Railway exec: Keystone debate not about rail versus pipes

Energy revolution fueling economy: BNSF

BNSF Railway plans to create the "next generation" of stronger tanker cars to transport the volatile crude oil mixture coming from the U.S.'s major shale gas formations, the company's executive chairman told CNBC on Friday.

During an interview with CNBC's "Squawk Box," Chairman Matthew Rose noted that oil made from natural gas out of the nation's major shale formations—such as Bakken and Eagle Ford—are being transported with a dangerous mix of crude oil and gases. Rose said he's been working with railway regulators to come up with a plan to separate volatile gases from crude before the oil is loaded onto tanker cars.

"There are additional gases—[natural gas liquids]— that are being shipped in this crude oil that is creating the increased volatility," Rose said. "There's also a another way to handle the crude, and that is to remove the gases out of it."

Rose added: "The country needs for us to be very successful in this."

Rose also said that observers of the heated debate over the Keystone XL pipeline don't get an important point: It's not about railways versus pipelines. Some U.S. lawmakers have said accidents make the Keystone pipeline seem like a safer alternative than rail for crude oil transportation.

Rose said he voted for the Keystone pipeline as a member of President Barack Obama's jobs council.

"The bottom line is as we grow to energy independence, pipelines are going to have a huge role to play," Rose told CNBC. "But rail is going to have a huge role to play, not only for the United States, but also for the Canadian crude that wants to come down into U.S. refineries."

A BNSF Railway Company train.
Matthew Staver | Bloomberg | Getty Images

Warren Buffett told Reuters last month that BNSF, which is owned by his Berkshire Hathaway company, and the railroad industry as a whole remain concerned about safety after a series of railway accidents. A BNSF crude oil train crashed and exploded in December in North Dakota.

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In February, BNSF Railway announced plans to purchase its own fleet of up to 5,000 crude oil tank cars that exceeded safety standards. In the Reuters interview, Buffett also expressed concern about cyberattacks against Berkshire properties such as BNSF.

Even in light of the safety concerns, Rose remains bullish on shale production in the U.S.

"I really do believe it's the most significant thing we've seen in our lifetimes," Rose told CNBC. "And what it's doing is allowing U.S. manufacturers to come back the United States in order to rely on affordable and reliable energy."

CORRECTION: This version corrected that the plan to reduce the danger would separate volatile gases from crude before the oil is loaded onto tanker cars.

—By CNBC's Jeff Morganteen. Reuters contributed to this report.