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Tesoro to upgrade oil tanker cars

Refinery owner Tesoro will upgrade its rail fleet for shipping crude oil by midyear, purchasing newer, puncture-resistant rail cars.

The San Antonio company’s announcement follows a string of fiery oil train derailments in the United States and Canada, including one that killed 47 people in Quebec last July. The explosions prompted federal scrutiny and concerns from states and communities on the route of oil trains.

Tesoro owns six oil refineries in the West, including one in Anacortes, Wash., which together can process more than 850,000 barrels of oil daily. It also sells gasoline under Tesoro and other retail brands.

An average of one oil train per day passes through Spokane, a figure that’s expected to grow as more Western Washington refineries and terminals accept crude oil shipments from North Dakota’s Bakken oil fields. The Spokane City Council on Monday unanimously approved a resolution asking state and federal officials for stricter scrutiny of oil shipments via rail.

Keith Casey, a senior vice president for Tesoro, said company officials decided to act ahead of expected changes in federal oil train regulations.

Tesoro will convert its fleet to the newer DOT-111 rail cars equipped with reinforced shields and other protective devices to reduce the risk of explosion following derailments.

Most of the crude oil delivered to Tesoro’s refineries and terminals is shipped in company-owned rail cars. Rail-car design will be part of discussions with third-party shippers, company officials said.

In addition to the Anacortes refinery, Tesoro is a partner in a proposed oil distribution terminal in Vancouver.

In related news, BNSF Railway Co. announced this week that it plans to invest $5 billion in its railroad this year, including $900 million to expand capacity in the Northern Plains, where crude oil shipments are surging.

The railroad said Tuesday its 2014 spending plan is roughly $1 billion higher than last year.

Some projects should help alleviate congestion near the booming Bakken oil fields. Last week, the National Association of Railroad Passengers complained to officials that the growth in oil shipments was disrupting Amtrak passenger service.

In addition to expanding capacity, BNSF plans to spend $2.3 billion maintaining its network and $1.6 billion on locomotives and equipment.

BNSF is based in Fort Worth, Texas, but it is owned by Omaha, Neb.-based conglomerate Berkshire Hathaway Inc.

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