Buffett’s BNSF Railway Considering Safer Oil Tank Cars

By | January 11, 2015

BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., is reconsidering a plan to buy 5,000 oil-tank cars built to new safety standards after some customers voiced concern about the initiative.

“At first everybody applauded us for doing it,” BNSF Chairman Matt Rose said today during a panel discussion in Washington on oil-by-rail safety, without specifying which concerns were raised. “We’re going to go back and talk to our customers and see what they want us to do.”

BNSF has said new tanks cars — with thicker shells, reinforced ends and thermal blankets to prevent overheating — would reduce risks of using trains to haul oil. Railroads such as BNSF typically don’t own the cars their locomotives haul on their tracks. Instead, many tank cars belong to leasing companies including GATX Corp. or oil companies that rely on trains to carry crude out of North Dakota, which is underserved by pipelines.

“There is a general belief that this may interject a different type of car in a different part of our supply chain,” Rose said. “If our customers do not want us in this business, we’ll re-evaluate. We’ll do something else.”

BNSF announced the planned purchase in February, responding to concerns about oil trains, which often have more than 100 tank cars filled with crude, after a series of fiery accidents. A 2013 explosion in Lac-Megantic, Quebec, killed 47.

U.S. regulators have proposed safety rules that include thicker-shelled tank cars and new speed limits for oil trains. Rose said the company also decided to delay its purchase until regulators establish a standard. While thicker walls are warranted, speed restrictions would hurt other businesses that rely on trains to haul their products, he said.

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