* Industry needs up to 50,000 new railcars for crude
* BNSF didn't foresee volatility issues of newer crudes
* BNSF crude volumes seen hitting 1.5 million bpd next few years
((Adds quotes, forecasts for crude volumes, paragraphs 3, 7-17)
By Robert Gibbons
ORLANDO, March 25 (Reuters) - BNSF Railway Co said on Tuesday that production could start in January on the first batch of 5,000 next-generation tank cars designed to carry crude oil more safely, earlier than expected in an industry grappling with bottlenecks.
One of the country's biggest freight companies, BNSF last month asked railcar makers to build thousands of new cars that would come with thicker walls and increased protection of safety and pressure valves, among other features.
A recent string of fiery accidents involving crude trains across the industry has alarmed regulators and the public. BNSF has sought to move ahead with more modern cars while the government works to address concerns about moving crude by rail.
"We believe we could actually start seeing production first of January, which was encouraging," said BNSF Executive Chairman Matt Rose, who spoke at an American Fuel and Petrochemical Manufacturers (AFPM) conference.
"We didn't think it could be quite that soon," he added.
Railcar manufacturers in the United States include Trinity Industries Inc
In February, BNSF issued a request for proposals to railcar manufacturers to bid for construction contracts.
"We want to kick start the process of transition to the next generation tank cars and give the builders a head start," Rose said.
He said the transition is "going to take a number of years."
Rose added that when BNSF started hauling crude from new oil patches like the Bakken in North Dakota, his company did not realize it could be more volatile than other crudes.
"When we first started hauling this stuff, quite frankly, we didn't recognize, and shame on us, that we would have the volatility that we're seeing," he said.
VOLUMES RISING
Rose said there was substantial demand for new railcars that can handle more volatile crudes as output from onshore U.S. fields surges. Railcar manufacturers may face a daunting task of producing enough next-generation cars to keep up with demand.
"We believe that (industry wide) there are about 80,000 older cars handling crude oil, sometimes ethanol as well. There's about 30,000 of the newer tank cars already," he said.
"At BNSF we're handling about 150 unit trains with 100 trains so that's 15,000. Double that for the industry, so (the industry) probably needs 30 to 50 thousand next-generation tank cars."
Rose said BNSF, a unit of Warren Buffett's Berkshire Hathaway Inc
"We think we'll be at about a million barrels per day (bpd) by the end of this year and see a glide path in the next three years to about a 1.5 million bpd, somewhere in that range." The company did 620,000 bpd last year.
"A lot of things will be determinative of that, the (crude oil price) spreads, pipelines and all those things."
(Reporting By Robert Gibbons; Editing by Terry Wade and David Gregorio)
((robert.gibbons@thomsonreuters.com)(+1 646 223 6059)(Reuters Messaging: robert.gibbons.reuters.com@reuters.net))
Keywords: BNSF RAILWAY CHAIRMAN
