Already besieged by explosive oil trains and polluting coal trains, rail-line communities in the Pacific Northwest may soon face a new vexation: mile-long trains hauling liquefied natural gas (LNG). It’s thanks to a little-known experiment taking place in Alaska, under test conditions that bear little resemblance to realities in Cascadia.

The first LNG-by-rail shipment

For safety reasons, the Federal Railroad Administration (FRA) does not allow railroads in the US to transport LNG by rail. Or rather, it did not allow this until October 2015, when, with virtually no public knowledge about the development, FRA granted a two-year permit to Alaska Railroad, suddenly making it the very first rail corporation in the US to carry the volatile fuel.

Alaska Rail hauled its first LNG cargo in September 2016 as both an LNG tank car demonstration and a cost experiment. It was a move watched eagerly by railroads in the lower 48—including Union Pacific and BNSF, the two dominant rail corporations in Oregon and Washington, which have been seeking authorization to transport LNG by rail from FRA for years. Railroads looking to offset recent losses in coal and oil haulage are looking to LNG, but the challenge is the same one that accompanies all fossil fuel by rail transportation: how to protect public safety.

LNG can erupt into catastrophic explosions, with blast zones larger and more severe than the conflagrations from oil trains.
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This opening for LNG-by-rail raises the specter of ever more hazardous rail cargos traveling through Northwest cities and towns if federal regulators and the fossil fuel industry treat Alaska’s experiment with LNG-by-rail as a first step toward approval throughout the US, which is exactly what rail corporations are lobbying FRA to do. But Alaska’s fossil fuel energy requirements and its relatively small and dispersed population are quite different from those of the Lower 48, making it a poor case study for justifying country-wide shipments. And the stakes are high: in the wrong conditions, LNG can erupt into catastrophic explosions, with blast zones larger and more severe than the conflagrations from oil trains.

The causes behind LNG-by-rail development

Interest in LNG-by-rail is a direct consequence of the US boom in fracking that unleashed huge volumes of low-cost natural gas into the market. This, in turn, began underpricing coal for electricity production, thereby driving down coal shipments. Making matters worse for rail corporations, oil-by-rail shipments also decreased in the last several years, primarily due to a downturn in the market for Bakken shale oil. Railroads hope to make up losses from declining oil and coal transportation by hauling new cargos like LNG, which they believe has the potential to generate significant revenues—if only it were legal.

Even without permission to actually haul it, railroads have already been preparing for the day when LNG-by-rail is legal. BNSF, the dominant railroad in the Northwest, has been testing LNG tank cars since at least 2014. By early 2015, BNSF, Union Pacific, Alaska Railroad, and Florida East Coast Railway had all applied for permits to haul the fuel. Even before the Federal Railroad Administration gave Alaska Rail its two-year LNG-by-rail permit in late 2015, natural gas producers had approached tank car manufacturers about developing tank cars suitable for the task.

Why is Alaska the testing ground?

Alaska’s story is peculiar. Although the state is a major producer of coal, oil, and gas, heating fuel and electricity prices in the interior of Alaska are among the highest in the nation. In fact, many residents still use wood-burning stoves and stove oil for heat, which produce high levels of unhealthy particulate matter pollution during the winter. The state’s Interior Energy Project has prioritized LNG as the solution to both energy costs and winter air pollution, particularly for Fairbanks, the largest city in the Alaska interior. Only about 1,000 of Fairbanks’ 32,500 residents and businesses currently use natural gas, but shipping LNG in bulk by rail could theoretically lower the cost of the fuel, making it more attractive to customers.

Rail shipments of LNG would also assist the struggling state-owned Alaska Rail, which has seen substantial losses. Net income for Alaska Rail fell from $14 million in 2013 to $11 million in 2015, and was expected to fall again to $9.3 million in 2016. The rail company’s 2015 annual report attributes the drop in revenue to weakening global coal markets and reduced oil shipments. In January 2017, Alaska Railroad president Bill O’Leary said the railroad is now “anticipating net earnings in the $4-4.5 million range.” LNG-by-rail shipments could help make up some of that revenue shortfall.

Alaska also has another business interest in increasing natural gas consumption. The state purchased the Titan Alaska LNG plant and gas utility provider Fairbanks Natural Gas in 2015. Since there are no pipelines connecting the two, Titan Alaska currently delivers natural gas hundreds of miles north to the Fairbanks utility using LNG tanker trucks. But rail shipments could reduce costs, since one rail car replaces two standard trucks on the road.

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  • Some Alaska citizens and environmental organizations have criticized Alaska Rail and the FRA for using residents as guinea pigs for the LNG industry,” noting that the agency avoided public input on the LNG-by-rail experiment by failing to disclose the approval process. One environmental organization is suing the railroad administration for information on the risk factors it considered before approving LNG-by-rail in Alaska. The case could ultimately inform the amount of input that Pacific Northwest residents would have on the approval of LNG-by-rail in their own communities.

    What’s good for Alaska is not good for the rest of the US

    Alaska Railroad says “an optimistic, long-term goal for the project” would be to use LNG-by-rail to supply natural gas to rural Alaska, much as in Japan, which rail companies point to as model. Japan ships LNG by rail in areas where transport by pipeline is not economically feasible, and the cost of truck transport limits the fuel’s delivery range.

    Yet even temporary approval in Alaska opens the door for longer-term LNG haulage by railroads in the Lower 48, where the impacts would be much different. Shipping LNG by rail would raise the same concerns as fatally combustible oil trains, but with a fuel that has more numerous and much more complex hazards. In Alaska, most of the LNG rail routes keep the dangerous cargo far from communities and roadways, which would not be true in the continental US. At-grade crossings, where rail traffic interacts with pedestrian and vehicle traffic, are particularly dangerous. These are a comparatively small issue for Alaska Rail—the entire 470-mile route from Seward to Fairbanks has only about a hundred at-grade crossings—but they are much more common in the the Lower 48: BNSF alone has 25,800 at-grade crossings on its rail network.

    Another key difference between Alaska and other states is that state ownership of the rail line makes it easier to give notice of fossil fuel shipments to local emergency responders. In the Lower 48, though, the major railroads are corporate entities, and for the most part they are not required to give firefighters any notice of hazardous materials being shipped.

    Implications for Cascadia

    Federal regulators should not treat the Alaska Railroad experiment as a reason to greenlight LNG-by-rail in other states.
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    BNSF and Union Pacific have a near-monopoly on rail haulage in the Northwest, and both have applied for permission to ship LNG by rail. Eager to replace sharply declining oil-by-rail cargoes with other products, railroads are looking to LNG in hopes it will yield revenues as coal and oil once did. But rather than deliver natural gas to Northwest residents, the vast majority of whom are already served by gas pipelines, LNG-by-rail through Cascadia would most likely support exports or other large fossil fuel expansion proposals—all at the expense of increased risks for communities along the rail lines.

    Railroads are federally regulated, so state and local governments have very little say over what rail corporations push through their towns. It’s a risky proposition for regions like the Northwest that could potentially see new and extremely hazardous rail cargoes passing through the heart of the region’s biggest cities. Federal regulators should not treat the Alaska Railroad experiment as a reason to greenlight LNG-by-rail in other states. To the contrary, the Alaska experiment should remain a limited decision subject to more extensive review and a robust opportunity for public input.