Analysis: As Alabama flames fade, new oil-by-rail questions arise

Mon Nov 11, 2013 7:10am EST
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By Anna Louie Sussman

NEW YORK (Reuters) - The second explosive oil-train derailment this year, which has finally burned out in rural Alabama, may raise new questions about the safety of the crude-by-rail boom, pointing to problems beyond those that surfaced following the earlier tragedy in Quebec.

Within hours of the accident early Friday morning, operator Genesee & Wyoming Inc had already ruled out many of the factors cited in the deadly Lac Megantic disaster, where a runaway train careened into the center of town, bursting into a fireball that killed 47 people and leveled buildings.

The train in Alabama was travelling on relatively flat terrain at below the 40 miles per hour limit, not parked atop an incline where brake failure may have been an issue. The tank cars on the 90-car Genesee train were T108s, not DOT-111s, which have been faulted by regulators. An industry-standard two engineers were driving it, not one as in Canada.

Both trains carried North Dakota crude, a type that tends to be very low-density or 'light', meaning it contains more volatile compounds that may account for its explosive properties. But that doesn't explain why the train derailed.

With no apparent extenuating circumstances, experts said investigators would likely be looking hard at the condition of the tracks themselves, noting that short-line railroads like the one in Alabama have become critical final links in the thriving oil-by-rail trade -- but can suffer from neglect.

Just days before the accident, in fact, Genesee executives had talked to analysts about the challenges of upgrading the assets they inherited a year ago after buying RailAmerica, becoming the country's largest short-line railroad operator.

"s we continue to systematically assess the former RailAmerica properties, we found conditions and facilities and track at several railroads that are not up to G&W standards for safety and service," president and CEO Jack Hellmann said on a conference call on November 1. He said many of the problems had been fixed in August and September, but the company would spend another $1 million in the fourth quarter.

On Friday, that bill likely rose after nearly 30 cars of the 90-car crude oil train on the Alabama & Gulf Coast Railway - one of the 45 former RailAmerica lines Genesee bought for $1.4 billion - derailed in western Alabama. Some dozen of the cars went up in flames that only finally died down by Sunday in the most dramatic U.S. accident since the oil-by-rail boom began. No one was injured or killed.   Continued...

Smoke rises from a number of cars that derailed and exploded from a train carrying crude oil in Aliceville, in western Alabama, early November 8, 2013, as pictured in this still image taken from video courtesy of WBMA/ REUTERS/WBMA/ via Reuters