LNG: Final Rule Allows Rail Movement

PHMSA Issues Final Rule Approving Transportation of LNG by Rail, Subject to DOT-113 Tank Car Upgrades and Operational Adjustments.

19 June, Washington DC – The Pipeline and Hazardous Materials Safety Administration released its Final Rule (RIN 2137-AF40) amending the Hazardous Materials Regulations (HMR) to allow for the bulk transport of “Methane, refrigerated liquid,” commonly known as liquefied natural gas (LNG), in rail tank cars. The rule aligns closely with the existing language in 49 CFR Parts 172, 173, 174, 179, and 180, with additional tank car construction specifications and operational controls.

New tank car specification

The final rule authorizes rail transport of LNG in DOT-113C120W-specification tank cars, upgraded with a thicker outer skin of a different alloy. Specifically, tank cars carrying LNG are required to have a minimum outer tank thickness of 9/16-in (compared to 7/16-in standard for current DOT-113C120W-specification tank cars). In addition, the thicker outer tanks must be made of TC-128 Grade B (TC-128B) normalized steel, which is more puncture resistant than the A516-70 steel used on current DOT-113C120W-specification tank cars. Cars incorporating these new specifications will be identified by the addition of the suffix “9;” e.g., the cars will be DOT-113C120W 9 -specification cars.

DOT-113C120W9 tank cars are projected to cost 3% more to manufacture.

In an effort to maintain consistency with FRA’s current approval ( see 76 FR 4250, January 25, 2011) of newly manufactured railroad tank cars with a GRL exceeding 263,000 pounds, this final rule will amend the HMR to state that tank cars manufactured for LNG service after (the effective date of this final rule) may be loaded to a maximum GRL of 286,000 provided the tank car is constructed in accordance with S-286, and the outer shell and heads are constructed with TC-128B.

The Final Rule adopts a 37.3 percent maximum filling density for LNG, upgraded from the 32.5 percent filling density proposed in the Notice of Proposed Rulemaking (NPRM), issued 24.Oct.2019. The higher capacity will allow for approximately 2 percent outage below the inlet of the pressure control valve to prevent the venting of liquid material at start-to-discharge pressure, thus ensuring the safe transportation of LNG. This maximum filling density is more conservative than maximum filling densities set in the HMR for other flammable cryogenic materials, which allows for 0.5 percent outage at the start-to-discharge pressure. See § 173.319(b)(1). Additionally, a 37.3 percent maximum filling density harmonizes with Canada’s Transportation of Dangerous Goods (TDG) regulations which have been in place since 2015.

Additional operational controls

operational controls in the form of enhanced braking requirements, remote monitoring, and route analysis,

The Final Rule adopts several additional operational controls:

1) Trains with a block of 20 loaded tank cars of LNG, or 35 loaded tank cars of LNG throughout the entire train, are required to be equipped with an advanced braking EOT device or DP system.

2) Each loaded tank car containing LNG must be monitored for location and tank pressure by the offeror and notify the carrier if the tank pressure rises by more than 3 psig in any 24-hour period.

3) Each carrier operating trains carrying a loaded tank car of LNG must perform additional planning requirements in accordance with § 172.820 (i.e., rail routing). Requirements of the route analysis measures for a rail carrier include:

  • Compilation of commodity transportation data;
  • Analysis of safety and security risks for transportation route(s);
  • Identification and analysis of potential alternate route(s); and
  • Based on the above data, selection of the practicable route posing the least overall
  • safety and security risk.

Will Soft Lng Market Delay Adoption Of Rail Transport?

From S&P Global/Platts Market Insights , 16.June.2020:

The flexible nature of US LNG supply has led to it being one of the hardest hit exporting countries in recent months, with more than 35 cargoes expected to be cancelled for June and potentially more than 45 cargoes in both July and August, according to reports from trading sources. Even exports for May have been noticeably curtailed relative to average monthly exports for Q1, with only around 52 cargoes loading, compared to an average of 72 per month at the start of the year.

The curtailment in exports has been driven by poor economics, with the value of a spot cargo loading in the US Gulf Coast trending below the approximate cost of feedgas since late March. The Platts Gulf Coast Marker was most recently assessed at $1.625/MMBtu on June 15, which was still below the equivalent NYMEX Henry Hub Futures price of $1.669/MMBtu. This comparison, however, does not consider the feedgas attrition rate during the liquefaction process, which would further dampen spot break even economics.