New stakes in the Lac-Mégantic frame up trial

The crucial importance of the Lac-Mégantic rail worker trial now underway is increased.

If Harding and Labrie are convicted, it will be seen and used by the rail industry in North America as vindication of their risky practices in handling cargoes like the one in the Lac-Mégantic wreck.  They will have escaped responsibility and railworkers and communities across the continent will be at risk.

 

Railway Age

Tuesday, October 10, 2017

Canadian CBR revival?

Canadian CBR revival?

TransCanada Corp’s recent decision to abandon its $12 billion plan to build the Energy East pipeline, combined with delays to other export pipeline projects, may create a resurgence in crude by rail (CBR) from Canada, according to a report from Reuters.

“Calgary-based TransCanada said on [Oct. 5] it will abandon Energy East, which would have taken crude from Alberta to the Atlantic Coast,” the news agency reported. “The move came after Canada’s National Energy Board (NEB) on Aug. 23 announced a tougher review process that would consider indirect greenhouse gas emissions.”

CBR is more expensive than pipeline for producers dealing with soft global oil prices. In the aftermath of the 2013 Lac-Mégantic disaster, and other CBR accidents that followed, the perception remains that CBR is less safe than pipeline. However, oil industry stakeholders say regulations for major energy projects in Canada “are now so stringent it is unlikely any company will try to build a new export pipeline,” Reuters noted. “A global oil market slump has also diminished appetite for building multibillion-dollar pipelines.”

As a result, Canada’s increasing crude oil production, expected to temporarily exceed pipeline capacity through 2019, “could face a longer-term lack of pipeline capacity and subsequent lower prices if crude becomes bottlenecked in Alberta,” Reuters said. “While pipeline congestion is bad news for producers, it will prove a boon for rail terminal operators who were badly burned when oil prices and CBR volumes crashed in 2014.”

Several crude oil producers and energy industry analysts Reuters contacted said that CBR traffic will increase:

• TORQ Transloading expects to move up to 20,000 barrels per day (BPD) of CBR in 2018, a threefold increase over 2017. “We have seen a pickup in activity and heightened interest as we move into next year. Some people are signing contracts and there’s just more spot movement,” CEO Jarrett Zielinski said.

• U.S. Development Partners LP and Gibson Energy, operators of a Hardisty, Alberta, terminal, have signed a three-year contract with a customer to ship 30,000 BPD of Canadian crude to Oklahoma, starting in October, using up idle loading capacity.

• Analysts are expecting a surge in CBR exports later this year as two major oil sands projects in northern Alberta add 270,000 BPD to Canada’s current 3.85 million BPD of production. Three export pipeline projects currently under development—Kinder Morgan Canada’s Trans Mountain, Enbridge Inc.’s Line 3 and TransCanada’s Keystone XL—have been delayed by continuing environmental opposition and legal challenges. Analysts at Tudor Pickering Holt estimate Canadian CBR volumes will rise from fewer than 200,000 BPD in early 2018 to a peak of around 550,000 BPD in 2019, when the Trans Mountain and Line 3 expansions are scheduled to begin operating. And even though CBR costs are up to two times that of pipeline, low global crude oil prices mean some producers will have little choice but to deal with higher costs if pipeline delays persist.

“If it looks like Trans Mountain could get delayed for years, people will start to reconsider their approach as the cost of rail in the current price environment means it is really hard for producers to make a return,” Morningstar analyst Sandy Fielden told Reuters, adding that some producers may shut down production.

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