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Last year, Canada exported a record amount of tar sands oil to the U.S., despite low oil prices leading to major losses once again for the struggling tar sands industry. That achievement required a big bump in hauling oil by rail, with those daily volumes in late 2018 more than double the previous record in 2014 during the first oil-by-rail boom.

Canada’s oil industry essentially has reached its limit for exporting oil into the U.S. through pipelines. That’s why it’s turning to rail to export more and more oil, but as an ever-increasing number of oil trains hit the tracks of North America, expect more accidents and oil spills to follow.

If Canada can open up new pipeline capacity, this scenario may change. However, Enbridge recently announced its Line 3 pipeline replacement will be delayed until at least the second half of 2020. That means if Canadian tar sands companies want to increase exports, they will have to move that oil by rail. ConocoPhillips chief financial officer Don Wallette, Jr. recently confirmed this reliance on oil trains to the Wall Street Journal: “The intention is to bridge us over to the next major pipeline expansion, so a few years.”

This could result in a near doubling of the current record volumes of Canadian crude moving by rail. Trains potentially could haul over 600,000 barrels per day (bpd) in the next two years, an outcome I predicted four years ago when the Canadian industry was moving only 150,000 bpd of oil by rail.

To put these volumes in perspective, the Enbridge Line 3 pipeline will have a capacity of 760,000 bpd. Oil trains amount to a veritable pipeline on wheels.

…click on the above link to read the rest of the article…

Canada’s Pipeline Challenges Will Force More Tar Sands Oil to Move by Rail

March 19, 2018

Canada’s Pipeline Challenges Will Force More Tar Sands Oil to Move by Rail

The Motley Fool has been advising investors on “How to Profit From the Re-Emergence of Canada’s Crude-by-Rail Strategy.” But what makes transporting Canadian crude oil by rail attractive to investors?

According to the Motley Fool, the reason is “… right now, there is so much excess oil being pumped out of Canada’s oil sands that the pipelines simply don’t have the capacity to handle it all.”

The International Energy Agency recently reached the same conclusion in its Oil 2018 market report.

“Crude by rail exports are likely to enjoy a renaissance, growing from their current 150,000 bpd [barrels per day] to an implied 250,000 bpd on average in 2018 and to 390,000 bpd in 2019. At their peak in 2019, rail exports of crude oil could be as high as 590,000 bpd — though this calculation assumes producers do not resort to crude storage in peak months,” the International Energy Agency said, as reported by the Financial Post.

To put that in perspective, however, the industry was moving 1.3 million barrels per day at the peak of the U.S. oil-by-rail boom in 2014.

Graph of American crude-by-rail volumes. Credit: U.S Energy Information Administration

And Canada has plenty of capacity to load oil on more trains, which means if a producer is willing to pay the premium to move oil by rail, it can find a customer to do it. The infrastructure is in place to load approximately 1.2 million barrels per day.

…click on the above link to read the rest of the article…

Will Canada’s Latest Boom in Tar Sands Oil Mean Another Boom for Oil-by-Rail?

December 22, 2017

Will Canada’s Latest Boom in Tar Sands Oil Mean Another Boom for Oil-by-Rail?

Oil by rail accident, with tank cars burning, near Gogama, Canada in 2015

Nothing seems able to derail the rise in Canadian tar sands oil production. Low prices, canceled pipelines, climate realities, a major oil company announcing it will no longer develop heavy oils, divestment, and now even refusals to insure tar sands pipelines have all certainly slowed production, but it is still poised for significant growth over the next several years.

In March an analyst for GMP FirstEnergy commented, “It’s hard to imagine a scenario where oilsands production would go down.”

But with pipelines to U.S. refineries and ports running at or near capacity from Canada, it’s hard to imagine all that heavy Canadian oil going anywhere without the help of the rail industry.

“The oilsands are witnessing unprecedented growth that we now peg at roughly 250,000 barrels per day in 2017 and 315,000 bpd in 2018, before downshifting to roughly 180,000 bpd in 2019,” says a new report from analyst Greg Pardy of RBCDominion Securities.

However, much like shale oil in the U.S., increased production doesn’t necessarily mean increased profits. The Wall Street Journal recently reported that since 2007 investors have spent approximately a quarter trillion dollars more on shale production than those investments have generated.

Clearly the oil industry will keep pumping as much oil as they can even while losing large sums of money. And just like in the U.S., Canadian oil producers are facing significant economic challenges, which have caused some companies to get out of the business.

As a result of these challenges, forecasts for future tar sands production have fallen significantly. In 2013 the forecast for 2030 production was 6.7 million barrels per day. That has been revised down to 5.1 million barrels per day. While that is a sizable drop in expected future production, the industry will still be growing in the near future, and most of that oil will be exported to America.

…click on the above link to read the rest of the article…

Luck Rides The Rails: Another Near Miss with an “Insane” Bakken Oil Bomb Train

June 7, 2016

Luck Rides The Rails: Another Near Miss with an “Insane” Bakken Oil Bomb Train

As Mosier Fire Chief Jim Appleton said, “Mosier really dodged a bullet in the last 24 hours.”

“I hope that this becomes death knell for this mode of shipping this cargo. I think it’s insane,” Appleton said. “I’ve been very hesitant to take a side up to now, but with this incident, and with all due respect to the wonderful people that I’ve met at Union Pacific, shareholder value doesn’t outweigh the lives and happiness of our community.”

It’s a familiar story to those following the Bakken oil “bomb train” saga — luck.

“If I had been there another second, it’d probably have killed me,” Bounds said. “Glass was flying everywhere behind me. The walls were caving in. I hadn’t run like that in years.”

That was Morris Bounds describing to The Spokesman Review how he barely escaped the derailing Bakken oil train that destroyed his home in Mount Carbon, West Virginia in February 2015. He literally saw the train derailing and ran out his front door as the train wiped out his house behind him.

You don’t get much luckier than Morris Bounds. Or his wife, who happened to be in the hospital that day instead of at home.

Later that year when another Bakken oil train derailed in a residential neighborhood in Watertown, Wisconsin but did not ignite, Sarah Feinberg, the head of the Federal Railroad Administration, declared, “We feel we got really lucky.”

…click on the above link to read the rest of the article…

Nationwide Resistance To Crude Oil ‘Bomb Trains’ Gaining Momentum

February 12, 2016

Nationwide Resistance To Crude Oil ‘Bomb Trains’ Gaining Momentum

In 2014, Terry Wechsler, an environmental attorney in northwest Washington, summed up why there hadn’t been opposition to the initial oil-by-rail terminals on the west coast, telling Reuters, “There was no opposition to the other three proposals only because we weren’t aware they were in formal permitting.”

But now the public knows. And despite public relations efforts by regulators and industry lobbyists, the public also knows that the crude oil “bomb trains” still pose a huge risk to communities along the rail lines.

The National Transportation Safety Board (NTSB) recently released its Top 10 Most Wanted List for 2016, and the list included addressing oil train risks. The Washington Post reported NTSB chairman Christopher Hart’s concerns regarding oil trains.

“We’ve been lucky thus far that derailments involving flammable liquids in America have not yet occurred in a populated area,” Hart said. “But an American version of Lac-Mégantic could happen at any time. Instead of happening out in the middle of a wheat field it could happen in the middle of a big city.”

Nearly three years after Lac-Megantic, the head of the NTSB is saying an accident like that could happen at “any time” in a major American city.

So it is no wonder that efforts to stop new oil-by-rail infrastructure and shut down existing transportation of crude by rail are spreading across the country.

…click on the above link to read the rest of the article…

There Will Be Blood – Oil Train Regulations Fail To Address Known Risks

January 18, 2016

There Will Be Blood – Oil Train Regulations Fail To Address Known Risks

One hundred and fifteen years later, in an opinion piece on rail safety for CNN, rail expert Fred Failey essentially said the same thing, opening his piece with the statement, “The rules by which trains operate on American railroads were written in blood.”

When it comes to the rules regarding oil trains in America, many regulations that would improve safety have yet to be written. One reason is that, despite the multiple oil train crashes resulting in massive explosions in the past several years, there have been no fatalities in America.

Although 47 people did die in the Lac-Megantic oil train crash just north of the Maine border in Canada, that apparently isn’t enough to change the tradition of the rail industry fighting any regulations that might improve public safety.
The Oil-By-Rail Industry Doesn’t Want to Be Regulated

An investigation by the Federal Railroad Administration(FRA) into the Mount Carbon oil train derailment concluded that the cause of the accident was a broken rail. At that time, Sarah Feinberg, the FRA’s acting administrator, noted that, “Broken rail is one of the leading causes of accidents.”

So what are the regulations regarding rails becoming worn and increasing the risk of derailments? There are none.

As the Associated Press (AP) reported in December, efforts to improve safety via rail wear regulations were stopped by the rail industry in 2013 in favor of “voluntary” safety measures.

…click on the above link to read the rest of the article…

Keystone XL may be dead. The oilsands probably aren’t

November 11, 2015

Keystone XL may be dead. The oilsands probably aren’t

Low petroleum prices mean new projects are on pause, but existing production won’t disappear

The oilsands are producing more than two million barrels per day from long-term projects that are very difficult to shut in. The transport network is like a game of whack-a-mole: One access point is knocked down, others pop up.

There is some soul searching going on in the oilpatch this week in the aftermath of the U.S. rejection of Keystone XL. Would a carbon tax have changed things? A gentler hand with the politics? How much of the U.S. decision was connected to increases in their own domestic production?

What they aren’t asking is how to get oilsands product to market. Because it’s getting there, in ways both obvious and unexpected. The oilsands have lots of problems, like low prices and high costs. But right now, market access is pretty far down the list.

Oil is even being floated on barges down the Mississippi, though this barge was hit by a tow boat in September. (The Associated Press)

A slow boat down the Mississippi

“There is sufficient capacity to move all our production,” said Greg Stringham, vice-president of oilsands and markets with Canadian Association of Petroleum Producers (CAPP). “There hasn’t been any production that has been shut in because of pipeline capacity.”

In the years since Keystone XL was first proposed in 2008, Canadian oil exports to the U.S. have increased by more than a million barrels a day. Rail has picked up some of that slack, maxing out at 165,000 barrels a day in 2014. It was around half that in the most recent quarter.

…click on the above link to read the rest of the article…

Risky Shale Oil-by-Rail Expands Despite Lack of Spill Response Preparedness

November 2, 2015

Risky Shale Oil-by-Rail Expands Despite Lack of Spill Response Preparedness

The worst onshore oil spill in United States history was the Kalamazoo River tar sands pipeline spill in 2010 with estimates of one million gallons of oil spilled. In comparison, the oil-by-rail accident in Lac-Megantic, Quebec was 50% bigger.

With the oil-by-rail industry proposing large expansions to West Coast destinations, it is understandable that some local communities are worried about the risks of a spill causing major environmental damage and threatening human health.

While the fiery explosions get the most attention when it comes to oil train accidents, the trains also have resulted in some of the largest oil spills in North America. And that oil is usually ending up in waterways.

In Lac-Megantic, 1.5 million gallons of oil spilled with some of it ending up in the nearby lake and river. In Aliceville, Alabama it was 750,000 gallons that ended up in wetlands. In Mount Carbon, W.Va. it was approximately 400,000 gallons on the banks of the Kanawha River. In Gogama, Ontario ruptured rail tank cars ended up in the water. Just like in Lynchburg, Virginia. And the spill in Galenas, Illinois was noted to pose “imminent and substantial danger” to the Mississippi River.

People trained as first responders to marine oil spills are very clear that the speed of the response is critical for minimizing damage. On the website for the Marine Spill Response Corporation it clearly states, “During an oil spill, time is of the essence!”

Of course, the volatile nature of the Bakken crude oil means that the current recommended approach to dealing with a Bakken oil train that has derailed and is leaking and on fire is to evacuate everyone within a half-mile radius and then let the train burn — sometimes for days.

Meanwhile in January of 2014 the National Transportation Safety Board put out a safety recommendation about the current state of oil response planning for the rail industry that stated:

“oil spill response planning requirements for rail transportation of oil/petroleum products are practically nonexistent compared with other modes of transportation.”

…click on the above link to read the rest of the article…

Pre-emption: How and Why Rail Companies Are Above The Law

October 3, 2015

Pre-emption: How and Why Rail Companies Are Above The Law

CSX is one of the major rail companies that is profiting from the oil-by-rail boom led by North Dakota’s Bakken crude oil. On September 28th, a day that is apparently national “good neighbor day,” CSX broadcast the following message on Twitter.

Which is a nice message. But CSX and the rest of the rail industry can turn into a horrible neighbor for many communities across the country. Why? Because as rail companies they are essentially above the law due to a legal doctrine known as “pre-emption.”

Pre-emption means that rail companies are not subject to any local or state laws. So if they want to build a new propane transloading facility near a school or neighborhood, they can. And CSX and others in the industry do.

A new article by the New England Center for Investigative Reporting (NECIR) details how pre-emption has allowed for the construction of oil and gas transloading facilities on rail company property with little to no oversight in communities like Grafton, Massachusetts.

In Grafton, the owner of a small railroad constructed what is now the largest rail propane facility in the state. No construction permits were acquired. No environmental assessments completed. And as NECIR reports, the rail company’s neighbors weren’t very happy about any of this.

Residents were dumbfounded: The location was in the middle of a residential neighborhood, less than 2,000 feet from an elementary school and atop the town’s water supply.

That is the reality of pre-emption. As we’ve reported on DeSmog since oil trains started derailing and exploding, pre-emption applies to all areas of rail operations.

Rail companies believe they are not subject to “right to know” laws regarding the transportation of dangerous materials through communities.

…click on the above link to read the rest of the article…

Oil-by-Rail Giant BNSF Threatens Shutdown Over Safety

October 2, 2015

Oil-by-Rail Giant BNSF Threatens Shutdown Over Safety

In June of 2014, a representative of oil-by-rail giant Burlington Northern Santa Fe (BNSF) attended a meeting with regulators where the American Association of Railroads (AAR) lobbied against any speed limits for oil trains. One of the slides from that presentation – titled “Far Reaching Economic Impacts” (image below) — predicted dire consequences to the American economy if speed limits were put in place.

There was no mention of the safety benefits of such a speed limit in the presentation.

And now BNSF is back at it, informing regulators that if a congressionally mandated requirement from 2008 that requires all railroads to implement positive train control (PTC) by the end of 2015 isn’t extended, they may just shut down BNSF.

No trains will run. Because BNSF apparently is so concerned about safety that the company would rather not operate if it can’t do it in the safest manner possible.

Aside from those speed limits it is against. And the modern braking systems it opposes. And its efforts to move to a single person crew for oil trains.

The rail industry is great at publicity stunts. Earlier this year, Hunter Harrison, CEO of Canadian Pacific Railway (CP) also threatened to get out of the oil-by-rail business citing safety risks to “the public.” Meanwhile, as noted on DeSmog, two days after that threat, CP’s vice president of safety was in D.C. lobbying against modern braking systems for oil trains.

And BNSF has pulled off some good public relations stunts in its efforts to shape the narrative on oil-by-rail safety. In early 2014, after a string of oil-by-rail accidents, BNSF announced that it would not wait for regulators and would be investing in 5,000 new rail tank cars that exceeded all existing safety requirements.

As documented by DeSmog, these cars never existed anywhere other than on a press release.

…click on the above link to read the rest of the article…

Are US Regulators Trying to Cover Up Influence Of Lobbyists On New Oil-By-Rail Regulations?

August 9, 2015

Are US Regulators Trying to Cover Up Influence Of Lobbyists On New Oil-By-Rail Regulations?

It’s no secret that the oil and rail industries lobbied the Obama Administration heavily during the creation of new oil-by-rail regulations released this past May, with lobbyists reportedly not even taking a break the day after a major oil train accident.

But just how much influence did lobbyists actually have in the drafting of the regulations?

Environmentalists who criticize the new rules as far too weak to stop business-as-usual — which has already resulted in five oil train explosions so far this year — are endeavoring to find out by submitting Freedom of Information Act requests for correspondence between lobbyists and five federal agencies within the US Department of Transportation that worked on the oil train safety rules.

So far, they say, they’ve been stonewalled by the Obama Administration.

The FOIA requests were originally filed in January by La Crosse, WI’s Citizens Acting for Rail Safety, Communities for a Better Environment, Albany, NY’s Ezra Prentice Homes Tenants Association and ForestEthics. The rules came out on May 1.

The groups were seeking all records of communications exchanged between lobbyists and staff at the Federal Railroad Administration, the Surface Transportation Board, the Pipeline and Hazardous Materials Safety Administration, the National Transportation Safety Board and the Office of the Secretary of Transportation since January 1, 2012.

Some 97 individual lobbyists were named in the requests, among them representatives from trade groups like the American Petroleum Institute and the Association of American Railroads as well as oil and rail companies including Chevron, Tesoro, and Burlington Northern Santa Fe (BNSF).

Six former members of the US Congress, including Trent Lott, Vin Weber, John Breaux, Steve LaTourette, Max Sandlin and Bill Lipinski, are also among the lobbyists named in the requests.

…click on the above link to read the rest of the article…

Minority, Low-Income Communities Bear Disproportionate Share Of Risk From Oil Trains In California

July 8, 2015

Minority, Low-Income Communities Bear Disproportionate Share Of Risk From Oil Trains In California

People of color and low-income communities are bearing a disproportionate burden of risk from dangerous oil trains rolling through California, according to a new report by ForestEthics and Communities for a Better Environment.

Called “Crude Injustice On The Rails,” the report found that 80 percent of the 5.5 million Californians with homes in the oil train blast zone — the one-mile region around train tracks that would need to be evacuated in the event of an oil train derailment, explosion and fire — live in communities with predominantly minority, low-income or non-English speaking households.

Nine of California’s 10 largest cities that have oil train routes running through them have an even higher rate of “discriminatory impact,” the authors of the report found. In those cities, 82–100 percent of people living in the blast zone are in what they call “environmental justice communities.”

“In California you are 33 percent more likely to live in the blast zone if you live in a nonwhite, low income, or non-English speaking household,” Matt Krogh, ForestEthics extreme oil campaign director and one of the authors of the report, said in a statement.

New oil-by-rail rules inadequate

The Obama Administration released new oil-by-rail regulations in May that were heavily criticized as inadequate because the industry had too much influence over the final rules, which would not stop more incidents like the oil train derailment in North Dakota in May that led to an explosion and fire that burned for days. That was the fifth accident of its kind in theUS so far this year.

Massive fireballs and raging infernos often accompany oil train accidents because of the highly volatile Bakken crude they frequently carry. Yet, as Justin Mikulka wrote here on DeSmog, the US Department of Transportation’s new regulations are so weak as to be little more than “a guidebook for the oil and rail industries to continue doing business as usual when it comes to moving explosive Bakken crude oil by rail.”

…click on the above link to read the rest of the article…

New York State Reverses Decision, Requires Full Environmental Review of Tar Sands-by-Rail Facility

May 25, 2015

New York State Reverses Decision, Requires Full Environmental Review of Tar Sands-by-Rail Facility

In what came as a welcome surprise to activists in Albany, New York, the New York State Department of Environmental Conservation (DEC) reversed an earlier decision and now will require a full environmental review for a proposed tar sands oil heating facility at the Port of Albany.

“It is good for New York State that the DEC came to a proper decision in one of the most important environmental matters facing the state. We look forward to participating with the state on a full public safety and environmental review that is robust and protective of our communities and our waterways,” said Riverkeeper President Paul Gallay.

Riverkeeper is one of many groups fighting the plan by Global Partners to add tar sands oil to the Bakken oil it is already moving down and along the Hudson River in large amounts, efforts highlighted in this recent New York Times Op-Doc.

Riverkeeper also recently filed a lawsuit challenging the Department of Transportation’s recent new oil-by-rail regulations.

Albany has become the largest distribution hub for crude oil on the East Coast due to its rail access and its port on the Hudson River and this transformation happened with so little fanfare that the local community was initially unaware of what the DEC had permitted.

There were no ribbon cutting ceremonies or big public announcements made by local government officials who were aware of what was happening. The mayor of Albany could be found cutting ribbons for the opening of Subway shops orbars, but not a word about the 2.8 billion gallons a year of oil that were permitted to arrive in Albany by train by the DEC.

…click on the above link to read the rest of the article…

New Oil-By-Rail Regulations Are Big Win for Oil and Rail Industries, Won’t Stop “Bomb Trains”

May 4, 2015

New Oil-By-Rail Regulations Are Big Win for Oil and Rail Industries, Won’t Stop “Bomb Trains”

The long-awaited oil-by-rail regulations released today are basically a guidebook for the oil and rail industries to continue doing business as usual when it comes to moving explosive Bakken crude oil by rail.

DeSmog recently reported on how the Obama administration has worked behind the scenes to help achieve the oil industry’s top goal when it came to these new regulations — allowing the oil producers to continue to put the highly volatile Bakken crude oil into rail tank cars without removing the natural gas liquids that make it such an explosive mixture.

As we’ve reported, there is a relatively simple fix to end, or significantly reduce, the “bomb train” disasters, via a process known as stabilization.

But the new regulations not only give the industry a pass on doing this, they add to the “we need more research before we do anything” approach that is the preferred tactic the industry and regulators are using to delay addressing the issue.

On page 232 of the new regulations, they state the following:

Any specific regulatory changes related to treatment of crude oil would consider further research and be handled in a separate action.

If you are a Bakken oil producer, that one sentence out of the close to 400 pages of new regulations is all you need to know. Time to start writing thank you notes to your lobbyists.

As Al Jazeera recently reported, quoting a professor of petroleum engineering at the University of Houston who was commenting on the science of Bakken crude:

“The notion that this requires significant research and development is a bunch of BS.”

A similar sentiment was expressed in an editorial published by RailwayAge earlier this week responding to the Department of Energy announcement that it will study the issue of Bakken oil volatility

…click on the above link to read the rest of the article…

Forget About Keystone XL – Canadian Crude Is Coming

March 20, 2015

Forget About Keystone XL – Canadian Crude Is Coming

While Congress and the White House continue to wrangle over the Keystone XL pipeline extension, the oil industry is taking matters into its own hands.

Markets are primed for an influx of Canadian crude oil, but with pipeline transport off the table for the foreseeable future, producers have built alternative modes to meet the demand. The problem is, recent disasters have soured legislators and environmentalists on road and rail for moving oil.

Alongside political uncertainties are other wild cards like extreme weather and the unknowns that arise from an emerging logistics infrastructure, which can all impact the flow of goods. That makes the proposition of a non-pipeline solution particularly thorny. How should supply chain decision makers position to connect with premium energy markets, manage the attendant risks, while also addressing the strong likelihood of an increased regulatory burden?

From the source of the commodity to the end consumer, the ability to track Canadian oil assets in real-time is set to become more important than ever.

Boom Times For Oil Producers

Production from Canada’s oil sands is on the rise, with output expected to nearly double by 2030 to 6.7 million barrels per day. That accounts for about 98% of the country’s oil reserves.

…click on the above link to read the rest of the article…

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