By Roger Annis, Aug 17, 2014
On Tuesday, Aug. 19, Canada’s Transportation Safety Board (TSB) will release its final report on the oil train disaster that occurred at Lac Mégantic, Quebec on July 6, 2013. This website will provide full news coverage of that event and the background to the disaster.
Coincidentally, yesterday’s edition of the Toronto Star publishes on page one an investigative report on the culture of secrecy prevailing at Transport Canada that has prevented the public from learning much information about what happened and why at Lac Mégantic. The article is here: Transport Canada keeping secret details MM&A safety inspections, By Wendy Gillis, Toronto Star, Aug 16 2014.
Next Thursday, August 21 in Ottawa, I will moderate a discussion panel on oil-by-rail to take place as part of the Aug. 21-24 Peoples Social Forum in that city. The panel will feature Bruce Campbell, Executive Director of the CCPA, and Alejandra Mendez, the newly-elected chairperson of the Réseau ecosocialiste (Ecosocialist Network) of Quebec’s left wing political party, Québec solidaire. Please join us at the panel discussion if you are in the city. It will take place at the Tabaret Building on the campus of the University of Ottawa, Room 333, 10:45 am. The Tabaret Building is at the corner of Laurier St. E. and Waller St., one block west of Laurier St./Nicholas St.
You can read the full program of the Peoples Social Forum here.
Enclosed is a dossier of articles on oil by rail that appeared in Canadian or U.S. media for the month of July. Each month, I compile such a dossier.
* * *
Oil train news July 2014, compiled by Roger Annis:
Summary:
1. Railroads give up attempts to keep crude oil shipment data secret, by Curtis Tate, McClatchy News Washington Bureau, June 24, 2014
2. Texas producers turn to rail out of Permian fields, by Dan Murtaugh, Bloomberg News, July 3, 2014
3. Montreal train tracks have become thoroughfares for crude oil tankers, by Jason Magder, The Gazette (Montreal daily), July 3, 2014
4. Groups seek ban of oil in older railroad tank cars, by Phuong Le and Matthew Brown, The Associated Press, July 15, 2014
5. Alberta bitumen to Montreal (e-mails in July 2014, see texts enclosed)
6. Coal railroad’s delay reflects hurdles for exports, by Matthew Brown, Associated Press, July 20, 2014
7. Oil industry pressure on Quebec grows [South Portland, Maine says no to tar sands], Le Devoir July 23 (text below, translated from French)
8. Sweeping oil-by-rail announcements set the stage for Bakken battle, July 24 (text below)
9. As DOT issues new oil-by-rail rules, DHS lags in its security plans, July 24 (text below)
10. Protesters stall an oil train for hours at Anacortes, Washington, By Martha Baskin, Crosscut, July 31, 2014
11. Bomb trains: The crude gamble of oil by rail, broadcast on Vice News, July 29, 2014. And see here the announcement, review and background information on the video by Sightline Institute (Seattle).
12. Oil trains crowd out grain shipments to Pacific Northwest ports, by Ángel González, business reporter, Seattle Times, July 31, 2014
13. Ottawa extends grain order for CN, CP or face penalties, by Vanessa Lu, Business reporter, Toronto Star, Aug 2, 2014
14. Lac-Mégantic : au-delà de la voie de contournement, par Renaud Gignac, Institut IRIS, 15 juillet 2014
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5. Alberta bitumen to Montreal and Sorel-Tracy (e-mails)
a. July 20, 2014
Here is a Radio Canada (CBC French) report on a new scheme to send oil train wagons through the south shore of Montreal to an export terminal in Sorel-Tracy (further down the St. Lawrence River). The citizens of the South Shore are none too happy. News to me, an oil by rail export terminal in Sorel-Tracy.
http://ici.radio-canada.ca/regions/Montreal/2014/07/19/001-convoi-ferroviaire-petrole-montreal.shtmlLe
This article (in French) from five months ago confirms that it’s a project of Suncor in the Alberta tar sands.
–Roger Annis
b. July 2, 2014
Subject: Montreal train tracks have become thoroughfares for crude oil tankers (imp. Gazette article)
This Gazette article [item #3 in present e-mail compilation–RA] is worth reading for anyone interested in what is now going to the Suncor, Valero and Irving refineries, and for the first two refineries, what will happen once line 9B goes into reversed flow “later this year.” It also has key info on a new rail–to-tanker ship export operation ready to start up very soon east of Montreal, which I have summarized below (with a little analysis added from me).
On 9B, it is noteworthy that the article also mentions 25% heavy crude (industry lingo for dilbit) expected to flow to the Suncor refinery on Line 9B.
IMPT and not getting much notice so far: the article also talks about the new rail-to-ship deal that Suncor is set to start operating this month (July). This new Suncor plan is not for the purpose of feeding its refinery in Montreal, but instead for export and will operate at a port on the Saint Lawrence River well east of Montreal. At the port at Sorel-Tracy, Suncor will load crude arriving by rail onto tankers that will head down the Saint Lawrence River to the Atlantic and then “to other refineries around the world”. That could, of course, include the U.S. east coast, and personally, I think this is a likely destination, though one cannot be certain at this point. The PBF refinery in Delaware takes dilbit, the Axeon refinery (formerly NuStar) that makes asphalt takes dilbit, and other east coast refineries can take syncrude.
The rail-to-ship facility at Sorel-Tracy on the Saint Lawrence will be able to handle 60 rail cars per day, and since each rail car can carry about 700 barrels of crude (actually a little more), this means a new flow of about 42,000 barrels a day of crude will start heading down the Saint Lawrence very soon, destined not for Eastern Canadian refineries, but for export.
It is unclear whether the crude to be loaded on tankers from rail cars arriving at the port at Sorel-Tracy soon will be heavy or light, but either way, I think it is very likely that most of it will be sourced from the tar sands (that is, it will be either dilbit or syncrude).
Lastly, here is a quote of some importance: “Both companies have said they intend to continue rail shipments even after the pipeline begins operations.” (my underlining).
Also many great quotes from Steven Guilbeault at Équiterre in the Gazette article!
— Shelley Kath (Maine)
c. July 21, 2014
Subject: Re: Oil by train through Montreal
To the best of my knowledge, the Sorel-Tracy rail-to-tanker export arrangement will be for tar sands, not Bakken. See this very brief summary in English from StockWatch last March: http://www.stockwatch.com/News/Item.aspx?bid=Z-C:SU-2152068&symbol=SU®ion=C
If I can find it quickly, I will also forward to you an email I sent to NRDC or someone a few months back, which may have links to other info on the project. I believe tar sands has already started reaching the port and getting loaded onto tankers: this article (in French) from the Town of Sorel-Tracey online newspaper indicated it would start in June:
Between Line 9 and Energy East, I fear that this project has largely–except for folks who actually live near the Sorel-Tracy port — fell between the cracks. I have raised the project at various meetings at various times, but groups on this side of the border just have too much to deal with. Not good.
— Shelley Kath (Maine)
7. Oil industry pressure on Quebec grows
[South Portland, Maine says no to tar sands]
Alexandre Shields, Le Devoir, with Canadian Press, July 23, 2014. Translation by Roger Annis, original article in French here.
Whether it likes it or not, Quebec is becoming the most squeezed and sensitive point of passage in this country for the export of oil from the Alberta tar sands. This is underlined by the decision of the City of South Portland, Maine to prohibit the transport of oil on its territory.
The municipality voted Monday evening [July 21] a regulation which has the effect of permanently blocking the passage of Alberta oil from the heart of the continent to the port, to be loaded onto ships. South Portland is the second largest oil port on the U.S. East Coast.
According to Mayor Jerry Jalbert, the regulation was adopted with a view to protecting the environment. The oil sands would travel by pipeline from Montreal to South Portland. However, the City is against reversing the flow of the existing pipeline between the two cities, a measure that would be needed to reach its port.
The pipeline, built in 1941, currently carries light crude oil from Maine to the Suncor refinery in Montreal. But a project has been developed since 2008 – under the name Trailbreaker – in order to use the pipeline to bring the black gold of the west to the east coast. From there, it could be carried on board oil to refineries in Texas or be exported, mainly to Europe.
Natural path
Portland Montreal Pipe Line (SFPM), owned by Imperial Oil (ExxonMobil) and Suncor, spent $6.5 million to prepare for this project. Its president and CEO, Larry Wilson, also reiterated last year that the project was still part of the options considered by the company. However on Tuesday, PMPL said that the reversal was not on the agenda.
“The vote is a vote against jobs, against energy and against workers. It’s the result of some premature judgment of some councilors, who ignored science in favor of fear in their demagogic approach supported by an activist group opposing the exploitation of oil.” said Vice President of SFPM, Thomas Hardison, following the vote in South Portland.
Co-founder and spokesman of Équiterre, Steven Guilbeault, believes that the oil companies have always looked to Portland as a gateway form the Alberta oil. “Many of us remain convinced that this was the goal. This is the easiest way to move oil from the tar sands in North America. The pipeline is already there, but also the seaport. But the decision of South Portland is compromising the project. ”
The fossil fuel industry is looking intensely for ways to market daily production that should reach three million barrels of oil by 2020. But for now, many obstacles stand against pipeline projects, the preferred route to carry large volumes of crude at the lowest cost. The pipeline project to the west coast, Northern Gateway, still faces a strong challenge, including First Nations. Keystone XL, which provides access to refineries in Texas, has still not been approved by Washington.
Alberta Quebec
As of result of South Portland’s pipeline refusal, Quebec now becomes a target for the export of a significant portion of Alberta oil. “Quebec is a natural point of passage for the oil. It is therefore clear that the pressure will be to give the green light to projects that are already on the table, “says Jean-Thomas Bernard, Professor, Department of Economics, University of Ottawa.
“There will be a lot of pressure on the Quebec to approve the Energy East project by TransCanada”, confirmed Pierre-Olivier Pineau, a specialist in energy policy at HEC Montreal. According to him, it is clear to the oil lobby that “the path of Quebec seems most beneficial.
“It is technically easier to go through Quebec” and this kind of project is “important for Alberta and the oil.”
Energy East pipeline would transport daily, starting in 2018, some 1.1 million barrels of tar sands oil to Quebec, then to New Brunswick. This is the largest project of its kind currently in development in North America. It has already been submitted to the National Energy Board (NEB) by the industry.
To achieve this, TransCanada will build hundreds of kilometers of pipeline in Québec, but also across the St. Lawrence River. The company has also built an export terminal to load tankers at Cacouna, in the heart of the Gulf of St. Lawrence.
Although Quebec is a focal point of passage for the future pipeline, the decision on its construction rests solely with the government of Stephen Harper. Under federal rules, it is the NEB that decides the fate of the project. This body is directly from the office of Prime Minister.
Couillard said yes
The government of [Quebec Premier] Philippe Couillard has already announced its support for the proposed TransCanada project. This before having clarified the scope of the environmental assessment to be conducted in Quebec. The assessment, neverheless, does not have the power to stop construction.
But according to Mr. Guilbeault, this does not diminish the need to discuss and debate the greenhouse gas emissions generated by the oil sands. “If we want to say yes to these projects in Quebec, we must ask what will be the impacts on emissions, in a context where we are trying to reduce them.”
Participants in the NEB hearings on pipeline projects, however, do not however have the right to address the environmental impacts of oil production in Alberta as part of their presentation.
Before the project TransCanada is approved, Enbridge is to begin transporting 300,000 barrels of crude daily from the West to Montreal by the end of 2014. The proposal to reverse the flow of its Line 9B was approved by the Harper government earlier this year. The pipeline crosses several rivers in Quebec, but also farmland and residential areas in the region of Montreal. Some of the oil will be refined to Suncor in the east of the city. Another part will be loaded on ships that will travel to the Ultramar refinery at Lévis [across the St. Lawrence River from Quebec City].
The TransCanada and Enbridge projects would carry 1.4 million barrels of crude oil daily from the West to Quebec by 2018. This is the equivalent of half of all the tar sands production expected for 2020.
8. Sweeping oil-by-rail announcements set the stage for Bakken battle
Blake Sobczak, E&E reporter, published on Energy Wire, July 24, 2014
The Department of Transportation unveiled a 200-page proposed rule yesterday that seeks to overhaul oil-by-rail safety in the wake of recent derailments and fires. Transportation Secretary Anthony Foxx called it the “most significant progress yet” in the U.S. government’s efforts to regulate rising volumes of crude oil and ethanol moving via tank car across the continent (Greenwire, July 23). Canada’s top transportation regulator published a similar oil-by-rail safety rule earlier this year (EnergyWire, June 19).
Both proposals shore up tank car designs and outline how shippers can retrofit older-model, DOT-111 cars that have been prone to puncture during accidents. A train hauling crude in DOT-111s derailed and exploded in Lac-Mégantic, Quebec, last summer, killing 47 people, prompting DOT to announce rulemaking plans two months later.
While yesterday’s proposal in the United States focused on tank car integrity, the Pipeline and Hazardous Materials Safety Administration, the DOT agency behind the rulemaking, also used the occasion to share findings from its ongoing tests of crude from North Dakota’s Bakken Shale play. “This is an ongoing effort, but what we’ve confirmed so far is that Bakken crude oil is on the high end of volatility compared to other crude oils,” Foxx said.
That finding clashes with industry-backed studies of Bakken crude that have concluded it is no more dangerous than other types. The combination of new rules and conflicting Bakken test results has put the oil industry on the defensive as it scrambles to assess how production could be affected.
The American Petroleum Institute, which is working on new testing methodology for Bakken crude, set out to rebut “speculation” that the oil is more flammable or hazardous than other types.
“The best science and data do not support recent speculation that crude oil from the Bakken presents greater than normal transportation risks,” API president and CEO Jack Gerard said in a statement yesterday.
Transportation regulators say they have based their Bakken focus on a “startling” increase in production there. This May, about 613,000 barrels of oil left North Dakota by train each day, according to the latest data from the North Dakota Pipeline Authority. Oil-laden tank cars now move five times as much crude as the entire state produced daily in 2007. “Not only is it on the
high end of volatility; its production is skyrocketing,” Foxx said of Bakken crude.
PHMSA’s summary report of its “Bakken blitz” series of inspections included data from 47 samples. The report concluded that “while this product does not demonstrate the characteristics for a flammable gas, corrosive liquid or toxic material, it is more volatile than most other types of crude — which correlates to increased ignitability and flammability.”
Bakken crude’s “light” profile — with its high gas content, low flash point and steep vapor pressure — means “there is an increased risk of a significant incident involving this material due to the significant volume that is transported, the routes and the extremely long distances it is moving by rail,” PHMSA concluded.
Kari Cutting, vice president of the North Dakota Petroleum Council, said in an interview yesterday that she is “disappointed” in DOT’s interpretation of its findings.
The NDPC contracted a hazardous materials consultancy to conduct a separate investigation of Bakken crude. Cutting said Turner, Mason & Co.’s findings and DOT’s results are like “mirror images”– yet the two reached opposite conclusions.
Gauging the impact
DOT’s proposed rule would make oil-by-rail shippers test “all mined gases and liquids” before transporting them in trains of 20 cars or more. But the rule stopped short of suggesting that shippers “strip” Bakken crude of its natural gas liquids before pumping it into rail cars, a step companies and environmentlists have claimed would boost safety.
Analysts at research firm ClearView Energy Partners LLC said DOT’s call for widespread testing suggests that a follow-up rule requiring Bakken crude “stabilization” could be in the works.
“It appears that DOT hopes to acquire a data set that could potentially open up opportunities for more prescriptive regulation in the future,” ClearView analysts, led by Kevin Book, said in a report yesterday.
PHMSA Administrator Cynthia Quarterman hinted that DOT’s rulemaking salvo may not be over. “This is one big step forward for the department,” she said yesterday, “but there are other things we have planned to address this issue, as well.”
PHMSA released a separate advance notice of proposed rulemaking yesterday seeking comments on how to adjust the threshold for filing comprehensive oil spill response plans (EnergyWire, July 21). But the White House has suggested that rule would not be economically impactful, and yesterday, all eyes turned to the tank car industry and its capacity to cope with a quick phaseout of DOT-111 cars.
There are more than 100,000 such cars now moving hazardous materials nationwide, according to industry estimates, with fewer than 30,000 older-model cars devoted to hauling crude. DOT’s proposed two-year deadline would apply only to the “highest-risk” category of flammable liquids — or those categorized in Class III, Packing Group 1. That applies to “most” Bakken crude, the regulator said, meaning oil producers in the region will likely have until 2017 to find another outlet for their crude.
The NDPC’s Cutting suggested producers could boost storage capacity or switch to other modes to get their crude to coastal refiners. “I would suspect that comments [filed to DOT] will say that two years is a pretty tight deadline and will require very diligent management to accomplish the phaseout, in building new rail cars or retrofitting,” she said. “At the same time, I am pretty certain that the industry in North Dakota is looking at all its options.”
Analyst Sandy Fielden at Houston-based consultancy RBN Energy LLC has pointed out that two recently proposed pipeline projects from Enterprise Products Partners and Energy Transfer Partners would boost capacity out of North Dakota by a “whopping” 660,000 barrels per day if they get the green light from regulators.
North Dakota’s director of mineral resources, Lynn Helms, said yesterday that “it’s too early at this point to determine what impacts this [notice of proposed rulemaking] could have on North Dakota oil production.” “However, we will review the 200-page document and work with the North Dakota Pipeline Authority on how to best advise the Industrial Commission moving forward,” he said in the statement.
‘Be very careful’
North Dakota Sens. Heidi Heitkamp (D) and John Hoeven (R) both welcomed DOT’s notice yesterday but said they would continue to assess the rule’s impact on the state.
A Dec. 30, 2013, oil train derailment and explosion near Casselton, N.D., put the crude-by-rail issue on the map for the state’s lawmakers. This year’s harsh winter, coupled with competing oil train traffic, also caused huge headaches for grain shippers in the region. Yet oil-by-rail shipments have also propped up an energy industry that has brought billions of dollars to the state and helped North Dakota earn the lowest unemployment rate in the nation (around 3 percent).
Heitkamp told reporters to be cautious about thinking in dollars and cents when looking at proposed tank car standards and retrofit requirements. “I think we need to be very careful about how we look at cost/benefit as it relates to a safety rule,” she said. “We’re going to be looking at those costs, we’re going to be thinking about those costs, but we’ve got to measure them against public safety.”
DOT has pegged the potential costs of its most stringent proposed tank car standard at more than $3 billion over the next 20 years. The regulator also claimed that the economic and safety benefits from using its “PHMSA and [Federal Railroad Administration]-designed car” — which would require thicker steel, advanced braking systems and rollover protection — could exceed $3.5 billion in the same time frame.
Hazardous materials consultant Fred Millar, who has worked with environmental groups including Friends of the Earth, suggested such a cost-benefit analysis may not pass muster with industry.
He was critical of yesterday’s proposal and has called on DOT to take emergency action on tank cars, rather than follow the slower rulemaking process that may not result in final standards until early next year. “DOT is proposing only relatively minor modifications of the DOT-111, known to be inadequate for 21 years, and will be hard pressed to come up with a science-based cost/benefit analysis that can justify the necessity even for these modifications,” he said in an email yesterday.
Twitter: @BlakeSobczak | Email: bsobczak@eenews.net
9. As DOT issues new oil-by-rail rules, DHS lags in its security plans
Blake Sobczak, E&E reporter, published on Energy Wire, July 24, 2014
Earlier this month, U.S. railway representatives sat down with energy and defense officials to discuss an urgent safety issue: moving crude by rail. The July 11 roundtable allowed industry to show off improvements in oil train safety following recent accidents, according to Tom Farmer, assistant vice president of security at the Association of American Railroads, which represents many of the biggest U.S. freight companies. The meeting was organized by an agency not typically associated with oil transportation: the Department of Homeland Security.
The agency more commonly associated with rail oversight, the Department of Transportation, yesterday unveiled a sweeping oil-by-rail rule that seeks to overhaul decades-old tank car standards and curb speeds for “high-hazard” trains.
Yet as mile-long strings of crude tank cars snake their way through major cities across the country, DHS has dusted off its role overseeing the nation’s rail network through the Transportation Security Administration. And the rapid rise of the “unit” oil train has also exposed gaps in the agency’s approach to securing surface transportation.
Farmer, who previously worked for TSA, said the railroad industry has taken a “proactive” approach to securing oil trains by overhauling several operating procedures and by communicating with DHS about threats to rail infrastructure. He noted that there “has not been any indication of security-related threats to the transport of crude oil by rail.”
Yet DHS has not followed many of the rail provisions laid out in the Implementing Recommendations of 9/11 Act of 2007, leading some security experts to question the agency’s “risk-based approach” to rail safety that relies heavily on industry cooperation.
The 2007 act called on DHS to create guidelines for railroads to prepare vulnerability assessments that could be updated to account for changes such as increased shipments of hazardous materials. However, a Freedom of Information Act request from EnergyWire revealed that the agency never followed through with regulations despite an August 2008 deadline. That means TSA neither keeps railroads’ security plans on file nor reviews them in any standardized fashion.
Denise Krepp, who drafted the surface transportation provisions of the 2007 law as chief counsel of the House of Representatives’ Homeland Security Committee, said she is “troubled” by DHS’s failure to address the requirements of the 9/11 Act.
After the 2004 Madrid train bombings and the deadly attacks on London’s public transportation system a year later, Krepp said lawmakers wanted to prevent a similar incident from happening in the United States by beefing up TSA’s oversight of rail systems.
Krepp had worked as an attorney on TSA’s rail team before joining the Homeland Security Committee under then-Chairman Bennie Thompson (D-Miss.). “I was there on day one when DHS was created — we knew what the weaknesses were,” Krepp said. “I was trying to make sure, working with my boss Bennie Thompson, that all of the gaps that I knew about and that Congress knew about were addressed.”
A TSA official said the agency “continues to work on” rail safety but added that inspectors “have been finding that railroads are prepared and have the appropriate procedures in place to address known threats and vulnerabilities.”
Laws aren’t ‘for fun’
While the TSA is typically associated with screening passengers at airports, the arm of the Department of Homeland Security is also responsible for safeguarding surface and marine transportation.
Yet the agency has faced criticism for its approach to rail security ever since the 9/11 Commission issued its final report on the terrorist attacks in the United States a decade ago.
In that 2004 document, the authors noted that “surface transportation systems such as railroads and mass transit remain hard to protect because they are so accessible and extensive” compared to air networks.
They also said “over 90 percent of the nation’s $5.3 billion annual investment in TSA goes to aviation — to fight the last war” despite the fact that opportunities to harm surface transportation “are as great, or greater” than threats to commercial flights.
One former congressional staffer familiar with the provisions of the 9/11 Act said DHS has been “shy about asserting a role” in surface transportation due to the scope of the challenge and the difficulty in regulating across multiple modes from trucks to rail. “It’s Fort Knox on one mode, and everything else is just kind of open — it doesn’t make good sense long-term.”
That was when Congress stepped in to help the agency up its game in 2007. “Congress doesn’t enact laws for fun — they don’t enact laws as guidance,” said the former staffer, who requested anonymity because of sensitivities with his current position.
But the funding gap between surface transportation and aviation security has persisted. TSA’s budget for fiscal 2012 set aside $5.25 billion for aviation security, while devoting $135 million to surface transportation security across all modes. “We’re never going to be able to stop paying most of our attention to aviation — it’s just too prominent and the consequences of a mistake are too costly,” said Slade Gorton, former Republican senator from Washington state and a member of the 9/11 Commission, in an interview.
He cited the recent disaster in eastern Ukraine, in which a Boeing 777 was shot down with a surface-to-air missile over territory controlled by Russia-backed separatists. “Once something like that happens, everyone who’s involved in it dies,” he said, which is part of what makes protecting commercial aircraft “a dramatically difficult task.”
The Sept. 11, 2001, terrorist attacks have also left a lasting impression on American attitudes toward aviation security, he observed.
But Gorton added that its continued focus on aviation doesn’t mean TSA can shrug off protecting railways, particularly in light of recent accidents. “In a perfect world, the DHS might have done more [in response to] specific requirements,” he said. “But it does seem to me that AAR has taken its responsibilities quite seriously.”
‘Bomb trains’
Railroads have moved hazardous materials for decades, from propane to radioactive waste.
But dangerous goods traditionally have filled up one or two cars in longer trains hauling mixed freight. Shipping big quantities of flammable liquids such as crude and ethanol is a fairly new phenomenon for the industry, dating back to the mid-2000s. (Railroads also shipped large quantities of crude in the late 19th century, but the practice slowed with the advent of pipelines.)
In 2008, railroads shipped fewer than 10,000 carloads of crude throughout the United States. Last year crude shipments topped 400,000 carloads for the first time in history, and today mile-long lines of tank cars are a common sight from North Dakota to New York.
Such 100-plus-car “unit trains” can haul millions of gallons of crude in a single trip, allowing railroads to compete with pipelines and offering coastal refiners a key conduit to price-advantaged shale oil. But their hazardous cargo has caught fire and exploded on more than one occasion, leading protest groups to dub them “bomb trains.”
Last year in Lac-Mégantic, Quebec, a 72-car oil train derailed and exploded downtown, killing 47 people. That set off a scramble on both sides of the border to address safety and security concerns.
“If Lac-Mégantic could happen by accident — and this was by accident — what happens if somebody deliberately does this?” Krepp said. “Why didn’t [regulators] ask that question?”
The Department of Transportation, which was also present at the July 11 oil-by-rail roundtable with AAR, said its employees keep an eye out for security vulnerabilities during routine inspections.
“If we come across any problems — if we see any security guards asleep or see anything missing — we bring it to the attention of the facility manager, and they would need to address the situation,” said DOT spokesman Damon Hill.
But Hill added that to his knowledge, TSA has no jurisdiction in securing rail facilities, suggesting the interagency cooperation Krepp and lawmakers called for in 2007 hasn’t developed.
DHS has conducted hundreds of site visits to passenger rail facilities in recent years, but its role in monitoring freight shipments has been less clear. The Government Accountability Office has said TSA has traditionally focused on toxic inhalation hazards — such as chlorine gas — when reviewing freight rail security.
Krepp said a key goal of the 9/11 Act was to get TSA and DOT working together more closely to address new potential vulnerabilities such as crude by rail. “Rail safety and security match up — you can’t have one without the other,” Krepp said. “It should have been a combo of DOT and DHS.”
Security sensitive
Mandates from DHS and DOT often overlap. For instance, both agencies can say certain hazardous materials are “security sensitive,” ensuring data on the whereabouts of shipments and stockpiles is shared on a need-to-know basis.
In practice, DOT has said it defers to homeland security experts for determining “security sensitive” information (SSI) (EnergyWire, June 4). Yet despite environmentalists’ “bomb trains” label for oil trains, crude isn’t covered under SSI regulations. TSA said it would consider adding oil from the Bakken Shale to SSI regulations “if asked.”
Barring SSI protections, oil train routing and traffic information has been shared widely via public records requests despite objections from freight giants such as BNSF Railway (EnergyWire, June 9). Farmer at AAR called such disclosures “a factor that we’d rather not have.”
Recent accidental oil train derailments and fires in Casselton, N.D., and Lynchburg, Va., mean the crude-by-rail boom is not likely to drop out of the national conversation. Still, the rail industry is better suited by staying out of the spotlight and keeping a “low profile” when it comes to security, he explained. “Part of that is ensuring care is taken with detailed information on shipments of crude oil, so that, for these distant adversaries that we have to be concerned about, you don’t create an opportunity where one may not have been thought of or practically considered before,” he said.
Many railroads have reached confidentiality agreements with state and local emergency response agencies to pre-empt disclosure of crude-by-rail details. The secrecy pacts reflect the rail industry’s efforts to treat crude oil as a “security sensitive” commodity in everything but name.
Under a February agreement with Transportation Secretary Anthony Foxx, railroads have even started using a special route selection tool — the Rail Corridor Risk Management System — when moving more than 20 cars of crude. DHS helped develop that system, which accounts for 27 risk factors when selecting routes and has traditionally been reserved for raw explosives and other highly dangerous, SSI-designated substances.
Farmer said the industry would continue to update its networkwide security plan, which assesses vulnerabilities, is shared with TSA and covers many of the criteria listed in the 9/11 Act.
“The statute calls for security plans — and we have those, both industrywide and among the major railroads. The statute calls for training, and we’ve had an appropriate and significant sustained effort on security training,” he said. “Congress’ expectations in the 9/11 Act — in my view — have been met.”
Twitter: @BlakeSobczak | Email: bsobczak@eenews.net
13. Ottawa extends grain order for CN, CP or face penalties
The piles of grain sitting in Western Canada from last year’s crop and the new seeds planted in farmers’ fields are now at the centre of a battle between Ottawa and the railways. In Saskatoon on Friday, Agriculture Minister Gerry Ritz announced that the federal government was extending an unusual order, due to expire on Sunday, to require Canada’s two main railways to move minimum amounts of grain each week until November.
“A free-market government is loath to regulate private-sector companies, but there comes a time when they are a major impediment to the economy overall that you have to step in,” said Ritz in an interview, noting annual grain exports represent up to $30 billion to the economy.
“We are still a number of cars behind. There are still boats sitting in Vancouver to be loaded,” he added. “There is still lots of work to be done.”
Ritz conceded that it was an exceptionally large crop last year, but he said the “tremendous lack of service by both railways” hurt farmers as well as other commodities. “It wasn’t necessarily a lack of cars. It was a lack of engines and crews to haul them. And a lack of co-ordination in the logistics system,” Ritz added.
CN’s chief executive officer Claude Mongeau quickly fired off a statement, calling it “truly unfortunate” that the federal government is introducing extensive regulations in reaction to a 100-year grain crop. “The grain supply chain is back in sync and ready to handle the next harvest as a result of hard work and normal commercial incentives,” Mongeau said. “As there are no structural problems to fix, there is no need for such burdensome and ill-advised regulatory intervention.”
CP’s chief executive officer Hunter Harrison said it clearly demonstrates that despite the facts, “this government has not listened.” He added that the issues relating to the transportation of grain “will not be solved in Ottawa but by the joint collaboration of all partners in the supply chain.”
CN shares closed down 78 cents to $72.11, while CP shares fell $2.70 to closed at $204.63.
With a record crop of 76 million tonnes in 2013, farmers produced a third more than the year before, creating a backlog that is still sitting in elevators and on farmer’s fields just as the new crop year began on Friday.
While harvested grain is usually carried over from one crop year to the next, this year’s carryover could be as much as 18 million tonnes out on the Prairies. “We don’t sell every single kernel from every bin from every corner of the field. There is always stuff left in the system,” said Rick White, CEO of the Canadian Canola Growers Association. “But it’s an unnaturally large carryover, at least three to four times larger than it should be.”
That’s because of problems encountered moving the grain to export markets this year. Different players point to different reasons, from extreme winter weather to a shortage of rail locomotives to move rail cars to delays in unloading grain at port terminals on the West Coast. The logjams got so bad that the federal government took the rare step in March of ordering Canadian National Railway and Canadian Pacific Railway to each move a minimum of 500,000 tonnes of grain a week, or face stiff penalties — as much as $100,000 a day.
The latest order, in place until Nov. 29, calls for the railways to each move 536,250 tonnes each week, or face the same penalties.
All sides acknowledge there’s a problem when it comes to grain shipping, but there’s no simple solution. Wade Sobkowich, executive director of Western Grain Elevator Association, whose members include grain companies like Patterson and Viterra, believes volume thresholds will help to clear the backlog of grain.
But in addition, he thinks the volumes should be adjustable if better information comes in about the size of the upcoming crop. “I don’t know how we are going to export more grain, and more potash, and more lumber, and more coal, and more manufactured goods, without growing the side of the rail pie,” said Sobkowich. “We need to be able meet our trade agenda in every industry. We can’t have the railways as a limiting factor.”
But the railways note they are private companies. And when Harrison was installed as CEO of Canadian Pacific in 2012, he was tasked with turning around the flailing company and deliver better profits for its shareholders. Under Harrison, CP has sold off locomotives and dramatically reduced its work force.
Frustrated with rail service, grain companies have filed service complaints to the Canadian Transportation Agency, a quasi-judicial entity that arbitrates any disputes between shippers and the railways over their contracts.
In April, Louise Dreyfus Commodities Canada filed a complaint against CN over service, and won an interim decision that ordered more rail cars to its facilities, pending a final decision. That then resulted in other shippers like Viterra and Richardson International filing their own complaints, saying the interim order negatively impacted the number of cars available for their grain.
CN declined to comment specifically on the cases, but spokesman Mark Hallman acknowledged the main issue is the allocation of rail capacity. “The record crop created a demand for rail services that exceeded the capacity of the supply chain. In that context, CN had to allocate capacity among market participants,” he said in an email.
The Canadian Transportation Agency has not issued any decisions in those pending cases yet.
White of the Canadian Canola Growers Association says the complaints show how everybody is fighting over a piece of the transportation capacity pie. “Instead of trying to divvy up the slices in the pie, the pie should be bigger.”
And that’s why the canola growers also filed an unprecedented complaint with the Canadian Transportation Agency against CN and CP, saying the railways failed farmers this year.
Legal wrangling is now under way about whether the canola growers can even file a complaint, given they are not the shippers holding the contracts. White is hoping the agency will hear the case and side with the farmers. “The remedy would be more locomotives, cars and more crew,” he said, adding his group is hoping for a specific order to boost capacity. “That would be a clear directive to the railways that what they did this past year is not acceptable under the law … and they need to pull up their socks.”
Gary Stanford, president of the Grain Growers of Canada, believes there needs to be more co-ordination across-the-board, including a willingness to consider ways to come up with new ideas. “Do we need more rail lines? Or more unloading facilities in the ports?” he said. “Or larger loading spots at the elevators where 150 cars can be loaded at a time, instead of 100?”
Stanford says the key is trying to work together, rather than punitive measures. “We don’t want to throw penalties at people,” he said. “If it’s bad now, it could be worse in 10 years.”
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