Oil-by-Rail Industry in North America Begins 2014 with Another Spectacular Crash

North America’s frenzied oil-by-rail industry began the new year in the same way it ended the old one—with a spectacular derailment and fire of oil train cars on the outskirts of a small community. It’s the latest calamity by an industry growing at a pace that should frighten anyone concerned with public safety and the world’s warming climate.

Concern is further underlined by a new derailment—seven cars in a 152-car coal train derailed in the center of the Vancouver region on Jan. 11. Nearby is a CP Rail route that handles daily shipments of oil to a refinery on the shore of Vancouver harbor.

The latest oil train derailment took place near the town of Plaster Rock in northern New Brunswick along the main CN Rail line that connects the ocean ports of Halifax, Nova Scotia and Saint John, New Brunswick to Montreal and points west. In the early evening of January 7, 19 cars and a rear locomotive in a mixed-cargo, 122-car CN train derailed. Five of the cars contained crude oil and four were carrying liquefied petroleum gas (propane or butane).

Two hundred people were ordered to immediately evacuate their homes in the area. It was three days before they were able to return home, though some still don’t have permission to do so. Traffic along the rail line has resumed.

Details of how many of the cars caught fire are still sketchy. At least one oil wagon, two propane wagons and the locomotive caught fire. The two burning propane wagons and a third one were deliberately blown up on Jan 10 to expedite the clean up and a return to train traffic. Without the controlled explosions, the propane cars would have burned for days longer. A special team from Louisiana was called in to perform the detonations.

According to CN, there were 45 cars carrying dangerous chemicals in the train. Plaster Rock is 30 km east of the Trans Canada Highway and the nearby international border with the U.S. state of Maine. There were no immediate injuries.

The oil and propane cars were loaded in western Canada and destined for the Irving Oil refinery in Saint John. Irving is a family-owned, industrial conglomerate that dominates the economy of Atlantic Canada and has a large presence in northern New England. Its oil division was the contractor that brought the oil train through Lac Mégantic, Quebec on July 6 last year. That derailment killed 47 people, obliterated the center of the town and spilled millions of liters of oil into the adjacent lake and river system.

Residents in and around Plaster Rock saw the night sky light when the derailment happened. Andrew Simpson told CBC, “We were playing cards at my uncle’s, the table rumbled, we looked out, and the window was orange. Everything was on fire across the road.”

The derailment occurred close to the Tobique River, a major tributary of the St. John River, the largest in Atlantic Canada. It is not reported whether any oil has escaped into the river system.

The first responders to the scene were the members of Plaster Rock’s volunteer fire department. As the CBC reported, in an understatement, “they were not ready for this”. By the next morning, the town was overrun with out-of-town emergency equipment and personnel from CN and Irving Oil and from nearby jurisdictions. But the fire was too intense to fight. CBC news reported one day later, “Residents, railway officials and first responders can only wait, watch and hope for the best.”

Volunteer firefighter Darren Burgoyne was among the first on the scene. He said he and his colleagues did not know what they were dealing with. He told CBC, “The scary part for me was the huge plume of black smoke that was blowing right towards… the village. But it was more or less bypassing us … and of course our fear was we didn’t know if it was toxic or not.”

This accident follows by nine days an oil train derailment outside the town of Casselton, North Dakota. There, 20 cars of a 104-car unit oil train derailed and exploded in spectacular fireballs that were captured on amateur film by nearby residents.

Reassuring Words From Industry and Government

Among the CN personnel soon on the scene at Plaster Rock was company CEO, Claude Mongeau. He held a press conference the morning after the accident and began by offering an apology.

Alongside the CEO was Premier David Alward of New Brunswick. He was in full damage control mode for the railway and the oil industry. He told reporters, “Every mode of transportation is not without risk.”

“What is important to realize is [that] how we are able to respond to situations when they happen really determines how we are able to manage as we go forward.”

Southern New Brunswick has been the scene of a heated battle over natural gas fracking that Irving wants to undertake. Premier Alward has forcefully defended the conglomerate’s plans to tear up the subsoil of the province to get at the gas.

Prime Minister Stephen Harper issued his own reassuring statement about rail safety the day following the accident. He said, “Canadians should not be mistaken—the rate of railway accidents in Canada is very low.”

“We have made significant investments in rail safety and rail inspections,” he said.

Harper was in northern Canada to mark the beginning of construction of a137 km stretch of highway across underlying permafrost that will be the first in Canada to reach the shore of the Arctic Ocean.

His soothing message on rail safety is the same one that government ministers have been furiously spinning since last summer as the number of oil train derailments began to pile up. Two occurred in the center of Calgary in June and August. No oil was spilled. A spectacular derailment and explosion happened near Gainford, Alberta, west of Edmonton, on Oct. 19. Another explosion occurred in Alabama, less than three weeks after Gainford.

At Gainford, CN used the same technique as at Plaster Rock of detonating propane cars to speed up the resumption of train traffic. The detonations send massive clouds of toxic gases into the atmosphere.

The Myth of ‘Safe’ Oil by Rail

The notion that the movement of oil by rail can be made safe is a steady theme of the fossil fuel industry and its government enablers. But the record of railway safety says otherwise.

As in the U.S., responsibility for rail safety in Canada has devolved more and more onto the railways themselves. The role of federal agencies is increasingly reduced to reviewing the ‘safety audits’ by the railways of their own performance.

The Canadian agencies are apparently not doing a good job. CBC has reported 1,800 rail accidents and derailments in Canada by CN Rail between 2001 and 2006 that the company failed to report to the Transportation Safety Board (TSB). The company says the events were minor. But former TSB employee Ian Naish told CBC that during his time at the agency, he “was not happy at all with someone from industry telling me what should be reported and what should not be reported”. The TSB scolded CN for its reporting failures, saying every piece of information about a rail accident may help to prevent the next one.

The CBC has also found that in the last 12 years, there have been some 300 cases of runaway trains in Canada not being reported as such. There have been 459 runaways in the past 12 years. One of them traveled 24 km in northern Quebec and reached a speed of 100 km/hr. But the app. 300 that crashed or derailed were not reported by the railways or by transport authorities as runaways. (See a map of runaway trains in Canada here.)

Canada’s auditor-general weighed into the mess in his annual report in November. The Globe and Mail reported, “Auditor-General Michael Ferguson said [his agency’s] review uncovered weaknesses ‘in all aspects’ of Transport Canada’s oversight of rail safety practices.”

The AG’s report said, “These findings indicate that Transport Canada does not have the assurance it needs that federal railways have implemented adequate and effective safety management systems.”

Heightening concern about rising oil movement is the recent discovery, kept secret by the industry, of the extremely high volatility of the oil extracted from the Bakken field that lies under North Dakota and extends into Manitoba and Saskatchewan and the related failure to document trains accordingly. The misleading documentation was discovered by the TSB inquiry following Lac Mégantic. The effort of the industry to keep it secret was documented by Globe and Mail reporters in December.

Three of the derailed oil cars at Plaster Rock were loaded with Bakken oil from Manitoba.

A Dec. 23 article in the Railway Age makes a further case that key safety information about North Dakota oil was ignored or covered up by the industry. It obtained a copy of a presentation by an Irving Oil representative to a meeting of the Crude Oil Quality Association in Seattle in June. The article explains:

In mid-December, Transport Canada criminal investigators obtained a warrant to search Irving Oil’s refinery offices for the results of tests performed when crude is unloaded at Saint John. At issue is just who in the long chain of possession between loading terminal and refinery was aware that crude oil was being misclassified…

What the Irving presentation [in Seattle] shows is that the misclassification of the Lac-Mégantic cargo was not a procedural lapse but instead was consistent with widespread disregard for hazmat law at the transloading terminals where is oil is received by truck or pipeline and often comingled in holding tanks before being loaded into tank cars, where it may be comingled again.

In mid-December, Canada’s Minister of Transport, Lisa Raitt, announced she will change rail regulations in Canada to finally recognize oil as a dangerous substance and make regulatory changes accordingly. Industry and federal governments have resisted this for years.

The new regulations as announced on January 11 will have no effect on the frequency of derailments; they merely on the chances of tanker cars being breached and causing fires, explosions and other environmental contamination. Even then, there is no hint of requiring double-wall manufacture of cars.

Raitt says her announcement will lead to better measures to deal with oil train disasters when they happen. She’s not referring to more emergency response capacity being made available but to more stringent requirements of documenting dangerous cargo so that when a disaster happens, more information will be more quickly available.

The government has provided only modest changes to regulations requiring notification to jurisdictions along rail routes of the transport of dangerous cargos. Rail companies must now provide quarterly, after the fact, reports of such transport.

Burnaby mayor Derek Corrigan told the Vancouver Sun after the coal train spill in his city on Jan. 11, “We have no idea (what’s being transported through Burnaby)… The federal government keeps dropping expertise in these areas and depending wholly on these companies to provide to provide the expertise.”

“It has reached the point of absurdity.”

And an emergency measure taken after Lac Mégantic was quietly lifted during the Christmas period. It required that any train carrying dangerous cargo that is left stationary must be attended at all time. The railways opposed the measure, saying it created a staffing nightmare for them.

Kevin McKinnon, director of regulatory affairs at the Railway Association of Canada, calls the measure “not realistic”. He compares it to someone deciding to keep their automobile safe by sleeping outside of it.

But Rob Smith, national legislative director of the Teamsters union, which represents CN and CP train crews, says that staffing could be done “very easily”.

“It’s a matter of dollars and cents, really.”

The U.S. Department of Transportation has taken a more substantive measure to deal with Bakken oil. On Jan. 2, the Pipeline and Hazardous Materials Safety Administration announced new measures to come into place later this year by which oil companies in North Dakota will be obliged to strip some of the volatile gases out of their oil before it is shipped. The measure will bump up the price of the oil, which is why the companies failed to undertake it in the first place.

Another alarming backdrop to the latest accident is that the CN mainline through Quebec and New Brunswick is where oil train delivery to Irving Oil was switched following the disaster at Lac Mégantic. The switchover has apparently drawn little attention and scrutiny. How many oil trains are rolling along this track each week? Carrying how many cars of which material?

A key argument of the ‘make oil-by-rail safe’ message is that the fleet of cars carrying the product should be replaced with more crash-resistant versions—building them with crash shields or even double hulls, for example. Only a small portion of the fleet of flammable-liquid cars (called DOT 111) in operation in North America—app. 15 per cent, according to the American Association of Railroads—have modest, crash-protection built into them.

The oil and rail industry are strongly resisting spending the several billion dollars required to shift to an entirely new fleet. (The current, single-hull version of the DOT 111 costs more than $100,000 to manufacture.) That message was reaffirmed at a rail industry conference that took place in Ottawa on Jan. 13. This as the number of oil trains is growing, particularly their most dangerous variant—‘unit’ trains consisting entirely of oil cars, routinely pulling more than 100 at a time.

The industry association says there are 228,000 liquid tank cars on the railways in the U.S. and Canada. Of those, 92,000 carry flammable liquids.

Liberal Party transport critic in Ottawa, David McGinty, told reporters after the Plaster Rock derailment, “We have a government that has cut transportation safety right across the board—airline safety, rail safety, road safety.”

He noted that during the past seven years of Conservative government in Ottawa, five different people have held the transportation minister portfolio. McGinty did not mention his own party’s record in pioneering cuts to rail safety regulation and inspection during its years in government in the 1990s and 2000s.

NDP leader Tom Mulcair believes that oil-by-rail can be made safe. “There is such a thing as safe transport by rail,” he says.

Growing Concern

The notion of safe oil-by-rail is belied by the sheer scale of it all. There has been an explosion in the volume of rail movement of oil in the past several years that is set to grow further by leaps and bounds. The AAR estimates there were 400,000 oil cars moved by rail in 2013 in the U.S. and Canada.

North Dakota is now the second largest oil producing region in the United States and 69 per cent of that is moved by rail. The two companies moving most of it—the Warren Buffett-owned BNSF and CP Rail—can’t expand their operations fast enough.

Rail shipment of light crude oil and tar sands bitumen* is also taking off. Oil-by-rail terminals are being built at a furious rate. There are more than a dozen existing ones in Alberta alone. The pace is even prompting concern of a glut in the service, but the industry believes the demand by refineries and even overseas markets will be relentless and that governments will continue to act doormats in acquiescing to it all.

Regular delivery by train of western oil has begun to arrive at two oil refineries in Quebec—Suncor in Montreal and Valero in Quebec City. Much, perhaps all, of that will follow the same route as the Lac Mégantic train through some of the largest cities on the continent, including Minneapolis, Chicago and Toronto.

The rise in oil-by-rail is fueled by three factors. One is the delay in building new pipelines to serve the landlocked Alberta tar sands and Bakken oil field. Environmental movements concerned with the dangers of oil spills and, especially, the climate consequences of expanded fossil fuel extraction and burning have slowed plans in Canada and the U.S. to build new pipelines such as Keystone XL in the U.S. and Northern Gateway in western Canada.

Two is the favorable railway regulatory regime. It is much more relaxed than the regime for building pipelines. And while shipping oil by rail is more costly than by pipeline, this is evidently manageable for the industry. The cost of shipping Canadian crude to the U.S. Gulf Coast is $7 to $11 per barrel by pipeline; $17 to $21 by rail. Unit oil trains can reduce the cost by $3 to $4 per barrel.

Three is the fluctuating price of crude oil that has oil in western North America competitive with oil purchased from overseas markets. An example of this is Irving Oil’s new, ‘rolling pipeline’ to Saint John. It began in 2012. For decades, the conglomerate’s refinery processed crude oil arriving by ship. Now a significant per centage (the exact amount is a secret) of its crude supply arrives by rail, either directly to Saint John or via a barge-to-ship operation out of Albany, New York. Ultimately, Irving wants the construction of the mega-billion dollar ‘Energy East’ pipeline that would take an all-Canada route eastward from Alberta.

Rail lines moving oil and coal to the U.S. west coast and the British Columbia coast have maxed out the capacity of parts of the existing rail network, seriously affecting passenger rail service. The on-time performance of Amtrak’s popular route connecting Chicago and Portland, Oregon is the lowest in the network—in October, the rate was zero; in November and December, it was in the low 40 per cent. Five Amtrak trains in December were cancelled outright due to ‘extreme freight congestion’.

Heavy fossil fuel rail traffic is even crowding out Santa Claus. According to a 2013 year-in-review article in the Northern View in Prince Rupert, BC, the annual Jingle Bell Express train was cancelled this year when the district chamber of commerce missed a deadline to secure a place on the local CN line. The article went on to say, “Organizers questioned whether (the Express) would return due to increased rail traffic in the region”.

The Alberta and British Columbia governments have threatened to unleash oil by rail on their citizens if plans to build two tar sands pipelines to the coast are thwarted by environmental concerns. Another hair-raising scheme is Omnitrax’ stated intent to launch an oil-by-rail service through northern Manitoba to the sub-Arctic port of Churchill, on the shore of Hudson’s Bay. Northern Manitoba is covered by bog and permafrost.

Montreal will be getting even more western oil if Enbridge Inc’s plan to reverse its existing Line 9 pipeline across southern Ontario (connected to its U.S. Midwest network) is approved by the National Energy Board and the federal government. (A very informative map of Line 9 produced by the Quebec group Equiterre is here.)

What the Lac Mégantic Lawsuits Reveal

Several lawsuits have been launched by the victims of the Lac Mégantic calamity and they are revealing much about the workings of the oil-by-rail industry.

Drawing upon these revelations and other sources, an article by Blake Sobsezak of Energy Wire on Dec 20, 2013 paints a picture of a decentralized industry with a bewildering web of ownership and leasing of its moving parts.

The companies that purchase oil from producers contract with sales and transportation companies to get it to their refineries. In the case of rail, the cars are leased by the purchasers or their sales agents. An oil train will typically be comprised of leased cars carrying different products to different customers.

One of the complications of the Lac Mégantic lawsuits is figuring out the exact responsibility for the crash amidst the myriad of companies and agencies involved in the fateful train. CP Rail, for example, carried the oil cars from North Dakota as far as Montreal (the company sold off its lines east of Montreal during the 1980s and 1990s). It is rebuffing any responsibility for the cleanup or for liability to the victims.

A Long and Difficult Fight

Nancy Grant, councilor and deputy mayor of Rothesay, New Brunswick, is witness to the increased oil by rail traffic coming through her town into the Irving refinery in nearby Saint John. She told CBC after the accidenet in Plaster Rock, “It really scares me. People are increasingly becoming fearful. I know people who have sold houses in [Kennebecasis] Park because of this and I know people who have not bought houses because of this.”

There are seven railway crossings in Rothesay, several of which leave districts completely cut off when trains pass, including the residential neighbourhood of Kennebecasis Park. It has an elementary school not far from the rail line.

What will it take to put an end to the danger of oil-by-rail and the death spiral of increasing fossil fuel burning of which it is part? It will be a difficult and long fight. The industry is owned and run by the most powerful corporate interests on the planet. The crazed oil train drive comes from the very heart and soul of the capitalist order—the imperative for profit and endless growth.

Oil-by-rail shows how ruthless and unthinking is that imperative. It needs to be replaced by a governing imperative of human dignity and caring stewardship of our natural surroundings.

* Fifty five per cent of western Canada oil production is conventional light oil or upgraded bitumen. Canada extracts close to half the quantity of crude oil as the United States.