Heavy crude poised to flow through Northern BC by rail, if not by pipe

DOT-111 tankers, like those pictured, are capable of carrying dangerous goods, according to Transportation Canada’s safety criteria, but transportation safety agency throughout North America admit to safety design flaws.

Whether the much-maligned Northern Gateway or the controversial twinning of the Trans Mountain pipelines actually come to fruition or not, heavy crude oil from the tar sands of Alberta are poised to flow to the west coast, according to oil industry experts and negotiations involving rail companies.

Substantial opposition to pipeline projects in BC has proven to be a boon for rail companies, which have experienced exponential growth in transporting crude oil in recent years. According to data compiled from Statistics Canada, the monthly average of rail cars loaded with fuel oils and crude petroleum in the Western Division of Canada increased by 88.6 per cent between 2011 and 2012, and increased an additional 49.2 per cent in the first two months of 2013. Canadian Pacific Railway reported record first quarter results in 2013, citing the crude business as a key driver, and expects to nearly triple its carloads carrying crude by the end of 2015. And the Canadian Association of Petroleum Producers – Canada’s largest oil and gas lobby group – projects Western Canadian crude exports by rail in the final quarter of 2013 to be nearly triple what it was in the third quarter of 2012.

Oil transported by rail has been in the national media’s spotlight recently because of this sharp growth rate, and because of a string of recent derailments spilling crude oil. CP’s latest spill occurred May 21st outside Jansen, Saskatchewan involving 91,000 litres of crude oil; on April 3rd, near White River, Ontario, a CP derailment spilled more than 65,500 litres.

Given these trends, will the relatively pristine Robson Valley near Mt. Robson and Jasper National Park see an increase of oil on rail sent through its communities? Is rail a safer option than pipeline? Will the communities be consulted or informed about the increase transportation of crude oil (a dangerous good, as defined by Transportation Canada) through their communities?

Crude through the Robson Valley?

Stephen Harper, making a public pitch for the Kestyone XL Pipeline in NYC earlier this month, said he thinks the facts are “overwhelmingly” on the side of approval, according to a CBC story. Harper said he was confident oil from the tar sands would be sent to the US Gulf Coast, if not by pipeline then by rail.

The sentiment of rail being an alternative to pipelines is echoed by BC media mogul David Black, whose company Kitimat Clean Ltd. proposes to build a refinery near Kitimat which would be designed specifically to process heavy crude from Alberta’s tar sands.

“If BC remains set against a pipeline the oil will come to the refinery by rail,” Black wrote in a proposal presentation to the BC Chamber of Commerce in March. “CN and the oil companies are keen on this.”

Black’s proposed refinery could handle the entire volume of the Northern Gateway Pipeline: over 500,000 barrels a day.

In a phone interview Black confirmed that he’s been in early conversations with CN to transport 400,000-500,000 barrels a day. But his preference is for a pipeline.

“Experts say the pipeline is safer.”

Black recently received the backing of China’s largest bank for his $25-billion proposal, expressed support from Christy Clark and has an agreement with the BC government for 3,000 hectares of Crown land, according to both Black’s press releases and various news articles. If Black’s proposal is to becomes a reality, that could mean 12 more trains a day through the Robson Valley (six northbound and six southbound), Black said.

According to the CN customer service line, the daily number of trains coming through the Valley is currently 40-45.

Black said small towns along the CN route with level crossings would rue having 12 more trains running through every day.

“Obviously there’s more disruptions for people with those level crossings,” Black said on the phone. “Valemount fits that description, I’ve been through there myself on the train a few times.”

Black’s project has been dismissed by some people as lacking support from the major energy companies in Alberta. But in a Financial Post article on June 1, Black responded to the lack of interest from Alberta for his proposed refinery: “I don’t need them to put their money up, and I don’t need their expertise. I can get the money elsewhere and I can buy the expertise.”

Another ambitious project currently under development, by a company called G7G, proposes to build a new rail line from Fort McMurray to just outside Fairbanks, Alaska, where heavy crude from Alberta could then be piped to Valdez. G7G was awarded $1.8-million from the Alberta government in May, according to a press release on their website, to conduct further research. Although G7G’s proposed route would go north of the Valley, the scope of its ambition points to an increase of oil flowing from Alberta to the West Coast, one way or another. And the exponential growth of CN and CP transports in crude oil –forecasted into the foreseeable future – means that protesting pipelines, whether Northern Gateway or Trans Mountain, may do little to slow the flow of oil down.

Greg Stringham, VP of Canadian Association of Petroleum Producers, said rail companies are currently investigating options to move crude by rail to the West Coast. “We have been removing what we use for diluent from the West Coast into Western Canada already, so [rail companies] have the facilities in place, but I don’t think they’re using them yet,” Stringham said.

Mark Hallman, media spokesman for CN, said there are no fixed plans to transport heavy crude from Alberta to the West Coast at this time.

Hallman notes, however, that CN started testing movement specifically of crude oils in 2010; in 2011 they moved around 5,000 car loads of crude oil, then in 2012 they moved more than 30,000 car loads of crude oil to various North American markets.

“We believe the company has the scope to double that scope of business in 2013.”

“Our corporate policy is not to engage in speculation,” Hallmann added.

CP Rail is already transporting 5,000-8,000 barrels per day to the Burnaby refinery, Ray Lord, manager of public and government affairs at the refinery said.

“We’ve just initiated deliveries here by crude, started in late May … given the fact that the pipeline is over subscribed.”

Any options involving CN rail transporting crude to the west coast would inevitably involve the Robson Valley, through which the CN line runs.

Safety of crude transport

The safety of rail cars used to transport crude oil has been recently brought into the media’s spotlight.

An American Press story published late last year revealed that over two-thirds of the continental fleet uses a model called DOT-111 to transport dangerous goods. DOT-111’s are easily recognizable by their soda-bottle-shape and wide-range use across the continent. And an email correspondence between Greepeace Canada and Transportation Canada – shared with The Goat – verified the same is true in Canada; perhaps even more so. But transportation safety agencies on both sides of the border acknowledge serious safety flaws.

The Canadian Transportation Safety Board released an investigation in 2009 of a 1994 derailment, stating, “The susceptibility of 111 tank cars to release product at derailment and impact is well documented. The transport of a variety of the most hazardous products in such cars continues.” The American National Transportation Safety Board conducted an investigation of a 2009 CN derailment and fire, stating they have “noted that DOT-111 tank cars have a high incidence of tank failures during accidents … This accident demonstrates the need for extra protection …”

Hallman points out that rail cars are not owned by CN, but owned by shippers or rail leasing companies.

“The standards of the cars are set by regulators such as Transport Canada or the US Federal Railroad Administration … and then car manufactures comply with those standards.”

But despite transportation safety agencies making safety recommendations in both countries on the use of DOT-111’s, the rail industry has resisted the costly changes, according to a number of news reports.

“The tanker companies, they’re not allowed to build tankers like this anymore,” Keith Stewart, a climate change campaigner with Greenpeace Canada, said. “What [the rail industry has] successfully done is to have the old ones grandfathered so that they don’t have to retrofit them to be safer.”

But Hallman says “rail transportation is highly regulated by the federal government. CN complies with existing regulation.”

The American rail industry made a similar proposal to the US National Transportation Safety Board, leaving 30,000-45,000 cars carrying dangerous goods out of their plan to increase rail safety. The proposal is currently being considered by the US Department of Transportation—a process that could take several years. In the meantime, DOT-111’s that have been proven susceptible to rupture upon derailment continue to be used to transport dangerous goods across North America.

War of numbers

The pipeline and rail industries are currently fighting a war of numbers to prove which mode of transportation is safer, with both industries claiming numbers are on their side. Most analysts agree, however, that while derailments are more frequent than pipeline leaks, lower volumes are usually released and are immediately known, while pipeline leaks can spill far higher volumes, may go undetected longer, and may occur in more remote areas, slowing response times.

Which is better for the Robson Valley?

Residents won’t be asked on the rail option because rail companies don’t face the same obstacles of regulation as pipelines do, including public consultation, according to a briefing note obtained by the Canadian Press through the Access to Information Act last October and reported in a CBC story. Transport Canada officials acknowledged the lack of hurdles facing transport of crude by rail, compared to pipelines, but marine terminals and tanker traffic would still be subject to environmental assessments, according to the story.

When asked if CN conducts public consultation on its proposals to transport crude to the west coast, Hallman said, “No that’s not the case. CN has been shipping various petroleum and chemical products for over a hundred years, in terms of the predecessors of the company.”

Another alternative

With the Trans Mountain Pipeline expansion plans progressing, and the Northern Gateway Pipeline Joint Review expected to reach a conclusion by December, the future of oil flowing through Robson Valley – by either rail or pipe – is very much at a crossroads. But for Stewart, who has campaigned against climate change for over a decade, his perfect world is markedly different than David Black’s.

“The solution to the tar sands can’t be found in the tar sands,” Stewart said. “There’s no technology you can use in the tar sands that can fix the problem…the only way to fix it is that carbon has to stay in the ground.”

“I have sympathy for that myself,” Black said when asked for his response to Stewart’s quote. “But it’s not feasible today to do away with oil…so we have to be pragmatic about this. We have to move from where we are today to a different place in time.”

“Before we knew about climate change,” Stewart said, “fossil fuels had greatly improved the quality of life, but now they’re putting all of those improvements at risk. What people need is energy, not oil, and we need to make that shift.”

“It’s a worry for everybody,” Black said, “because CO2 emissions are ramping up, not ramping down.”

By: Thomas Rohner

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For more information, visit the following links:
Keith Stewart, Climate Change Campaigner, Greenpeace Canada blog posting: http://www.greenpeace.org/canada/en/Blog/is-the-oil-industry-using-unsafe-rail-cars-to/blog/45237/
Pembina Institute blog post on oil being moved by rail: http://www.pembina.org/blog/732