Tag Archives: Montreal Maine and Atlantic Railway

Does zero Bakken crude for Irving Oil indicate a trend?

Repost from Railway Age
[Reference:  see the 8/20/15 Wall Street Journal article, Canada’s Largest Refinery Shifts from Bakken Shale Oil to Brent Crudes.  – RS]

Does zero Bakken crude for Irving Oil indicate a trend?

By  William C. Vantuono, Editor-in-Chief, August 28, 2015
Irving Oil Ltd. Saint John, N.B. refinery
Irving Oil Ltd. Saint John, N.B. refinery

Irving Oil Ltd., operator of Canada’s largest crude oil refinery, has stopped importing crude oil sourced from the Bakken shale formation in North Dakota and shipped by rail in favor of cheaper crudes from such producers as OPEC, “reflecting a shift in crude costs affecting East Coast refiners during a global slump in oil prices,” the Wall Street Journal recently reported.

The 320,000-barrel-a-day refinery in Saint John, N.B., one of the biggest by volume in North America, had been receiving 100,000 barrels a day by rail, a high reached two years ago that was only temporarily affected by the Lac Mégantic disaster. (The Montreal, Maine & Atlantic crude oil train that derailed on July 6, 2013, claiming 47 lives, was bound for the refinery). Today, CBR shipments the refinery are zero, a move “that reflects shifting economics in the energy industry even as the price of oil—including Bakken crude—has slumped to six-year lows,” said the WSJ. “About 90% of the crude oil Irving currently buys is shipped by sea from such producers as Saudi Arabia and those in western Africa, with the remainder coming by rail from such western Canadian oil-sands operators as Syncrude Canada Ltd. and Royal Dutch Shell PLC. A year ago, Bakken crude made up about 25% of Irving’s feedstock and in 2013 it supplied nearly one-third of its procurement volume, or about 100,000 barrels a day. ‘The Bakken price has gone up’ relative to other crudes when CBR costs are factored in,’ [an Irving Oil executive] said.”

“A once-yawning gap, between the cost of oil produced in North America and overseas crudes priced at the Brent global benchmark, has narrowed since 2013,” the WSJ noted. “Refiners on North America’s east coast can now import crude shipped by sea for less than the cost of shipping it by rail from shale oil producers in North Dakota and elsewhere in the U.S.”

Production of U.S. shale oil, especially that from the Bakken, led to CBR shipments increasing exponentially due to a lack of pipelines. CBR is more expensive than by shipping by pipeline and even by ship, and fewer refiners are willing to pay a premium for CBR. <p< Whether Irving Oil’s decision to abandon Bakken crude for a single refinery reflects a broader trend that will affect CBR movements remains to be seen. Two other refiners have followed suit, but the situation may not be permanent.

“Refiners PBF Energy Inc. and Phillips 66 both said they increased procurement of overseas crudes at the expense of CBR in the second quarter, though they signaled it is unclear if that will continue throughout the rest of the year,” the WSJ reported. “‘Our ability to source sovereign waterborne crudes was far more economic to the East Coast facilities, and that’s what we did,’ PBF Energy CEO Tom Nimbley said in late July. Phillips 66 CEO and Chairman Greg Garland told investors last month, ‘We actually set [crude-by-rail] cars on the siding. We brought imported crudes in the system.’ But, he added, ‘I’d say given where our expectations are for the third quarter, I’d say cars are coming off the sidings, and we’re going to import less crude.’”

CBR traffic has dropped substantially compared to last year, “reflecting both the worsening economics of CBR and better pipeline access to refineries on the Gulf of Mexico,” the WSJ noted. According to Association of American Railroads figures, U.S. Class I railroads originated 111,068 carloads of crude oil in the second quarter of 2015, down 2,201 carloads from the first quarter and some 21,000 fewer carloads than the peak in 2014’s third quarter.

 

    Lac-Mégantic protest: crude oil trains should bypass our town

    Repost from the Montreal Gazette
    [Editor:  Another perspective: for a local report that completely ignores the protest in Lac-Mégantic, see In Lac-Mégantic, everyone marks the anniversary in their own way, including a brief news video of church bells and a solemn ceremony.  – RS]

    Lac-Mégantic marches against crude oil returning

    By Jesse Feith, July 5, 2015 9:09 AM EDT
    Anti-oil demonstration in Lac-Megantic
    (To play the video, click the image which takes you to the Montreal Gazette page.)

    Two years after the deadly derailment in Lac-Mégantic, people are starting to feel comfortable about standing up for what they want, says Jonathan Santerre, an activist and founder of the Carré bleu Lac-Mégantic citizens’ group.

    The group organized a walk against crude oil in Lac-Mégantic on Saturday afternoon, where about 150 people walked from the town’s high school down Laval St. toward the old downtown.

    At first, residents were afraid to speak out after the train derailment that killed 47 people in July 2013, Santerre said.

    Sending loud political messages while many continue to mourn could be seen as insensitive by some, but, Santerre said, “we have no choice.”

    “Emotions and politics are tied together in this, unfortunately,” he continued. “It’s shocking that after everything that happened, people’s lives still come second to money.”

    Though Saturday’s march was held to denounce crude oil, Santerre knows getting oil shipments through Lac-Mégantic banned isn’t realistic. When Central Maine and Québec Railway Canada bought the line in 2014 after Montreal, Maine and Atlantic Railway went bankrupt following the derailment, it was clear from the beginning that oil would return come 2016.

    The town needs the railroad to survive economically, and CMQ needs to ship oil on it to be profitable.

    But the goal that everyone is holding onto now is a new set of tracks that would bypass Lac-Mégantic’s residential sector, even though it could take years to get one.

    “What’s important is that the conversation goes on,” Santerre said. “That the debate takes place.”

    The town council and a number of vocal residents haven’t seen eye to eye on decisions taken since the disaster, but the one idea both sides agree on is the new railroad. Town officials weren’t on hand for Saturday’s protest, but it had been approved by council.

    “With every passing day, residents are more determined to see it done,” said Mayor Colette Roy-Laroche earlier this week about the bypass railway. “As a municipal council, we consider it a must. Not a week goes by that it’s not brought up.”

    Until then, she said, “we’re preoccupied with prevention, better security measures, well-maintained infrastructure and limited speeds.”

    People dressed all in white for Saturday’s march, to contrast the colour of “dirty oil.”

    “Say yes to a bypass railway,” they chanted as they descended toward downtown, “say no to another oil spill.”

    Gilles Fluet, 67, said he was walking to make sure what happened never does again, in Lac-Mégantic or anywhere else.

    MONTREAL, QUE.: July 04, 2015 -- Gilles Fluet, centre kneeling, stopped with other protesters by the train tracks in Lac-Megantic, 250 kilometres east of Montreal Saturday July 04, 2015 to voice their opposition to the transport of oil by rail through their community.  The demonstration took place two days before the anniversary of the 2013 train derailment that levelled the centre of the town and killed 47 residents. (John Mahoney / MONTREAL GAZETTE)
    MONTREAL, QUE.: July 04, 2015 — Gilles Fluet, centre kneeling, stopped with other protesters by the train tracks in Lac-Megantic, 250 kilometres east of Montreal Saturday July 04, 2015 to voice their opposition to the transport of oil by rail through their community. The demonstration took place two days before the anniversary of the 2013 train derailment that levelled the centre of the town and killed 47 residents. (John Mahoney / MONTREAL GAZETTE) John Mahoney / Montreal Gazette 

    He was at the Musi-Café the night of the derailment, leaving just before the tankers crashed and ignited.

    “I couldn’t be closer to it without dying, I had to run to avoid burning,” he said, holding up a sign that said “47 reasons” with a picture of residents lying across the tracks.

    The post-traumatic stress symptoms have been present ever since, he said. First he avoided the sunshine because the bright light and heat reminded him of the fire he ran away from that night.

    Then when the trains started coming through again in December, the sound they made was too much for him to handle.

    “There are a bunch of different things that trigger it,” he said. “You don’t know when it’s going to hit you, and you don’t understand when it does.”

    He fears oil returning could worsen his symptoms, or trigger some for other residents.

    Nathalie Beaudet drove down from Varennes, on the south shore, to participate in the demonstration. She lost a close friend in the derailment, and recently, oil tankers have started rolling on the tracks behind her house.

    “It’s scary, it terrorizes us,” she said. “I want Lac-Mégantic to get its new tracks because I know what it will do to residents once the oil starts again. They’ve been through enough, this shouldn’t be imposed on them.”

    After marching through the town’s side streets, the group made its way to the railway longing the fence that cuts off the old downtown core, now a mountain of soil as decontamination work continues.

    Demonstrators lined up elbow-to-elbow on the tracks, and together, symbolically crossed their arms.

      Oil companies pay into compensation fund for Quebec train crash – deny further liability

      Repost from The Hill

      Oil companies pay into compensation fund for Quebec train crash

      By Timothy Cama – 06/11/15 08:35 AM EDT
      This July 16, 2013, file photo shows firefighters and workers at the crash site of a train derailment that killed 47 people in Lac-Megantic, Quebec. A watchdog from the Justice Department is looking for transparency on dollar amounts that oil companies are paying into a fund for victims of the crash. —Ryan Remiorz/Associated Press

      Oil companies have contributed tens of millions of dollars toward a fund to compensate victims of a major 2013 oil train disaster in Quebec, Canada, that killed 47.

      Companies like Royal Dutch Shell PLC, Marathon Oil Corp., ConocoPhillips Co. and Irving Oil Ltd. have paid into the $345 million fund, though they deny responsibility for the events on the train transporting their products, The Wall Street Journal reports.

      If courts in the United States and Canada approve the oil companies’ role in the fund, the companies will be shielded from liability for any negligence they had involving the disaster in Lac-Megantic, including for failing to test the oil’s vulnerability.

      The Montreal, Maine & Atlantic Railway Ltd., which ran the train that derailed and exploded, filed for bankruptcy shortly after the incident.

      But its court-appointed trustee said the oil companies knew that the oil was volatile and dangerous.

      The oil companies have responded that their responsibility ended when they extracted the oil.

      Most of the companies that contributed to the fund declined to comment to The Wall Street Journal. Marathon Oil told the newspaper that its contribution is not an acknowledgment of liability.

      The Quebec disaster led officials in both Canada and the United States to pay new attention to the use of oil trains, which has increased dramatically in recent years along with oil production in places like the Bakken shale region.

      It has resulted in rules in both countries that will ban the use of the oldest tank cars for oil in the coming years, as well as speed restrictions and other operational regulations.

      Some Democratic lawmakers, led by Sen. Maria Cantwell (D-Wash.), have pushed for regulations limiting oil volatility in rail transport.