Increased U.S. and Canadian regulation of rail shipments of crude oil is likely, but the details aren’t certain. What is certain, according to Wells Fargo Securities, is the changes will raise costs for shippers. But by how much?

“Previously, we had estimated higher shipping costs from new car designs and retrofits of existing cars as adding 50 cents per barrel (bbl.) to shipping costs, a manageable incremental cost in our view,” the firm said in a recent research report.

However, new U.S. National Transportation Safety Board (NTSB) recommendations—which are in addition to
recommendations by the U.S. Pipeline and Hazardous Materials Safety Administration and Federal Railroad Administration— complicate forecasting what the new oversight will look like.

The NTSB guidelines “could increase costs further as they would extend delivery times and time is money. At this time we are unable to quantify the impact as how and when the new recommendations will be implemented is unclear,” Wells Fargo said shortly after the NTSB announcement.

Key takeaways, Wells Fargo said, are that the greatest impact will be on East Coast and West Coast refiners, which have been major purchasers of light, sweet Bakken crude shipped by train.

The NTSB recommendations include:

• Routing shipments around high-population and other sensitive areas when transporting hazardous materials, including
crude. Wells Fargo observed that NTSB did not define what it meant by “populated/sensitive areas.”
• Audits to ensure railroads carrying crude have adequate response plan for worst-case emergency situations.
• Audits to assure shippers and railroads properly classify hazardous material shipments, including crude.

“In general, the potential impact of increased rail regulations should not be material to energy MLPs, in our view,” Wells
Fargo said. “Only a few partnerships have invested in rail-related infrastructure with even a smaller subset of MLPs owning/leasing railcars. Thus, while a potential regulatory change could impact MLPs involved in the rail business, the overall impact to the sector (given limited participation) should be nominal, in our view.”

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