By Paola Loriggio, The Canadian Press, March 17, 2015
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.
Milton residents ‘will be lying down on the tracks’ to prevent surprise CN plan
By San Grewal, March 17, 2015
MILTON MAYOR Gordon Krantz says his town has been “blindsided” by a CN plan to have a facility between Britannia Rd. and Lower Base Line that would bring 1,500 trucks and four additional trains into Milton every day. Zoe McKnight,Torstar News Service
A “David and Goliath” battle is shaping up in Milton, where the Toronto Star has learned CN is about to announce plans for a 400-acre rail distribution centre that throws a wrench into the region’s carefully crafted growth management strategy.
Milton’s mayor and top bureaucrat are vowing the town will not go down without a fight.
“We have 50,000 residents, 20,000 houses planned for the area north of this (intermodal) facility. CN came in last week and pronounced that they are going forward — no formal application, no formal announcement,” said Milton’s chief administrative officer, William Mann.
“We know they are announcing it on Thursday. When Milton residents hear about this, they will be lying down on the tracks.”
Mann said the town, one of Canada’s fastest growing municipalities, has been told that CN, as a former Crown corporation, still has a certain power to circumvent municipal planning as governed by the province of Ontario.
Mann and Mayor Gord Krantz told the Star the town has been “blindsided” by the plan for a facility between Britannia Rd. and Lower Base Line that the town says would operate 24/7, transferring containers between trains and trucks. The town says it would bring 1,500 trucks and four additional trains into Milton every day, on CN-owned land that isn’t supposed to be used for such a facility according to Milton’s planning strategy.
Under Sustainable Halton, the region’s widely lauded plan for growth management, the land has been earmarked for strategic employment, with a mix of residential and commercial development surrounding it, as well as environmentally protected lands.
“It’s completely contrary to what we had planned,” Krantz said. “If I knew what was being proposed by CN I certainly wouldn’t be purchasing. Or if I already purchased one (of the newly built homes) and I wanted to get out from under it — I can imagine the possible legal battles.”
But Krantz is vowing to do everything the town can to fight CN, even if the rail giant has the federal government on its side, along with its powers to ignore local planning jurisdiction.
Referring to the tale of David and Goliath, Krantz said: “We all know how that story ended. I’ve got my one shot ready.”
He said Milton is already working with Halton Region and other partners on a legal strategy, but said he didn’t want to tip his hand.
CN responded to the Star’s questions about the project with a brief statement: “CN owns approximately 1,000 acres of land in the Milton, Ont., area. As part of its ongoing business operations, CN continually reviews its facilities and real estate holdings to ensure they are adequate to accommodate growth in its various businesses. Such is the case with CN’s Milton property. CN has no further comment at this time.”
One of the world’s largest rail companies, CN has a market capitalization of almost $71 billion.
CN had proposed a similar project in 2001 — preceding the province’s strategy to manage growth — that was withdrawn after the town and region identified major issues with it, according to a news release from the Town of Milton.
Multiple sources told the Star the CN plan is to be unveiled Thursday at a breakfast event hosted by the local chamber of commerce. As the MP for Halton riding, Federal Transport Minister Lisa Raitt represents Milton. A statement from the ministry to the Star said only that Raitt would attend the Chamber event Thursday “and looks forward to the presentation.”
The Ministry of Municipal Affairs and Housing was asked whether the province would guarantee a public consultation and that provincial environmental and safety rules as well as municipal planning processes would be complied with. A spokesperson said the ministry, and the Ministry of Transportation, “have been advised by CN that they are revisiting the need for an intermodal yard in the Town of Milton … CN has not provided the province with specific details of their proposal.”
With concern mounting over rail safety in the wake of the Lac-Mégantic disaster and more recent fiery derailments of trains carrying crude oil, Krantz and Mann said they have been disheartened by the province’s unwillingness to address the CN plan.
When asked if he has an idea of what would be passing through the area, Krantz said: “That’s a good question. We don’t know what’s going to be transported.”
Beyond the negative impact on surrounding property values, and environmental and safety concerns, the development industry is going to be extremely upset with CN’s decision, he said.
“You ain’t seen nothing yet. Wait until the developers, especially in the residential sector, hear. I suspect their reaction will be something like mine.”
Mann said Milton has behaved like the model municipality for Ontario’s Places to Grow Act, which established managed population growth targets throughout the GTA. The town has grown from about 7,000 residents in 1971 to 84,362, according to the 2011 census.
“We could go to over 400,000 under Places to Grow. Places to Grow is all about taking your fair share. Now, upward of 500 acres of employment land and all the residential around it, could be taken out of the picture. That means the rest of the GTA will have to pick up that population.
“This plan has nothing but negative consequences for Milton, from a community perspective.”
Crude oil joins rail industry staples as key revenue producer
By Jarrett Renshaw, Mar 16, 2015 2:05pm EDT
(Reuters) – U.S. railroads generated almost as much money last year hauling crude oil and sand, largely used in hydraulic fracturing, as they did moving industry staples like field crops and motor vehicles, according to a Reuters’ analysis of newly released federal data.
The previously unreported company data submitted to the U.S. Department of Transportation provides the latest piece of evidence of the blossoming marriage between the energy and rail industries, forged on the back of the U.S. shale oil boom.
Led by Berkshire Hathaway-owned BNSF Railways, the seven largest railroads operating in the United States generated $2.8 billion in gross revenue from hauling crude oil in 2014, up nearly 30 percent from 2013, according to company data filed with the federal government and released earlier this month.
The $2.8 billion figure puts crude oil in sixth place among similarly classified products, trailing industry standards like coal, field crops and motor vehicles, the analysis shows. Sand and gravel, an often overlooked winner in the shale boom, generated $2.7 billion last year in gross revenue.
Crude oil provides the biggest return on a per-carload basis, drawing $5,700 in gross revenue for each car that originated on the network, more than double than what coal brings.
The continuing financial success comes as the industry faces threats from a massive drop in oil prices and impending new U.S. regulations aimed at public safety that could impose additional costs.
“Will the major carriers go belly up? No,” said Barton Jennings, a professor of supply chain management at Western Illinois University. However, short-line cariers that rely upon crude for the bulk of their business may be exposed, he said.
Overall, the seven major carriers reported U.S. profits of $14.4 billion last year, led by Union Pacific and BNSF, which combined accounted for 67 percent of the industry’s U.S. profits, the analysis shows.
KING CRUDE
The biggest player in the U.S. crude rail business is BNSF, which dominates North Dakota, home to the Bakken shale.
BNSF’s gross revenue from crude oil rose to $1.48 billion from $63 million in 2010. Gross revenue from hauling sand and gravel climbed to $651 million last year, a more than 300 percent jump from 2010.
The growth in crude and sand hauling helped BNSF boost profits, which climbed from $2.6 billion in 2010 to $4.4 billion last year.
(Reporting By Jarrett Renshaw; Editing by Jessica Resnick-Ault and Jonathan Oatis)
Repost from McClatchy DC [Editor: Incredible: The complaint says, “Despite BNSF’s distaste for the DOT-111 cars, (emphasis added) they are authorized bulk packaging for crude oil service.” “Distaste?” Really! Oh, and … the BNSF surcharge would suggest that $1000/car will help exactly whom if/when the next explosion occurs? Surely not those whose bodies and livelihoods are incinerated. See this story also at Bloomberg Business News and Courthouse News Service. – RS]
Refiners sue BNSF over fee on oil loaded in older tank cars
By Curtis Tate, McClatchy Washington Bureau, March 16, 2015
A trade group representing oil refiners has sued the nation’s largest hauler of crude oil in trains over a surcharge for oil loaded into older tank cars that have punctured and ruptured in numerous derailments.
The American Fuel & Petrochemical Manufacturers, a trade association for producers of gasoline, jet fuel, home heating oil and other refined products, sought an injunction last week in U.S. District Court in the Southern District of Texas to block BNSF Railway from imposing a $1,000 surcharge for every DOT-111 model tank car loaded with crude oil.
Tens of thousands of DOT-111 cars have carried a surge in domestic energy production, but their poor safety record in oil and ethanol train derailments has drawn fresh scrutiny from regulators, lawmakers and the National Transportation Safety Board.
BNSF hauls 600,000 barrels a day of crude oil, mostly from North Dakota’s Bakken region, to refineries on the east and west coasts. In October, the railroad announced it would impose a $1,000 surcharge on oil shipped in DOT-111 tank cars, effective Jan. 1.
But the trade group, which represents more than 400 companies, said in its complaint that BNSF asserted “unlawful regulatory authority” when it began imposing the surcharge.
The U.S. Department of Transportation regulates rail transportation, and until regulations require tank cars of a different design for oil shipments, the group’s complaint says that BNSF and other railroads are obligated by law to accept them in whatever cars the government currently allows.
“Despite BNSF’s distaste for the DOT-111 cars,” the complaint says, “they are authorized bulk packaging for crude oil service.”
One DOT-111 tank car holds about 30,000 gallons, or 700 barrels of oil. The complaint says the $1,000 surcharge adds $1.50 per barrel in rail transportation costs.
The trade group’s complaint says that BNSF’s surcharge causes “direct and substantial harm” to its clients and “breaches BNSF’s common carrier duty to ship hazardous materials.” By law, railroads must provide rail transportation on reasonable request.
Four crude oil trains have derailed and caught fire across North America since mid-February. One of them was a BNSF train that derailed earlier this month near Galena, Ill.
In all four derailments, the tank cars were a modestly improved version of the DOT-111.
