paul Reimer, senior vice president in charge of transport and marketing for the Canadian oil company Cenovus Energy CVE, told the Times.

Cenovus repotedly plans to ramp up its rail shipments of oil from the current 7,000 barrels a day to as much as 30,000 barrels daily by the end of next year.

And the Times notes Canada “is poised to quadruple its rail-loading capacity over the next few years to as much as 900,000 barrels a day, up from 180,000 today.”