May 7, 2015
BISMARCK, N.D.
An oil train that burst into flames after derailing in North Dakota was
extinguished early Thursday, and nearby residents who were evacuated from their
homes were allowed to return. Crews were removing the remaining oil from the
tank cars that burned.
The 20 people who live in Heimdal went home Wednesday night
after the fire died down, Wells County Commission Chairman Mark Schmitz said.
"It had pretty much quieted down by 8, 9 o'clock,"
he said of the fire scene. "Firemen said it was just a matter of watching
it, making sure it didn't flare up again."
Residents were ordered from their homes shortly after the
BNSF Railway train derailed about 7:30 a.m. Wednesday outside the town, about
115 miles northeast of Bismarck. No injuries were reported.
The National
Transportation Safety Board is investigating the cause of the wreck.
The six cars that caught fire on the 109-car train were
carrying approximately 180,000 gallons of oil, according to BNSF vice president
Mike Trevino. He did not immediately know early Thursday how much burned and
how much was left in the cars once the fire was extinguished but he expected
the operation to transfer the oil to trucks to wrap up by midday.
Once the NTSB has cleared the site, the derailed cars can be
removed, and this should happen by Thursday evening, Trevino said.
Officials are trying to determine how much oil spilled onto
the ground and to get it cleaned up, Trevino said.
The rail line through Heimdal runs next to an intermittent
waterway known as the Big Slough, which drains into the James River about 15
miles downstream. Some oil got into the slough, but it was contained and was
being recovered, state Emergency Services spokeswoman Cecily Fong said early
Thursday.
The train was hauling crude from the state's oil patch, and
the accident raised questions about whether new state standards intended to
reduce the volatility of such shipments are sufficient.
Industry representatives and state officials said oil
companies have been complying with a standard that went into effect April 1
requiring them to remove propane, butane and other gases that occur in North
Dakota crude to reduce the chance of tank cars catching fire. There was no
immediate indication of a violation of that rule with the train involved in
Wednesday's accident.
The six tank cars that exploded into flames were a model
slated to be phased out or retrofitted by 2020 under a federal rule announced
last week. It's the fifth fiery accident since February involving that type of
tank car, and industry critics responded to the latest with calls for them to
be taken off the tracks immediately to prevent further fires.
For residents of Wells County — which oil trains cross daily
— the disaster was the realization of something they always feared might
happen, Schmitz said.
"It's definitely been in the back of everybody's
minds," he said.
WAR AND BUFFET PROMISES TO FIX HIS TRAIN
DISASTERS AFTER LATEST BNSF OIL TRAIN CABOOM IN NORTH DAKOTA. MEANWHILE, HAVE A COKE ON HIM.
//------------------------//
Nov. 10 (Bloomberg) -- Days after Warren Buffett announced
his $26.5 billion buyout of railroad BNSF, he insisted that he’d paid a steep
price to own a business that would benefit his company, Berkshire Hathaway
Inc., over the next century.
“You don’t get bargains on things like that,” he said in a
November 2009 interview with Charlie Rose that aired on PBS. “It’s not cheap.”
Five years later, that assessment rings a bit hollow. Buoyed
by an onshore oil boom, BNSF has become a cash machine for Buffett. The
railroad had sent more than $15 billion in dividends to Berkshire through Sept.
30, according to quarterly regulatory filings, the latest of which was released
last week. More stunning: The business is on pace to return all the cash
Buffett spent taking it private by the end of this year.
Annual revenue at the railroad has risen 57 percent, and
earnings more than doubled to $3.8 billion since Buffett bought it. Sales have
climbed even as BNSF faced increased public scrutiny over service delays and
safety.
“He stole it,” said Jeff Matthews, a Berkshire shareholder
and author of books about the company. “He’s got to feel really good that he
bought it when he did, because it’s a wonderful asset, and it’s done nothing
but get more valuable in the time that he’s owned it.”
The railroad’s profit continued its climb in the third
quarter as revenue from agricultural and industrial shipments, including oil,
rose. The business accounted for more than a fifth of Omaha, Nebraska-based
Berkshire’s net income in the period, according to a Nov. 7 regulatory filing.
Oil Glut
Berkshire’s third-quarter profit slipped 8.6 percent to
$4.62 billion on investment results, including the impairment of a holding in
U.K. retailer Tesco Plc. Buffett’s company climbed 0.7 percent to $216,525 at
9:33 a.m. in New York trading after operating earnings beat analysts’ estimates
on gains at units including the railroad.
BNSF’s tracks sit on top of North Dakota’s Bakken formation,
where energy producers are using fracking and other extraction methods to pull
crude from the ground in unprecedented volumes. Because pipeline capacity is
limited in the area, oil companies have turned to BNSF to ship their product to
refineries.
The extra freight has exacerbated weather-related train
tie-ups that the railroad has spent months working to resolve. In June, the
U.S. Surface Transportation Board ordered BNSF and Canadian Pacific Railway
Ltd. to report plans for resolving the delays.
Below Standards
At a hearing in North Dakota in September, state officials
urged the railroad to improve service. BNSF has said it’s adding workers and
rail cars to improve operations. In the filing last week, Berkshire said that
the railroad’s service is still “well below” its standards.
The expansion of crude shipments has also created risks for
the industry. Derailments of oil tank cars in the U.S. and Canada have led to
fires, spills and the bankruptcy of smaller carrier Montreal, Maine &
Atlantic Railway Ltd. after a derailment in Quebec last year that killed 47
people.
BNSF has worked to allay concerns about oil shipments by
agreeing to buy 5,000 safer tank cars. It has also announced plans to apply a
surcharge on an older generation of cars that have been involved in some of the
worst accidents.
Investments like those have been common since Berkshire took
over. The railroad budgeted a record $5 billion this year to upgrade its
network, expand facilities and buy equipment. That’s about $1 billion more than
it spent in 2013.
Cash, Stock
Even with those increasing outlays, BNSF’s climbing earnings
have helped make the multiple that Buffett paid look small. Berkshire was
already the railroad’s largest shareholder when he agreed to buy out the
remaining 77.5 percent of the company. The price included Berkshire stock and
$15.9 billion in cash. Since the beginning of 2011, the railroad has paid
distributions to its parent of at least $750 million a quarter.
Union Pacific Corp., BNSF’s main competitor in the western
U.S., currently trades for about 12.6 times annual pretax, pre-interest income,
according to data compiled by Bloomberg. Were Buffett’s railroad to fetch that
kind of price now, 77.5 percent of it would be worth about $66.5 billion --
more than double what Berkshire paid.
Part of Buffett’s success with BNSF comes down to luck, said
James Armstrong, who oversees Berkshire shares as president of Henry H.
Armstrong Associates. Very little crude was being shipped by rail when Buffett
bought the company and it wasn’t widely known that BNSF would play such a big
role in transporting oil from where it was produced.
Luck aside, there’s little upside for Buffett in bragging,
said Armstrong. Berkshire is always looking to buy other businesses and it
needs to have a reputation for paying fair prices, he said.
“It’s never in Buffett’s interest to indicate that he got a
bargain, even though that’s what he’s shooting for,” Armstrong said. “He has to
manage other people’s perception of him.”
Source: http://www.bloomberg.com