Train Hauling Crude Derails, Burns in Alabama

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A 90-car train operated by a subsidiary of Genesee & Wyoming Inc. (NYSE: GWR) delivering crude oil from North Dakota to Florida continues to burn Saturday after 20 cars and 2 engines derailed in Alabama early Friday morning. No injuries have been reported and authorities plan to let the conflagration burn itself out.

This is the latest in a string of derailments involving trains moving crude oil from North Dakota to market. A Canadian National Railway Co. (NYSE: CNI) derailed and 4 cars carrying crude oil and 9 cars carrying liquefied petroleum gas (LPG) caught fire about 50 miles west of Edmonton, Alberta, in early October. There were no injuries in that incident either, although all 100 people living a nearby town were evacuated.

In early July a 72-car train derailed and exploded in the town of Lac-Megantic, Quebec, killing 47 people and levelling the town’s central business district.

Moving crude oil and other petroleum products by rail has boomed in the last few years due to a lack of pipelines in the Bakken shale play in North Dakota and Montana. Crude production in the Bakken rose to nearly 1 million barrels a day this year, less than a third of which is transported by pipeline.

U.S. railroads moved more than 93,000 carloads of crude oil in the third quarter according to the Association of American Railroads. The Railway Association of Canada estimates that as many as 140,000 carloads of crude oil will be shipped on Canada’s tracks this year, up from 500 carloads in 2009.