By Alicia Underlee Nelson

CASSELTON, North Dakota (Reuters) - Mandatory evacuation orders were lifted on Tuesday in Casselton, North Dakota, where a fiery oil train crash a day earlier triggered a series of blasts and forced residents from their homes.

The 106-car BNSF Railway Co oil train struck a derailed grain train on Monday afternoon about a mile west of Casselton, a town of 2,300 people.

No injuries were reported. About 65 percent of the town some 25 miles west of Fargo was evacuated as emergency workers and hazardous materials crews battled the blaze.

Authorities said on Tuesday that it was safe for residents to return home.

"The environment within the city limits of Casselton is now safe for residents to return to their homes," the Cass County Sheriff's Office said in a statement.

One or two train cars carrying oil were still burning, but the fire is contained, said Casselton Mayor Ed McConnell.

"Air samples have been coming back great so we're just trying to let everybody get back to their lives," he said.

The crash set off explosions and fire that sent a plume of thick, black smoke over the town.

Dr. Alan Nye, a toxicologist hired by BNSF to monitor the crash, said air quality tests had not shown byproducts from burning crude oil.

Members of the National Transportation Safety Board were at the site investigating the collision, and hazardous materials crews from Burlington Northern Santa Fe were clearing wreckage and extinguishing smoldering fires, the sheriff's office said.

The crash was at least the fourth major explosive derailment this year involving a train hauling oil. It is certain to fuel debate over additional safety measures to address the oil-by-rail boom.

The measures include tighter rules on highly flammable types of crude or costly retrofits of tank cars. More than two-thirds of North Dakota's oil production is shipped by rail.

In the state, the center of the shale oil revolution and the origin for most U. S. oil-train shipments, there was little immediate outcry.

The impact of the incident is more likely to be felt thousands of miles (km) away, along the densely populated coastal regions such as the Pacific Northwest, where some residents have raised alarm over the potential environmental impact of oil-rail traffic.

"Accidents like this are not only wake-up calls to the residents directly affected, but to those along the heavily trafficked routes bringing crude to the US east and west coasts," said Eurasia Group analyst Elena McGovern.

(Additional reporting by Anna Louie Sussman in New York and Ian Simpson in Washington; editing by Gunna Dickson and Ellen Wulfhorst)

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