Crude on the Rails

Striking oil in North America is easy these days. What’s tricky is getting the stuff to customers. The U.S. has passed Saudi Arabia as the world’s largest producer and Canada’s recoverable reserves are the third-biggest globally. But existing pipelines don’t have the capacity or don’t go to the right places, and building more has proven politically challenging. That means record volumes of oil are traveling by rail, adding a contentious new element to the fierce debate about the safety and environmental impact of the region’s energy renaissance.

Environmental concerns lie at the heart of efforts to block permits for rail terminals where oil would be delivered to refineries. Safety takes center stage in accidents involving oil trains. On Feb. 16, a train carrying oil from North Dakota derailed and ignited in West Virginia, forcing the evacuation of more than 100 residents and endangering the drinking water supply. There were four major North American oil-train derailments in six months leading up to a conflagration in rural New Brunswick, Canada, on Jan. 7, 2014. The deadliest incident came on July 6, 2013, when a runaway train hauling 72 carloads of crude derailed in Lac-Megantic, Quebec, causing an explosion that killed 47 people, incinerated 30 buildings and transformed the downtown into a smoldering hellscape. The investigation that followed raised questions about trains operated by a single engineer and about the soundness of the tanker cars involved in the crash. To increase safety, the U.S. and Canadian governments set new tank car standards in May. Most of the U.S. oil shipped by rail comes from North Dakota because there aren’t enough pipelines to take it from there to coastal refineries. The proposed $5.4 billion Keystone XL pipeline, opposed by U.S. President Barack Obama and environmentalists but favored by Congress and the Canadian government, has the potential to ease demands on North America’s railway network to a limited extent by moving 830,000 barrels per day of Canadian oil sands crude. Rail explosions have led advocacy groups to push for producers to remove volatile liquids and chemicals from North Dakota crude before transporting it. Oil sands crude is thick sludge that is not easily ignited.