New Year, New Rules: Oil and Gas Transportation Industry Faces New Safety Protocols, Increased Scrutiny

Many recent conversations about the North American oil and gas industry have been preoccupied with slumping prices and the impact on the stock market. Yet the oil and gas industry is also facing a year of increased public scrutiny and new safety requirements, particularly in the midstream sector.

U.S. and Canada Reviewing Crude Oil / Rail Safety Standards

The tragic 2013 Lac-Mégantic train derailment and other recent rail accidents have led both Transport Canada and the US Department of Transportation (DOT) to take a closer look at rail safety standards, particularly as they relate to the transportation of crude oil. Canadian Transport Minister Lisa Raitt met with U.S. Transportation Secretary Anthony Foxx on December 18, 2014 to discuss aligning their regulatory approaches in the year ahead.

“Safety is a shared responsibility,” said Foxx at the time. “While we have different regulatory processes, we share a goal of ensuring the safety of our citizens and communities.”

Increasing Oversight and Precautionary Measures

In direct response to the explosion in Lac-Mégantic, Quebec, which killed 47 residents and levelled more than 40 buildings, Raitt has committed to recruiting 10 additional inspectors to conduct more audits on rail companies’ Safety Management Systems.

Transport Canada is also investing in new research on hazardous goods, such as crude oil (which is generally classified as a Class 3 Flammable Liquid). The train that exploded in Lac-Mégantic was carrying oil from North Dakota’s Bakken region; several studies have concluded that crude oil from this region is unusually volatile (with a high gas content and lower boiling point), though other studies and trade groups dispute this.

Also in December 2014, North Dakota’s Industrial Commission announced new regulations in response to Bakken oil safety concerns. “Better safe than sorry” appears to be the approach – as of April 1, 2015, all oil produced from the Bakken petroleum system must pass through a gas-liquid separator or heater-treater in order to ensure its safety prior to transportation. North Dakota’s regulators have been criticized in the past for not being tough on oil industry safety and environmental controls.

Oil-By-Rail By-the-Numbers

Looking forward in 2015, the shipment of crude oil by rail is expected to continue to grow alongside these concerns about rail safety, despite volatility in oil prices. More than one million barrels of oil are being moved by rail from just the Bakken region every day. In Canada, the latest numbers from Transport Canada state that shipments of oil by rail to Western Canada are projected to increase from 200,000 barrels of crude oil in 2013 to 700,000 barrels in 2016. Lengthy regulatory approval processes for new pipelines are contributing to the continued volume increases of oil-by-rail.

More updates to regulations and safety requirements can be expected in the coming year as both United States’ and Canadian regulatory bodies continue to research safety as it relates to the transportation of oil.

About Intelex

Intelex Technologies provides environment, health and safety (EHS) and quality management systems to both the transportation and oil and gas industries, among others. For more information, visit www.intelex.com.

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