Bakken oil safety warning issued by federal government

Following this week’s fiery train crash in North Dakota, the federal government Thursday issued a safety alert that crude oil being transported from the Bakken region, which stretches through swaths of North Dakota and Montana, is more flammable than traditional heavy crude.

The Pipeline and Hazardous Materials Safety Administration said it issued the alert to notify the public, emergency responders, shippers and carriers as a result of its preliminary inspections after recent train derailments and resulting fires in North Dakota, Alabama and Canada.

(Read more: Train collision forces N. Dakota town evacuation)

Getty Images

Getty Images

The most serious of these derailments was the Lac-Megantic, Quebec accident, where a runaway train, sped for seven miles into the town and crashed into a night club, killing dozens last July. The PHMSA, part of the Department of Transportation, said it is reinforcing the requirement that hazardous materials be properly tested, characterized, classified and where necessary, degasified.

About 700,000 barrels per day of Bakken crude is carried by rail, a fast-growing, flexible alternative to pipelines for transporting the land-locked oil to the Gulf coast and east and west coast refineries. A total 900,000 barrels a day of crude moved by rail in North America during the third quarter, according to IHS.

The hazards of rail shipping are expected to give more weight to the argument for pipelines, including the controversial Keystone XL pipeline, under review by the State Department. That pipeline would carry crude from the Canadian sands to a southern extension that would bring it into the Gulf Coast refining region.

The PHMSA, along with the Federal Railroad Administration, said as part of its investigation of the train accidents, it has begun a compliance initiative involving unannounced inspections and testing of crude shipments to verify that it has been properly classified.

The most recent incident occurred when a BNSF Railway train carrying soy beansderailed Monday, and a portion fell onto a neighboring track in front of the approaching oil train. Eighteen of the 106 cars on the oil train derailed and several burned, causing a massive plume and explosions. The 2400 residents of nearby Casselton, N.D. were temporarily evacuated.

—By CNBC’s Patti Domm. Follow here on Twitter @pattidomm.

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