UPDATE 1-CN Rail sees U.S. banning older rail cars for oil in 3-5 years

Thu May 29, 2014 5:54pm EDT
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(Adds comments about safer railcar design)

By Rod Nickel

May 29 (Reuters) - Canadian National Railway Chief Executive Claude Mongeau said on Thursday he expects U.S. regulators to phase out use of DOT-111 tank cars in three to five years, following a deadly explosion in Quebec last year.

Mongeau also expects U.S. authorities to decide no later than early 2015 on a new, safer design for cars to transport crude oil, he said in an interview.

"Canada has already spoken; all these older legacy DOT-111 cars have to be phased out of flammable service (there) in the next three years," Mongeau said, speaking at a Sanford Bernstein conference in New York. "I think the U.S. will follow suit, three years, five years who knows? That's the range I think."

Canada will require that older rail cars used for carrying crude oil be phased out by May 2017, the government said in April, moving ahead of the United States to ban the controversial cars in light of burgeoning oil-by-rail traffic

The transport of oil by rail is rising due to fracking in North Dakota and drilling in Alberta's oil sands. Oil train cargoes have been under scrutiny since a shipment derailed in Lac Megantic, Quebec, last July, killing 47 people in an explosion.

The type of cars that derailed there are known as DOT-111 cars, and are seen as being vulnerable to puncturing and leakage.

The Association of American Railroads has made several recommendations for the new cars, including thicker, stronger steel, but shippers, leasing companies and manufacturers have their own views too, Mongeau said.   Continued...