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Fort Worth's BNSF says company can keep up with oil demands

DAVE KOLPACK, Associated Press


GRAND FORKS, N.D. (AP) — BNSF Railway Co. is putting billions of dollars into infrastructure improvements and is implementing safety measures that should allow it to keep up with demands of shipping crude from North Dakota, the company's CEO said Wednesday.

BNSF CEO Matt Rose told attendees at the North Dakota Petroleum Council's annual meeting that the company will spend $4.3 billion in 2013 to improve its system and plans to invest $400 million in the next 18 months to increase its capacity to ship oil.

The issue is important to North Dakota, which has become the nation's No. 2 oil producer behind Texas. BNSF, the largest shipper of oil in North Dakota's Bakken and Three Forks shale formations, ships more than 600,000 barrels a day from across the U.S.

"We understand the mission of oil producers, and rail is a good means to complete the job," Rose said.

Rose said it's also a safe way to complete the job, despite recent attention on a disaster in Canada in which a runaway train carrying 72 carloads of crude derailed and killed 50 people in July. BNSF had been working on safety measures before the U.S. government issued an emergency order in August, he said.

Certain trains carrying hazardous materials are now required to undergo "special handling and risk reduction review" and trains are no longer left unattended on mainline tracks, Rose said.

Rose was not available for comment after his speech, but North Dakota Gov. Jack Dalrymple said he has talked to the BNSF CEO about some of the protection measures. Dalrymple said he believes the company is staying ahead of possible rule changes from the federal government.

"They are doing some things even though they feel very strongly their freight trains are safe in North Dakota," Dalrymple said. "They have good practices. What happened in Quebec is really an anomaly. It was a short line situation and some obvious mistakes were made."

Rose said the rail industry has reduced hazardous material train accident rates by 91 percent since 1980 and railroads set new overall safety records in 2012. There were no derailment-caused releases of crude oil on BNSF's network in 2012, he said.

Those improvements come despite a drastic increase in shipments from North Dakota's booming oil patch. Five percent of the oil produced in the Bakken was shipped by rail in 2010, compared with 70 percent in July.

Executives with Norway-based Statoil, which has been operating in the Bakken since 2011, said BNSF and other rail shippers came forward at a time when the industry was worried about getting its oil to refineries on the coasts. BNSF had primarily been an agricultural shipper in North Dakota before the oil boom.

"They have been able to keep up and they have been able to make rail cars," Statoil President Bill Maloney said.

"This is America. There will be a solution," Statoil vice president Lance Langford said, referring to questions about industry lacking the capacity to ship oil. "I didn't imagine it would be rail, but it was."

The Statoil executives said there's still a long-term need for pipelines, but said rail transportation will offers flexibility.

"This model has shown the industry the benefits of taking those barrels to the highest price market, wherever those may be," Langford said.
 

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