Category Archives: Explosion

Crude By Rail, Derailment, DOT-111, Explosion, Fire, Insurance and liability, Lac-Mégantic, Oil Industry, Rail industry, Victim compensation

Victim compensation after oil train derailment: Big Oil cost of doing business?

Repost from DESMOG

Cost of Doing Business? Oil Companies Agree To Pay For Some of Lac-Megantic Damages, But Not to Solve the Real Problems

By Justin Mikulka, June 21, 2015 – 05:58
Image credit: Wikimedia

Although insisting the industry is not to blame, several of the oil companies involved in the fatal Lac-Megantic oil train accident in 2013 have agreed to contribute to a fund to compensate the families of the 47 victims in that accident.

The Wall Street Journal reported recently that oil companies Shell, ConocoPhillips, Marathon and Irving have all agreed to contribute to the fund to avoid future litigation, along with General Electric and the Canadian government. While the actual amounts contributed by most companies involved are not available, the total fund is reportedly at $345 million. That sounds like a lot of money but still is less than the $400 million retirement package for Exxon’s last CEO, for example.

Canadian Pacific Railway Ltd. hasn’t agreed to the settlement, according to the Bangor Daily News, which reports that the judge in the case has delayed his decision on the settlement. Canadian Pacific has asked the court to shield it from future litigation and challenged the Quebec provincial court’s jurisdiction.

It is no surprise that oil companies would prefer to pay fines of tens of millions of dollars to avoid future litigation as well as duck responsibility for the full cost of the cleanup. Rebuilding the destroyed Lac Megantic property is expected to take as long as eight years and as much as $2.7 billion.

This approach has proven successful for the oil and rail industry in the past. In 2009, when a Canadian National (CN) ethanol train derailed in Cherry Valley, Illinois resulting in a fire and the death of one woman and injury to several others, the railroad paid the surviving family members $36 million.

The National Transportation Safety Board laid some of the blame for that tragedy on the “inadequate design of the tank cars, which made them subject to damage and catastrophic loss of hazardous materials during the derailment.”

But CN just paid the $36 million and the industry kept using the same inadequate DOT-111 tank cars to move ethanol and crude oil. It was the DOT-111 tank cars that were involved in the Lac-Megantic accident four years later, and the same tank cars that the oil industry is currently fighting to keep on the rails as long as possible.

There is no question it is far more profitable for the oil and rail industries to continue to use unsafe rail tank cars and to just pay off the families of the victims or for environmental damages from oil spills after any accidents than to invest in safer tank cars.

Canadian National has had two oil train derailments already in 2015 which the company reports have cost it $40 million. However, CN still reported over $700 million in net income for just the first quarter of 2015.

Business as usual in the oil-by-rail industry is highly profitable. Which is why the oil and rail industries are fighting against any safety measures that would require investment and cut into profits.

After the faulty tank cars, the two other issues the oil industry has fought against are modernized braking systems and removing the volatile and explosive natural gas liquids from the oil itself via stabilization.

Both of these proven safety measures would cost the industry billions of dollars to implement. So they haven’t done anything. It is far more profitable to live with the consequences of some accidents and make relatively small payouts to avoid lawsuits than it is to invest in safe alternatives.

In 2013, the year of the Lac-Megantic disaster, the big five oil companies made $93 billion in profits. Fines and settlements like those resulting from oil train disasters or deadly refinery accidents are simply a cost of doing business. And for these companies, it turns out to be a very small cost when compared to the profits.

In a forum on rail safety held in Albany, NY this month, emergency first responders from three oil train accidents (Lac-Megantic, Lynchburg, Virginia and Galena, Illinois) recounted their experiences dealing with oil train fires and explosions. While offering excellent insights to the risks involved with oil-by-rail, there also was insight into how the rail companies responded once the accidents occurred.

For both the Lynchburg and Galena accidents, it was noted that the rail companies were on the scene almost immediately. And they rebuilt the tracks and got them back in operation as soon as possible because in Galena, rail downtime was costing the company $1 million an hour. When money is at stake, the rail companies jump into action.

Did the rail company jump into action the day before the Lynchburg rail accident when an inspection revealed a defect in the track in Lynchburg? No.

At the forum in Albany, Lynchburg Battalion Chief Robert Lipscomb summed up the situation nicely.

“You got to remember their business is making money. Our business is taking care of emergencies. So sometimes those two don’t line up exactly right,” Lipscomb said.

When your business is making money, it is much easier to accomplish your goals by lobbying regulators to ensure weak regulations and paying out meaningless fines when something goes wrong than to invest in safety.

The oil trains will return to Lac-Megantic in 2016, with the same inadequate tank cars and 19th century braking systems. And they will be full of unstabilized, dangerous and very profitable oil.

Crude By Rail, Derailment, DOT-111, DOT-112, DOT-117, Ethanol, Explosion, Tank car design, Tank car retrofit

New Brunswick derailment: some tank cars fared better than others

Repost from McClatchy DC News

Tank car upgrades effective in derailments, Canadian report shows

By Curtis Tate, McClatchy Washington Bureau, June 19, 2015

Tank car improvements required by the U.S. and Canadian governments last month should cut the risk of spills and fires in oil train accidents, Canadian investigators have concluded.

The finding came from the Transportation Safety Board of Canada’s investigation of on a derailment in January 2014 in Plaster Rock, New Brunswick.

While the report pinpointed a broken wheel as the cause, the derailment provided a rare side-by-side comparison of the performance of two different types of tank cars in use for decades on the North American rail system.

A type of tank car called the DOT-112 survived the Plaster Rock derailment with no impact damage, according to the report, released Friday. Four such cars carrying butane derailed.

In contrast, two DOT-111 cars carrying crude oil sustained punctures, spilling more than 60,000 gallons. The spilled oil caught fire.

The DOT-112 cars have features very similar to the new DOT-117 standard unveiled by regulators on May 1. Both include half-inch thick shields that fully protect both ends of the car, thicker 9/16-inch shells and thermal insulation around the tank shell enclosed with an additional layer of steel.

Typically, the DOT-111 cars have 7/16-inch shells and none of the other protections.

As McClatchy reported last year, the DOT-112 was beefed up after a series of catastrophic tank car explosions in the 1970s that killed railroad workers and firefighters and caused extensive property damage. After the 112 was upgraded, the accidents subsided.

But the DOT-111 fleet remained unchanged, even when railroads began hauling larger quantities of ethanol a decade ago, followed by crude oil five years ago.

The Canadian report lists 13 other rail accidents involving crude oil or ethanol since 2005 that illustrate the vulnerabilities of the DOT-111. Three of those derailments took place this year, including two in Ontario and one in West Virginia.

The list also includes the 2013 disaster in Lac-Megantic, Quebec, which resulted in 47 fatalities. The families of the victims and their attorneys earlier this month unanimously ratified a proposed $350 million settlement package.

The U.S. Department of Transportation last month required that new tank cars carrying crude oil and ethanol meet the DOT-117 standard beginning in October. Tank car owners, which are typically railcar manufacturers, financial firms and energy companies, must comply with a series of retrofit deadlines for DOT-111 cars that are spread out over a decade.

The oil industry says the timeline is too short, while environmentalists say it’s too long. Both have since taken the department to court.

Bakken Crude, Crude By Rail, Derailment, Explosion, Insurance and liability, Lac-Mégantic, Oil Industry, Rail industry

Court delays Lac-Mégantic settlement

[Editor: Liability is a huge – and lingering – issue when it comes to oil train derailments and catastrophic firey explosions.  There have been daily updates this past week on an announced settlement in the massive Lac-Mégantic disaster of July, 2013.  We watch and wait for potentially precedent-setting decisions.  See below.  – RS]

Court delays ruling on 2013 Quebec oil train crash settlement

(Reuters) — A Quebec judge reserved his decision on Wednesday on whether to grant a motion that would clear the way for a settlement between victims of the 2013 Lac-Megantic oil train disaster and dozens of companies and individuals linked to the crash that killed 47 people.  Read More >

Canadian Pacific asks judge not to approve Lac-Megantic derailment settlement

In this July 6, 2013 file photo, smoke rises from railway cars carrying crude oil after derailing in downtown Lac Megantic, Que.
In this July 6, 2013 file photo, smoke rises from railway cars carrying crude oil after derailing in downtown Lac Megantic, Que. Paul Chiasson / THE CANADIAN PRESS

(Calgary Herald) — SHERBROOKE, Que. – Canadian Pacific Railway Ltd.’s lawyers asked a Quebec judge not to approve a proposed $430-million settlement fund for victims of the Lac-Megantic train derailment because they say its terms are unfair to the company.  Read More >

Quebec court to hear arguments in $431 million settlement for Lac-Megantic victims

(Globalnews.ca) – WATCH: A settlement to compensate victims of the Lac-Megantic train disaster may be in danger. Lawyers for Canadian Pacific are questioning the legitimacy of the entire process, just two days before a judge was set to approve the deal. As Mike Armstrong explains, the last minute hiccup could mean a delay of months or even years.  Read More >

 

Canadian Pacific legal challenge plunges Lac-Mégantic settlement into question

(Montreal Gazette) – A lawyer for the defunct railroad at the centre of the Lac-Mégantic train derailment said Canadian Pacific Railway Ltd. is acting deplorably and offensively by attempting to shut down proceedings to distribute more than $430 million to victims and creditors of the 2013 tragedy.  Read More >

 

Crude By Rail, Derailment, Explosion, Local Regulation, Public Safety

Mayors from Great Lakes region, St. Lawrence River address oil train derailments

Repost from the Sarnia Observer
[Editor: reading highlighted text for references to the Mayors’ efforts to stop crude oil train derailments, and the importance of local communities banding together on such matters.  – RS]

Sarnia convention brings together mayors from Great Lakes region, St. Lawrence River

By Chris O’Gorman, June 18, 2015 8:11:34 EDT AM
Deputy mayor of Quebec City, Michelle Morin-Doyle, speaks about the need for oil transportation regulations at the kick off to a three day conference in Sarnia. The conference will produce a list of resolutions backed by 110 mayors and municipal leaders asking governments and industries to curb harmful environmental practices. (CHRIS O’GORMAN, Sarnia Observer)
Deputy mayor of Quebec City, Michelle Morin-Doyle, speaks about the need for oil transportation regulations at the kick off to a three day conference in Sarnia. The conference will produce a list of resolutions backed by 110 mayors and municipal leaders asking governments and industries to curb harmful environmental practices. (CHRIS O’GORMAN, Sarnia Observer)

The mayors of cities and towns dotting the coast of the Great Lakes and St. Lawrence are in Sarnia for a three-day environmental conference where they announced “aggressive targets” for reducing phosphorus in Lake Erie.

A Lake Erie algae bloom last summer made city water unsafe for residents of Toledo, Ohio to unable to use city water for several days.

The event served as a “wake-up call” for all municipalities on the lake to pressure governments and industries to reduce phosphorus run-off, David Ullrich, the executive director of the Great Lakes and St. Lawrence Cities Initiative, said Wednesday

“In the minds of the mayors, this was really a game changer for us. We couldn’t be complacent anymore about algae blooms,” he said.

Phosphorus is a naturally occurring element is the byproduct of some industries and is found in fertilizers. When it makes it way from farm fields into bodies of water, it feeds toxic algae, sometimes creating blooms.

The city representatives from eight states and two provinces are hoping to introduce a harmonized system for dealing with algae blooms, similar to the one Toledo adopted after the toxic water disaster. They’re calling for a 40% reduction in phosphorus by 2025 in Lake Erie.

There are a number of items on the conference agenda on Thursday,  including making oil transportation safer through the Great Lakes region , eliminating micro beads from consumer products, and discussing the future of energy generation and distribution.

“Our collective voice has never been more important. We’re facing a number of challenging issues that we will be discussing at our conference,” said Mitch Twolan, the mayor of Huron-Kinloss.

While it may seem as if initiatives like these involve a lot of policy documents and occasional finger pointing—one mayor said “we do send a lot of letters,” receiving a few chuckles—the collective of mayors has achieved much in just the last year.

At the last conference, the group decided to take action against “micro beads,” small plastic beads found in body washes, toothpastes, and other products. The beads accumulate in waterways and the bodies of animals.

Today, the city initiative has successfully lobbied six companies to stop using the beads in their products. Most recently, Loblaws said it would be phasing out micro bead products from its stores.

 The Lac Mégantic disaster will also be a major agenda item. In July 2013, a train carrying crude oil derailed near the rural Quebec town of Lac Méganic and exploded killing 47 people. Deputy mayor of Quebec City, Michelle Morin-Doyle said the group is committed to improving oil transportation safety through the Great Lakes and St. Lawrence regions. While the initiatives work may be slow sometimes and alone a city may be able to move faster, working with a larger collective means changes are permanent and far-reaching.

  “Because what it all comes down to is we want to make sure our citizens are safe,” she said. “The objective must be zero derailments. We cannot afford another accident like the one in Lac Mégantic.”

  From Wisconsin, mayor John Dickert of Racine said the environmental group prefers to speak with, encourage, and sometimes demand industries that create these contaminants stop, rather than dealing with aftermaths like Lac Mégantic.

  “The reason these are not small issues is… because businesses deal with these disasters on the day it happens. If their train derails, they’ve lost a financial commodity. Our people have lost their lives,” he said.

  “We are going to be very aggressive on these issues so that we don’t have to deal with it after the fact or deal with a parent who’s saying they just lost a loved one.”