EXCLUSIVE-BNSF to take bids to buy up to 5,000 safer oil railcars

Thu Feb 20, 2014 11:42am EST
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(Adds details on crude-by-rail growth, safety standards, crashes, share movement, second byline and dateline)

By Kristen Hays and Cezary Podkul

HOUSTON/NEW YORK Feb 20 (Reuters) - BNSF Railway Co plans to buy its own fleet of up to 5,000 new crude oil tank cars with safety features that exceed the latest industry standards, the unit of investor Warren Buffett's Berkshire Hathaway Inc said on Thursday.

The unusual step is intended to further the industry's push for safer movement of crude by rail in light of several accidents in recent months, including one involving a BNSF train in North Dakota last December.

The company, a major mover of crude by rail throughout the United States, plans to seek bids from railcar makers for up to 5,000 new tank cars with thicker walls and ends, increased protection of safety and pressure valves, and other safety features exceeding industry standards adopted two years ago.

The news sent shares of several railcar manufacturers higher.

BNSF's plan is atypical for a railroad, which generally owns only the tracks and locomotives that pull trains. Railcars are usually owned by companies that lease them to others that rely on rail transport such as refiners Phillips 66 and PBF Energy Inc, which also buy their own cars.

The December crash of a BNSF crude train in North Dakota involved railcars that do not meet industry safety standards, according to investigators. The train collided with a derailed grain train, setting off fires that burned for more than a day. No one was hurt.

Crude-carrying tank cars built after October 2011 are based on stronger design standards recommended by the Association of American Railroads trade group. That design features stronger hulls and reinforced valves less likely to puncture or leak in a derailment.   Continued...