Tag Archives: Irving Oil

Rail company ends shipping of crude oil in Maine & New Hampshire

Repost from The Portland Press Herald
[Editor:  Interesting summary of various effects on rail companies following the Lac-Mégantic disaster.  – RS]

Irving ends rail shipping of crude oil through Maine

The cutback is due to a drop in global demand and is not related to the Lac-Megantic rail disaster, the firm says.
By Tom Bell, July 15, 2015

Irving Oil has stopped shipping crude oil on railroads through Maine and has no plans to revive the practice.

The Canadian company, which operates an oil refinery in Saint John, New Brunswick, confirmed the policy change in a June 30 email to the Maine Center for Public Interest Reporting.

The change means there will be no more oil shipments though New Hampshire and southern and central Maine on Pan Am Railways. In addition, there will be no more oil shipments on the Eastern Maine Railway, which connects with Pan Am at Mattawamkeag and continues through Washington County to the Canadian border.

The cutback is because of global oil-supply-and-demand issues and is not related to the fallout from the Lac-Megantic rail disaster, Mark Sherman, Irving’s chief operating officer, told the Maine Center for Public Interest Reporting. The U.S. demand for Canadian-produced petroleum products has declined in the wake of an oversupply of oil from domestic and Mideast sources.

In 2012, Maine railroads shipped 5.2 million barrels of crude oil, but shipments declined sharply after the July 6, 2013 accident in Lac-Megantic, Quebec, when an unattended 74-car freight train carrying Bakken crude oil rolled and derailed, resulting in a fire and explosion that killed 47 people.

The railroad involved in the disaster, the Montreal, Maine & Atlantic Railway, never carried oil again and went bankrupt. Its successor, the Central Maine & Quebec Railway, also has never carried oil because of political opposition in Lac-Megantic.

Pan Am, whose trains travel through Portland, carried just 15,545 barrels of oil in all of 2014, according to records the company filed with the Maine Department of Environmental Protection. In 2015, Pan Am has carried 37,128 barrels. All those shipments occurred in February, the last month the railroad delivered oil to the Irving refinery, according to the Maine Center for Public Interest Reporting.

An official with Pan Am could not immediately be reached for comment.

John Giles, CEO of Central Maine & Quebec Railway, had been seeking an agreement with Lac-Megantic officials to restart oil train shipments through the Canadian town. On Tuesday, Giles said the railroad does not need to carry oil to be profitable.

“I was never counting on moving crude oil in the first place,” Giles said.

Giles said his railroad spent $10 million to upgrade the rail line last year and is spending $6 million this year, with about half of that investment in Maine.

An investigation after the Lac-Megantic accident found that the tank-car labels understated the flammability of the oil. Twenty-five companies have offered a total of $431 million (Canadian) to settle lawsuits arising out of the disaster. Irving Oil’s contribution is $75 million. The settlement is being considered by U.S. and Canadian courts.

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    Quebec town: Train disaster settlement provides very little

    Repost from AP News, The Big Story
    [Editor: Significant quote: “Lac-Megantic Mayor Colette Roy Laroche said over the weekend the estimated cost of rebuilding the town is about $2 billion.”  See also: repost from The Globe and Mail.  – RS]

    Quebec town: Train disaster settlement provides very little

    Jan. 12, 2015

    MONTREAL (AP) — The deputy mayor of a Quebec town where a fiery oil train derailment killed 47 people said Monday a proposed settlement fund for victims represents just a fraction of what’s needed.

    A $200-million settlement was announced last week, with more than one-half of the money going to various levels of government. About $50 million is destined for relatives of the 47 people who died in the July 2013 disaster, although the amount could rise. The settlement involves the Montreal Maine and Atlantic Canada Co., its insurance carrier, rail-car manufacturers and some oil producers. Three major companies have declined to participate — World Fuel Services, Canadian Pacific Railway and Irving Oil.

    Lac Megantic Deputy Mayor Richard Michaud said the families of the victims will share in the settlement money, which is “very little considering there are more than 20 orphans who must rebuild their lives.”

    “Two hundred million can seem like a lot of money but in my opinion, it’s very little,” Michaud said. “Much more than $200 million has been injected by the federal and provincial government to decontaminate the devastated territory alone, and we’re not even talking about reconstruction.”

    Much of downtown Lac Megantic was destroyed on July 6, 2013, by a raging fire caused when an unattended train with 72 oil tankers carrying volatile crude derailed after it began rolling downhill toward the town of 10,000 people. More than 60 tankers derailed and several exploded. Forty-seven people died, and dozens of buildings were destroyed.

    U.S. bankruptcy trustee Robert Keach is hoping the $200 million amount rises considerably before final approval of the plan in U.S. and Canadian courts.

    Keach, a court-appointed trustee in the defunct railroad’s bankruptcy case in Maine, said the draft sets aside about $50 million of the $200 million pool for wrongful death claims, which could increase through a reallocation of the federal government’s share to as much as $57 million.

    Up to $29 million could go to property damage, while another $19 million could go to bodily injury and moral damage claims, Keach said.

    Those amounts reflect a possible reallocation of the federal government’s take. As it currently stands, more than 52 percent of the overall funds would go to provincial, federal and municipal governments. The formulas could change if the amount goes up.

    “This is only a draft, so there are separate but parallel processes on both sides of the border,” Keach said. “The hope is we’ll have all the approval orders in place in early to mid-April so we could have a distribution in place by June or July.

    “We are hoping (the final amount) grows between now and then, but the deadline for it growing is going to be those final hearings,” he added.

    Yannick Gagne, owner of the Musi-Cafe, a business that was destroyed and where the majority of the victims died, said money won’t bring back the lives lost but could help with the relaunch of the downtown. Plenty more money will be required, however, to rebuild the town center essentially from scratch, he said.

    Reconstruction costs are significant and Gagne himself has taken out loans, used insurance money and paid out of pocket. He also spent seven months out of work.

    “For many people, it was a difficult time financially,” said Gagne, whose cafe quietly reopened on Dec. 15. “The mayor said it best —that $200 million is not sufficient.

    “We are a long way from what we need. And it’s not up to the population to pay for this tragedy.”

    Lac-Megantic Mayor Colette Roy Laroche said over the weekend the estimated cost of rebuilding the town is about $2 billion.

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      $200 million settlement money announced for victims of Lac-Mégantic rail disaster

      Repost from The Globe and Mail, Toronto
      [Editor: Significant quote: “‘The main three bad actors, World Fuels, Canadian Pacific Railway and Irving Oil, aren’t contributing a penny to this settlement. We’re going to keep going after them very hard in American court,’ said Mr. Flowers.”  – RS]

      Settlement money announced for victims of Lac-Mégantic rail disaster

      Justin Giovannetti, Jan. 09 2015
      Smoke rises from tanker cars in downtown Lac-Megantic, Que., on July 6, 2013. THE CANADIAN PRESS/Paul Chiasson
      Smoke rises from tanker cars in downtown Lac-Megantic, Que., on July 6, 2013. THE CANADIAN PRESS/Paul Chiasson

      The families of those who died in the Lac-Mégantic rail disaster will have access to a $200-million (U.S.) fund, according to details released Friday from the bankruptcy case of the railroad responsible for the 2013 tragedy in eastern Quebec.

      The fund still needs to be approved by Canadian and American courts before the first cheques are mailed to the families of the 47 people killed in the crash. A firefighter who died by suicide three months after the disaster was added to the list of victims. Money could flow as soon as this spring.

      “The families of the victims need to live with this disaster every day. Those in town have gone into debt to try to get back on our feet and rebuild. If this could let us start over our lives on the right foot, that would be great, but we haven’t seen any money yet,” Yannick Gagné, the owner of the Musi-Café bar where the majority of the victims died, told The Globe on Friday.

      Mr. Gagné has rebuilt the Musi-Café, but he’s still awaiting the help he says he was promised in the weeks after the disaster.

      Just after 1 a.m. on July 6, 2013, a train carrying 72 cars of crude oil from North Dakota to a refinery in New Brunswick careened while unmanned into the centre of town and derailed. A series of powerful explosions then levelled much of the city’s once picturesque downtown.

      The settlement money announced Friday was drawn not only from the liquidation of the Montreal, Maine & Atlantic Railway, the firm at the centre of the derailment, but also from a number of companies that extracted the oil, built the rail cars and leased them to shippers.

      According to Peter Flowers, a Chicago-based lawyer involved in a wrongful death lawsuit, talks are continuing about how much of the $200-million will go to the families of victims.

      “The money goes to the wrongful death victims – a class-action filed in Canada – those who suffered economic and emotional damages, and to the provincial and federal governments’ environmental claims,” Mr. Flowers said.

      Crews are still demolishing buildings in downtown Lac-Mégantic and locals remain jittery about how much compensation they’ll receive. Property owners downtown have received $37-million from the government. But victims of the disaster have so far received nothing from the companies.

      While bankruptcy trustee Robert Keach said he is seeking $500-million for the victims’ fund before Monday’s filing deadline, Mr. Flowers said the decision not to pay by three of the largest corporations linked to the disaster was responsible for the shortfall.

      “The main three bad actors, World Fuels, Canadian Pacific Railway and Irving Oil, aren’t contributing a penny to this settlement. We’re going to keep going after them very hard in American court,” said Mr. Flowers.

      The three companies have so far denied any responsibility for the 2013 disaster.

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        National Geographic series on Energy: New Oil Train Safety Rules Divide Rail Industry

        Repost from The National Geographic

        New Oil Train Safety Rules Divide Rail Industry

        Many railroad companies want more time to retrofit cars in the U.S. and Canada, but some are forging ahead.
        By Joe Eaton for National Geographic, October 31, 2014
        Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Quebec, Canada, Saturday, July 6, 2013.
        Smoke rises from railway cars that were carrying crude oil and derailed in downtown Lac-Megantic, Quebec, in 2013. Regulators in Canada and the United States have been working on new standards for trains that carry flammable fuel. – Photograph by Paul Chiasson, Associated Press

        Three days after an oil train derailed and exploded in 2013 in Lac-Mégantic, Quebec, killing 47 people, Greg Saxton wandered through the disaster site inspecting tank cars.

        For Saxton, the damage was personal. Some of the tank cars were built by Greenbrier, an Oregon-based manufacturer where he’s chief engineer. Almost every car that derailed was punctured, some in multiple places. Crude oil flowed from the gashes, fueling the flames, covering the ground, and running off into nearby waterways.

        Each day, as Saxton returned to the disaster zone, he passed a Roman Catholic church. “We never came and went when there wasn’t a funeral going on,” he said.

        In the wake of this and other recent accidents as energy production soars in North America, Canadian and U.S. regulators are proposing new safety rules for tank cars that carry oil, ethanol, and other flammable liquids. Saxton and Greenbrier have pushed for swift changes, but others in the industry are asking for more time to retrofit cars like the type that exploded at Lac-Mégantic. (See related stories: “Oil Train Derails in Lynchburg, Virginia” and “North Dakota Oil Train Fire Spotlights Risks of Transporting Crude“)

        “If you don’t set an aggressive time line, you won’t see improvements as quickly as the current safety demands require,” Jack Isselmann, a Greenbrier spokesman, said. “We’ve been frankly just perplexed and confused by the resistance.”

        Industry Pushes for More Time

        The tank cars that derailed at Lac-Mégantic were built before October 2011, when the American Railway Association mandated safety enhancements to the oil and ethanol tankers known in the industry as DOT-111 cars. The cars lacked puncture-resistant steel jackets, thermal insulation, and heavy steel shields, all of which could have lessened the destruction, experts say.

        In July, the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) proposed rules that, if finalized, would require higher safety standards for new oil cars. The rules also require owners to retrofit older cars or remove them from the rails by October 2017.

        Canadian regulators in July mandated that DOT-111 tank cars built before 2014 be retrofitted or phased out by May 2017. Transport Canada, which regulates rail safety, has also proposed aggressive safety standards for new tank cars and will seek industry comment this fall before finalizing its rules.

        Saxton and others at Greenbrier support the proposed regulations, which could be tremendously lucrative to the company. However, others in the rail supply industry say the proposed retrofit time line cannot be met.

        The Railway Supply Institute—a trade organization that represents the rail industry—has asked DOT to allow legacy cars in the oil and ethanol fleet to remain on the rails until 2020.

        Thomas Simpson, the institute’s president, said a survey of rail maintenance and repair shops found that only 15,000 of the roughly 50,000 non-jacketed legacy tank cars in the crude oil and ethanol fleet can be modified by the proposed 2017 deadline.

        For many cars, the retrofit process would include adding thermal protection systems, thick steel plates at the ends, and outer steel jackets, as well as reconfiguring the bottom outlet valve to ensure it does not break off and release oil during a derailment.

        That’s too much work to complete before the deadline, and the regulations have not yet been finalized, Simpson said.

        The proposed deadline, he said, will “idle cars waiting for shop capacity and adversely affect the movement of crude and ethanol.”

        Tying in the Keystone XL Debate

        The American Petroleum Institute, which represents the oil and natural gas industry, also says the 2017 deadline to retrofit tank cars is too aggressive and could slow oil and gas production. (See related story: “Blocked on Keystone XL, Oil-Sands Industry Looks East“)

        In comments to U.S. regulators and the press, API tied the safety upgrades to approval of the proposed Keystone XL pipeline, which would transport Alberta’s tar sands oil through the Midwest to Texas refineries.

        Workers stand before mangled tanker cars at the crash site of the train derailment and fire in Lac-Megantic, Quebec
        The deadly oil train accident at Lac-Megantic, Quebec, raised awareness of the potential dangers of transporting crude by rail. – Photograph by Ryan Remiorz, Associated Press

        If Keystone is not built, API president Jack Gerard said in September that the cost of the proposed oil tank rules would nearly double to $45 billion because demand for transporting crude by rail would be higher.  (See related story and map: “Keystone XL: 4 Animals and 3 Habitats in Its Path” and “Interactive Map: Mapping the Flow of Tar Sands Oil“)

        Both API and the Rail Supply Institute have also warned regulators that a short time line for retrofitting oil cars could cause a spike in truck shipments of oil and ethanol.

        But Anthony Swift, an attorney with the Natural Resources Defense Council, an environmental group opposed to Keystone XL, called these arguments misleading. Swift said Keystone XL would have little impact on retrofitting tank cars, because most train traffic from the Bakken oil fields in North Dakota moves to East Coast and West Coast refineries. He said that traffic would not be affected by the pipeline.

        Keystone XL would have the capacity to carry 830,000 barrels of oil-sands crude a day, with up to 100,000 barrels a day set aside for crude from the Bakken. By 2016, the rail industry in Canada is expected to carry about as much oil as Keystone XL would. The U.S. rail industry is already there: Almost 760,000 barrels a day of crude had traveled by rail by August.

        Swift said the costs to the oil industry are worthwhile if lives are saved. “The argument that we need to wait until the oil industry does not need tank cars until we can make them safe is ridiculous on its face,” he said.

        Greenbrier Gears Up to Meet Demand

        In February, Greenbrier introduced a beefed-up tanker with a 9/16-inch steel shell (1/8-inch thicker than many DOT-111 cars), 11-gauge steel jacket, removable bottom valve, and rollover protection for fittings along the top of the cars.

        Greenbrier calls the tanker the “car of the future,” saying it’s eight times safer than the DOT-111. Isselmann said Greenbrier has received more than 3,000 orders for the new car and plans to double its manufacturing capacity by the end of the year.

        In June, Greenbrier and Kansas rail-service company Watco joined forces to form GBW Railcar Services, creating the largest independent railcar repair-shop network in North America. Isselmann said the company plans to hire 400 workers and start second shifts at its factories to meet demand for retrofitting DOT-111 tank cars.

        In comments to U.S. regulators, GBW said it currently has the capacity to retrofit more than 10 percent of the fleet of DOT-111 tank cars.

        Isselmann said that number will grow as other companies take advantage of the market once regulators release final rules. For that reason, he said the industry’s current capacity to meet regulations is less important than its ability to ramp up quickly to capture the increased business that new safety standards could bring.

        “This notion that the status quo is going to remain—it’s diversionary at best,” Isselmann said.

        An oil tanker car at Lac-Megantic, Quebec
        Almost every tanker in the Lac-Megantic accident was punctured. New standards would mandate stronger cars, among other measures. – Photograph by Ryan Remiorz, Associated Press

        Some in the industry are responding to public concern before rules are finalized. In April, Irving Oil—the owner of Canada’s largest refinery, in Saint John, New Brunswick, where the Lac-Mégantic train was headed before the disaster—completed a voluntary conversion of its crude oil railcar fleet.

        Also in April, Global Partners, one of the largest U.S. distributors of gasoline and other fuels, began requiring all crude oil unit trains making deliveries at its East and West Coast terminals to meet October 2011 safety standards for tank car design.

        “As an industry, we have both an opportunity and a responsibility to maximize public confidence in the safety of the system that carries these products across the country,” Eric Slifka, Global Partners’ CEO, said in a press release.

        A Push to Harmonize Regulations

        As the U.S. and Canada consider train safety regulations, oil and rail companies are pushing to ensure that the same tank cars can be used to haul flammable liquids in both countries.

        Regulators say they are working together to make that happen. Lauren Armstrong, a spokeswoman at Transport Canada, said the department is holding technical discussions on new tank car standards with the U.S. Department of Transportation and the Federal Railroad Administration.

        However, coordinating tank car regulations between the two countries would have to overcome current gaps, industry representatives say.

        In April, Transport Canada banned the use of the oldest and least crash-resistant DOT-111 tank cars, which lacked bottom reinforcement.  The U.S. so far has not banned the cars from carrying oil and ethanol.

        Canada also set a 2017 deadline for retrofitting the cars. In the U.S., regulators are expected to release final rules by early 2015. The process, however, could continue much longer.

        The strongest standards will carry the day, said Thomas Simpson, the president of the Railway Supply Institute. Given the large amount of oil that moves between the two countries, Simpson said it makes no business sense for companies to keep two different sets of cars to meet the two sets of rules.

        Communities Concerned About Safety

        But as final rules are being hammered out in the U.S., some train safety advocates and community groups worry they are being left out of the process.

        Karen Darch, co-chair of TRAC, a coalition of Illinois communities concerned about train congestion and rail safety, said she is hopeful that final rules will include a fast deadline to retrofit old cars. (See related story: “Illinois Village Leads Charge for Tougher Train Rules“)

        But she said rail and oil industry lobbyists have had much more access to policymakers than community advocates, and she’s concerned they will have a greater impact on final rules.

        “The inside players, the guys in the industry,” she said, “they seem to be able to be in front of the decision-makers more than we have been.”

        The story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.

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