Even the precipitous fall in oil prices and increasing U.S. energy independence will not reduce shipments of volatile crude oil by train, according to an expert consultant who spoke this week at a Rail Summit in Chicago.
"It is no longer just a stop-gap measure until pipelines get built," said Graham Brisben, founder and CEO of PLG Consulting. "It's no longer a way to exploit price differentials. It really now has a permanent, structural role in the supply of oil in this country."
Last year, railroads moved 493,126 tank cars of crude oil, compared to 407,761 in 2013. That's up from just 9,500 cars in 2008, before the hydraulic fracturing boom took off in the Bakken region of North Dakota, Montana and Canada.
But just how many of those tank cars are moving through Northwest Indiana, where three Class I railroads operate a dense network of tracks to get around Lake Michigan, is not known.
The Indiana Department of Homeland Security has steadfastly refused to release reports detailing how many oil trains pass through Indiana. Emergency management agencies in other states, including Illinois, have released oil train tallies for their states.
Oil shipments by rail have grabbed the public's — and regulators' — attention due to several high-profile oil train accidents, the most recent in March near Galena, Ill.
The worst recent incident was in Lac Megantic, Canada, in July 2013, when a runaway train with cars full of oil derailed in the city's downtown. The resulting explosion and inferno killed 47 people and destroyed half the downtown's buildings.
Shipments of oil by rail from the Bakken oil fields is likely to keep increasing, Brisben said.
It was the Bakken discoveries and drilling in 2008 that triggered the movement toward shipping oil by rail. It has also been the oil involved in the most catastrophic of the train accidents.
However, train shipments of sour crude oil from Canada may decrease as more pipelines get built, Brisben said. That oil is generally less volatile than the Bakken crude.
People shouldn't forget that the fall in oil prices, and a related fall in natural gas prices, is leading to a manufacturing renaissance in the United States, Brisben said.
PLG Consulting executives provided keynote addresses before more than 150 industry attendees at "The Rail Summit, the Supply Chain," at the Union League Club in Chicago, on Thursday.
In coming years, there will be a demand for more oil tank cars as about 50,000 older ones are taken out of service due to government safety regulations, Brisben said.
Concern about the tanker cars' safety, particularly older ones, has been ongoing since the Lac Megantic tragedy.
On Friday, U.S. and Canadian rail regulators issued new rules requiring tank cars that are used to transport most crude oil and many other flammable liquids be built to stronger standards to reduce risk of explosions and fire.
Last June, the Federal Railroad Administration required railroads to hand over reports to state emergency management agencies on any trains carrying 1 million or more gallons of volatile crude oil from the Bakken fields.
Indiana's Department of Homeland Security has cited a broad provision in the state's access to public records statutes in denying the public access to that information. That provision allows exemptions to the law's regular disclosure requirements for any record that "would have a reasonable likelihood of threatening public safety by exposing a vulnerability to terrorist attack."
Other states have released reports submitted by railroads operating in their states. A public records request from the Associated Press last year revealed dozens of trains containing volatile oil from the Northern Plains area passing through Illinois every week. For example, one railroad, BSNF, reported 27 oil trains a week passing through Cook County.