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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Canada Threatens U.S. with Oil Trains if Keystone XL Not Built

On 6 July, a Montreal, Maine & Atlantic train carrying 72 tank cars filled with oil exploded after its brakes apparently failed, sending it rolling into the small Quebec town of Lac-Megantic, where it derailed and then exploded. In the conflagration that followed, an estimated 47 people were killed.

Whether Canadians like it or not, the use of such trains has soared in recent years. The Railway Association of Canada reports that as recently as four years ago Canadian railways moved just 500 carloads of crude oil, but that number has now soared to about 140,000 carloads annually.

While currently only about three percent of Canadian crude is currently transported by rail, one industry predicts railway carriage of oil products rising to as high as 25 percent by 2035.

Related article: Will Quebec Tragedy Derail Heavy Oil Upswing?

Now, in a breathtaking display of chutzpah, the Canadian ambassador to the U.S. is warning President Obama if he does not approve the controversial Keystone XL pipeline, then he can expect similar oil trains and even trucks to enter the U.S. Ambassador Gary Doer said, “His choice is to have it come down by a pipeline that he approves, or without his approval, it comes down on trains. That’s just the raw common sense of this thing, and we’ve been saying it for two years and we’ve been proven correct. At the end of the day, it’s trains or pipelines.”

Greenpeace Canada publicized a May 2012 Transport Canada memo that reported that the department had "identified no major safety concerns with the increased oil on rail capacity in Canada, nor with the safety of tank cars that are designed, maintained, qualified and used according to Canadian and U.S. standards and regulations. Indeed, Canada and the U.S. work collaboratively to ensure the harmonization of rail safety requirements." In the wake of the Lac-Megantic tragedy Greenpeace Canada recommended that the federal government implement an immediate ban on shipping oil in the older, type 111A tanker cars that that the Canadian Transportation Safety Board has identified as spill-prone, reinstate mandatory two-person minimum train crews; and begin a comprehensive, independent safety review of all means of hydrocarbon transportation, including public hearings.

Greenpeace Canada Climate and Energy Coordinator Keith Stewart observed, “Transporting oil is always risky, but both rail and pipelines can be a lot safer than they are today. Breaking our addiction to oil is the only real solution and something we must do to combat climate change, but as we make the transition to clean energy we must reduce the harm from transporting and using oil.”

In the wake of Lac-Megantic derailment, Transport Canada issued a series of emergency orders, some of which incorporate the Greenpeace Canada suggestions. Starting immediately, at least two crew members must work trains that carry dangerous goods and no locomotive attached to a tank car filled with dangerous materials can be left unattended on a main track.

In defending itself against a rising storm of criticism, The Railway Association of Canada points to the Canadian rail industry’s improving safety record, emphasizing that the number of derailments, including those involving dangerous goods is stable or decreasing.

Adding to the defensive chorus, Canada’s Transportation Safety Board noted that 2012 there were four main-track derailments involving dangerous goods, below the 2008-12 annual average of eight incidents and that there were 32 derailments involving hazardous materials in 2012 below the 2009-12 annual average of 37.

Related article: TransCanada Might Rethink Potential Keystone Launch Date

The Railway Association of Canada asserts that “99.9977” percent of all hazardous goods shipped by rail reach their destination without a release caused by a train accident, adding that the railway oil spillage rate is lower than for pipelines.

All of which will no doubt comfort the remaining citizens of Lac-Megantic.

Who may have to wait a long time for compensation, as Montreal, Maine & Atlantic Railway chairman Ed Burkhardt said the company is now depending on its insurers to begin paying for the cleanup and provide compensation, raising doubts publicly on whether the company will even survive.

How much money is involved? Estimates range from $500 million to more than $1 billion. So, no doubt to prevent such a debacle in the U.S., Ambassador Doer believes that Obama will approve Keystone XL.

Such a deal.

By. John C.K. Daly of Oilprice.com

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  • Priscilla King on August 01 2013 said:
    Yikes. Doesn't say much for a country if they consider their trains a threat!
  • Brianroy on August 01 2013 said:
    Canada needs to develop its energy resources on its own, and should explore the option of running the oil sands by pipeline through Quebec to the Atlantic, refining the oil there, and then selling it to those oil companies that will then distribute it up and down the East Coast of the United States. Why pay for Middle Eastern Oil when Canada can cut transportation and other costs and boost the bottom line exponentially, and what oil company will really turn down higher profits? The Government of Canada can actually benefit immensely through a free market end run around Obama, who is illegally in office NOT being a United States Natural Born Citizen, but one who is so viewed as a Natural Born Citizen of Kenya (and was at the time of birth also a Natural Born Citizen of a British Commonwealth); who can neither produce birth identity docs in court because they are all fabrications, nor claim in court his own Social Security Number because his was first used by someone born in 1890, which is illegal. Obama is all about using the new Healthcare Legislation to make the United States convert into a more hardline Socialist Republic than the U.S.S.R. was. He erroneously hates the British with black racism, and also erroneously considers Canada with the same contempt. May Canada follow my advice, and look forward to a new 100 - 200 billion dollar a year annual revenue stream. I would rather see Canada enriched than the radical Islamic megalo-maniacal Middle East wanting to use their monies to export terrorism and world enslavement (literally) to Islam.
  • Jim on August 02 2013 said:
    Transport by train would suit a major Obama supporter. Warren Buffet who invested big time into rail less than a year before the Keystone issue rose to public view.
    Is the decision not to build the pipeline simply political payback to a loyal donor?
  • Jon Zentihily on August 04 2013 said:
    Obama's stance on Keystone XL is entirely political, and entirely changeable depending upon political winds.

    Keystone XL foes are laughably idiotic in their steely-eyed determination to save the planet by slowing down one little route of oil transport among many. By making oil transport less efficient, at least they are increasing CO2 emissions! Not quite what they intended.

    You might think the 1970's era end of the world doomers would die out, but no, there's an eco-dumbkopf born every minute.

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