Quebec tragedy unlikely to slow oil shipments via rail
With shipments of crude rising, some say an accident as happened in Quebec was inevitable, but others say trains are the only — and safest — way to move the fuel
The weekend’s tragedy in Quebec, where at least 15 people were killed after an oil tanker train derailed and exploded in a small town near the Maine border, probably will not slow the tremendous growth in rail shipments of oil across New England and North America, local and national industry officials say.
Two Massachusetts companies, Global Partners LLC of Waltham and Pan Am Railways of Billerica, are part of this rail boom and should continue to benefit from it, analysts said. With production surging in North Dakota and western Canada, and no major pipelines connecting the oil fields to coastal refineries, there are few alternatives to rail to help meet the demand for gasoline, diesel, and other petroleum products.
“It’s something that’s really increased in the past year and a half,” Cynthia Scarano, executive vice president of Pan Am Railways, said of train shipments of crude oil from western North America through New England in particular.
“The trends are definitely pointing in the direction of increased shipments.”
With about 2,000 miles of rail lines in New England, Pan Am Railway regularly ships an undisclosed amount of crude oil from the Bakken shale fields in North Dakota through Massachusetts, southern New Hampshire, and Maine for eventual delivery to an Irving Oil refinery in St. John, New Brunswick.
Global Partners, meanwhile, has snapped up rail centers in the Northeast, including a facility in Albany, N.Y., and across the country in recent years to transport oil products. In the first quarter of this year, its sales soared by 40 percent to $5.6 billion, driven largely by Global Partners’ quickly growing “crude-by-rail” business, the company recently reported.
Global Partners officials did not respond Tuesday to several requests for interviews.
The tragedy in Lac-Megantic, Quebec, has focused attention on the rapidly increasing use of rail to transport oil. Just five years ago, fewer than 10,000 carloads of crude were carried by rail; last year, nearly 234,000 carloads were transported, according to the American Association of Railroads, a trade group.
At approximately 30,000 gallons per car, that means about 7 billion gallons of crude oil are shipped around the country. In a recent report, Raymond James & Associates Inc., a St. Petersburg, Fla., consulting firm, estimated that the volume of crude shipped by rail could increase by 150 percent over the next two to three years in the United States.
Meanwhile, the number of serious train accidents in the United States has declined significantly, from 867 in 2008 to 552 last year. Holly Arthur, a spokeswoman for the American Association of Railroads, said 2012 was the safest year ever for the railway industry.
But environmentalists, who have been mobilizing against the controversial drilling method known as “fracking” used in North Dakota and elsewhere, said the surge in oil moving by rail through communities made Lac-Megantic a tragedy waiting to happen.
Earlier this week, environmentalists protested at the headquarters of the owner of the derailed train, the Montreal, Maine & Atlantic Railway in Hermon, Maine, calling attention to rail safety and the role of fossil fuels in climate change. Some of those protesters included people who were arrested last month after they tried to block a Pan Am Railway line in Maine that they believed would be used to transport crude oil through Maine to New Brunswick. The protesters were arrested for trespassing.
John Calandrelli, a program director at the Sierra Club of Connecticut, expects protests to escalate across New England over the issue of crude oil deliveries through the region.
“We’re trying to change a system that doesn’t want to change,” said Calandrelli of the oil and transport sectors.
“This is both a safety issue and an environmental issue.”
In Massachusetts, environmentalists beat back a proposal by a Global Partners subsidiary to transport ethanol through densely populated communities north of Boston to a facility in Revere. Global Partners withdrew the request for a rail license after the state Legislature approved an amendment that prohibited the storage of large quantities of ethanol near crowded neighborhoods.
“I heard about the devastating news in Quebec and thought, ‘That could have been us,’ ’’ said Roseann Bongiovanni, an environmental activist at Chelsea Collaborative, which helped fight the Global Partners rail plan.
“The accident in Quebec shows that we need a lot more state regulation of these lines.”
But the federal government, not the states, regulates interstate rail. Industry officials say that is another reason why they expect crude oil deliveries to continue to grow.
“The bottom line is that there’s a demand for this oil,” said Richard C. Beall, a former railroad engineer and now a consultant for Railroad Litigation Experts, a railroad operations and safety consulting firm.
“We have a demand for more oil, and with that demand will be a demand for more trains. It’s not going away.”
Material from Globe wire services was used in this report.