Tag Archives: Canadian regulation

Alberta’s possible pivot to the left alarms Canadian oil sector

Repost from Reuters

Alberta’s possible pivot to the left alarms Canadian oil sector

By Scott Haggett and Nia Williams, May 4, 2015 7:07am EDT
Alberta NDP Leader Rachel Notley meets with Mayor Naheed Nenshi in his office in Calgary, Alberta, April 30, 2015. REUTERS/Todd Korol

(Reuters: CALGARY, Alberta) – Canada’s oil-rich province of Alberta is on the cusp of electing a left-wing government that can make life harder for the energy industry with its plans to raise taxes, end support for key pipeline projects and seek a bigger cut of oil revenues.

Polls suggest Tuesday’s election is set to end the Conservative’s 44-year reign in the province that boasts the world’s third-largest proven oil reserves and now faces recession because of the slide in crude prices.

Surveys have proven wrong in Canadian provincial elections before and voters may end up merely downgrading the Conservatives’ grip on power to a minority government.

Yet the meteoric rise of the New Democratic Party and the way it already challenges the status-quo of close ties between the industry and the ruling establishment has alarmed oil executives. The proposed review of royalties oil and gas companies pay the government for using natural resources and which could lead to higher levies, is a matter of particular concern.

“Now is not the time for a review of oil and natural gas royalties,” Tim McMillan, president of the Canadian Association of Petroleum Producers, the country’s top oil lobby, said in a statement.

A 2007 increase in the levy was rolled back when the global financial crisis struck and oil executives say today the time is equally bad to try it again.

Yet the left’s leader Rachel Notley, a former union activist and law school graduate, has shot up in popularity ratings in the past months advocating policies that have been anathema for many conservative administrations.

She says she would not lobby on behalf of TransCanada Corp’s controversial Keystone XL pipeline or support building of Enbridge Inc’s Northern Gateway pipeline to link the province’s oil sands with a Pacific port in British Columbia. Citing heavy resistance from aboriginal groups to the Enbridge line, Notley says Alberta should back those that are more realistic such as TransCanada’s Energy East pipeline to the Atlantic ocean.

PACKING UP?

Notley also advocates a 2 percentage point rise in Alberta’s corporate tax rate to 12 percent to shore up its budget that is expected to swing from a surplus to a C$5 billion deficit in 2015/2016 as energy-related royalty payments and tax revenues shrink.

Even with the proposed corporate tax hike Alberta’s overall taxes would remain the lowest nationally. Oil executives warn, however, that any new burdens at a time when the industry is in a downturn, shedding jobs and cutting spending, could prompt firms to move corporate head offices out of the province.

“Business is mobile,” said Adam Legge, president of the Chamber of Commerce in Calgary where most of Canada’s oil industry is based. “Capital, people and companies move.”

Ironically, the challenge the oil industry and the Conservatives face is in part a by-product of Alberta’s rapid growth fueled by the oil-sands boom.

The influx of immigrants from other parts of Canada and overseas has changed the once overwhelmingly white and rural province. Today Alberta is one of the youngest provinces and polls show younger and more diverse population is more likely to support left-wing causes such as environment and education and more critical of big business. The New Democratic Party still only got 10 percent of the votes in the 2012 vote, but an election of a Muslim politician as a mayor of Calgary in 2010 served as an early sign of the changing political landscape.

The Conservatives themselves and their gaffe-prone leader Premier Jim Prentice also share the blame for the reversal of fortunes with one poll showing them trailing the left by 21 percent to 44 percent.

Prentice angered voters when he told Albertans to “look in the mirror” to find reasons for the province’s fiscal woes and then passed a budget in March that raised individual taxes and fees for government services but spared corporations.

Scandals – Prentice’ s predecessor left last year because of a controversy over lavish spending – and blunders added to the party’s woes.

The NDP vaulted to the top of the polls after Notley’s strong performance in an April 23 televised debate, when Prentice, former investment banker, drew fire for suggesting his rival struggled with math.

Then there is voter fatigue with a party seen as too comfortable and scandal-prone after decades in power.

“It’s still the same gang, the same policy, same procedures, the same concept of entitlement,” said one executive at a large oil and gas producer who declined to be named because he is not authorized to talk to the media. “I know some extremely neo-conservative guys who have said enough is enough.”

(Additional reporting by Julie Gordon in Vancouver and Mike De Souza in Ottawa; Editing by Amran Abocar and Tomasz Janowski)
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    NY Times: New Oil Train Rules Are Hit From All Sides

    Repost from The New York Times

    New Oil Train Rules Are Hit From All Sides

    By Jad Mouawad, May 1, 2015
    An oil train rolls through Surrey, N.D., in the Bakken region, where oil production has grown at a spectacular rate in recent years. Credit Jim Wilson/The New York Times

    Ending months of uncertainty and delays, federal regulators on Friday unveiled new rules for transporting crude oil by trains, saying the measures would improve rail safety and reduce the risks of a catastrophic event.

    But the rules quickly came under criticism from many sides. Lawmakers and safety advocates said the regulations did not go far enough in protecting the public, while industry representatives said some provisions would be costly and yield few safety benefits.

    More than two years in the making, the rules followed a spate of derailments, explosions and oil spills around the country that highlighted the hazards of shipping large quantities of potentially explosive material on rails. The regulations introduce a new tank car standard for oil and ethanol with better protections, and mandate the use of electronically controlled brakes.

    Facing growing pressure from members of Congress as well as local and state officials, the Department of Transportation has taken repeated steps in the last two years to tackle the safety of oil trains and reassure the public. Last month, for example, it set lower speed limits for oil trains going through urban areas.

    Under the new rules, the oldest, least safe tank cars would be replaced within three years with new cars that have thicker shells, higher safety shields and better fire protection. A later generation of tank cars, built since 2011 with more safety features, will have to be retrofitted or replaced by 2020.

    Oil trains — with as many as 120 cars — have become common sights in cities like Philadelphia, Albany and Chicago as they make the slow journey from the Bakken region of North Dakota, where oil production has surged in recent years.

    Local and state officials have complained that rail-friendly rules make it difficult to predict when trains will pass through.

    But regulators retreated from a provision that would have forced railroads to notify communities of any oil train traffic. Instead, railroads will need to have only a “point of contact” for information related to the routing of hazardous materials.

    Several members of Congress, particularly those representing states like Washington, Oregon, North Dakota and New York that have seen a surge in train traffic, said the rules did not go far enough and signaled that legislation might be needed.

    Senators Ron Wyden and Jeff Merkley of Oregon said they were disappointed that transportation officials had not expanded public information about oil train routes.

    “Instead of providing first responders more details about oil shipments, railroads will simply be required to give our firefighters a phone number,” they said.

    Railroads said they welcomed the new regulations but objected to a provision that would require tank cars to have electronically controlled pneumatic brakes by 2021. The Department of Transportation said the new brakes, known as E.C.P., are more effective than air brakes or dynamic brakes that are currently being used.

    “The D.O.T. couldn’t make a safety case for E.C.P. but forged ahead anyway,” Edward R. Hamberger, the president and chief executive of the Association of American Railroads, said in a statement. “I have a hard time believing the determination to impose E.C.P. brakes is anything but a rash rush to judgment.”

    The railroad association has estimated in comments filed to the Transportation Department last year that installing the new brakes would cost $9,665 per tank car. The Railway Supply Institute, which represents tank car makers, also pushed against the use of those brakes, saying their effectiveness was not proved and would not provide a significant safety advantage.

    Transportation officials said the new type of brakes was already in use by some railroads for other types of commodities. Their use would decrease the chances of a catastrophic pileup, reduce the number of punctured cars in an accident, or allow train operators to stop faster if there was an obstacle on the tracks.

    Sarah Feinberg, the acting administrator of the Federal Railroad Administration, said: “The mission of the F.R.A. is safety and not focusing on what is convenient or inexpensive or provides the most cost savings for the rail industry. When I focus on safety, I land on E.C.P. It’s a very black-and-white issue for me.”

    There have been five explosions and spills this year alone, four in the United States and one in Canada. In July 2013, 47 people died in Canada after a runaway train derailed and exploded in the city of Lac-Mégantic, Quebec.

    “I am hopeful the rail industry will accept this rule, and will follow this rule,” Anthony Foxx, the transportation secretary, said at a news conference in Washington. He appeared with Canada’s transport minister, Lisa Raitt, who said Canadian and American regulations would be aligned.

    A central question before the administration was to determine what level of protection the new generation of cars should have and how quickly to roll them out.

    The new rules create a new standard, “high-hazard flammable trains,” defined as “a continuous block of 20 or more tank cars loaded with flammable liquid or 35 or more tank cars loaded with a flammable liquid dispersed through a train.”

    By 2018, the rule would phase out older tank cars, DOT-111s, long known to be ill suited for transporting flammable material. A newer generation of cars, known as CPC-1232, would have to be retired or refitted to meet the new standard, DOT-117, by 2020.

    All cars built under the DOT-117 standard after Oct. 1, 2015, will have a thicker nine-sixteenths-inch tank shell, a one-half-inch shield running the full height of the front and back of a tank car, thermal protection and improved pressure-relief valves and bottom outlet valves.

    Senator Charles E. Schumer, Democrat of New York, said Friday’s announcement gave railroads too much time to remove older cars from service. Mr. Schumer was one of seven senators who unveiled a bill that would seek to impose a fee of $175 per shipment on older cars to speed up their removal from service.

    “The good news is that the standards are predictable, but the bad news is that the phaseout time is too lenient,” Mr. Schumer said.

    Senator Marie Cantwell, Democrat of Washington, was more forceful, saying that the new regulations also failed to reduce the volatility of Bakken crude, which is more likely to catch fire and explode than other forms of crude.

    “It does nothing to address explosive volatility, very little to reduce the threat of rail car punctures, and is too slow on the removal of the most dangerous cars,” she said. “It’s more of a status quo rule.”

    Oil companies, though, said the mandate to build new tank cars to replace older models starting in 2018 would stretch the industry’s manufacturing ability and lead to shortages.

    Placing blame on the railroads, Jack Gerard, the chief executive of the American Petroleum Institute, said regulators should focus instead on preventing derailments and enhancing track inspection and maintenance.

    The spectacular growth of oil production from the Bakken region, negligible only a few years ago and now exceeding a million barrels a day, has transformed the domestic energy industry. It has placed the United States back on a path to oil self-sufficiency, and profoundly disrupted international energy markets.

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      Canada Transport Watchdog to Introduce New Tank Cars Ahead of Schedule

      Repost from Insurance Journal (Reuters)

      Canada Transport Watchdog to Introduce New Tank Cars Ahead of Schedule

      By David Ljunggren | March 18, 2015
      RTR4PZHU
      IN PHOTO: Tanker rail cars burn after a crude oil train derailment 50 miles (80 km) south of Timmins, Ontario, in this picture from the Transportation Safety Board of Canada taken in Gogama, Ontario, February 16, 2015. Canadian National Railway Co is still cleaning up spilled oil and removing damaged rail cars after a weekend derailment on its line at a remote site. The company said 29 of 100 cars on the train heading from Alberta’s tar sands to eastern Ontario derailed late on Saturday and seven caught fire. There were no injuries. Picture taken February 16, 2015. REUTERS/Transportation Safety Board of Canada/Handout via Reuters

      Canada’s transportation watchdog said that recent fiery derailments of trains hauling crude oil mean a new generation of stronger tanker wagons should be introduced ahead of schedule.

      The Transportation Safety Board (TSB) is probing two accidents within the last month involving Canadian National Railway Co. oil trains which came off the tracks and caught fire near the small northern Ontario town of Gogama.

      Both trains were hauling CPC-1232 crude tankers, meant to be safer than the older DOT-111 models that blew up in downtown Lac-Megantic, Quebec in 2013, killing 47 people. Canada last week unveiled tough standards for a new generation of tanker cars that would replace the CPC-1232s by 2025 at the latest.

      “While the proposed standards look promising, the TSB has concerns about the implementation timeline, given initial observations of the performance of CPC-1232 cars in recent derailments,” the agency said in a release.

      “If older tank cars, including the CPC-1232 cars, are not phased out sooner, then the regulator and industry need to take more steps to reduce the risk of derailments or consequences following a derailment carrying flammable liquids,” it said, but gave no details.

      The agency said track failures may have played a role in each of the Gogama derailments as well as in the case of an oil train that left the tracks near Minnipuka, also in northern Ontario. No crude caught fire in that accident.

      The TSB has issued a safety advisory letter asking the federal transport ministry to review the risk assessments conducted for the area.

      “Petroleum crude oil unit trains transporting heavily-loaded tank cars will tend to impart higher than usual forces to the track infrastructure during their operation,” said the agency.

      “These higher forces expose any weaknesses that may be present in the track structure, making the track more susceptible to failure.”

      It noted trains traveling in the area were under orders to travel slowly to protect against various infrastructure and track maintenance issues.

      CN spokesman Jim Feeny said the company “has enhanced its already rigorous infrastructure and mechanical inspection procedures on this northern Ontario rail corridor.”

      The office of Transport Minister Lisa Raitt – which has overall responsibility for regulating the rail industry – was not immediately available for comment.

      (Additional reporting by Allison Martell in Toronto; editing by Chizu Nomiyama and Marguerita Choy)

      Related article:
      Canada Proposes Tough New Oil Tank Car Standards

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        Canada’s Transportation Safety Board points to track issues in derailments

        Repost from insideHALTON.com

        TSB points to track issues in derailments

        By Paola Loriggio, The Canadian Press, March 17, 2015
        TSB points to track issues in derailments-Image1
        A CN Rail train derailment near Gogama, Ont., is shown in a Sunday, March 8, 2015 handout photo. Canada’s transportation investigator says track infrastructure failures may have played a role in three recent derailments involving oil-laden trains in northern Ontario. THE CANADIAN PRESS/HO – Glenn Thibeault

        Canada’s transportation investigator says track infrastructure failures may have played a role in three recent derailments involving oil-laden trains in northern Ontario.

        The Transportation Safety Board says it wants Transport Canada to review the risk assessments for a stretch of track known as the CN Ruel subdivision following the fiery derailments in Gogama and Minnipuka.

        It says trains have already been ordered to travel slowly on the Class 4 welded rail track due to “various infrastructure and track maintenance issues,” but that heavily loaded tank cars often exert “higher than usual forces” on the track.

        The board says that exposes weaknesses in the track and makes it more susceptible to failure.

        The agency says its preliminary observations on the March 7 Gogama derailment also found the tank cars performed similarly to those involved in the deadly derailment in Lac-Megantic, Que., despite meeting upgraded safety standards for Class 111 tank cars.

        Similar observations were made about a Feb. 14 derailment near the same community, which is about 80 kilometres south of Timmins.

        The derailments have fuelled the debate over transporting oil by rail and prompted the transportation ministers of Ontario and Quebec to express concern to their federal counterpart.

        Last week, Ottawa proposed tough new standards for rail tank cars used to transport crude oil that would phase out the much-criticized Class 111 tank cars by 2025.

        The proposal would require the new tank cars to have outer “jackets,” a layer of thermal protection, and thicker steel walls.

        The Transportation Safety Board said Tuesday the proposed standards “look promising,” but must be implemented more quickly than suggested “given initial observations of the performance” of the upgraded Class 111 in recent derailments.

        “If older tank cars, including the (upgraded cars), are not phased out sooner, then the regulator and industry need to take more steps to reduce the risk of derailments or consequences following a derailment carrying flammable liquids,” it said.

         

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