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1 1 (September 7, 2017)

handle is hein.crs/govcgux0001 and id is 1 raw text is: 0S,0 September 7, 2017 Rail Transportation of Crude Oil and the FAST Act: An Update After a multiyear boom, the volume of crude oil carried by U.S. railroads has fallen to the lowest level since 2012. This decline may have implications for efforts by the U.S. Department of Transportation (DOT) to finalize regulations concerning the safety of rail transportation of crude. Increased oil drilling in North Dakota's Williston Basin (also known as the Bakken), made possible by new drilling methods such as hydraulic fracturing and directional drilling, led to a sharp rise in the movement of crude oil by railroads beginning about 2010 (see Figure 1). Large-scale oil production was new to the region, which lacked pipeline capacity to handle the volume. As an alternative, oil producers began shipping more oil to refineries by railroad. Some of these trains derailed, leading to oil spills, fires, and explosions. Several incidents required emergency evacuations of nearby residents, and one resulted in fatalities. (For further background, see CRS Report R43390, US. Rail Transportation of Crude Oil: Background and Issues for Congress.) DOT issued emergency orders requiring new safety measures for oil trains in 2014 and 2015. Congress enacted or modified many of these measures in the Fixing America's Surface Transportation Act (the FAST Act; P.L. 114-94, Title VII, Subtitle C) in December 2015. These measures include use of stronger tank cars, more frequent safety inspections, speed limits for oil trains, and enhanced emergency response preparations. A substantial fall in the volume of crude oil carried by railroads has taken place since summer 2015, as shown in Figure 1. Figure I. Domestic Crude Oil Movements by Railroad -AN -S 3A t -1 1 -A N - 1 2 1- 3 J A N -I )AN--1 5 -- -N 1 A- -7 Source: CRS presentation of Energy Information Agency (EIA) data; Movements of Crude Oil and Selected Products by Rail. One cause of this fall is the diminishing price of imported oil versus the domestic price. As this price gap narrows, coastal refineries switch to importing oil by tanker, which entails much lower transport costs per barrel than rail transport. Also, pipeline capacity from the Williston Basin has gradually increased. Pipelines, including the recently opened Dakota Access Pipeline, now have the capacity to carry all of the Williston Basin's current production at lower cost than rail. According to the North Dakota Pipeline Authority, at the peak of crude-by-rail volumes during fall 2014, railroads were carrying away 60% of the Williston Basin's production, while pipelines transported about 35%. In June 2017, railroads carried 7%, while pipelines carried 78%; the remaining 15% was refined locally or trucked to Canada. An oil train with 100 tank cars carries 70,000 barrels, so as volume declined by more than 800,000 barrels per day, the required number of trains has fallen from approximately 14 per day in the fall of 2014 to about three per day at present. As Figure 2 indicates, most of the decline in rail volumes has occurred in movements of North Dakota oil to East Coast refineries. Movement of North Dakota oil by rail to West Coast refineries has remained relatively steady, as there is no pipeline available. The United States continues to import Canadian oil by rail, most of which is destined for refineries on the Gulf Coast. Figure 2. Selected Crude by Rail Routes T HUSAND BARRELS PER %1,ONT mports from Carada M iwest to East Coast 20,000 . . .. . . . . . . . . . . . . . . . . . . -M dwest to West Coast 3AN-12 AN-13 J A' N- 14 WN-15 JAN -16 3AN-1 7 Source: CRS presentation of EIA data; Movements of Crude Oil and Selected Products by Rail. ,ssw,,,s ,,Cg,,'es The FAST Act, enacted at a time when crude by rail volumes were three times greater than they are today, set deadlines for DOT to issue a number of regulations affecting transportation of oil by rail. Some of these proposed regulatory changes are still pending, and the THOUSAND BARRELS PER M0O XTH 40 009 O....Pr...u..... Domestic Rail Movements ND Cruade -Oil Production .0 'T gognpo 'popmm ggmm g 'S a X

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