Despite Risks, Canada's Tar Sands Industry Is Betting Big on Oil Trains

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Last year, Canadaย exported a record amount of tar sands oil to the U.S., despite low oil prices leading toย major lossesย once again for the struggling tar sands industry.ย That achievement required a big bump in haulingย oil by rail, with those dailyย volumes in late 2018 more than double the previous record in 2014 duringย the first oil-by-railย boom.

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

If Canada can open up new pipeline capacity, this scenario may change. However,ย Enbridge recently announced itsย Line 3 pipeline replacement will be delayed until at least the second half of 2020. That means if Canadian tar sands companiesย want toย 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: โ€œThe intention is to bridge us over to the next major pipeline expansion, so a fewย years.โ€

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

To help move things along, the Alberta government announced it will spend $3.7 billion to lease 4,400 rail tank cars.ย The province, heavily reliant on the tar sands industry, hopes to moveย an additional 120,000 bpd by mid-2020. There haven’t been many details on the Alberta plan made public, so it isn’t clear if the government will be moving an additional 120,000 bpd or if this will contribute to the estimatedย 600,000 bpdย total.ย 

This rapid ramp-up of moving crude by rail is causing congestion in the overall Canadian rail system, which likely will affectย oil-by-rail volumes asย well.

If the oil and rail industries do end up moving 600,000 bpd or more of oil by train, one thing is for certain: Accidents willย increase.

More Trains + Weak Regulations =ย Moreย Accidents

In February, just asย Alberta was announcing its oil-by-rail business plans, Canadian National Railway was dealing with an oil train derailment that caused aย roughlyย 264,000 gallon oil spill inย Manitoba.

That train was using the new model of retrofitted rail cars, which were promoted as safer for oil transport. However,ย those supposedly safer rail cars did little to prevent a major oil spill, much asย in 2018 when a train full of Canadian oilย derailed in Doon, Iowa, andย spilled 230,000 gallons of oil into a river’sย floodwaters.

As detailed on DeSmog, existing regulations ignore many of the risks of moving oil by rail. That means as oil volumes increase, we should expect derailments to increase too. And while the rail industry likes to tout its safety record, 2018 was not a good year for the Canadian rail industry โ€” which experienced an increase inย accidents.

The big increases in moving oil by rail will push the Canadian rail system to its limits over the next twoย years.ย 

Oil Train Activismย Continues

While Canadian oil train volumes are breaking records, thoseย numbers could be even higher if not for the efforts of activists effectively blocking new oil-by-rail infrastructure in Northย America.

Activists have blocked many proposed projects on Americaโ€™s West Coast and expansion efforts to the East Coast as well. Local municipalities for port cities have passed laws banning new fossil fuel infrastructure, which effectively blocked new oil-by-rail facilities in Portland, Oregon, and Baltimore, Maryland. The Portland law withstood multiple legal challenges by the oilย industry.

Despite these efforts, oil-by-rail volumes in America were 88 percent higher in October 2018 compared toย the previous October. However, volumes remainย below the peaks achieved in the first U.S. oil-by-rail boom, fueled by skyrocketing oil production in the Bakken Shale region of Northย Dakota.

This resurgence in oil-by-rail in America has led to activists and local communities pursuing new effortsย to address the growing risks as oil trains roll through their cities andย towns.

Despite the ban on new infrastructure in Portland, Oregon, one company is expanding its oil-by-rail offloading operations using permits that were approved before the ban went into place. The oil is being shipped into Portland and then loaded onto ships for export. While activists were unable to prevent the expansion, they say they are keeping tabs on theย activity.

Just to the north of Orgeon, the state of Washington is considering a bill that would create a vapor pressure limit of 9 pounds per square inch for any oil offloaded and stored in the state.ย A similar regulation was initiated at the federal level after the New York State Attorney Generalย filed a petitionย in 2015. That regulation, however, has gone nowhere since the beginning of the Trumpย administration.

Reducing the vapor pressure of oil, which essentially lowers the volatility,ย reduces the chance that it will ignite in aย derailment.

Despite these efforts, municipalities generally haveย very little ability to regulate the movements of oil by rail through their communities.ย As a result, Canada will be exportingย large volumes of oil into andย across the U.S. to refineries and ports for later export, despite the opposition of manyย communities along theย rails.

The oil and rail industries have been lucky that none of the recent oil train derailments have occurred in populated areas. With the lack of stringent safety regulations and the boom in oil train traffic expected for the next few years, the estimatedย 25 million people living within the oil train blast zones along North American railroads will be hopingย that lucky streak doesn’t runย out.

Main image:ย Canadian Pacific Railway locomotive.ย Credit: Mariano Mantel,ย CC BYNCย 2.0

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Justin Mikulka is a research fellow at New Consensus. Prior to joining New Consensus in October 2021, Justin reported for DeSmog, where he began in 2014. Justin has a degree in Civil and Environmental Engineering from Cornell University.

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