05 Dec 2013: Analysis

Shipping Crude Oil by Rail:
New Front in Tar Sands Wars

As debate over the Keystone XL and other pipeline projects continues, crude oil from the Alberta tar sands and western U.S. oil fields is increasingly being hauled by railroad. Critics warn that this development poses a threat not only to the environment but to public safety.

by jacques leslie

On New Year's Eve 2009, a train with 104 tank cars of light crude oil traveled 1,123 miles from North Dakota's Bakken oil fields to a terminal in Stroud, Oklahoma, and opened a new front in the war over development of Canada's tar sands.

It didn't seem that way at the time. EOG Resources, the company that owned the oil, simply needed a way to get its crude out of North Dakota,
Crude oil rail transport
Andrew Burton/Getty Images
Tanker cars at a depot in North Dakota, where railroads now move 600,000 barrels of oil a day from the Bakken fields.
where production since the advent of oil fracking there nearly a decade earlier had far exceeded the capacity of available pipelines and trucks. The 2009 shipment is now considered a bellwether event, marking the first significant movement of U.S. crude oil by rail in many decades. Less than four years later, railroads have shipped as much as 600,000 barrels a day from the Bakken and are transporting crude not just from North Dakota but from oil-fracking sites in Montana, Texas, Utah, Ohio, Wyoming, Colorado, and southern Canada. Across North America, trains are now moving nearly a million barrels of crude a day, and that number will continue to grow rapidly.
Some analysts have declared that crude from Alberta will find a way to refineries regardless of Keystone XL’s fate.

A million barrels a day is more than the capacity of the controversial Keystone XL pipeline, 830,000 barrels — a fact that has led some oil industry analysts to declare that heavy crude from Alberta's tar sands will find a way to refineries regardless of Keystone XL's fate. Even The New York Times has supported this claim. An October 30 Times news story, headlined "Looking for a Way Around Keystone XL, Canadian Oil Hits the Rails," said, "Even if President Obama rejects the pipeline, it might not matter much" because of rail's emergence. That's also the prevailing view at the U.S. State Department, whose March 2013 environmental assessment of Keystone XL concluded that rail "should be capable" of transporting all tar sands crude even "if there were no additional pipeline projects approved."

Tar sands advocates are happy to promote the idea that continued development of the tar sands is inevitable because it implies that opposition to Keystone XL is futile and that Americans should therefore cash in on its jobs and construction expenditures before somebody else does. However, as tar sands opponents point out, much evidence suggests that this conclusion is at best premature and perhaps flat-out wrong.

What is certain is that rail has now joined a half-dozen proposals for tar sands pipelines as an arena of contention, with the future of the Florida-sized Alberta basin of western Canada at stake. Just as pipeline safety has been a key issue in the Keystone XL debate, this development
Safety questions have intensified since a tanker accident in Quebec last July that killed 47 people.
has raised questions about the safety of crude-by-rail to new prominence, especially since a tanker accident in Quebec last July that killed 47 people. With these safety questions, such arcane matters as the design of tank cars and the carbon-hydrogen ratio of their contents have taken on heightened importance. How regulations governing these issues are decided will help determine whether the tar sands basin — the world's largest fossil fuel reserve outside Saudi Arabia — stays close to its current production level of 1.8 million barrels a day or expands to four or five times as much, as its developers hope. That in turn will have a significant impact on climate change's intensity in coming decades.

Of the million barrels now being shipped by rail in North America, only a small fraction — around 50,000 barrels — consists of the "heavy crude" that is produced in the tar sands; the rest is "light crude" from southern Alberta, Saskatchewan, and the U.S. Light crude is hydrogen-heavy and carbon-light; its high hydrogen content enables it to flow easily but also makes it alarmingly explosive. Bitumen, the chief constituent of heavy crude, is the opposite, carbon-heavy and hydrogen-light, as viscous as peanut butter, unable to flow through pipelines unless diluents are added to it, but also unable to be loaded into railcars unless it is heated or diluted. Heavy crude is therefore more expensive to transport by rail than light crude, which is one reason tar sands crude lags far behind light crude in rail shipments. Another is that few rail cars are equipped to carry heavy crude. Some oil industry analysts predict that both obstacles will eventually fall away, leading to massive heavy crude transport by rail, while others think that rail will never serve more than a niche market, serving newly developed oil fields only until pipelines to them are built.

Sandy Fielden, an energy markets consultant at RBN Energy and blogger whose entries include "Crude Loves Rock'n'Rail," said in an interview, "If there is money to be made, people will figure out a way of getting oil to market. Pipelines are the safest and most efficient way to accomplish that, but if there aren't pipelines, people will figure out alternatives, and clearly
Keystone XL is only one of seven proposed pipeline intended to transport tar sands crude.
the current emphasis on crude-by-rail is one such alternative."

Yet the Canadian Association of Petroleum Producers, whose member companies produce about 90 percent of Canada's crude oil and natural gas, takes a less upbeat view of rail transport. Rail is "a complement to pipelines," said Greg Stringham, the group's vice president for markets and oil sands. "The rail companies can provide some service on a short-term, short-distance basis, maybe even longer-distance, until a pipeline is in place...They're seeing this as an opportunity to be much more complementary to the long-haul pipeline system that needs to be built."

Whether rail replaces or only complements pipelines, the oil industry's budding romance with it is not necessarily a sign of the tar sands' rosy prospects, for it could also be an indication of developers' setbacks in building pipelines. Although American media provide relentless coverage of Keystone XL's prospects, their focus is myopic. Keystone XL is only one of seven proposed pipelines intended to transport tar sands crude — the projects extend from Alberta not just south to the Gulf of Mexico but east and west to both the Atlantic and Pacific coasts, and are aimed at reaching vast export markets from ports in Portland, Maine; St. John, New Brunswick; Kitimat, British Columbia; and Anacortes, Washington.

The Canadian and Alberta governments avidly support all these proposals, yet opponents have entangled every one in so much protest and legal conflict that their fates are uncertain. Based on the assumption that at least some of the pipelines will be approved, tar sands developers are investing at a current rate of $19 billion a year in tar sands projects. Now they face the real possibility that delays in pipeline construction (never mind outright rejections) will leave them without transport outlets within a year or two. That's one reason that last month Alberta bitumen sold for as low as $29.40 a barrel, while benchmark West Texas light crude sold for $94.25. There's a hint of desperation in the developers' embrace of rail.

Just like pipelines, railroads face significant obstacles as conveyors of tar sands crude — and for some of the same reasons. Just as pipelines leak, trains derail, sometimes with devastating consequences. On the night of July 6, 2013, a train with 72 tank cars carrying Bakken light crude was left on a hill overlooking the Quebec town of Lac-Mégantic, 130 miles east of Montreal. The train's sole engineer apparently failed to apply hand brakes to enough rail cars before he checked into a hotel for the evening, and at 12:56 a.m. the train began rolling. It reached a speed of 60 miles per hour — far exceeding a 10-mile-per-hour limit considered safe in the town — when, just after crossing Lac-Mégantic's main street, it derailed. Bakken crude is highly flammable, and explosions went on for hours, leveling half the town of 6,000 people, destroying 30 buildings and killing 47 people, including six whose bodies were so thoroughly vaporized in the prodigiously high temperatures that no trace of them was found.

The accident was the biggest Canadian train disaster in more than a century. It received massive coverage in Canada, but it got far less
The Quebec accident revealed the lax state of railroad regulation in Canada and the U.S.
attention in the U.S. That's unfortunate, since it revealed the lax state of regulation of the railroad industry in both Canada and the U.S — and the huge expansion of rail-by-crude increases the odds that such accidents will happen again. Employing only one engineer to operate a train that was nearly a mile long might have been imprudent, but it did not violate regulations. The light crude in the Lac-Mégantic train turned out to have been mislabeled as conventional crude, which is not explosive, but even with proper labeling, the dangerous cargo wouldn't have had to be handled any differently.

As long ago as 1991, the U.S. National Transportation Safety Board singled out the model of tank car used in the Lac-Mégantic train for its susceptibility to releasing its contents when derailed. Nevertheless, this model, known as the DOT-111, dominates North American tank fleets. Older versions are entirely unsuited to carrying light crude, but thanks to the crude-by-rail boom there's a backlog of at least two years on orders for an upgraded, somewhat safer version that has been in circulation since 2011.

Frustrated by the halting pace of change to federal railroad regulations, the American Association of Railroads voluntarily tightened tank car rules in 2011. Last month, after a 90-car train carrying Bakken light crude derailed and ignited in western Alabama, the association called on federal regulators to require retrofits of 72,000 older DOT-111s and upgrades in 14,000 newer ones to lessen the likelihood of light crude explosions after derailment. If carried out quickly, this change would limit the supply of tank cars even more, and would place still another obstacle in the way of a rapid buildup in rail shipments of tar sands crude.

Unlike Bakken crude, bitumen-laden heavy crude is not explosive, but rail shipments of it pose another sort of danger: If bitumen is spilled into a body of water, it sinks, making cleanups highly difficult, if not impossible. That was clearly demonstrated when an Enbridge Inc. pipeline leaked more than 31,000 barrels of tar sands crude into Michigan's Kalamazoo

MORE FROM YALE e360

Tar Sands Oil Boom Drives
Push for A Northern Pipeline

Tar Sands Oil Boom Drives
Push for A Northern Pipeline
The rapid development of Alberta’s tar sands has spawned a proposed 731-mile pipeline that would transport oil to the British Columbia coast. As Ed Struzik reported last year, the project is strongly opposed by conservationists and First Nations leaders, who fear the environmental risks it would bring.
READ MORE
River in July 2010. Bitumen covered 36 miles of riverbed, triggering a complicated cleanup that has so far cost the company about a billion dollars and is far from complete.

In addition, some refineries lack offloading facilities to handle crude arriving by rail. An October 8 Goldman Sachs report questioned whether refiners "have access to sufficient terminal off-loading capacity to handle the growing rail volumes of heavy crude oil." Shipping crude by rail is more expensive than using pipelines, and construction of new loading and offloading facilities will drive the cost higher.

On top of this, some of these projects are certain to face local opposition. Communities with refineries may oppose proposed facilities to offload tar sands crude, since refining bitumen emits substantially more pollutants than conventional crude; communities with ports may fear that proposed crude-by-rail terminals will increase chances of oil spills in their waterways. And because tar sands oil extraction releases far more greenhouse gases than conventional crude does, some communities may also resist as a way of fighting climate change. Such concerns were reflected in recent decisions in Benicia, California, and Grays Harbor, Washington, to delay construction of crude-by-rail terminals while environmental evaluations are conducted.

"The rail guys right now are in the same space the pipeline guys were five years ago," said Keith Stewart, Greenpeace Canada's climate and energy campaign coordinator. "They're assuming they can have massive growth rates and there won't be any hiccups along the way. I think the pipeline guys have now realized it's not that easy, and the unnatural exuberance about rail will soon come crashing down in the same way."



POSTED ON 05 Dec 2013 IN Business & Innovation Energy Pollution & Health North America 

COMMENTS


Respectfully submit that "the rail guys" are NOT making the same mistake (or assumption) vis a vis crude oil transport that "the pipeline guys" did before them. Do they want the business? Of course. But recent U.S. rail history is, among other things, a series of hiccups.

And, as Mr. Leslie himself notes, the AAR has moved proactively to set higher standards for tank cars before federal regulators demand the same. That's self-interest, sure, but bordering on *enlightened* self-interest, keenly aware that railroads, too, can quickly be seen as the environmental enemy with the next oil spill.

That certainly would counter, if not negate, the industry's effort (right or wrong, accurate or not) to position itself as the green alternative to truck traffic — and cost money in the long run.

Mr. Leslie's article is comprehensive and well thought out.

Douglas John Bowen
Managing Editor
RAILWAY AGE Magazine
New York, N.Y.
Posted by Douglas John Bowen on 05 Dec 2013


In my humble opinion, the use of rail cards to transport oil is the wrong this to do. While not risk-free pipelines do have the potential to transport more product without a spill than do rail cars. As for cleaning up bitumen, dredging offers a good and expeditious way to clean the material, as opposed to light oil that floats downstream spreading the contamination further.
Posted by Bill on 05 Dec 2013


POST A COMMENT

Comments are moderated and will be reviewed before they are posted to ensure they are on topic, relevant, and not abusive. They may be edited for length and clarity. By filling out this form, you give Yale Environment 360 permission to publish this comment.

Name 
Email address 
Comment 
 
Please type the text shown in the graphic.


jacques leslieABOUT THE AUTHOR
Jacques Leslie writes narrative nonfiction about global environmental issues. His book on dams, Deep Water: The Epic Struggle Over Dams, Displaced People, and the Environment, won the J. Anthony Lukas Work-in-Progress Award for its “elegant, beautiful prose.” He recently published an ebook, A Deluge of Consequences, that portrays a project in Bhutan to counter the effects of climate change.

 
 

RELATED ARTICLES


UN Panel Looks to Renewables
As the Key to Stabilizing Climate

In its latest report, the UN's Intergovernmental Panel on Climate Change makes a strong case for a sharp increase in low-carbon energy production, especially solar and wind, and provides hope that this transformation can occur in time to hold off the worst impacts of global warming.
READ MORE

On Fracking Front, A Push
To Reduce Leaks of Methane

Scientists, engineers, and government regulators are increasingly turning their attention to solving one of the chief environmental problems associated with fracking for natural gas and oil – significant leaks of methane, a potent greenhouse gas.
READ MORE

On Ravaged Tar Sands Lands,
Big Challenges for Reclamation

The mining of Canada’s tar sands has destroyed large areas of sensitive wetlands in Alberta. Oil sands companies have vowed to reclaim this land, but little restoration has occurred so far and many scientists say it is virtually impossible to rebuild these complex ecosystems.
READ MORE

In a Host of Small Sources,
Scientists See Energy Windfall

The emerging field of “energy scavenging” is drawing on a wide array of untapped energy sources­ — including radio waves, vibrations created by moving objects, and waste heat from computers or car exhaust systems — to generate electricity and boost efficiency.
READ MORE

As Fracking Booms, Growing
Concerns About Wastewater

With hydraulic fracturing for oil and gas continuing to proliferate across the U.S., scientists and environmental activists are raising questions about whether millions of gallons of contaminated drilling fluids could be threatening water supplies and human health.
READ MORE

 

MORE IN Analysis


UN Panel Looks to Renewables
As the Key to Stabilizing Climate

by fred pearce
In its latest report, the UN's Intergovernmental Panel on Climate Change makes a strong case for a sharp increase in low-carbon energy production, especially solar and wind, and provides hope that this transformation can occur in time to hold off the worst impacts of global warming.
READ MORE

Will Increased Food Production
Devour Tropical Forest Lands?

by william laurance
As global population soars, efforts to boost food production will inevitably be focused on the world’s tropical regions. Can this agricultural transformation be achieved without destroying the remaining tropical forests of Africa, South America, and Asia?
READ MORE

New Satellite Boosts Research
On Global Rainfall and Climate

by nicola jones
Although it may seem simple, measuring rainfall worldwide has proven to be a difficult job for scientists. But a recently launched satellite is set to change that, providing data that could help in understanding whether global rainfall really is increasing as the planet warms.
READ MORE

UN Climate Report Is Cautious
On Making Specific Predictions

by fred pearce
The draft of the latest report from the Intergovernmental Panel on Climate Change warns that the world faces serious risks from warming and that the poor are especially vulnerable. But it avoids the kinds of specific forecasts that have sparked controversy in the past.
READ MORE

Rebuilding the Natural World:
A Shift in Ecological Restoration

by richard conniff
From forests in Queens to wetlands in China, planners and scientists are promoting a new approach that incorporates experiments into landscape restoration projects to determine what works to the long-term benefit of nature and what does not.
READ MORE

In the Pastures of Colombia,
Cows, Crops and Timber Coexist

by lisa palmer
As an ambitious program in Colombia demonstrates, combining grazing and agriculture with tree cultivation can coax more food from each acre, boost farmers’ incomes, restore degraded landscapes, and make farmland more resilient to climate change.
READ MORE

Soil as Carbon Storehouse:
New Weapon in Climate Fight?

by judith d. schwartz
The degradation of soils from unsustainable agriculture and other development has released billions of tons of carbon into the atmosphere. But new research shows how effective land restoration could play a major role in sequestering CO2 and slowing climate change.
READ MORE

Is Weird Winter Weather
Related to Climate Change?

by fred pearce
Scientists are trying to understand if the unusual weather in the Northern Hemisphere this winter — from record heat in Alaska to unprecedented flooding in Britain — is linked to climate change. One thing seems clear: Shifts in the jet stream play a key role and could become even more disruptive as the world warms.
READ MORE

Amid Elephant Slaughter,
Ivory Trade in U.S. Continues

by adam welz
In the last year, the U.S. government and nonprofits have put a spotlight on the illegal poaching of Africa’s elephants and Asia’s insatiable demand for ivory. But the media coverage has ignored a dirty secret: The U.S. has its own large ivory trade that has not been adequately regulated.
READ MORE

Monitoring Corporate Behavior:
Greening or Merely Greenwash?

by fred pearce
Companies with bad environmental records are increasingly turning to a little-known nonprofit called TFT to make sure they meet commitments to improve their practices. It remains to be seen if this is just a PR move or a turning point for corporate conduct.
READ MORE


e360 digest
Yale
Yale Environment 360 is
a publication of the
Yale School of Forestry
& Environmental Studies
.

SEARCH e360



Donate to Yale Environment 360
Yale Environment 360 Newsletter

CONNECT

Twitter: YaleE360
e360 on Facebook
Donate to e360
View mobile site
Bookmark
Share e360
Subscribe to our newsletter
Subscribe to our feed:
rss


ABOUT

About e360
Contact
Submission Guidelines
Reprints

e360 video contest
Yale Environment 360 is sponsoring a contest to honor the best environmental videos.
Find more contest information.


DEPARTMENTS

Opinion
Reports
Analysis
Interviews
Forums
e360 Digest
Podcasts
Video Reports

TOPICS

Biodiversity
Business & Innovation
Climate
Energy
Forests
Oceans
Policy & Politics
Pollution & Health
Science & Technology
Sustainability
Urbanization
Water

REGIONS

Antarctica and the Arctic
Africa
Asia
Australia
Central & South America
Europe
Middle East
North America

E360 en Español

Universia partnership
Yale Environment 360 articles are now available in Spanish and Portuguese on Universia, the online educational network.
Visit the site.

e360 MOBILE

Mobile
The latest
from Yale
Environment 360
is now available for mobile devices at e360.yale.edu/mobile.

e360 VIDEO

Warriors of Qiugang
The Warriors of Qiugang, a Yale Environment 360 video that chronicles the story of a Chinese village’s fight against a polluting chemical plant, was nominated for a 2011 Academy Award for Best Documentary (Short Subject). Watch the video.


header image
Top Image: aerial view of Iceland. © Google & TerraMetrics.

e360 VIDEO

Colorado River Video
In a Yale Environment 360 video, photographer Pete McBride documents how increasing water demands have transformed the Colorado River, the lifeblood of the arid Southwest. Watch the video.

 

OF INTEREST



Yale